GOLDEN ARCHES DEVELOPMENT CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court Of Tax Appeals QUEZON CITY SECOND DIVISION GOLDEN ARCHES DEVELOPMENT C.T.A. CASE NO. 7200 CORPORATION, Petitioner, Members: -versus- CASTANEDA,JR., Chairperson UY, and PALANCA-ENRIQUEZ, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, OCT 15 2008/ Respondent. J (0:4!' 4�"� X ----------------------------------------------------------------------------------- X DECISION PALANCA-ENRIQUEZ, J.: A taxpayer's excess withholding tax credits for the taxable quarter/taxable year shall automatically be allowed as a refund or credit for purposes of filing his income tax return for the taxable quarter/taxable year immediately succeeding the taxable quarter/taxable year in which the aforesaid excess credit arose. This right to refund or credit, however, is not automatic, the taxpayer must be able to prove the same by substantial evidence, pursuant to the prescribed requirements set forth in our Tax Code. �

C.T.A. CASE NO. 7200 2 DECISION THE CASE This is a Petition for Review filed by Golden Arches Development Corporation (hereafter "petitioner") praying for the refund or issuance of a tax credit certificate in the total amount of P56,220,970.00, representing its unutilized creditable income taxes withheld for calendar year ending December 31 , 2002. THE FACTS In their Joint Stipulation of Facts, the parties stipulated as follows: "1. On April 21, 2003, petitioner filed with the BIR, through the Electronic Filing and Payment System (EFPS), its Annual Income Tax Return for CY ending December 31, 2002; 2. On November 25, 2003, petitioner filed an Amended Annual Income Tax Return for CY 2002 with the BIR; 3. Petitioner's Application for Tax Credits/Refunds (BIR Form No. 1914) for unutilized creditable withholding taxes for CY 2002, stamped received by the BIR on April 1, 2005, is authentic and duly-executed; 4. Petitioner's administrative claim for refund of unutilized creditable withholding taxes for CY 2002 dated April 1, 2005, addressed to Ms. Maridur V. Rosario of the BIR,LTDO - Makati, is authentic and duly-executed; 5. On November 28, 2002, the Securities and Exchange Commission ("SEC") approved the merger between the petitioner and McGeorge Food Industries, In(i1.1

C.T.A. CASE NO. 7200 3 DECISION 6. As stated in its Amended Articles of Incorporation filed with the SEC on November 28, 2002, petitioner's primary purpose was amended to that of establishing, maintaining, operating and managing, for its own account or for the account of other entities or individuals, restaurants, cafes, bars, and general food catering services; 7. To date, respondent has neither denied nor approved petitioner' s administrative claim for refund or unutilized creditable withholding taxes for CY 2002." In her Answer, respondent alleged by way of special and affirmative defenses that petitioner failed to demonstrate that the tax subject of the case at bar was erroneously or illegally collected; taxes paid and collected are presumed to have been made in accordance with law and regulations, hence, not refundable; in an action for tax refund/credit, the burden of proof is on the taxpayer to establish its right to refund and failure to adduce sufficient proof is fatal to the action for tax refund/credit; it is incumbent upon the petitioner to show that it has complied with the provisions of Section 204, in relation to Section 229 of the Tax Code, as amended; and finally, claims for refund are construed strictly against the claimant for the same partakes of the nature of exemption from taxation and as such, are looked upon with disfavor. Petitioner presented its Senior Accounting Manager, Cornelia Naguit, as witness, and documentary evidence, marked as Exhibits "A " {MJP

C.T.A. CASE NO. 7200 4 DECISION to "RR ", inclusive of their submarkings, which were all admitted by the Court. On February 16, 2006, petitioner filed a "Motion for Leave to Admit Amended Petition for Review", which was granted and the Amended Petition for Review was admitted. The Amended Petition for Review incorporated the alternative option and willingness of petitioner to accept a TCC, in lieu of cash refund, for its claim of unutilized creditable withholding taxes. On the other hand, respondent waived her right to present evidence and submitted the case for decision. Thereafter, both parties were ordered to file their simultaneous memoranda, within thirty (30) days from July 25, 2007. Considering that only petitioner filed its memorandum, the case was deemed submitted for decision on October 17, 2007. Hence, this decision. ISSUES As stipulated upon by the parties, the following are the issues for the consideration of this Court: I WHETHER OR NOT PETITIONER'S WITHHOLDING TAX CREDITS OF P68,446,803.00 FOR CY 2002 ARE (p)JL

C.T.A. CASE NO. 7200 5 DECISION DULY SUBSTANTIATED BY DOCUMENTARY EVIDENCE. II WHETHER OR NOT PETITIONER HAS AN UNUTILIZED/EXCESS CREDITABLE WITHHOLDING TAX IN THE AMOUNT OF P56,220,970.00 FOR CY 2002. III WHETHER OR NOT THE INCOME FROM WHICH THE SUBJECT CREDITABLE TAXES WERE WITHHELD WERE REPORTED AS PART OF PETITIONER'S REVENUES IN ITS ANNUAL INCOME TAX RETURN FORCY2002. IV WHETHER OR NOT SAID PETITIONER'S UNUTILIZED CREDITABLE WITHHOLDING TAXES AS OF DECEMBER 31, 2002 WERE APPLIED AGAINST ITS INCOME TAX LIABILITY IN THE SUCCEEDING TAXABLE YEAR/S. v WHETHER OR NOT PETITIONER FILED ITS ADMINISTRATIVE CLAIM FOR REFUND/TAX CREDIT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 204 (C) OF THE TAX CODE. VI WHETHER OR NOT PETITIONER FILED ITS JUDICIAL CLAIM FOR REFUND/TAX CREDIT WITHIN THE TWO YEAR PERIOD AS PROVIDED UNDER SECTION 229 OF THE TAX CODE. ~

C.T.A. CASE NO. 7200 6 DECISION Principal Issue The foregoing Issues raised by both parties boil down to the principal issue of whether or not petitioner is entitled to a refund or issuance of a tax credit certificate in the amount of P56,220,970.00, attributable to its unutilized creditable income taxes withheld for CY 2002. THE RULING OF THE COURT The petition is partly meritorious. A perusal of petitioner's Annual Income Tax Return (both original and amended) for the calendar year 2002 shows a gross income of P611 ,291 ,648.00 and operating expenses ofP611,291,648.00, resulting to a net operating loss. Pursuant to Section 27(E)(J) of the National Internal Revenue Code of 1997 (hereafter "NIRC of 1997"), as amended, petitioner is still liable for the Minimum Corporate Income Tax (MCIT) in the amount of P12,225,833.00. Consequently, the excess taxes withheld during the course of the taxable year, while collected legally, partakes of the nature of erroneously collected taxes at the end of the taxable year. In this regard, Section 76 of the NIRC of 1997, as amended, provides:

C.T.A. CASE NO. 7200 7 DECISION "SEC. 76. Final Adjustment Return - Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of that year, the corporation shall either: (A) Pay the balance of tax still due; or (B) Carry over the excess credit; or (C) Be credited or refunded with the excess amount paid, as the case may be. In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry-over and apply the excess quarterly income tax against tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor." The above provision gives two options to a taxable corporation whose total quarterly income tax payment in a given taxable year exceeds its total income tax due. These options are (1) be credited or refunded either in the form of cash or credit certificate with the excess amount paid; or (2) carry over the excess credit to the succeeding taxable year. 0N-

C.T.A. CASE NO. 7200 8 DECISION The first option works simply by applying for a cash refund or tax credit certificate with the Bureau of Internal Revenue for any tax on income that is paid in excess of the amount due to the government. The second option, on the other hand, works by applying the refundable amount, as shown on the Final Adjustment Return of the given taxable year, against the income tax liabilities of the succeeding taxable year. The two options under Section 76 are alternative in nature (Paseo Realty & Development Corp. v. Court of Appeals, 440 SCRA 235, 250-251). The choice of one precludes the other. Once the choice is made, it shall be considered irrevocable for that taxable period, and no application for a tax refund or issuance of a tax credit certificate shall then be allowed regardless of whether or not the excess tax credit is actually utilized. A perusal of petitioner's Annual Income Tax Return (both original and amended) for calendar year ending December 31, 2002 shows that petitioner did not mark any choice in the options provided under Item 31 thereof. A perusal also of the succeeding Annual Income Tax Return for calendar year 2003 (Exhibit " C'') reveals that petitioner did not indicate any amount of prior year's excess credit. Evidently, petitioner did not carry over its claimed amount of P56,220,970.00, as tax credit to the succeeding taxable year 2003. The subsequent filing of a claim for refund

C.T.A. CASE NO. 7200 9 DECISION with the BIR is a clear manifestation of its intention to have its excess tax payments be refunded as cash or tax credit certificate. However, in order to be entitled to a claim for refund or issuance of a tax credit certificate of excess creditable withholding tax at source, petitioner must comply with the following requisites prescribed under Section 2.58.3 of Revenue Regulations No.2-98, otherwise known as the Withholding Tax Regulations, to wit: 1) That the claim for refund was filed within the two-year reglementary period prescribed under Section 204(C), m relation to Section 229 of the NIRC of 1997, as amended; 2) That the fact of withholding is established by a copy of the statement duly issued by the payor (withholding agent) to the payee (BIR Form No. 1743-A), showing the amount paid and the amount of tax withheld therefrom; 3) That it is shown on the return of the recipient that the income payment received was declared as part of the gross income declared in the income tax return of the recipient (Citibank N.A. vs. Court ofAppeals and Commissioner ofInternal Revenue, 280 SCRA 459) .

