PHILIP G. BRODETT v. COMMISSIONER OF INTERNAL REVENUE

\' REPUBLIC OF THE PHILIPPINES coon of Tu Appeals QUEZON CITY SECOND DIVISION PHILIP G. BRODETT, C.T.A. CASE NO. 7049 Peti tioner, Members: - versus - CASTANEDA , JR., Chairperson � � UY, and � PALANCA-ENRIQUEZ, JJ COMMISSIONER OF INTERNAL Promulgated : REVENUE , /. Respondent \Z- JAND 9 200!Y Lj: o:f t>m � X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION UY, ~.: This Petition for Review seeks fh e cancellation and withdrawa l of the deficiency assessments dated April 22, 2004 issued by the Commissioner of Internal Revenue against petitioner, Philip G. Brodett, and reiterated in the former's Final Decision on Disputed Assessment dated August 6, 2004 pertaining to petitioner's alleged deficiency Documentary Stamp Tax (DST) liabiliti es for the ta xab le year 1996 in the amount of Php143 ,437.50 , and deficiency Documentary Stamp Ta x and defi cien cy Capital Gains Tax (CGT) for ta xabl e year 1997 in the amounts of Php132 ,143.84, and Php8,069,584.13, respectively for the all eged transfers of shares of stock~ 40

DECISION C.T.A. CASE NO. 7049 Page 2 of29 during the taxable years 1996 and 1997, or for the total aggregate amount of Php8,345, 165.47. THE FACTS Petitioner Philip G. Brodett, an individual taxpayer residing at 36 Cambridge St. , Hillsborough Subdivision , Alabang , Muntinlupa City\ is a stockholder and the Vice-President of Liberty Mines, Inc., now Philcomsat Holdings Corporation (Philcomsat). 2 Respondent, on the other hand, is the Commissioner of the Bureau of Internal Revenue (BIR) who was duly appointed and empowered to perform the duties of his office, including , among others , the power to cancel disputed assessments . He holds office at the BIR National Office Building, Diliman, Quezon City.3 j In the year 1996, petitioner alleges that Jose Ma . Ozamiz, Fernando P. Jacinto , Jr. , Winston A Lee, Ma . Melizza Mendoza del Rosario, Jose Ma . G. Santos , and Grace Saulog (referred to as Beneficial Owners) orally requested that he purchase , on their behalf, shares of Liberty Mines, lnc.4 With this request, petitioner allegedly contacted his business associate, Prudencio C. Somera , Jr., informing him of the Beneficial Owners' intention to acquire stocks. As Somera allegedly wanted to deal solely with petitioner, and in order to accommodate the Beneficial Owners ' request in Somera's allocation of shares, a Declaration of Trust with Assignment was executed between 1 Petition for Review, Par. 1, Docket, p. I . 0\.~ 2 Transcript of Stenographic Notes (TSN), February 6, 2006, �p. 6; TSN, December 5, 2005 , p. 6. 3 Petitioner's Memorandum , Par. 2, Docket, pp. 306-307. 4 Ibid , Par. 3, Docket, p. 307; TSN, December 5, 200p, p. 6. �41

DE C ISION C.T.A. CASE NO. 7049 Page 3 of29 petitioner and Somera on July 24 , 1996. 5 On the same day, the latter � subscribed to 500 million shares of the proposed increase of capital stock of Liberty Mines , Inc. with a cost of Php .01 per share or FIVE MILLION PESOS (Php5,000,000 .00) payable in the followin g manner:6 1. 25 % of subscription price or P1 ,250,000.00 as down payment; 2. the balance o(75% upon c'all made by the Board of Directors of the Com pan y. On July 24 , 1996, Somera paid th e down paymenf that was allegedly advanced by petitioner.8 � Sometime in July 1997, each of the Beneficial Owners executed a Declaration of Trust with Assignment,9 naming herein petitioner as their respective trustee. Th e deta ils of the said Declaration of Trust with Assignment are summarized as follows : TRUSTOR NUMBER OF DATE OF SHARES DEED Grace Saulog Melizza Mendoza 12,5 00 ,000 July 28, 1997 Winston Lee 75 ,000,000 July 25, 1997 75 ,000 ,000 July 25, 1997 Fernando Jacinto 50 ,0 00 ,000 July 25, 1997 Jos.e Ma . Santos 250 ,000,000 July 25 , 1997 Jose Ma . Ozamiz 12 ,500 ,000 July 25, 1997 Total 25 ,000 ,000 � July 25 , 1997 500,000 ,000 On July 28, 1997, petitioner ackn owledged receipt of the following amounts from the Beneficial Owners:10 5 TSN , Decembe r 5, 2005, p. 7-8 . 6 Exh ibi t " D", Docket, p. 186. 7 Ex hib it " L", Docket, p. 2 10. 8 Petiti on for Review, Par. 45, Docket, p. 20 . 9 Exh ibi ts "E", "F","G", "H", " 1", " J", "K", Docket, pp. 189-209. 10 Annexes "0" to " 0 -7," Docket, pp. 8 1-88. The ann exes inCluded 2 otlier ackno wledgement receipts from Mary Rose Ezpele ta and Jose Maria P. Jnc into lo r 1> I,000,000.00 a nd P2 ,000,000 .00 respectively but they are not one of the named Bene fic ial Owners thu s. th e transacti o n that it covers is not considered in thi s instant case. Moreover, another acknow ledgement receipt from Jose Ma. Santos in the amo unt of P250,000.00 is inclu ded in the annexes but it is a mere dup licate. 42

DEC ISION C.T.A . CASE NO . 7049 PAYOR AMOUNT Grace Saulog PhtJ 250,000.00 Melizza Del Rosario 1,500 ,000 .00 Winston Lee 2 ,000 ,000 .00 Fernando Jacinto 2 ,000 ,000 .00 Jose Ma. Santos 250 000.00 Total Php 6,000 ,000.00 From these payments of the Beneficial Owners , petitioner allegedly reimbursed himself for his advances on the down payment and at the same time forwarded the amount of Php3,750,000 .00 to Somera to settle the 75% balance on the subscription agreement O h August 4, 2007 , Somera paid the balance of Php3,750 ,000.00 to Liberty Mines , Inc , now Philcomsat. Upon full payment, the corresponding Certificates of Stocks 11 were issued in the name of Somera on August 30, 1997. The certifi cates have the following details:12 Certificate Number Stockholder Number of Shares LM-3209 Prudencio Somera 12,500,000 LM-3205 Prudencio Somera 75,000,000 LM-3206 Prudencio Somera 25,000 ,000 LM-3207 PrUdencio Somera LM - 3208 Prudencio Somera 250,000 ,000 LM-3210 Prudencio Somera 12,500 ,000 LM-3211 Prudencio Somera 75,000 ,000 Total 50 ,000,000 500,000 ,000 On September 4, 2002 , petitioner received a Tax Verification Notice (TVN) dated August 30, 2002 from the 81 R informing him that Revenue Officer Efren Clemente was authorized to examine and verify his documents and other pertinent records , pertaining to ~apital gains tax return for the taxable year/period July 25 , 1997.13 11 Annexes "G", " G- 1" to " G-5 ," Docket, pp. 54-5 9. , ;\. ~J , 12 BIR Reco rds, p. 76. 13 Exhi bit " !", SIR Reco rds, p. 25 . I~ 43

