SPLASH CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION SPLASH CORPORATION, CTA CASE NO. 8530 Petitioner, Members: -versus- Castaneda, Jr., Chairperson, Casanova, and Cotangco-Manalastas, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, MAY 19 2016 ~ Respondent. ~7 I v; .r.J 4 �-'. x---------------------------- ---------- ---- -- ----- - ----- - -------- -- -- ----- --------- x DECISION CASTANEDA, JR., J.: STATEMENT OF THE CASE Before this Court is a Petition for Review filed by Splash Corporation to seek the cancellation, setting aside, and declaration as null and void of the Final Assessment Notice (FAN) dated December 21, 2011 that found it liable for internal revenue tax liabilities for calendar year (CY) 2007, amounting to Two Hundred Eleven Million Fifty-Two Thousand Sixteen Pesos and 94/100 (P211,052,016.94). STATEMENT OF FACTS Petitioner Splash Corporation is a domestic corporation organized in accordance with the laws of the Republic of the fz-

DECISION CTA Case No. 8530 Philippines, with office address at the 5th Floor, W Office Building, 11th Avenue corner 28th Street, Bonifacio Global, Taguig City. 1 Respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR), who is responsible for the assessment and collection of all national internal revenue taxes, fees and charges and the enforcement of all forfeitures, penalties and fines connected with such taxes. She holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. On December 22, 2011, petitioner received a copy of the FAN dated December 21, 2011. The notice made a formal demand upon petitioner to settle its purported tax liabilities amounting to P211,052,016.94, as broken down below: 2 TAX TYPE BASIC TAX SURCHARGE INTEREST COMPROMIS TOTAL p 86 647 041.67 P8 479,280.00 E PENALTY Income Tax p 63 779 154.43 p 150 426 196.10 VAT 22 986 157.63 17 938 927.28 p 50 000 40 924 784.91 EWT 845 679.14 664 771.46 1 510 450.61 Percentage Tax 18 178 585.33 MC P110,478,878.44 p 9 649 305.33 12 000.00 Total 12 000.00 P211,052,016.94 p 62,000.00 Petitioner filed a request for reconsideration of the FAN before respondent on January 20, 2012.3 However, respondent failed to act on petitioner's request for reconsideration, prompting petitioner to file the instant Petition for Review4 before this Court on August 17, 2012. In her Amended Answer5, respondent insists that petitioner is liable to pay deficiency income tax in the amount of P150,426,196.10, inclusive of increments. According to respondent, while petitioner claims that its net taxable income is exempt under Republic Act (RA) No. 7459, otherwise known as the "Inventors and Invention Incentives Act of the Philippines", the person entitled to the said exemption is the inventor under whose name the patent was registered.6 She further states that in Revenue Regulations (RR) No. 19-93, an inventor refers to the patenteejs, heir/s or assignee/s of an invention letters patent, utility model letters, or industrial design Jz- 1 Par. 4, Summary of Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), docket, p. 240. 2 Par. 2, Summary of Admitted Facts, JSFI, docket, pp. 239-240. 3 Exhibit "R". 4 Docket, pp. 6-38. 5 Amended Answer filed on October 16, 2012, docket, pp. 172-191. 6 Amended Answer, docket, p. 174.

DECISION CfA Case No. 8530 letters patent. Since petitioner is not the inventor or assignee of the inventor, it has no right to claim the exemption.7 Respondent also contends that petitioner's reliance on BIR Ruling Nos. 041-95, 042-95, and 158-99, which state that a corporation in which the inventor holds majority shares may claim tax incentives due to the inventor, is misplaced.8 She adds that in the afore-mentioned BIR Rulings, the inventors are majority shareholders in their respective corporations, which is not the situation in the present case.9 Respondent maintains that the exemption applies to the sale of the inventions by the inventor himself and not on the sale of the invention by other parties. The tax incentive applies to the sale of inventions by Dr. Rolando B. Hortaleza, and not the sale by petitioner. 10 Respondent points out that based on the conducted investigation, petitioner is neither the inventor nor a patent holder of the invention, and merely manufactured and marketed the inventions solely for itself and not for and in behalf of the inventor nor any person for that matter. Respondent also calls attention to the fact that petitioner was incorporated in 1991, while the first of Dr. Hortaleza's inventions that have qualified under RA No. 7459 was made a decade after. 11 Respondent posits that petitioner's net taxable income claimed as exempt under RA No. 7459 is subject to corporate income tax. Respondent further states that there is a discrepancy on net taxable income as stated in the Income Tax Return (ITR) and based on the investigation. Petitioner declared its net taxable income on a regular rate of P134,592,153.00, which should have been P138,533,066.00. Hence, there is an understatement of P3,940,913.00. 12 Respondent asserts that petitioner is liable for deficiency income tax on the disallowed cost of sales to Crown Asia Properties, Inc. amounting to P33,335,564.00. 13 She likewise contends that petitioner is liable for deficiency income tax for its failure to withhold and remit withholding tax in full on various income payments which should have been subjected to expanded withholding tax (EWT) }t- 7 Amended Answer, docket, p. 175. 8 Amended Answer, docket, p. 176. 9 Amended Answer, docket, p. 178. 10 Amended Answer, docket, p. 179. 11 Amended Answer, docket, p. 179. 12 Amended Answer, docket, p. 180. 13 Amended Answer, docket, pp. 181-182.