C.T.A. CASE NO. 7200 10 DECISION Thus, it is imperative that petitioner should be able to prove the above requisites. First Requisite - Claim For Refund Was Filed Within the Two-year Prescriptive Period In this connection, Sections 204 (C) and 229 of the NIRC of 1997, as amended, provide: "SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. The Commissioner may - (A) XXX (B) XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund." "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any [t1fL

C.T.A. CASE NO. 7200 11 DECISION penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." The two-year prescriptive period for the filing of a claim for refund under Section 204 (C), in relation to Section 229 of the NIRC of 1997, as amended, commences from the date of filing of the final adjustment return (ACCRA Investments Corp. vs. Court of Appeals, 204 SCRA 957). It must be stressed that the rationale in computing the two-year prescriptive period with respect to petitioner corporation's claim for refund from the time it filed its final adjustment return is the fact that it was only then that petitioner could ascertain whether it made profits or incurred losses in its business operations. Records reveal that petitioner filed its Annual Income Tax Return for the calendar year ending December 31 , 2002 on April 21, 2003 (}tf

C.T.A. CASE NO. 7200 12 DECISION (Exhibit "A-7") through electronic filing and within the extended period for filing income tax returns by virtue of Revenue Regulations 15-2003. Counting from April 21 , 2003 , petitioner had until April 21 , 2005 , within which to file its claim for refund/tax credit certificate, both administratively and judicially. Therefore, both petitioner's administrative claim filed on April 1, 2005 (Exhibit "D ") and the instant Petition for Review filed on April 13, 2005 were filed within the two-year prescriptive period under Section 204 (C) , in relation to Section 229 ofthe NIRC of 1997, as amended. Clearly, the first requirement has been complied with. Second Requisite - Taxes Withheld Are Duly Supported by Certificates o[Tax Withheld To prove the fact of withholding of the reported creditable taxes withheld for the first three quarters and fourth quarter of 2002 in the respective amounts of P48,068,171.00 (Exhibit "B-3 '') and P20,378,632.00 (Exhibit "B-4 '') or in the total amount of P68,446,803 .00, petitioner presented Certificates of Creditable Tax Withheld at Source duly issued to it by various withholding agents for the same year (Exhibits "1-1 " to "1- 50 "' "L-1 " to "L-108"' "N-1 " to "N-103 "' "0-1 " to "0-215 ", "R "' "S " and "T " )' which were all summarized in Exhibit "V". ~

C.T.A. CASE NO. 7200 13 DECISION However, upon a careful examination of the documentary evidence presented, the Court finds that the following certificates should be disallowed for the same pertain to final taxes withheld on royalties: Exhibit Withholding AgentlPayor Final Tax 0-13 Alfonso Ng Withheld 0-36 Davao City Food Industries, Inc. p 61,954.49 Total 6,037 .63 P 67.992.12 Likewise, this Court denies the following certificates with creditable withholding taxes in the amount ofP151,227.76 on the ground that petitioner is not indicated as the payee/income recipient, but as the withholding agent/payor: Exhibit Withholding AgentlPayor Creditable Tax Withheld L-58 Golden Arches Development Corp. p 23,133.36 L-59 Golden Arches Development Corp 49,888 .98 L-60 Golden Arches Development Corp 78.205.42 Total p 151.227.76 Thus, this Court holds that only the creditable withholding taxes amounting to P68,227,583.31 are duly supported by valid withholding tax certificates, which are summarized, as follows, per nature of income payment: Nature of Income Payment Income Tax Rentals - Real Property Withheld Payments to Prime Contractors/Sub-Contractors Professional Fees P62 ,032 ,657.07 Sales of Real Property Other Than Capital Assets 344,114 .09 Sales of Goods 142,945 .54 Royalties 5,613,937.49 Total 73,338 .58 20,590 .53

C.T.A. CASE NO. 7200 14 DECISION The details of the creditable withholding taxes in the amount of P68,227,583.31 is hereto attached and made an integral part of this decision, as Annex "A". Third Requisite - The Income Withheld Were Declared as Part o{Petitioner 's Gross Income With regard to the third requisite, in its amended 2002 income tax return (Exhibit "B ''), petitioner reflected the following gross income amounts: Gross Income Per Income Tax Return Sale of Goods/Properties p 572 ,232,425 .00 Sale of Services 10,922 ,502 .00 Lease of Properties Total Sales/Revenues/Receipts/Fees (Exhibit "B-8") 1.221 .741 ,087 .00 P1.804 896.014.00 Interest Income p 14,179,984 .00 Gain on sale of restaurant business p 28 ,723 ,821 .00 Rent Income 16,463,321 .00 Other Income Total Other Income (Exhibit "B-9'J 9,736 ,992 .00 69.104.118.00 On the other hand, the certificates show that creditable withholding taxes of P68,227,583.31 were withheld on income payments, totalling to P1 ,344,977,364.94, which are summarized per nature of income payment, broken down as follows:

C.T.A. CASE NO. 7200 15 DECISION Per Certificates Income Income Tax Payments Withheld Rentals - Real Property P1 ,240,975,363 .33 P62,032,657.07 Payments to Prime Contractors/Sub-Contractors Professional Fees 19,570,110.87 344 ,114 .09 Sales of Real Property Other Than Capital Assets Sales of Goods 1,429,455 .32 142 ,945 .54 Royalties 75,565,624.90 5,613,937.49 Total 7,333,857 .86 73,338 .58 102,952.66 20,590 .53 P1.344.977.364.94 P68.227.583.31 The details of the income payments in the total amount of P1,344,977,364.94 with their corresponding income taxes withheld is shown also in Annex "A". Apparently, the income from lease of properties in the amount of P1,221,741,087.00, and the rent income of P16,463,321.00, totalling to P1,238,204,408.00, as reflected in petitioner's 2002 income tax return is lower by P2,770,955.33 than the rental income of P1,240,975,363.33, as shown in the certificates. In her Sworn Statement dated June 23, 2006 (Exhibit "FF"), petitioner's Senior Accounting Manager, Cornelia Naguit, explained the nature of the discrepancy, as follows: "The discrepancy was primarily due to the adjustment of the rental income billed to McGeorge for the 4th quarter of CY 2002. As you are aware, Me George was merged with GADC on November 28, 2002. For this reason, the rentals due from McGeorge for the period November 28, 2002 to December 31, 2002 amounting to P7,748,628.29 were reversed since GADC and Me George were merged into one corporation. Aside from the adjustment of the company's rental income from McGeorge, we have already accrued the rental income from lessees such as GENOSI, HAVI Food, Aurora Trading, Expression ~

C.T.A. CASE NO. 7200 16 DECISION Stationery, Filemon Pascua and Leopolda Bartolome, even though the rentals have not yet been collected and the Creditable Withholding Tax Certificates have not yet been received. Lastly, rentals due from franchisees amounting to P2,994,255.30 have already been reported as part of our gross revenues in CY 2001. However, we only received the Creditable Withholding Tax Certificates from our franchisees in CY 2002 when they paid the rentals." To corroborate the testimony of Ms. Naguit, petitioner submitted the Schedule of Rent Income for the year 2002 (Exhibit "Y") with attached Schedule of Rent Income from McGeorge Food Ind., Inc. (Exhibit "Z''), Certificates of Creditable Tax Withheld at Source for taxable year 2002 (Exhibits "CC", "DD", "EE", "EE-2", "EE-3", "EE-4"), income tax return for taxable year 2001, and the corresponding Certificates of Creditable Tax Withheld at Source for 2001 (Exhibits "MM" & "NN"). However, the Court finds the aforesaid documents insufficient because the discrepancy of P2,770,955.33 cannot be traced as forming part of petitioner's declared taxable gross income in 2002 or prior year 2001. Thus, with respect to this amount petitioner failed to comply with the third requisite that to be entitled for refund the income upon which the taxes were withheld was included as part of the gross income. Therefore, out of the claimed creditable withholding taxes of P62,032,657.07, pertaining to the rental mcome payments of P1,240,975,363.33, the amount of P138,547.77, corresponding to the (}fP