DE CI S ION C.T.A. CASE NO. 7049 Page 5 o f 29 On February 3, 2003 , petitioner availed of the Voluntary Assessment and Abatement Program (VAAP) and paid the capital gains and documentary stamp taxes on the 25 ,000 ,000 shares sold to Jose Ma. Ozamiz.14 However, on March 26, 2003, petitioner, through the Assistant Vice-President of Philcomsat, Johnny R. Tan , asked for confirmation from the BIR regarding the exemption from Capital Gains Ta x, Documentary Stamp Tax , and Donor's Tax of the transfer of the stocks from th e trustees/nominees , Somera (first trustee) and petitioner (second trustee) in favor of the Beneficial Owners .15 In response , on April 1, 2003, Officer-in-Charge-Regional Director Ans elmo G. Adriano wrote that under BI R Ruling Nos. DA 136-2000 and DA- 101 -2001 , where the conveyance ,of property by the trustee in' favor of the trustor-beneficiary , who is the real owner of the subject property is without consideration , the conveyance is exempt' from CGT. Adriano likewise mentioned that the questioned transfers are also exempt from DST, pursuant to Section 176 of the National Internal Revenue Code (NIRC) of 1997, and Donor's Ta x, due to lack of intent to donate on the part of the trustees under Section 98 of the same Code. 16 On May 16, 2003 , Jose Ma. Oza mi z, one of the alleged Beneficial . Owners , wrote Adriano seeking the revo ca ti on of his April 1, 2003 Ruling , on the ground that the transfers were not trust agreements but in reality , were actually sales ; citing the following circumstan ce s: "1. First and foremost , Mr. Brodett represented that Mr. Somera did not exercise his right to subscribe to Liberty Mines , 0 'A-rt " Aooe.~.~:��::~~:sfocTRh~:,: :~o:::u:a~: Attachedhereto as Annexes 15 B IR Records, pp. 86-88. 16 Annex " S", Petition for Review, Docket, pp. 93-95. 44

DEC IS ION C.T.A. CASE NO. 7049 Page 6 or 29 1' and is a copy of the Subscription Agreement signed by Mr. Prudencio Somera , dated 24 July 1996 pertaining to 500,000,000 shares of Liberty Min es, Inc. which shares are the ones involved in this particular transaction made on the said subscription , by Somera . 2. In fact, shares were issu ed in the name of Somera by Liberty Mines , Inc., lat~r renam ed ,.as Philcomsat Holdings Corporation. Attached hereto as Annexes 'B' thru 'B-1' and 'B-5 ' are copies of the certificates . If you examine the back portion , the shares were later endorsed by Somera , and delivered by Robert Brodett to the buyers. 3. What was described as a trust in favor of certain parties indicated in page 1 of your letter, were actual transfers of shares purchased by Mr. Somera, and later purchased and paid , by the said parties/'benefici ari es' (borrowing your word) from Brodett. 3.1 Attached is a distribution list duly signed by Mr. Brodett, naming the persons to whom the shares will be eventually transferred and the number of shares for each buye r. 3.2 Also attached are th e acknowledgment receipts of payments (Ann exes 'C' and series) made by the purchasers of the shares , MADE IN THE FORM OF MANAGER 'S CHECKS (IN COMPLIANCE WITH THE MODE OF PAYMENT INSISTED ON BY MR. BRODETT). Also attached , for your ready referen ce is a detailed list of the payments made to Mr. Brodett. 3.3 If you will compare the acquisition cost of Mr. Brodett fo r the share s and the selling price to the so-called beneficiaries, you will readily determine that Mr. Brodett made a profit of P5 Million . To my mind , he sh ould also be held liable for income tax (please see also the affidavitI. executed by the undersigned, dated July 30 , 2002, copy attached as Anne x 'D'.17" On July 24 , 2003 , with the docum ents submitted by Jose Ma. Ozamiz, the Legal Division Chief, Cesar Pangilinan , revoked the April 1, 2003 Ruling 17 Letter dated May 6, 2003. of Jose Ma. Oza miz to l'vfr. Anse lmo G. Adr iano, Exh ibit "3", BIR Records, pp. 89-90. 45

DEClSlON C.T.A. CASE NO. 7049 Page 7 of29 of Adriano on the basis that there was a misrepresentation of facts made by > petitioner when he sought a legal opinion ; since what actually transp ired were sales transactions as evidenced by the Acknowledgment Receipts of payments dated July 28, 1997. 18 On October 24, 2003, petitioner received a Notice of Conference19 inviting him to an informal conference on October 27 , 2003. In a Letter dated October 27 , 2003, petitioner informed the BIR that he will not be able to attend the conference due to a sched~l~d meeting. 20 The case of petitioner was re-assigned to Revenue Officer Loida A. Ladignon, who assumed the investigation and computation of petitioner's liabilities on November 3, 2003.21 On April 1, 2004, petitioner received a Preliminary Assessment Notice dated March 24, 200422, assessing him for deficiency DST for the year 1996 on the Declaration of Trust with Assignment between himself and Somera with the following computations, to wit: I. Deficiency Documentary Stamp Tax Eb_p5 000 000 .00 Par value of shares Computation of Basic Tax 5,000,000.00 x 200/1 .5023 Php 37 ,500 .00 Basic Tax Due 37,500.00 Add: 50% Surcharge 18,750 .00 Interest 08-25-96 to 03-31-04 (151 .9954) ----"'8-"'5......,4-""9-'-7'--'.4_,_1_ _---'-'10"-4!..J.;2:::...4-'-'7-'-.4-'-'-1 Deficiency Capital Gains Tax Php 141 747 41 On April 26, 2004, petitioner received two formal assessment notices (FAN). One FAN reiterated the computation above with the minor increase of 18 Memorandum for The Regional Director fr om Wilmer B. Dekit, Revenu e Attorney lll , co ncurred by Cesar A. Pangilinan , Ch ief, Legal Di vision, Apptovccl by A nselm o G. Adriano, Acting Reg ional Director, Exhibit " 5", BlR Records, pp. 95-96. ;( 19 Exhibit "8-b", BIR Records, p. 170. 20 BIR Records, p. 172. 21 Exhibit " 13", BIR Records, p. 173; TSN, February 14 .2007, p. 10. 22Exhibit " 10", BIR Records, p. 194; TSN, February 14. 2007, pp . 19-20. 23 Should be 5,000,000 *1.5/200 = P37,500.00 4S

