SC grants tax compromise deal

THE Supreme Court has approved the judicial compromise agreement between the Bureau of Internal Revenue (BIR) and the Oriental Assurance Corp. on taxes dating as far back as 2007.

In a nine-page ruling signed by Division Clerk of Court Teresita Tuazon, the Court’s Second Division denied the motion for reconsideration filed by the BIR for being moot and academic.

The parties’ motion to render judgment based on the agreement contained in the manifestation filed by Oriental was granted.

“The Judicial Compromise Agreement entered into...is hereby approved and the parties are enjoined to faithfully observe and comply with the terms and conditions of their compromise agreement,” the high court ruled.

The Supreme Court also declared the case closed and terminated.

On June 15, 2010, Oriental received the preliminary assessment notice assessing it for deficiency documentary stamp tax (DST) for calendar year 2007 in the amount of P72,656,907.28.

After 14 days, the BIR sent a formal letter of demand dated June 29, 2010, assessing respondent for deficiency DST of more than P73 million.

In response, Oriental filed a letter expressing its willingness to settle the tax liability through a compromise agreement on the ground of doubtful validity.

Oriental paid the amount of P12,069,671.00 out of the P60,622,895.38 total DST liability. The balance of P48,553,224.38 was the subject of a compromise offer between the parties.

The BIR signed the payment form representing the compromise amount of 40 percent of the respondent’s DST liability, which is equivalent to P19,421,289.75, which was paid by the respondent.

But the bureau issued a warrant of garnishment against Oriental. This prompted the respondent to elevate the case to the Court of Tax Appeals, which in turn, held that it has jurisdiction in the determination of the validity of the warrant of garnishment.

It thereafter ruled that such was void due to a violation of taxpayer’s due process, prompting the BIR to seek redress before the high tribunal.

The firm filed a manifestation with motion to render judgment based on judicial compromise agreement as it requested the tribunal to approve the pact executed by them.

Both parties later on agreed to amicably settle the case with terms and conditions.

“Based on the foregoing, the compromise agreement of herein parties may be accepted,” the Court said.