C.T.A. CASE NO. 7200 17 DECISION discrepancy in rental income of P2,770,955 .33, computed as follows, 1s hereby disallowed: Lease of Properties Per ITR Per Certificates Discrepancy Rent Income P1 ,221 ,741 ,087 .00 P1 ,240 ,975,363.33 P 2,770,955.33 Total Rent Income 16.463,321 .00 P1 ,238,204,408.00 Multiply by 5% w/holding tax rate X 0.05 Disallowed Creditable Withholding Taxes p 138 547 77 Also, the Court finds that petitioner' s income from sale of services m the amount of Pl 0,922,502.00, as reflected in its 2002 income tax return, is lower by P/ 0,077,064.19, when compared with the professional fees and contractor' s fees , as shown in the certificates in the respective amounts of P1 ,429,455.32 and P19,570,110.87, or in the sum of P20,999,566.19. For petitioner' s failure to account for the discrepancy of P10,077,064.19, the related creditable withholding taxes in the amount of P233 ,725.30, as computed below, are also disallowed from petitioner' s claim for refund: Income from sale of services per certificates P19,570 ,110.87 Payments to prime contractors/sub-contractors 1,429,455 .32 Professional fees Total P20 ,999 ,566 .19 10,922,502 .00 Less: Income from sale of services per income tax return Discrepancy in income P10 077 064 19 Percentage of discrepancy to total income per certificates 47 .987% Multiply by: Creditable Taxes Withheld per Certificates P344 ,114 .09 487,059.63 Payments to prime contractors/sub-contractors 142,945.54 Professional fees p 233.725.30 Disallowed creditable withholding taxes

C.T.A. CASE NO. 7200 18 DECISION As regards petitioner's sale of real property other than capital assets in the amount of P ,565,624.90 pertaining to the claimed creditable withholding taxes ofP5,613,937.49, the same allegedly formed part of petitioner's reported gain on sale of restaurant business in the amount of P28,723,821.00, as testified to by petitioner's Senior Accounting Manager, Cornelia Naguit, on direct examination, to wit: Q. Based on the Summary of GADC's Creditable Withholding Tax Certificates for CY 2002 marked as Exhibit "U", GADC derived income from sale of real property in the total amount of P75 ,565,625 .00, and creditable withholding taxes at the rate of 6% and 7.5% amounting to P5 ,613,937.50 were withheld therefrom. In what portion ofGADC's Amended Annual Income Tax Return for CY 2002 (Exhibit "B") is the income from sale of real properties reported? A. The company's income from sale of real properties is reported in Line 54 of the Annual Income Tax Return for CY 2002, pertaining to "gain on sale of restaurant businesses." Q. Can you please explain why the "gain on sale of restaurant businesses" reported on Line 54 is only P28,723 ,821.32, while the company's total income from sale of real properties as shown in the Creditable Withholding Tax Certificates is P75 ,565,625.00. A. The amount of gain on sale of restaurant businesses reported in Line 54 of the Annual Income Tax Return for CY 2002 is based on the excess of selling price over the net book value of the property. On the other hand, the tax base for the creditable withholding taxes is the higher of (1) the consideration stated in the sales document, or (b) the fair market value ofthe property. For this reason, the tax base shown in the CWT Certificates does not tally with the amount of income reported in GADC's Annual Income Tax Return for CY 2002. Q. Do you confirm that the amount of P28,723,821.32, representing "gain on sale of restaurant businesses," pertains to the net gain on the sale of real properties in 2002.

C.T.A. CASE NO. 7200 19 DECISION A. The net gain on sale of real properties, particularly restaurants, represent approximately 80% of the P28,723,821.32. The remaining 20% pertains to the retirement of various properties of the company in 2002. Q. In any case, are the creditable withholding taxes on GADC ' s income from sale of real properties supported by Certificates of Creditable Tax Withheld at Source (BIR Form 2307)? A. Yes. As a matter of fact, the CWT Certificates covering the P5,613 ,937.50 creditable withholding taxes on sale of real properties other than capital asset has already been presented to the Court and marked as petitioner' s Exhibits "L-40." "L-41 ", "L-42", "0-19", "0-74", "0-75", "0-76", "0-77", "0-163", "0- 167" and "0-213 " . Q. Can you please explain to us the nature ofthese transactions. A: The "gain on sale of restaurant businesses" pertains to the sale of McDonald's Restaurants - particularly, the building or leasehold improvements, equipment, signage, seating and decor of the said restaurants - to our franchisees during the year. In 2002, our franchisees HRA Foods, Angel of Hope Food Enterprises, Noemi Concepcion, Ordo Food Enterprises (Ma. Jose Ordoveza), and 3k Golden Foods Corporation purchased the McDonald's Restaurants located at Metropolis-Aiabang, Vigan- IIocos Sur, Santiago-Isabela, Sta. Cruz-Laguna, and E. Rodriguez-Quezon City, respectively. These restaurants were previously owned and operated by GADC. The gain realized on the sale of the five (5) McDonald ' s Restaurants were reported as part of GADC's "gain on sale of restaurant businesses," as shown in Line 54 of the Annual Income Tax Return for CY 2002." (Exhibit "QQ ''). To prove the computation of the reported gain on sale of restaurant business for the year 2002 in the amount of P28,723 ,821.00, petitioner presented a schedule summarizing in detail the selling price, acquisition cost, accumulated depreciation, net book value, other cost and gain/loss earned for each property sold (Exhibit "RR ''). However, other than the

C.T.A. CASE NO. 7200 20 DECISION Deed of Sale (Exhibit "GG-4 ") pertaining to the McDonald's store located in Vigan and Withholding Tax Remittance Returns (Exhibits "II", "JJ", "KK " and "LL), which reflected the selling prices of the properties sold, petitioner failed to submit the underlying documents upon which the figures indicated in the schedule, i.e., acquisition cost, accumulated depreciation and other costs, were based. Thus, this Court cannot ascertain whether the gain on sale related to the claimed creditable withholding taxes of P5,613,937.49 actually formed part of petitioner's taxable income for the year 2002. Accordingly, this Court denies petitioner's claimed creditable withholding taxes in the amount of P5 ,613,937.49. As regards the sales of goods in the amount of corresponding to the claimed creditable taxes withheld of P73,338.58, petitioner's witness, Ms. Cornelia Naguit, on direct examination testified that the same pertains to food, paper and other restaurant supplies, such as hamburger patties, marinated chicken, French fries, ketchup, disposable spoons and forks, drinking cups, sanitizer, linen, etc., which were sold to petitioner's franchisees at cost, thus, no income was derived therefrom. (Exhibit "X''). The sales were allegedly recorded in petitioner's books of accounts, as decreases in inventory (Exhibit "X"). Again, the Court finds

C.T.A. CASE NO. 7200 21 DECISION such testimony, unsupported by documentary proof, insufficient to establish petitioner's claim. Thus, the Court disallows the claimed creditable taxes withheld ofP73,338.58. The same holds true as regards the royalties received by petitioner in the amount of Pl 02,9 2.66 with the corresponding creditable taxes withheld of P20,590.53. Petitioner's witness, Ms. Cornelia Naguit, on direct examination, testified that the amount ofP102,952.66 was reported as part of petitioner's income from "Sale of Services" amounting to Pl 0,922,502.00, as shown in Line 36 of its Annual Income Tax Return. (Exhibit "FF "). Without documentary evidence to corroborate her statement, the claimed creditable taxes withheld of P20,590.53 cannot be granted. As regards the third requisite, petitioner has complied with the� same, but only to the extent of P62,147,443.64 out of the total claimed creditable withholding taxes of P68,227,583.31 with valid certificates, computed as follows: Claimed creditable taxes withheld w/ proper certificates P68,227 ,583.31 Less: a. Creditable taxes withheld pertaining to the discrepancy p 138,547 .77 in rental income per income tax return and per 5,613,937.49 certificates b. Creditable taxes withheld pertaining to petitioner's sales 233,725.30 of real property other than capital assets 73 , 338~ c. Creditable taxes withheld pertaining to the discrepancy in sales of seNices per income tax return and per certificates d. Creditable taxes withheld pertaining to petitioner's sales of goods in the amount of P7,344,766.95

C.T.A. CASE NO. 7200 22 DECISION e. Creditable taxes withheld pertaining to the royalties 20,590.53 6.080,139.67 received by petitioner in the amount of P1 02 ,952.66 P62 147 443 64 Claimed creditable taxes withheld pertaining to petitioner's declared income per income tax return In sum, the Court finds petitioner to have sufficiently established its entitlement for the refund/tax credit of its unutilized creditable taxes withheld for the taxable year 2002, but in the reduced amount of P49,921,610.64, computed as follows: Sales/Revenue/Receipts/Fees P1,804,896,014 .00 Less: Cost of Sales/Services 1,262,708.484 .00 Gross Income from Operation Add : Non-Operating & Other Income p 542,187,530.00 Total Gross Income 69,104 ,118 .00 Less: Deductions Taxable Income p 611,291,648.00 611 .291,648 .00 Minimum Corporate Income Tax (MCIT) Due Less: Tax Credits p 12,225 ,833.00 Substantiated Creditable Taxes Withheld during the 62 147 443.64 year2002 p 49 921 610 64 Refundable Excess Tax Credits Finally, We reiterate the well entrenched rule in jurisprudence that actions for tax refund, as in the instant case, are in the nature of a claim for exemption and the law is not only construed in strictissimi juris against the taxpayer, but also the pieces of evidence presented entitling a taxpayer to an exemption are strictissimi scrutinized and must be duly proven.