DECIS ION C.T.A CASE NO. 7049 interest to P87,187.50, adjusting the total deficiency DST to P143,437 .50.24 � The second FAN assessed petitioner for deficiency CGT and DST for the year 1997 on the Declaration of Tru st with Assignm ent in favor of Mr. Ozamiz, eta/. The details of this FAN 25 are shown below: Deficiency Capital Gains Tax p 11 ,500 000 .00 Net Capital Gain Tax Realized p 10,000 .00 Computation of Basic Tax 100,000.00 x 10% 2,280 ,000.00 11 ,400,000.00 X 20% p 2,290 ,000 .00 Basic Tax Due Add : Surcharge (50%) . 1 ,145 ,000.00 Interest 08-26-97 to 05-24-04 4 ,634,584 .13 TOTAL AMOUNT DUE p 8,069,584.13 Deficiency Documentary Stamp Ta x p 5,000 ,000 .00 Par value of shares p 37 500.00 p 37 ,500 .00 Computation of Basic Tax 5,000 ,000.00 x 200/ 1.5026 Basic Tax Due 18,750 .00 Add : Surcharge (50%) 75 893 .84 Interest 08-26-97 to 05-24-04 p 132,143.84 TOTAL AMOUNT DUE As explained by t_he BIR , the deficiency CGT was arrived at by using as tax base the market value of the 500 million shares at P0 .033 per share less acquisition cost, computed as foll ows :27 Per Per Investigation Adjustment/ Return Disallowance p 16,500 ,000 .00 Deficiencv Capital Gains Tax p 0 5 000 000 .00 p 16,500 ,000 .00 Selling Price I B.V. of LMI Shares 5 000 000.00 Less : Acquisition Cost 0 p 11.500.000.00 Net Capital Gains I Loss p 11.500.000.00 p 0 In response to the FANs , petition er filed formal letters of protest on May 24, 2004 with the BIR . For the assessment of deficiency DST for the / 24 Exhibit" 1 I", BIR Reco rds , p. 203. 25 Exhibit " 15", BIR Records, p. 198- 199. 26 Shoul d be 5,0.00,000 * 1. 5/2 00 = P37,500.00 27 Deta il s of Discrepa ncies, Exhibit " 15-B", BIR Reco rJ s, p. 196- 197. 47

DECISION C.T.A. CASE NO. 7049 Page 9 of29 year 1996, petitioner reiterated that the transaction between Somera and � himself was not a sale but a Trust Agreem ent. 28 The same holds true for the deficiency CGT and DST assessment for the year 1997; that what transpired between himself and the Beneficial Owners were Trust Agreements and not sale transactions . Petitioner fw:ther add ed �that if indeed he was liable for deficiency CGT, the basis of the assessment was erroneous and contrary to Revenue Regulations No. 2-82 , sin ce what the revenue officer used was the market value instead of the book value , co nsidering that the stocks were not listed in the stock exchange. The computation should allegedly use the following formula , which is based on the last audited financial statem ents at that time : 29 "Total Stockholder's Equity/ Shares Issued and Outstanding = Book Value/ Share " With the foregoing formula , petition er states that the book value per share is P.0025 and not P.033 - market value, computed as follows : 249 ,227 ,049 I 99,639,125 ,400 = P.0025/ share This will give a total market valu e of shares in the amount of Php1 ,250,648.00, which is much less than the acquisition cost of the shares of Php5 ,000,000.00 . Petitioner alleges that this shows lack of capital gain and thus providing no basis for the deficien cy CGT assessment. 30 Despite the foregoing arguments. submitted by petitioner, a Final Decision 31 was received by petit(oner on August 6, 2004, affirming the deficiency assessments against him with the increased amounts due to interest, as shown below: 28 Exhibit "A", Docket, p. 179. 29 Exhibit "B", Docket, pp. 180- 183. 30 Ibid 31 Petition for Rev iew, A nnex " D", Docket, pp. 48-50: nm Rt.:cord s, pp . 292-294 . 48

DEC IS ION J J C.T.A. CASE NO. 7049 Page 10 of29 Deficiency Documentary Stamp Ta x for 1996 Php 146,250.00 Deficiency Capital Gains Ta;x for 1997 Php 8,241 ,331 .01 Deficiency Documentary Stamp Ta x for 1997 Php 134,956.29 On September 3, 2004 , petitioner filed the instant Petition for Review, praying for the cancellation and withdrawal of the foregoing assessments against him . In the Answer filed on November 25, 2004 ,32 respondent submits the following Special and Affirmative Defenses: "4. The investigation of the petitioner's internal revenue tax liabilities for the year 199,6 revealed a tax obligation of Php8,069 ,584.13 as deficie.ncy capital gains tax and Php132 ,143.84 as deficiency documentary stamp tax all inclusive of surcharges and interests . 5. The subject deficiency ta x assessments were issued in accordance with law and pertinent regulations and has complied with the � provisions of Section 228 of the 1997 Tax Code, as amended , relative to the taxpayer being informed in writing of the fa cts and laws in which the assessment is based,- the sam e is contained in the 'Details of Discrepancies' dated April 22, 2004. 6. Petitioner is found to be liable for deficiency capital gains tax in the amount of Php8 ,069,584 .13 and deficiency documentary stamp tax in the amount of Php132,143.84 for the reason that supposed transfer of the subject shares of stocks to Mr. Jose Ma . Ozamis , et al. were really a sale and not by virtue of a Trust Agreement. 7. All presumptions are in favor of the correctness of tax assessments and the burden of proof to prove otherwise is upon the petitioner.33" � During trial , petitioner presente d testimonial and documentary evidence -primarily aimed at proving that the contractual relationships of the parties involved are that of trustor-truste es �and not that of seller-buyers. On the other hand , respondent presented evidence to establish the basis for the 32 Posted on November 17,2004. n Docket, pp. l 08 -11 0. 49

D EC ISION C.T.A. CASE NO. 7049 Page II of29 deficiency assessments by proving that petitioner misrepresented the ' transactions to be Trust Agreements and not con tracts of sale. Upon the admi.ssion of respondenrs evidence in the Resolution dated December 3, 2007, the parties were directed to simultaneously file their respective Memorandum within thirty (30) days from receipt thereof. Only petitioner submitted its Memorandum 34 on January 10, 2008 , and this case was deemed submitted for decision on February 1, 2008, sans respondent's Memorandum .35 THE ISSUES The stipulated issues by the parties are as follows : "1. Whether or not the conveyance or transfer of Liberty Mines , Inc. shares from Philip ~rodett to Jose Ma . Ozamis , et. al. was actually a sale . 2. Whether or not petitioner is liable for deficiency documentary stamp tax in the amount of Php143,437 .50 in 1996 and deficiency capital gains ta x and documentary stamp� tax in the amount of Php8,069,584.13 and Php132 ,143.84 respectively for ta xable year 1997 for the supposed transfer of the subject shares of stock to Mr. Jose Ma. Ozamis , et al. 3. Assuming a taxable sale between Petitioner and Beneficial Owners, whether or not the subject Liberty Mines , Inc. shares (which are not listed nor traded through the stock exchange) , should be valued at the market value of P0.33 per share, as claimed by the Respondent, or at the � book value thereof nearest the valuati on date, which is P.0025 per share , for purposes of capital gains tax. 36" Petitioner's Arguments Petitioner argues that the transfer of shares from the trustee to the trustors without monetary consideration and by virtue of the Deeds of Trust 34 Docket, pp. 306-335. 35 Docket, p. 338 . 36 .l{)int Stipul ati on of Facts a nd Iss ues, Docket , pp. 137- 138.

DECISION J C.T.A . CASE NO. 7049 Page 12 of29 and Assignment is not subject to DST under Section 176 of the NIRC of 1997, the rationale being that the conveyance by the trustee in favor of the trustor of the properties , which the former acquired by virtue of the trust agreement, is merely to be treated as a continuation and confirmation of the title in favor of the ultimate and real beneficiary of the subject properties . Respondent's insisten ce that there is no trust created between petitioner and the Beneficial Owners is allegedly misplaced because there are separate Declarations of Trust with .Assignment which were subsequently executed by the Beneficial Owners in fa vor of petitioner in July 1997, and it invariably provides that the trustee acknowledges and admits that the beneficial ownership of the shares by the trustor and undertakes and promises to hold, vote and dispose of the sam e in trust for and under the instruction of the trustee . Thus , these Declarations of Trust with Assignment actually confirm that trust was indeed agreed upon between petitioner and the Beneficial Owners. Petitioner further emphasizes the fa ct that the Declarations of Trust with Assignment expressly state that the shares form part of the subscription agreement for 500 million shares subs crib ed by and registered in the name of Somera, under Subscription Agreement No. S4-027 who has executed a Declaration of Trust with Assignmeht covering said 500 million shares in favor of the trustee (Brodett) ; and although these declarations were executed by and between the Beneficial Owners and petitioner almost one year after the subscription agreement was signed by Somera , this should not affect the character of the said declarations as it is merely a continuation and �~ !\~ 51

DEC ISION J C.T.A. CASE NO . 7049 Page 13 of29 >I confirmation of title in favor of the ultimate and real beneficiary of the shares I � of stocks. With respect to the acknowledg ement receipts (a total of eight [8] receipts amounting to Php9,250 ,000.00 ) relied upon by the respondent. petitioner alleges that <?nly five (5) receipts amounting to Php6,000 ,000.00 should be considered , since two (2) oth ers are acknowledged by persons other than the Beneficial Owners . while the other one (1) is a mere duplicate. Furthermore, petitioner insists that the excess of Php1 ,000,000.00 does not represent gain but would pertain . among others . to reimbursements by the Beneficial Owners of the expenses incurred by the petitioner as trustee such as . but not limited to , expenses in curred in the execution of the Declarations of Trust with Assignment between petitioner and Somera, and petitioner and the Beneficial Owners - legal a()d notari al fees , fees paid out to stock and transfer agent. and trustee fees in consid ~ration of petitioner's agreement to act as trustee in favor of the Benefi cial Owners. Thus , no gain may be attributed to petitioner that would make him liable for capital gains tax . Moreover, petitioner contends that the payment of CGT and DST on the 25 million shares sold to Ozamiz under the Voluntary Assessment and Abatement Program (VAAP) of Februa ry 3, 2003 by petitioner is not an implied admission that the transaction wa s a sale of shares of stock; and that in fact, there are proofs to the contrary - such as the Declarations of Trust with Assignment between petitioners and the Beneficial Owners . including Ozamiz. According to petitioner. he avail ed of the VAAP only as regards the vt 25 million shares upon insistence of Oza.rni z; contrary to petitioner's erstwhile . 5~ ~. !.. -

DECISION C.T.A. CASE NO. 7049 Page 14 o f 29 belief that the assignment of shares should have been subjected to CGT and ~ DST. Finally, in computing for the CGT, petitioner claims that it was erroneous for the BIR to have used the market value of Php0.033 per share, giving rise to a total market value of Php16 ,500,000.00 for the 500 million shares , considering that the shares involved herein are not listed through the stock exchange. Petitioner points out that under Revenue Regulations No. 2- 82 it is provided that unliste~ shares shall be valued at their book value nearest the valuation date. The book value of these unlisted shares of stock shall be prima facie considered as their fair market value 3? The computation I of the book value should thus be based on the Audited Financial Statements for the period ending December 31 , 1996 that is Php.0025 38 per share. Respondent's Counter-Arguments In the Answer, r~spondent alleges that petitioner is found to be liable for deficiency CGT and DST for the years 1996 and 1997 for the reason that the supposed transfers - from Somera to petitioner, and from petitioner to the Beneficial Owners , of the subject shares of stocks were actua lly a sa le and not a trust despite the existence of the Deeds of Trust with Assignment. Respondent also places emphasis on the doctrine that all presumptions are in favor of the correctness� of tax assessments as these were issued in accordance with law and pertinent regulations, thus the burden of proof to prove otherwise is upon the peti.tiorJer. .J 37 Petitioner's Memora ndum ; Docket, p. 333. 38 Total Stockholde rs' Equity I N um hc r of Shares Iss ued and O utstand ing = Book Va lue, computed as ./\}" V Ph p249,172 ,257 I 99 ,63 9, 125,40 0 = Ph p 0.0025. 5J