C.T.A. CASE NO. 7200 23 DECISION WHEREFORE, premises considered, the present Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND OR TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the reduced amount of P49,921,610.64, representing the unutilized creditable withholding taxes for the calendar year 2002. SO ORDERED. ~-~ Associate Justice WE CONCUR: Q441A~ Q ~~I Q.. JliANITO C. CASTANEDA,t1.ffi. Associate Justice � EAs~~~tUicYe ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the cases were assigned to the writer of the opinion of the Court's Division. Associate Justice Chairperson, Second Division

C.T.A. CASE NO. 7200 24 DECISION CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairman's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the cases were assigned to the writer of the opinion of the Court's Division. L~. ~ ERNESTO D. ACOSTA Presiding Justice

ANNEXA GOLDEN ARCHES DEVELOPMENT CORPORATION SCHEDULE OF CREDITABLE TAXES WITHHELD FOR THE YEAR ENDING DECEMBER 31, 2002 EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD Rentals- Real Property {5%} p 373,778.91 p 18,688.95 I-1 Alfonso Ng I-2 Alfonso Ng 487,038.59 24,351.93 I-3 Alfonso Ng I-4 Alfonso Ng 697,601.35 34,880.07 I-5 Ancel A Corporation I-6 Ancel A Corporation 433,848.05 21,692.41 I-7 Clark Mac Enterprises I-8 Blue Dairy Corporation 1,053,009.84 52,650 .50 I-9 Cebu Golden Food Industries, Inc. I-10 Cebu Golden Food Ventures, Inc. 651,183.91 32,559.20 I-11 Davao City Food Industries, Inc. I-12 Edsa Food Industries, Inc. 261,389.60 13,069.48 I-13 Geneva Food Inc. I-14 Giant Arches Food Corp.-Session Rd. 500,000.01 25,000.00 I-15 Giant Arches Food Corp.-Centermall I-16 Giant Arches Food Corp.-Baguio Sunshine 1,165,154.40 58,257.72 I-17 Golden Laoag Foods Corp. I-18 Golden City Food Industries, Inc. 1,633,415.00 81,670.75 I-19 HAVI Food Services Phils., Inc. I-20 HRA Foods 1,132,553.04 56,627.69 I-21 Johnarches Foods I-22 Marie! Food Corp.-Baliuag 1,546,950.48 77,347.52 I-23 Marie! Food Corp.-Pulilan I-24 Mary Gocheco-Commonwealth 773,151.98 38,657.60 I-25 Mary Gocheco-Ever Gotesco I-26 McColby's Inc.-CSI Urdaneta-Pass Thru 1,978,725.27 98,936.26 I-27 McColby's Inc.-CSI Urdaneta I-28 McColby's Inc.-Dagupan1-Pass Thru 817,179.26 40,858 .96 I-29 McColby's Inc.-Dagupan1 I-30 McColby's Inc.-Lucao-Pass Thru 706,739 .27 35,336 .97 I-31 McColby's Inc.-Lucao I-32 McDaniels Food Corp. 989,592.53 49,479.63 I-33 McGeorge Food Industries, Inc. I-34 McDonald's Restaurant-Balanga 377,470.36 18,873.52 I-35 McDonald's Alaminos I-36 MeAnt Food Service 2,500,000.40 125,000.02 I-37 MeAnt Food Service I-38 Retire Golden Foods, Inc. 805,835.90 40,291.79 I-39 Nee Mee Food Corp. I-40 Nestor dela Merced II-Guadalupe-Pass Thru 682,302.30 34,115.12 I-41 Nestor dela Merced II-Guadalupe I-42 Nestor dela Merced II-Pass Thru 554,445.16 27,722.26 I-43 Nestor dela Merced II I-44 QSC & V Food Services(San Mateo) 389,777.80 19,488.89 I-45 QSC & V Food Services(Sumulong) I-46 Ontiveros, Cyrus Ren Balubai-Tuguegarao 725,822.99 36,291.15 I-47 Ontiveros, Cyrus Ren Balubai-Tuguegarao I-48 PQS Enterprises 462,311.55 23,115.58 741,839.49 37,091.97 104,007.27 5,200.36 188,807.28 9,440.36 621,930.27 31,096.51 269,325.00 13,466.25 408,102.98 20,405.15 719,627.84 35,981.39 264,837,454.40 13,241,872.72 1,244,487.45 62,224.37 1,663,903.04 83,195.15 807,739 .80 40,386.99 911,741.91 45,587.10 631,653.40 31,582.67 1,432,478.67 71,623.94 443,041.29 22,152.06 137,400.27 6,870.01 851,593 .92 42,579.70 69,853.52 3,492 .67 522,095.29 26,104.76 1, 035,693 .57 51,784.65 261,933 .15 13,096.65 288,672.81 14,433.63 951,957.24 w47,597.86 page 1 of11

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD I-49 Ranola, Alan Ong 962,735.00 I -50 VZG Food Industries, Inc. 593,046.05 48, 136.75 L- 1 Ranola, Alan Ong 853,510.45 29,652.31 L-2 Alfonso Ng 373,778.91 42, 675 .53 L- 3 Alfonso Ng 420,118.53 18,688.95 L-4 Alfonso Ng 693,767.48 21 ,005 .93 L- 5 Alfonso Ng 424,938.97 34,688 .37 L-6 Ancel A Corporation 886,302.96 21,246.95 L-7 Ancel A Corporation 1,799,678.66 44,315.15 L-8 Ancel A Corporation 676,554.01 89,983.93 L-9 Clark Mac Enterprises 232,967.80 33,827.70 L-10 Clark Mac Enterprises 252,868 .00 11,648.39 L- 11 Blue Dairy Corporation 500,000.01 12,643.40 L-12 Cebu Golden Food Industries, Inc. 101,978.40 25,000.00 L-13 Cebu Golden Food Industries, Inc. 384,470.80 L-15 Cebu Golden Food Ventures, Inc. 1,209,859.20 5,098.92 L-16 Davao City Food Industries, Inc. 1,114,546.87 19,223.54 L-17 Geneva Food Inc. 739,952.41 60,492 .96 L-18 Geneva Food Inc. 255,612.73 55,727.34 L-19 Giant Arches Food Corp.-Session Rd. 666,661.29 36,997.62 L-20 Giant Arches Food Corp.-Session Rd. 668,725.43 12,780.64 L-21 Giant Arches Food Corp.-Session Rd. 593,370.78 33, 333 .06 L-22 Giant Arches Food Corp.-Session Rd . 287,655.12 33,436.27 L-23 Giant Arches Food Corp.-Session Rd . 539,664.63 29,668.54 L-24 Giant Arches Food Corp.-Centermall 269,521.65 14,382.76 L-25 Giant Arches Food Corp.-Centermall 291,700.80 26,983.23 L-26 Giant Arches Food Corp.-Centermall 235,479.57 13,476.08 L-27 Giant Arches Food Corp.-Baguio Sunshine 502,629.97 14,585.04 L-28 Giant Arches Food Corp.-Baguio Sunshine 213,157.04 11,773.98 L-29 Glenn Lim 1,592,522.24 25, 131.50 L-31 Golden Laoag Foods Corp. 667,375.98 10,657.85 L-32 Golden Laoag Foods Corp. 344,773.29 79,626.11 L-33 Golden Laoag Foods Corp. 336,707.38 33,368.80 L-34 Golden City Food Industries, Inc. 394,012.24 17,238.66 L-35 Golden South Foods, Inc. 2,198,660.14 16,835.37 L-36 Golden South Foods, Inc. 2,538,471.59 19,700.61 L-37 HAVI Food Services Phils., Inc. 3,143,302.00 109,933.01 L-38 HRA Foods 879,583.58 126,925.16 L-39 HRA Foods 281,971.50 157, 165.10 L-43 Jessica Golayan Lim 825,251.73 43,979 .1 8 L-44 Jessica Golayan Lim 953,409.79 14,098.58 L-45 Johnarches Foods 424,848.68 41,262 .58 L-46 Mariel Food Corp.-Baliuag 537,109.89 47,670.48 L-47 Mariel Food Corp.-Pulilan 393,337.90 21,242.43 L-48 Mary Gocheco-Commonwealth 754,866.60 26,855 .50 L-49 Mary Gocheco-Ever Gotesco 455,426.22 19,666.90 L- 50 McColby's Inc.-CSI Urdaneta-Pass Thru 823,221.97 37,744.33 L-51 McColby's Inc.-CSI Urdaneta 104,007.27 22,771.31 L-52 McColby's Inc.-Dagupan1-Pass Thru 198,247.65 41,161.10 L-53 McColby's Inc.-Dagupan1 663,934.59 L- 54 McColby's Inc.-Lucao-Pass Thru 269,325.00 5,200.36 L-55 McColby's Inc.-Lucao 485,657.10 9,912.38 L-56 McColby's Inc.-Aiaminos 1,580,011.04 33,196.73 13,466.25 24,282.86 79,000.55 @#

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD L-57 McDaniels Food Corp. 804,470.87 L-61 McGeorge Food Industries, Inc. 89,264,010.00 40,223.54 L-62 McGeorge Food Industries, Inc. 82,079,404.40 4,463,200.50 L-63 McGeorge Food Industries, Inc. 86, 739,487 .00 4,103,970.72 L-64 McGill Food Industries, Inc. 4,336,974.35 L-65 McGill Food Industries, Inc. 791,980.92 L-66 McPhilips Food Industries, Inc.-Baclaran 762,032.68 39,599 .07 L-67 McPhilips Food Industries, Inc.-Baclaran 1,974,408.56 38,101.64 L-68 McPhilips Food Industries, Inc.-Baclaran 979,901.05 98,720.43 L-69 McPhilips Food Industries, Inc.-La Salle 306,284.81 48,995.05 L-70 McPhilips Food Industries, Inc.-La Salle 1,056,897.00 15,314.24 L-71 McPhilips Food Industries, Inc.-La Salle 992,627.71 52,844.85 L-72 McDonald's Restaurant-Balanga 410,500.87 49,631.39 L-73 McDonald's Restaurant-Balanga 809,250.35 20,525.04 L-74 McDonald's Restaurant-Balanga 409,120.92 40,462.51 L-75 MeAnt Food Service 419,768.90 20,456.05 L-76 MeAnt Food Service 878,453.35 20,988.45 L-77 MeAnt Food Service 265,672.49 43,922.67 L-78 MeAnt Food Service 900,582.77 13,283.62 L-79 Retiro Golden Foods, Inc. 268,950.46 45,029 .14 L-80 Nee Mee Food Corp. 426,065.20 13,447.52 L-81 Nee Mee Food Corp. 1,508,143.20 21,303.26 L-82 Nestor dela Merced II-Guadalupe-Pass Thru 485,964.38 75,407 .1 6 L-83 Nestor dela Merced II-Guadalupe-Pass Thru 471,426.43 24,298.22 L-84 Nestor dela Merced II-Pass Thru 166,244.66 23,571.33 L-85 Nestor dela Merced II-Pass Thru 926,669.67 L-86 QSC & V Food Services(San Mateo) 329,114.04 8,312 .23 L-87 QSC & V Food Services(San Mateo) 168,337.28 46,333.48 L-88 QSC & V Food Services(San Mateo) 179,200.72 16,4 55 .70 L-89 QSC & V Food Services(San Mateo) L-90 QSC & V Food Services(Sumulong) 73,312.37 8,416.87 L-91 QSC & V Food Services(Sumulong) 185,975.55 8,960.04 L-92 QSC & V Food Services(Sumulong) 342,312.43 3,665.62 L-93 QSC & V Food Services(Sumulong) 373,798.72 9,298.78 L-94 Teresita Borbon Ababao (Batangas City) 261,170.35 17,115.62 L-95 Teresita Borbon Ababao (Batangas City) 275,753.78 18,689 .94 L-96 Teresita Borbon Ababao (Bauan) 1,045,064.94 13,058.52 L-97 Teresita Borbon Ababao (Bauan) 1,083,014.15 13,787.69 L-98 Teves, Lyndon 767,691.39 52,253.25 L-99 Teves, Lyndon 866,683.72 54, 150.71 L-100 Teves, Lyndon 540,673.20 38,384.56 L-101 Teves, Lyndon 304,324.40 43,334.18 L-102 Ontiveros, Cyrus Ren Balubai-Tuguegarao 388,300.80 27,033.66 L-103 Ontiveros, Cyrus Ren Balubai-Tuguegarao 300,121.00 15,216.22 L-104 SPF Food 313,791.09 19,415.04 L-105 VZG Food Industries, Inc. 293,569.43 15,006.05 L-106 VZG Food Industries, Inc. 1,351,977.64 15,689.55 L-107 VZG Food Industries, Inc. 188,397.03 14,678.45 L-108 VZG Food Industries, Inc. 195,584.94 67,598.88 N-3 Alfonso Ng 194,950.57 9,419.86 N-4 Alfonso Ng 207,308.01 9,779 .25 N-5 Alfonso Ng 373,778.91 9,747.53 N-6 Alfonso Ng 506,930.36 10,365.41 739,513.77 18,688.95 487,621.43 25,346.52 36,975.69 24,381.08 page3of 11

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD N-7 Ancel A Corporation 868,135.92 N-8 Clark Mac Enterprises 205,302.20 43,406.80 N-9 Clark Mac Enterprises 104,292.94 10,265.11 N-10 Blue Dairy Corporation 500,000.01 5,2 14 .65 N-11 Cebu Golden Food Industries, Inc. 354,762.40 25,000.00 N-12 Davao City Food Industries, Inc. 1,178,222.51 17,738.12 N-13 Edsa Food Industries, Inc. 1,118,950.88 58,911.12 N-14 Edsa Food Industries, Inc. 2,278,209.38 55,947 .54 N-15 Geneva Food Inc. 204,198.89 11 3,910.47 N-16 Geneva Food Inc. 238,969.24 10,209.94 N-17 Geneva Food Inc. 231,331.25 11,948.46 N-18 Giant Arches Food Corp.-Session Rd. 660,229.56 11,566.56 N-19 Giant Arches Food Corp.-Session Rd. 640,811.87 33,011.48 N-20 Giant Arches Food Corp.-Session Rd . 600,288.71 32,040.59 N-21 Giant Arches Food Corp.-Centermall 273,095.07 30,014.44 N-22 Giant Arches Food Corp. -Centermall 311,639.26 13,654.75 N-23 Giant Arches Food Corp.-Centermall 282,208.74 15,58 1. 96 N-24 Giant Arches Food Corp.-Centermall 273,302.66 14,110.43 N-25 Giant Arches Food Corp.-Baguio Sunshine 242,296.72 13,665.13 N-26 Giant Arches Food Corp. -Baguio Sunshine 233,359.79 12,114.84 N-27 Giant Arches Food Corp.-Baguio Sunshine 249,344.96 11,667.99 N-28 Glenn Lim 1,459,930.76 12,467.25 N-29 Glenn Lim 1,746,818.94 72,996.54 N-30 Golden Laoag Foods Corp. 322,182.19 87, 340 .95 N-31 Golden Laoag Foods Corp. 339,296.50 16,109.11 N-32 Golden Laoag Foods Corp. 314,956 .93 16,964.83 N-33 Golden City Food Industries, Inc. 402,918.99 15,747.85 N-36 Golden South Foods, Inc. 730,903.53 20,145.95 N-37 Golden South Foods, Inc. 601,957.39 36,545.18 N-38 Golden South Foods, Inc. 696,446.10 30,097.87 N-41 HRA Foods 326,212.23 34,822.31 N-42 Marie! Food Corp.-Baliuag 585,963.62 16,310 .61 N-43 Marie! Food Corp.-Pulilan 424,917.09 29,298.18 N-44 Mary Gocheco-Commonwealth 780 , 183.91 21 ,245 .85 N-45 Mary Gocheco-Ever Gotesco 459,611.83 39,009. 19 N-46 DLC Foods, Inc.-Meycauayan 440,084.25 22,980 .59 N-47 DLC Foods, Inc. -Meycauayan 446,333 .68 22,004.21 N-48 DLC Foods, Inc.-Valenzuela 981,124.66 22 , 316 .69 N-49 DLC Foods, Inc.-Valenzuela 1,150,748.28 49 , 055 .73 N-50 DLC Foods, Inc. -Balagtas,Bulacan 1,793,819.71 57,537.42 N-51 DLC Foods, Inc.-Balagtas,Bulacan 1,379,522.14 89, 690 .99 N-52 McGeorge Food Industries, Inc. 283,229 , 262 .00 68,976.1 2 N-53 McGill Food Industries, Inc. 469 , 169.97 14,161 ,463 .10 N-54 McGill Food Industries, Inc. 383,744.67 21 , 325 .92 N-55 McDonald's Restaurant-Balanga 460,509.85 19, 187 .24 N-56 McDonald's Restaurant-Balanga 425,381.32 23,025.49 N-57 MeAnt Food Service 302,938 .92 21 , 269 .07 N-58 MeAnt Food Service 320,945.14 15,146.95 N-59 MeAnt Food Service 334,335.88 16, 047 .26 N-60 MeAnt Food Service 311 , 553 .66 16, 716 .79 N-61 MeAnt Food Service 297,242 .70 15, 577 .68 N-62 MeAnt Food Service 303,520.35 14,862. 14 N-63 Nee Mee Food Corp. 541 ,985 .21 15,1 76 .02 27, 099 .26