) DEC I SIO N C.T.A. CASE NO. 7049 Page 15 of29 THE COURT'S RULING Respondent assessed petitioner based on the premise that what actually transpired between petitioner and the Beneficial Owners were sales transactions . Contrary thereto however, petitioner maintains that he entered into Trust Agreements, first with Somera , and thereafter, with the Beneficial Owners because the latter allegedly took it in their best interests to subscribe to a portion of the increase in the capital stock of Liberty Mines, Inc. (now Philcomsat) amounting to 94 billion shares , through him ~ Although , there was no Trust Agreement at the onset, a ratifi cation of this Trust Agreement was allegedly made through the subsequent execution of Declarations of Trust with Assignment, approximately one year from subscription .39 First Issue: Whether or not conveyance or transfer of Liberty Mines, Inc. shares from Philip Brodett to Jose Ozamis, was actually a sale. To resolve the first issue , We look into the nature of a contract of sale and trust agreement. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other I ' to pay .therefore a price certain in money or its equivalent. A contract of sale may be absolute or conditional 4 0 Based on the foregoing definition, the requisites of a contract of sale are : (1) consent on the part of the seller, to transfer and deliver, and on the pa rt of the buyer, to pay; {2) object which must be a determinate thing ; and (3) cause or price certain in money or its equivalent. 39 Petiti oner's " Memora ndum", Pars. 3-5, Doc ket, pp. 307-308. /U~ v~ vO- . 40 Arti cle 1458, C iv il Code o f th e Philippines '

DEC IS ION C.T.A. CASE NO. 7049 Page 16 of,29 On the other hand , trust is a fiduciary relationship with respect to ' property, subjecting the person by whom the property is held to equitable duties to deal with the property for the benefit of another person which arises as the result of a manife�station of an intention to create it. 41 Trusts are either express or implied . An expre ss trust is created by the intention of the trustor or of the parties. Implied trust come into being by operation of law.42 No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended 4 3 The intention to create a trust , which must be manifest before an express trust can be found to have been created , may be determined from the employment by the trustor of express or explicit language, or it may be by construction or inference from what the trustor has said or done, the nature of a transaction and the surrounding circumstances 44 In the instant case , it is petition er's contention that there was no contract of sale, but actually trusts agreements that were entered into between him and the supposed Benefi cial Owners, namely, Jose Ma . Ozamiz, Fernando P. Jacinto, Jr., Winston A Lee , Ma . Melizza Mendoza del Rosario , Jose Ma. G . Santos , and Grace Saulog , pertaining to the latter's acquisition of shares of stocks of .Liberty Mines , Inc. sometime in 1996, as allegedly supported by the "Declarations of Trust with Assignment" , initially, 41 Black's Law Di cti onary, 5'h Ed iti o n, 1979, p. l 352. 42 Arti cle 1441 ofthe 1987 C iv il Code. 43 Article 1444 of th e 1987 Civ il Code. 44 54 A m . .Jur. 52,53.

DECISION C.T.A. CASE NO. 7049 Page 17 of29 between him and Prudencio Somera , Jr., 45 and subsequently, between him - and the Beneficial Owners 4 6 On the other hand , respondent insists .that what actually transpired between Prudencio C. Somera , Jr. and petitioner, on one hand, and the Beneficial Owners on the other hand , were sales transactions . We find respondent's contention meritorious and resolve the first issue in the affirmative. The Court notes that the total ~mqunt received by petitioner from the Beneficial Owners is substantially 'in excess of the cost of the subscription. We however modify respondent's findings that petitioner received the sum of Php10,000,000.00 when the cost of the subscription is only Php5 ,000,000 .0047 considering that a verification of the Acknowledgment Receipts reveal that petitioner received P9 ,000 ,000.00 instead . The details are summarized as followsA8 Payor Manager's Bank Amount Corresponding Payee Check No. Wilson Lee FEBTC Php 1,000 ,000 .00 Shares 12573 Metrobank 1,OOO ,bOO .OO Fernando Jacinto 0163 BPI 2,000 ,000 .00 125,000,000 P. Brodett Mary Rose Ezpeleta BPI 1,000 ,000 .0(} Jose Ma. Jacinto 41907 PC IBank 2,000 ,000 .00 100,000 ,000 P. Brodett Grace Saulog 41906 BPI 150,000 .00 50 ,000,000 P. Brodett 74479 PC IBank 100 ,000.00 P. Brodett Melissa Del Rosario 41911 PC IBank 1,250 ,000 .00 100,000 ,000 P. Brodett 037385 FEBTC 250 ,000.00 12,500,000 P. Brodett Jose Ma. Santos Prudential . 250 000 .00 P. Brodett Total 2282 75,000 ,000 P. Brodett 13278 Ph~, OOO,OOO . OO P. Brodett 190978 12 500 000 475,000.00 Petitioner claims that respondent made a mistake in relying on all the j Acknowleqgment Receipts as the basis to cbnclude that sales transactions . 45 Exhi bit "C", Docket, pp. 184- 185 . #V 46 Exhibit "E" to " K", Docket, pp. 189-209 . 47 Respondent 's Pre-tri al Bri ef, Docket, p. 11 4. 48 BIR Records, pp. 77-84. 56

DECIS ION J C.T.A. CASE NO. 7049 Page 18o f 29 transpired , because not all the payors of the said receipts were covered by .. .. ! , Declarations of Trust with Assignment in favor of Brodett, the pertinent details of which are mentioned in petitioner's Memorandum 49, to wit Tru sto r No. of Shares Grace Saulog 12 ,500 ,000 .00 Ma. Melizza Mendoza Del Rosario 75,000,000 .00 Winston A Lee 75 ,000,000.00 Winston A Lee 50 ,000,000.00 Fernando P. Jacinto, Jr. 250 ,000 ,000 .00 Jose Maria G. Santos 12 ,500,000 .00 Jose Ma . Ozamiz 25 ,000,000.00 TOTAL ~ 500 ,000 ,000.00 The amounts that should allegedly be considered are only those Acknowledgment Receipts pertaining to the Beneficial Owners amounting to Php6,000,000.0051, with the following details : Name of Person Amount To Whom Issued Ac knowledged Fernando P. Jacinto, Jr Php 2,000 ,000.00 Grace Saulog Melissa Del Rosario 250 ,000 .00 Jose Ma . Santos 1,500,000 .00 Wilson Lee=>u 250 ,000.00 2,000,000.00 TOTAL __f_hp 6, 000 ,000.00 I Out of this amount, the excess over the subscription cost of the 500 million shares is P1 ,000,000.00. Petiti oner alleges that this amount was reimbursement for legal and notarial fees , stock and transfer agent fees , and trustee fees .52 -'. 49 Docke t, pp. 308. 50 Wilso n Lee is take n to be th e same perso n as Winston Lee. based on th e allegations in Petitioner's Memorandum . 51 Docket, p. 309. 52 Peti ti on for Rev iew, Pa r. 45 , Docket , pp. 20-2 1. 57