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD N-64 Nee Mee Food Corp. 601,577.35 N-65 Nee Mee Food Corp. 493,599 .78 28,646.54 N-66 Nee Mee Food Corp. 512,615.54 24, 679 .99 N-67 Nestor dela Merced II-Guadalupe-Pass Thru 366,115.04 25,615.54 N-68 Nestor dela Merced II-Guadalupe-Pass Thru 147,500.00 18,305.75 N-69 Nestor dela Merced II-Guadalupe 170,903.10 7,375.00 N-70 Nestor dela Merced II-Pass Thru 705,895.70 8,545.16 N-71 Nestor dela Merced II-Pass Thru 312,731.58 35,294.79 N-72 QSC & V Food Services(San Mateo) 797,977 .80 15,636.58 N-73 QSC & V Food Services(San Mateo) 193,891.65 39,898.89 N-74 QSC & V Food Services(San Mateo) 188,606.51 9,694.58 N-75 QSC & V Food Services(San Mateo) 189,099.24 9,430 .33 N-76 QSC & V Food Services(San Mateo) 2,087,806.27 9,454.97 N-77 QSC & V Food Services(Sumulong) 316,836.28 104,390.31 N-78 QSC & V Food Services(Sumulong) 296,558.05 15,841. 82 N-79 QSC & V Food Services(Sumulong) 323,156.91 14,827. 90 N-80 Teresita Borbon Ababao (Batangas City) 1,159,785.13 16, 157.85 N-81 Teresita Borbon Ababao (Bauan) 784,258.32 57,951.43 N-82 Teves, Lyndon 165,097.66 39,212 .92 N-83 Teves, Lyndon 322,035.40 N-84 PQS Enterprises 275,165.63 8,254.88 N-85 PQS Enterprises 285,474.68 16,101.77 N-86 PQS Enterprises 297,560.04 13, 758 .28 N-87 PQS Enterprises 320,946.67 14,423.73 N-88 PQS Enterprises 362,476.84 14,878.00 N-89 PQS Enterprises 317,840.45 16,047.33 N-90 PQS Enterprises 305,735.53 18,123.84 N-1 Ranola, Alan Ong 623,949 .05 15, 892 .02 N-91 SPF Food 438,310.50 15, 286 .78 N-92 SPF Food 465,771.76 31 , 197.45 N-93 SPF Food 511,648.82 21 ,915.53 N-94 SPF Food 540,881.97 23,288.59 N-95 SPF Food 545,085.73 25,582.44 N-96 SPF Food 510,066.37 27,044.10 N-97 SPF Food 496,093.95 27,254.29 N-98 VZG Food Industries, Inc. 217,385.39 25 , 503 .32 N-99 VZG Food Industries, Inc. 200,287.50 24,804.70 N-100 VZG Food Industries, Inc. 205,480.27 10,869 .27 N-101 J&F Food Corp . 115,835.33 10,0 14 .38 N-102 J&F Food Corp. 210,179.25 10,274.01 N-103 J&F Food Corp. 266,233.21 5,265.24 0 -4 Ranola, Alan Ong 10,008.54 0 -5 Ranola, Alan Ong 1,003.20 12,101. 51 0 -6 Ranola, Alan Ong 310,324.86 0 -8 Ranola, Alan Ong 361,888.23 50.16 0-9 Ranola, Alan Ong 288,409.74 15,516. 24 0 -12 Alfonso Ng 398,038.53 18,094.41 0 -15 Alfonso Ng 373,778.91 14,420.49 0 -16 Alfonso Ng 444,546.97 19,901.93 0 -18 Alfonso Ng 713,706.39 18,688.95 0 -20 Angel of Hope Food Enterprises 440,861.59 22,227.35 0 -21 Angel of Hope Food Enterprises 450,000.00 35,685 .3 2 0 -22 Angel of Hope Food Enterprises 450,000.00 22,043 .07 450,000.00 22 , 500 .00 22,500.00 22,500 .00 pageS of11

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD 0-23 Angel of Hope Food Enterprises 531,883.26 0-25 Angel of Hope Food Enterprises 140,578.38 26,594.16 0 -26 Clark Mac Enterprises 128,829.87 7,028.92 0-28 Clark Mac Enterprises 113,235.79 6,441.49 0-29 Blue Dairy Corporation 499,999.80 5,661.79 0-32 Cebu Golden Food Ventures, Inc. 1,024,077.00 24,999.99 0-33 Cebu Golden Food Ventures, Inc. 2,784,824.00 51,203.85 0-35 Davao City Food Industries, Inc. 1,229,470.40 0-38 Edsa Food Industries, Inc. 606,035.14 139,241.20 0-39 Geneva Food Inc. 259,124.32 61,473 .52 0-40 Geneva Food Inc. 264,383.30 30,301.76 0-43 Giant Arches Food Corp.-Session Rd. 550,348.50 12,956.22 0-44 Giant Arches Food Corp. -Session Rd. 659,740 .03 13,219.17 0-46 Giant Arches Food Corp.-Centermall 257,897.77 27,517.43 0 -47 Giant Arches Food Corp.-Centermall 299,311.76 32,987.00 0-49 Giant Arches Food Corp.-Baguio Sunshine 231,837.21 12,894.89 0 -50 Giant Arches Food Corp.-Baguio Sunshine 262,076.34 14,965.59 0-52 Glenn Lim 1,580,320.45 11,591.86 0-56 Golden City Food Industries, Inc. 377,755.62 13,103.82 0-59 Golden South Foods, Inc. 664,333.20 79,016.02 0-60 Golden South Foods, Inc. 751,958.09 18,887.78 0-61 Golden South Foods, Inc. 692,332.40 33,216 .66 0-67 HAVI Food Services Phils., Inc. 2,500,000.20 37,597.90 0-68 HAVI Food Services Phils., Inc. 2,500,000.60 34,616.62 0-69 HRA Foods 303,141.32 125,000.01 0-70 HRA Foods 317,594.08 125,000.03 0-71 HRA Foods 283,903.00 15,157.07 0 -72 HRA Foods 403,605.57 15,879.70 0-78 Jessica Golayan Lim 1,090,768.95 14,195.15 0-79 Jessica Golayan Lim 1, 103,153 .09 20,180.28 0-80 Johnarches Foods 378,175.48 54,538.44 0 -81 Johnarches Foods (2%) 437,170.77 55,157.65 0-83 Mariel Food Corp.-Baliuag 576,694.14 18,908.77 0 -84 Mariel Food Corp.-Pulilan 425,375.58 0-85 Mary Gocheco-Commonwealth 777,357 .44 8,743.42 0-86 Mary Gocheco-Ever Gotesco 495,636.34 28,834.72 0-88 McColby's Inc.-CSI Urdaneta-Pass Thru 766,190.56 21,268.79 0-89 McColby's Inc.-CSI Urdaneta-Pass Thru 846,129.67 38,867.88 0 -91 McColby's Inc.-CSI Urdaneta 104,007.27 24,781.82 0-92 McColby's Inc.-CSI Urdaneta 104,007.27 38,309 .53 0-93 McColby's Inc.-Dagupan1-Pass Thru 198,247.65 42,306.48 0-94 McColby's Inc.-Dagupan1-Pass Thru 198,247.65 0 -95 McColby's Inc.-Dagupan1 610,436.07 5,200 .36 0-96 McColby's Inc.-Dagupan1 616,343.64 5,200.36 0-99 McColby's Inc.-Lucao-Pass Thru 269,325.00 9,912.38 0-100 McColby's Inc.-Lucao-Pass Thru 269,325.00 9,912.38 0-101 McColby's Inc.-Lucao 440,695.04 30,521.80 0-102 McColby's Inc.-Lucao 492,878.48 30,817.18 0-104 McColby's Inc.-Aiaminos 1,489,944.56 13,466.25 0-105 McColby's Inc.-Aiaminos 1,637,946.57 13,466.25 0-107 McColby's Inc.-San Carlos 682,144.29 22,034.75 0-109 McDaniels Food Corp. 830,890.93 24,643.92 0-110 McDaniels Food Corp. 804,179.97 74,497.23 81,897.33 34,107.21 41 , 544.55 40,208.99 pnge 6 of11

-ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD 0-112 DLC Foods, Inc.-Meycauayan 457,502.57 0-113 DLC Foods, Inc.-Valenzuela 1,074,750.21 22,875.13 0-114 DLC Foods, Inc.-Balagtas,Bulacan 1,563,353.20 53,737.51 0-115 Miriam Bernardo Arguelles-Bifian1 78,167.66 0-116 Miriam Bernardo Arguelles-Bifian1 746,907.16 37,345.37 0-117 Miriam Bernardo Arguelles-Bifian1 721,440.55 36,072.02 0-118 Miriam Bernardo Arguelles-Bifian1 783,004.86 39,150.24 0-119 Miriam Bernardo Arguelles-Bifian2 677,623.83 33,881.19 0-120 Miriam Bernardo Arguelles-Bifian2 195,000.00 0-121 Miriam Bernardo Arguelles-Bifian2 195,000.00 9,750.00 0-122 Miriam Bernardo Arguelles-Bifian2 195,000.00 9,750.00 0-123 McGill Food Industries, Inc. 195,000.00 9,750.00 0-124 McGill Food Industries, Inc. 426,518.16 9,750.00 0-125 McGill Food Industries, Inc. 426,518.16 21,325.92 0-126 McJola, Inc. 356,720.95 21,325.92 0-127 McJola, Inc. 1,626,130.40 17,836.05 0-128 McJola, Inc. 1,557,815.00 81,306.52 0-129 McJola, Inc. 1,804,862.40 77,890.75 0-130 Lopez, Eusebio Soriano 2,419,009.40 90,243.12 0-131 Lopez, Eusebio Soriano 1,074,112.00 120,950.47 0-132 Lopez, Eusebio Soriano 1,110,652.80 53,705.60 0-133 Lopez, Eusebio Soriano 1,268,100.00 55,532.64 0-134 McPhilips Food Industries, Inc.-Baclaran 1,342,331.60 63,405.00 0-135 McPhilips Food Industries, Inc.-La Salle 4,912,983.57 67,116.58 0-136 McDonald's Restaurant-Balanga 4,302,007.84 245,653.28 0-137 McDonald's Restaurant-Balanga 423,057.56 215,100.39 0-138 McDonald's Restaurant-Balanga 374,964.54 21,152.88 0-140 MeAnt Food Service 452,665.08 18,748.23 0-141 MeAnt Food Service 272,603.89 22,633.25 0-142 MeAnt Food Service 348,865.53 13,630.19 0-143 MeAnt Food Service 333,010.83 17,443.28 0-144 Retire Golden Foods, Inc. 335,956.45 16,650.54 0-145 Retire Golden Foods, Inc. 225,000.00 16,797.82 0-146 Retire Golden Foods, Inc. 201,051.20 11,250.00 0-147 Retire Golden Foods, Inc. 546,292.20 10,052.56 0-148 Retire Golden Foods, Inc. 225,678.00 27,314.61 0-149 Nee Mee Food Corp. 243,540.00 11,283.90 0-150 Nee Mee Food Corp. 471,650.04 12,177.00 0-151 Nestor dela Merced 11-Guadalupe-Pass Thru 495,310.03 23,582.50 0-152 Nestor dela Merced 11-Guadalupe-Pass Thru 24,765.50 0-154 Nestor dela Merced 11-Guadalupe 20,803.53 1,040.18 0-155 Noemi Cabuay-Rosario, Cavite 165,872.31 8,293.62 0-156 Noemi Cabuay-Rosario, Cavite 580,130.96 29,006.55 0-157 Noemi Cabuay-Rosario, Cavite 751,340.40 37,567.02 0-158 Noemi Cabuay-Binakayan 973,581.84 48,679.08 0-159 Noemi Cabuay-Binakayan 917,807.22 48,590.36 0-160 Noemi Cabuay-Binakayan 720,550.34 36,027.51 0-161 Noemi Cabuay-Binakayan 779,589.80 38,978.48 0-162 Noemi Concepcion 798,189.69 39,909.48 0-168 OrdoFood Enterprises 769,047.24 38,452.36 0-169 QSC & V Food Services(San Mateo) 538,956.00 26,947.80 0-170 QSC & V Food Services(San Mateo) 260,843.34 13,042.17 0-171 QSC & V Food Services(Sumulong) 172,653.39 8,632.67 192,971.03 9,648.55 303,907.01 15,195.35 page 7of11

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD 0-172 QSC & V Food Services(Sumulong) 295,146.38 14,757.32 0 -173 QSC & V Food Services(Masinag) 69,569.64 3,478.48 0-174 Teresita Borbon Ababao (Batangas City) 1,115,398.84 55,769.94 0-176 Teresita Borbon Ababao (Bauan) 800,149.75 40,007.49 0-178 Teves, Lyndon 62,552.40 3,127.62 0 -179 Teves, Lyndon 76,415.60 3,820.78 0-180 Teves, Lyndon 65,829.40 3,291.47 0 -181 Teves, Lyndon 75,593.00 3,779.65 0-182 Teves, Lyndon 72,299 .60 3,614.98 0-184 Teves, Lyndon 94,470.40 4,723.52 0 - 185 Ontiveros, Cyrus Ren Balubai-Tuguegarao 525,775.53 26,291.78 0-186 Ontiveros, Cyrus Ren Balubai-Tuguegarao 538,452.23 26,922.59 0-187 PQS Enterprises 264,739.61 13,236.98 0 -1 88 PQS Enterprises 306,874.71 15,343.74 0-190 RSA Food Service (RFC Molino) 1,397,544.80 69,877 .24 0 - 191 RSA Food Service (RFC Molino) 1,467,684.20 73,384.21 0 -192 RSA Food Service (RFC Molino) 1,520,638.00 76,031.90 0 -193 RSA Food Service (RFC Molino) 1,480,937.60 74,046.88 0 -194 RSA Food Service (General Trias) 1,072,002.00 53,600 .1 0 0-195 RSA Food Service (General Trias) 1,012,449.40 50,622.47 0-196 RSA Food Service (General Trias) 1, 117,926.60 55,896.33 0-197 RSA Food Service (General Trias) 1,071,791.80 53,590.00 0-198 SPF Food 485,548.31 24,277.42 0 -199 SPF Food 487,246.60 24,362.33 0 -201 TGY & Kids Inc. 1,555,511.02 77,775.54 0-202 TGY & Kids Inc. 1,620,849.32 81,042.46 0-203 TGY & Kids Inc. 1,772,472.52 88,623 .61 0 -204 TGY & Kids Inc. 651,059.43 32,552.97 0 -205 Yaman Kids Corporation 1,105,804.19 55,290.20 0-206 VZG Food Industries, Inc. 192,350.24 9,617 .52 0-207 VZG Food Industries, Inc. 201,433.13 10,071.66 0 -209 J&F Food Corp. 227,151.04 11,357.55 0 -210 J&F Food Corp. 162,050.59 8,102.53 0 -211 J&F Food Corp. 156,044.13 7,802.21 0 -212 J&F Food Corp. 133,602.95 6,680 .15 0 -214 3K Golden Foods Corp. 253,471.25 12,673.56 R McGeorge Food Industries, Inc. 95,456,478.60 4, 772,823.93 s McGeorge Food Industries, Inc. 82,800,958.20 4,140,047.91 Total: Rentals - Real Property p 1,240,975,363.33 p 62,032,657.07 Payments to Prime Contractors/Sub-contractors (2%} L-32 Golden Laoag Foods Corp. p 18,181.82 p 363.64 136,577.06 2,731.54 N-2 Ranola, Alan Ong (2%) 1,419.40 70,970.00 N- 11 Cebu Golden Food Industries, Inc. (2%) 800.00 16.00 1,742.37 N-3 1 Golden Laoag Foods Corp. (2%) 174,237.03 1,438.54 71,927.00 N-34 Golden South Foods, Inc. (1%) 2,195.00 21.95 146,138.49 1,461.38 N-35 Golden South Foods, Inc. (2%) 147,917.44 2,958.34 144,393.62 2,887.87 N-39 Golden South Foods, Inc. (1%) N-40 Golden South Foods, Inc. (1%) 0 -1 Ranola, Alan Ong 0 -2 Ranola, Alan Ong page 8 of11

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD 0-3 Ranola, Alan Ong 287,819.73 0 -7 Ranola, Alan Ong 468,356.35 5,756.39 0 - 10 Ranola, Alan Ong 180,926.60 9,367.14 0-11 Ranola, Alan Ong 3,618.53 0 -14 Alfonso Ng 38,967.00 0 -17 Alfonso Ng 370,455.81 779.34 0-24 Angel of Hope Food Enterprises 339,124.29 7,409 . 11 0 -25 Clark Mac Enterprises 194,126.44 6,782.48 Clark Mac Enterprises 202,934.50 3,882.53 0 -27 Clark Mac Enterprises 155,699.21 4,058.69 Cebu Golden Food Industries, Inc. 3, 113.98 0 -28 Cebu Golden Food Industries, Inc. 36,850.00 0 -30 Cebu Golden Food Ventures, Inc. 161,879.13 737.00 0 -31 Cebu Golden Food Ventures, Inc. 309,316.81 3,237.58 0 -33 Davao City Food Industries, Inc. 6,186.34 0 -34 Geneva Food, Inc. 5,515.50 0-35 Giant Arches Food Corp.-Session Rd. 461,996.00 110.31 0-42 Giant Arches Food Corp. -Centermall 351,954.70 9,239.92 0 -45 Giant Arches Food Corp.-Baguio Sunshine 2,135,076 .58 7,039 .09 0-48 Glenn Lim 286,843.49 42,701.53 0-51 Golden Laoag Foods Corporation 213,794.12 5,736.87 0 -53 Golden City Food Industries, Inc. 252,595.43 4,275.88 0 -54 Golden South Foods, Inc. (1 %) 207,994.65 5,05 1. 9 1 0 -58 Golden South Foods, Inc. 255,024.39 4, 159.89 0 -59 Golden South Foods, Inc. (1%) 629,592.70 5,100.49 0-60 Golden South Foods, Inc. 12,591.85 0-62 Golden South Foods, Inc. (1 %) 2,675.60 0-63 HRA Foods 1,950.00 26 .76 0 -66 Johnarches Foods 26, 171.99 39 .00 McCarol Ventures 85,410.00 261.72 0 -73 McColby's Inc.-CSI Urdaneta-Pass Thru 3,626,226.69 1,708.20 McColby's Inc. -Dagupan1 224,225.32 36, 262 .27 0-82 McColby's Inc. -Lucao 257,291.60 4,484.51 0-87 McColby's Inc.-Aiaminos 512,770.97 5, 145 .83 0-90 McColby's Inc.-San Carlos 141,761.14 10,255 .41 0 -97 McDaniels Food Corp. 290,159.14 2,835.22 0 -103 Miriam Bernardo Arguelles-Biiian1 244,380.22 5, 803 .18 0 -106 Miriam Bernardo Arguelles-Biiian2 259,051.47 4,887 .60 0-108 McGill Food Industries, Inc. 92,052.68 5, 181.03 0-111 McJola, Inc. 115,844.77 1,841.05 0 -118 Lopez, Eusebio Soriano 126,674.18 2,316.90 0 -122 McDonald's Restaurant-Balanga 54,079.96 2,533 .48 0-125 MeAnt Food Service 152,068.29 1,081.60 0-129 MeAnt Food Service 538,717.00 3,041.38 0-133 Nee Mee Food Corp. 149,877.00 10,774.34 0 -139 Nestor dela Merced II 189,296.48 2,997 .54 0 - 141 Noemi Cabuay-Rosario, Cavite 153,581.91 3,785 .93 0 - 143 Noemi Cabuay-Binakayan 377,521.56 3,071.64 0 - 150 OrdoFood Enterprises ( 1%) 198,255.38 7,550.43 0 -153 OrdoFood Enterprises 178,903.52 3,965.11 0 -157 OrdoFood Enterprises 179,809.26 3,578.07 0-161 QSC & V Food Services(San Mateo) 115,998.89 3,596.19 0 -164 QSC & V Food Services(Sumulong) 880,984.00 2,319.98 0 -165 221,959.50 8,809 .84 0 - 166 118, 565 .15 4,439 .19 0-170 117,229.42 2,371.30 0 - 172 210,818 .85 2,344.59 4,216.38 {rJf

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD 0-173 QSC & V Food Services(Masinag) 69,569.64 1,391.39 0 -175 Teresita Borbon Ababao (Batangas City) 182,760.06 3,655 .20 0 -177 Teresita Borbon Ababao (Bauan) 146,336.59 2,926.73 0 -183 Teves, Lyndon 157,450.50 3,149.01 0 -189 PQS Enterprises 219,196.22 4,383.92 0-200 SPF Food 165,623.30 3,312.47 0 -208 VZG Food Industries, Inc. 100,856.16 2, 017 .1 2 0 -215 3K Golden Foods Corp. 207,598.27 4,151.97 1,622.73 T Payments to Prime Contractors/ 16,227.30 Total: Subcontractors p 19,570,110.87 p 3 4 4 , 1 1 4. 0 9 Professional Fees (10%} 0 -25 Clark Mac Enterprises p 262,611.90 p 26,261.19 0 -27 Clark Mac Enterprises 0-34 Cebu Golden Food Ventures, Inc. 151,290.90 15, 129 .09 0 -35 Davao City Food Industries, Inc. 0 -57 Golden City Food Industries, Inc. 192, 676 .90 19,267.69 0 -54 Golden Laoag Foods Corporation 0-64 Golden South Foods, Inc. 173,932.85 17,393.29 0-65 Golden South Foods, Inc. Total: Professional Fees 284,700.00 28,470.00 104,366.60 10,436.66 73,236.87 7,323.69 186,639.30 18,663.93 p 1,429,455.32 p 142,945.54 Sale ofReal Property Other Than Capital Assets {6%} L-40 HRA Foods p 509,374.98 p 30,562 .50 L-41 HRA Foods L-42 HRA Foods 509,374.98 30,562.50 0-19 Angel of Hope Food Enterprises (7.5%) 0 -74 HRA Foods (6%) 509,374.98 30, 562 .5 0 0 -75 HRA Foods (6%) 0 -76 HRA Foods (6%) 20,000,000.00 1,5 00 ,000.00 0 -77 HRA Foods (6%) 0-163 Noemi Concepcion (7.5%) 509,374.99 30,562. 50 0 -167 OrdoFood Enterprises (7.5%) 0 -213 3K Golden Foods Corp. (7.5%) 509,374.99 30,562.50 Total: Sale ofReal Property Other Than 509,374.99 30,562 .5 0 Capital Assets 509,374.99 30, 562 .50 13, 000 , 000 .00 975,000.00 17,000,000.00 1,275, 000 .00 22,000,000.00 1,650 ,000 .00 p 75,565,624.90 p 5,613,937.49 Sales ofGoods {1 %} I-17 Golden Laoag Foods Corp. p 154,300.52 p 1, 543 .01 L-14 Cebu Golden Food Industries, Inc. L-32 Golden Laoag Foods Corp. 104,976.94 1,049.77 L-33 Golden Laoag Foods Corp. N-30 Golden Laoag Foods Corp. 15,762.79 157.63 0 -37 Davao City Food Industries, Inc. 0 -54 Golden Laoag Foods Corp. 39,000 .00 390.00 0-55 Golden Laoag Foods Corp. Total: Sales ofGoods 190, 142 .18 1,901.42 2,185,085.59 21 ,850.86 818.80 8 . 19 4,643,771.04 46,437 .71 p 7,333,857.86 p 73,338.58 (}P page l Oaf11 @

ANNEXA EXHIBIT WITHHOLDING AGENT/PAYOR INCOME PAYMENT INCOME TAX WITHHELD Royalties Geneva Food, Inc. (20�~) p 44,920.83 p 8,984.16 0 -41 McColby's Inc.-Dagupan1 (20%) 0 -98 Royalties 58,031.83 11,606 .37 Total: p 102,952.66 p 2 0 , 5 9 0. 5 3 GRAND TOTAL p 1,344,977,364.94 p 68,227,583.31 MY page 11 of11