DECISION C.T.A . CASE NO. 7049 Following petitioner's argument, the amount of Php6,000,000.00 which -he acknowledged to have received from the Beneficial Owners would pertain only to 325 million shares as shown below: Name of Person to Amount Corresponding Payee Whom Issued Php 1,000,000.00 Shares Wilson Lee53 1,000 ,000.00 2 ,000 ,000 .00 125,000,000 P. Brodett Fernando P. Jacinto54 150 ,000 .00 Grace Saulog::>:> 100,000 .00 100,000,000 P. Brodett 1,250 ,000 .00 12,500,000 P. Brodett Melissa Del Rosario::>o 250 ,000.00 P. Brodett 250 ,000.00 75,000 ,000 P. Brodett Jose Ma . Santos::>/ P. Brodett Total Php 6,000 ,000.00 12 500 000 P. Brodett 325,000.00 Out of the alleged subscribed shares of 500 million, 175 million shares left unpaid or unaccounted for, and therefore , technically speaking , the amount of six million (Php6 ,000,000 .00) pesos received by petitioner pertained only to 325 million shares . Assuming that indeed Php1 ,000,000.00 was for reimbursement of expenses advanced by petitioner, no evidence was offered .in support of this claim , nor was there any accounting re cord presented to breakdown the excess payment. This leads to the logical conclusion that whatever petitioner received substantially above the cost of subscription is sufficient consideration , or to put it in another way , in co me for petitioner. I From the foregoing , We cannot determine with reasonable certainty that the intent was merely to create a mere Trust Agreement between the j Beneficial Owners and petitioner, nor can We say that the amounts received 53 Anne x "0-5 " and " 0-6", Docket, pp. 86-87 . ~ 54 Annex "0", Docket, p. 8 1. 55 Annex "0-1 ", Docket, p. 82. 56 Annex "0 -2" . Docket, p. 83 . 57 Annex "0-3 ", Docket, p. 84 . 58

DECISION .J C.T.A . CAS E NO . 7049 Page 20 o f 29 were "mere reimbursements". The pr~v a iling circumstances in the instant -case present the existence of the elements of a contract of sale, which are: (1) consent of the parties: on the part of Brodett, to transfer and deliver; on the part of the Beneficial Owners , to pay there fore; (2) determinate object: the shares of stocks of Liberty Mines , Inc., now Philcomsat; and (3) cause or price certain in money or its equivalent: substantial consideration given by the Beneficial Owners to Brodett. We find the payments of the Beneficial Owners to Brodett too substantial to be considered as mere reimbursements . On the other hand , the intention to create a trust and manifestation thereof with reasonable certainty , are esse ntial to the creation and existence of a trust. This means an intention specifica lly to create a trust and not to do something else, as to create a gift or to ma ke a transfer of property.58 At this point, it is wise to go ba ck to the basis of the ruling of the BIR initially exempting petitioner from CGT. The OIC-Regional Director at that time , Mr. Anselmo Adriano , ruled that petiti oner has no tax liability based on the following justification : "In the instant case, since thi s is a resulting trust in view of the owner's intention to create a trust, i.e., the transfer of the aforesaid shares in the name of Prudencio C. Somera, Jr. to Philip G. Brodett, as trustee, for and in behalf of Fernando P. Jacinto, Jr., Winston Lee, Maria Melizza Mendoza del Rosario, Jose Ma. Ozamis, Jose Ma. G. Santos and Grace Saulog, as beneficiaries, is without monetary consideration and the trustee acknowledges and confirms the title and ownership over the above-mentioned shares of the latter, this Office is of the opinion as it hereby holds that the transfer of the aforesaid shares in favor of Philip G. Brodett, as trustee for and in behalf of the afore-named benefi ciaries by way of Deed of Conveyance is not subject to capital gains tax. Similarly, the subsequent transfers/conveyances of the aforesaid shares by Philip G. Brodett to the afore-nam ed beneficiaries under th~ 58 54 Am . Jur. 33 . 59

DEC ISION C.T.A. CASE NO. 7049 Page 2 1 of2 9 Deed of Conveyance that is without consideration because the latter are the real owners (pro-rata) of the 500 million shares , is exempt from capital ~ains tax imposed under Section 24(C) of the 1997 Tax Code."5 (Emphasis and underscoring supplied) The excess payments received by petitioner from the Beneficial Owners, negate the abovementioned finding that the transfers were without monetary consideration , thus making it no longer viable to say that petitioner is not liable for the CGT for the subject transfers to the Beneficial Owners. However, We find it nec~ssary to di,fferentiate the Trust Agreement between petitioner and So~era ; ana tlia t between � petitioner and the Beneficial Owners . A perusal of the Declaration of Trust with Assignment between petitioner and Somera executed on July 24, 2006 indicates that petitioner advanced the initial payment of 25% of th e subscription value or the amount of P1 ,250,000.00 paid by Somera to Liberty Mines , Inc. on the same date, as shown by the official receipt60 issued by the said corporation in favor of Somera . The pertinent provision of the Agreement61 states that: "WHEREAS , the TRUSTEE has subscribed to 500.0 Million shares under SUBSCRIPTI ON AGREEMENT NO . S4- 027 (the SHARES) with a pa r value of PO 01 per share of the capital stock of Liberty Mines , Inc. (the CORPORATION), a corporation duly organized and existing under the laws of the Philippines , on which an amount eq uivalent to 25% of the subscription value at par appears to have been paid by the TRUSTEE, with funds provided by the TRUSTOR." (Emphasis supplied) In .,.this instance, the advance payment made by petitioner establishes the fact he is the true owner of the shares purchased by Somera . No ~ 59 An nex "S", Petiti on for Revi ew, Docket, pp. 93-95. 60 Exhibi t " L", Docket, p. 2 .10. 6Q 61 Ex hi bi t "C", Docket, pp. 184- 185.

DEC ISION C.T. A. CASE NO. 7049 Page 22 of29 evidence to the contrary was presented for this Court to rule otherwise. - Nota bly however, the aforequoted provision is absent in al l the Declarations of Trust with Assignment executed between petitioner and he Beneficial Owners thus, cas ting doubt on petitioner's claim that he merely advanced payments for th.e stocks on behalf of the Beneficial Owners. Second and Third Issues : Whether or not petitioner is liable for deficiency documentary stamp tax in the amount of Php143,43 7.50 in 1996 and deficiency capital gains tax and documentary stamp tax in .the amount of Php8,069,584.13 and Php132,143.84 respectively fo r taxabl e year 1997 for the supposed transfer of the subject shares of stock to Mr. Jose Ma. Ozamis, eta/. Assuming a taxable sale b etween Petition er and Beneficial Owners, whether or not the subject Lib erty Mines, In c. shares (which are not listed nor traded through the stock exchange), should be valued at the market value of P0.33 per share, as claimed by the Respondent, or at the book value thereof nearest the valuation date, which is P.0025 per share, for purposes of capital gains tax.62 " Being interrelated , we shall resolve the second and third issues together. On the subject of DST, petitioner was assessed the amount of Php143,437 .50 for the year 1996 and the amount of Php132 ,143.84 for the year 1997. Through his Revenue Officers , respondent applied Section 176 of the National Internal Revenue Code (1993 Tax Code)63 which reads : "SEC. 176. Stamp Tax on Sal es, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Due-bills, Certificates of Obligation, or Shares of Certificates of Stock. - On all sa les , or agreements to sell , or memoranda of sale, or deliveries or transfer of bonds , due-bills, certi ficates of obligation , or shares of certificates of stock, in any association , company, or corporation , or transfer of such securities by assignment in blank, or by delivery , or by any paper or agreement, or memorandum or other evidences of transfer or ,;{ 62 Joint Stipulation of Facts and Iss ues, Docket-, pp. 137- 138. /if . 63 Exhibits " II " and " I S," BIR Reco rds, p. 205 and p. 198 , respective ly. 61

DECISION C.T.A. CASE NO. 7049 Page 23 of29 sale whether entitling the holder in any manner to the benefit of such bonds, due-bills , certificates of obligation or stock, or to secure the future payment of money, or for the future transfer of any bond , due-bills, certificates of obligation or stock, there shall be collected a documentary stamp tax of one peso (P1 .00) on each two hundred pesos or fracti onal part thereof, of the par value of such bonds , due-bills , certificates of obligation or stock; Provided, That only one tax shall be collected on each sale or transfer of stock or securities from one person to another, regardless of whether or not a certifi cate of stock or obligation is issued, indorsed , or delivered in pursuance of such sale or transfer: And Provided, fi..Jrther, That in the case of stock without par value the amount of documentary stamp tax herein prescribed shall be equivalent to twenty-five percentum (25%) of the documentary stamp tax paid upon the original issue of said stock: Provided, furthennore, That the ta x herein imposed shall be increased to one peso and fifty centavos (P1 .20) beginning 1996." A documentary stamp ta x is a ta x on documents , instruments and papers evidencing the acceptance , assignment, sale or transfer of an obligation , right or property incident thereto . It is not imposed upon the business transacted but is an excise upon �the privilege, opportunity or facility offered at exchanges for the transaction of the business . It is an excise upon I the facilities used in the transaction of th e business separate and part from the business itself. 64 Petitioner argues that for both sets of Declarations of Trust with Assignment, there was � no change in the beneficial ownership and legal ownership as these remained in favor of the Beneficial Owners . Petitioner cited several BIR Rulings mainly discus sing that the execution of a Declaration of Trust , whereby a nominee shareholder acknowledges and states that he is holding certain shares in trust for the real owners , is not a taxable transaction/event, and is thus exem pt from documentary stamp tax . rb 64 Commissioner ofInternal Revenue vs. Heald Lumber Co ., G.R. No . L-16340, February 29, 1964. - 62 ~

DEC IS ION C.T.A. CASE NO. 7049 Petitioner also adds th.at the transfer of shares from the trustees to the -trustors without monetary consideration is not subject to DST. A cursory reading of the Declaration of Tru st with Assignment between petitioner and Somera shows that there was indeed no shift in the beneficial and legal ownership of subject shares of. stocks . In effect there was no transfer of shares as contemplated under Section 176 of the Ta x Code of 1993 between Somera and petitioner as there was no new conveyance upon which DST can be imposed . The transfer was merely a continuation and confirmation of title in favor of the ultimate and real beneficiary of the subject properties .65 There being no new conveya nce to speak of, there was no new exercise of a privilege that may be ta xed . Hence, the assessment for deficiency DST of P143 ,437 .50 for the yea r 1996 is invalid . On the other hand , this does not hold true for the deficiency DST assessment for the year 1997 covering the transactions between petitioner and the Beneficial Owners. The transfers of the subject shares of stocks in favo r of the Beneficial Owners .for valuable consideration result in the consummation of new transactions upon wh ich DST can be imposed , as there were changes in the titles or owners hips of subject properties, and these transaction are considered as sales transactions . Thus , the assessment in the amou nt of deficiency DST for the year 1997 P132,143.84 is valid pursuant to Section 21(d)(1) of the 1993 Tax Code, the applicable legal provision during the ta xable year 1997, the pertinent provision of which is quoted hereunder for easy referen ce, to wit: llfJIV 65 BIR Ru li ng No . 03 1-99; B IR Rul ing No. DA-365-03. 63

) DECISION C.T.A. CASE NO. 7049 Page 25 of29 "SEC. 21. Tax on citizens or residents. - XXX XXX XXX (d) Capital gains from sales of shares of stock. - The provisions of Section 33 (b) notwithstanding, capital gains realized from th e sale , exchanges or disposition of shares of stocks in any domestic corporation shall be ta xed as follows : (1) Net capital gain as defined in Section 33 I (a) (2) realized during each taxable year from the sale, exchange or other disposition of shares of stock not traded through a local stock exchange: Not over P1 00 ,000 ....... .. .. .. .10% Over P100 ,000................. 20%" Capitak gains tax is a tax on income 66 It is an income tax defined as a tax on a person's income, wages , salary commissions , emoluments , profits and the like.57 The concept of income impli es gain , profit or flow of wealth 68 The question to consider, at this point, is whether or not petitioner derives any gain from the transfer of shares from himself to the Beneficial Owners by virtue of the Deeds of Trusts? We rule in the affirmative. As We have discussed earlier, petiti oner derived a substantial amount ... ! over and above the cost of the value of the shares showing flow of income, or profit; hence, he is liable for CGT , the rates of which depend on whether or not the shares of stock sold are listed and traded t11rough the local stock exchange, as provided under Section 21 (d) of the 1993 Tax Code . 66 CIR vs. Universal Molasses Corp., CA-G.R. S.P. 52297\ December 28, 2000 . 67 Black's Law Dictionary, 6'h Ed iti on. 68 Madrigal, eta/. vs. Rafferty, et al, G.R. No. l 2287, August 7, 19 18.

DECISION C.T.A. CASE NO . 7049 Page 26 of29 Petitioner invokes Revenue Regulations No. 2-82 which provides that unlisted shares shall be valued at their book value nearest the valuation date. The book value of these unlisted shares of stock shall be prima facie considered as their fair market value .69 We agree with petitioner's submissi on that in computing the net capital gain or loss , unlisted shares shall be valued based on its book value nearest the valuation date. However, a careful review of the records show that the Annual Report for 199670 of Liberty Min es, Inc., which reflects the Audited Financial Statements for the year ending December 31 , 1996, indicates that the Securities and Exchange Commission approved its increase in capital stocks on November 13, 1996 and that it is listed in the Philippine Stock Exchange without any notation nor distinction as to the volume of the shares that are listed or not. It should be noted that the Deeds of Trust with Assignment between petitioner and the Beneficial Owners were executed in 1997, thus , respondent correctly based the computation for the 'CG T on the market value of the shares of stock. Moreover, petitioner fail ed to present evidence before this Court during trial to show that the 500 million shares of stocks in question were actually not listed with the stock exchange during the material dates of the Deeds of Trust, nor at the time of the iss uance of the certificates of stocks. We cannot rely solely on petitioner's unsubstantiated claim that the subject shares were not listed with the stock exc hange . 69 Petitioner's Memorandum , Docket, p. 333. 70 Petition for Review, Annex " T", pp. 6 - 7; Docket, p. 98. 65

DEC ISION C.T.A . CASE NO. 7049 Page 27 of29 The Supreme Court has ruled in several cases that the examiner's �assessments should be given full weight and credit absent proof to the contrary. In the case of COMMISSIONER OF INTERNAL REVENUE VS. CONSTRUCTION RESOURCES OF ASIA, INC. ET AL. 7 1 the said legal , principle was stated as follows : "All presumptions are in favo r of the correctness of tax assessments . The good faith of ta x assessors and the validity of their actions are presumed . They will be presumed to have taken into consideration all the facts to whi ch their attention was called . No presumption can be indulg ed .th at: all of the public officials of the State in the various countries who have to do with the assessment of property for ta xation will knowingly violate the duties imposed upon them by law_;, Tax assessments by ta x examiners are presumed correct and made in good faith . The taxpayer has the duty to prove otherwise . In the absence of proof of any irregularities in the performan ce of duties , an assessment duly made by a BIR officer and approved by his superior officers will not be disturbed .72 Hence , this Court upholds res pondent's assigned valuation on the shares of stocks - using the stock's market value - in determining the net capital gain on the transaction between peti tioner and the Beneficial Owners . WHEREFORE , the instant Petition for Review is hereby PARTIALLY GRANTED. The Final Assessment Noti ce dated April 22, 2004 finding petitioner liable for deficiency Documentary Stamp Ta x for the year 1996 in the amount of P143,437.50 is hereby CANCELLED . However, the Final Assessment Notice also dated April 22, 20 0~ , finding petitioner liable for deficiency Capital Gains Ta x and Docum entary Stamp Ta x for th e year 1997 is hereby AFFIRMED . 11 G.R. No. L-68230, November 25 , 1986. 12 Bonifacio Sy Po vs. Honorable Cow:r of Tax Appeals, eta! , G.R. No . L-81446, August 18, 1988. 6G

'I DECISION CTA. CASE NO. 7049 Page 28 of29 According ly, petitioner is hereby ORDERED TO PAY EIGHT MILLION ~ SIXTY NINE THOUSAND FIVE HUNDRED EIGHTY FOUR PESOS and 13/100 (P8 ,069 ,584.13) for deficiency Capital Gains Tax and ONE HUNDRED THIRTY TWO THOUSAND ONE HUND RE D FORTY THREE PESOS and 84/100 (P132,143. 84) for deficiency Documentary Stamp Tax for the year 1997. Said amounts are broken do'wn as foll ows : Deficiency Capital Gains Tax p 11,500,000.00 Net Capital Gain Tax Realized Computation of Basic Tax 100,000 .00 X 10% P 10,000.00 1,400,000.00 X 20% 2,280,000 .00 Basic Tax Due p 2,290 ,000.00 Add : Surcharge (50%) 1,145,000 .00 Interest 08-26-97 to 05-24-04 4 ,634,584 .13 TOTAL p 8.069 .584.13 Deficiency Documentary Stam p Tax p 5 000 000 .00 Par va lue of shares Computation of Basic Tax 5,000 ,000 .00 x 200/1.50 !.....P-~3C!..7...,5=0""-0'"."0'=0 Basic Tax Due P 37 ,500 .00 Add : 50% Surcharge 18 ,750 .00 Interest 08-26-97 to 05-24-04 75 893 .84 TOTAL P 132,143.84 In addition, petitioner is ORDERED TO PAY respondent twenty percent (20%) delinquency interest per annum on the amounts of P8 ,069,584.13 and P132 ,143.84, computed from September 5, 2004 until the amount is fully paid . SO ORDERED. 67

DEC IS ION ll:vh. {d_,_ ~ C.T.A. CASE NO. 7049 Page 29 of29 OLGA ALANCA-E-NRiao'Ez WE CONCUR: Associate Justice c . <2~~</z:, ~~~/ts;2. 9tJANITO C. CASTANEDA, JR. Associate Justice ATTESTATION attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ~~hC . ~-~ ~ JUANITO C. CASTANEDJ(CfR.' Associate Justice Chairperson CERTIFICATION Pursuant to Article VIII , Section 13 of the Constitution, and the Division Chairperson's Attestation , it is hereby certified that the conclusions in the above Decision were reached in consultati on before the case was assigned to the writer of the opinion of the Court. l____::~. o~ ERNESTO D. ACOSTA Presiding Justice 68