DECISION CfA Case No. 8530 amounting to P34,800,115.00. 14 Petitioner is also allegedly liable for deficiency value-added tax (VAT) for sales to HBC, Inc. and Crown Asia Properties, Inc.; and for deficiency expanded withholding tax (EWf) amounting to P1,510,450.61. 15 Respondent adds that petitioner is liable for percentage tax due to the listing of its shares of stock in the Philippine Stock Exchange. 16 Finally, respondent argues that by executing Waivers of Statute of Limitations, petitioner is now estopped from questioning the validity of the waivers and from using the defense of prescription. 17 The case was then set for a Pre-Trial Conference on November 8, 2012. 18 Accordingly, respondent and petitioner submitted their respective Pre-Trial Briefs on October 24, 201219 and on November 5, 201220 � On November 8, 2012,21 the Court ordered the parties to submit their Joint Stipulation of Facts and Issues22, which they submitted on December 3, 2012. Thereafter, the case was set for the presentation of evidence. 23 On December 13, 2012, petitioner filed its Reply (To Respondent's Amended Answer).24 Petitioner presented the following witnesses: Mr. Jose Enrique D. Santos25 - Financial Accounting Manager of petitioner; Atty. Jasmine U. Tan26 - Corporate Secretary of petitioner; Mr. Raphael C. Miguel27 - Independent Certified Public Accountant; and Ms. Christina E. Buenafe28 - Research and Development Manager for Personal Care of petitioner. Jn- 14 Amended Answer, docket, p. 182. 15 Amended Answer, docket, p. 183. 16 Amended Answer, docket, p. 183. 17 Amended Answer, docket, p. 184. 18 Notice of Pre-Trial Conference, docket, p. 167. 19 Respondent's Pre-Trial Brief, docket, pp. 198-204. 20 Pre-Trial Brief, docket, pp. 210-221. 21 Minutes of the Hearing, docket, p. 225. 22 Docket, pp. 239-245. 23 Resolution, docket, p. 247. 24 Docket, pp. 248-255. 25 Minutes of the Hearing, docket, pp. 1121, 1130, and 1489. 26 Minutes of the Hearing, docket, pp. 1121, 1130, 1390, and 1489. 27 Minutes of the Hearing, docket, pp. 1130, 1197, and 1213. 28 Minutes of the Hearing, docket, pp. 1278, 1365, and 1370.

DECISION CTA Case No. 8530 Petitioner formally offered its documentary evidence29 on June 9, 2014 and on June 26, 2014. The Court admitted all of petitioner's submitted exhibits, except Exhibits "EEE-3451" and "KKK-166" for not being found in the records. 30 On the other hand, respondent presented Nicasio H. Lumagui, Jr. - BIR Chief Revenue Officer I, as her lone witness. 31 Thereafter, on February 16, 2015, respondent formally offered her evidence.32 In the Court's Resolution33 dated March 26, 2015, Exhibits "1", "2", "3"I "4"I "5"I "6"I "7"I "8"I "9"I "10"I "11"I "12"I "17"I and "17-A" were admitted as evidence. Petitioner submitted its Memorandum on June 1, 2015.34 On the other hand, respondent filed a Manifestation35 stating that she is adopting the arguments she raised in her Amended Answer dated October 15, 2012 as her Memorandum. Hence, on June 8, 2015, the Court declared the case submitted for decision. STATEMENT OF ISSUES The parties submitted the following issues for resolution of the Court: 1. Whether or not respondent can subject to income tax for taxable year 2007 petitioner's sales of tax-exempt products in disregard of the provisions of RA No. 7459, the rulings of the BIR, and the final and executory judgment rendered by the Court of Tax Appeals and the Supreme Court; 1.1 Whether or not the tax exemption under Section 6 of RA No. 7459 attaches to the income derived from the commercial sale of Dr. Rolando Hortaleza's invention; fz- 29 Formal Offer of Evidence with Motion for Commissioner's Hearing and Leave to File Supplemental Formal Offer of Evidence, docket, pp. 1504-1521; Supplemental Formal Offer of Evidence, docket, pp. 1531- 1535. 30 Resolution dated August 12, 2014, docket, pp. 1543-1555; Resolution dated November 26, 2014, pp. 1647-1653. 31 Minutes of the Hearing, docket, p. 1655. 32 Formal Offer of Evidence, docket, pp. 1664-1670. 33 Docket, pp. 1681-1682. 34 Docket, pp. 1690-1740. 35 Docket, pp. 1741-1743.

DECISION CTA Case No. 8530 1.2 Whether or not petitioner is entitled to tax exemption if the commercial production/sale of Dr. Rolando Hortaleza's invention is done through petitioner; 2. Whether or not the 2007 tax assessment has prescribed; 3. Whether or not respondent can subject petitioner for alleged discrepancy on net taxable income of P3,940,913.00; 4. Whether or not petitioner's contribution of parcel of land to the joint venture project with Crown Asia Properties constitutes capital contribution; 5. Whether or not petitioner failed to withhold and remit withholding tax in full on various income payments subject to expanded withholding tax; 6. Whether or not petitioner underdeclared its sales to HBC�' 7. Whether or not respondent can assess petitioner for deficiency VAT arising from cash sale to Crown Asia Properties; 8. Whether or not petitioner erred in recording its input taxes under one time vendor; 9. Whether or not petitioner was informed of the law and the facts from which the assessment for income tax, VAT, withholding tax, and percentage tax for the year 2007 was based, pursuant to Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended; 10. Whether petitioner is liable to pay deficiency income tax, VAT, EWT, and percentage tax assessments for taxable year 2007, in the aggregate amount of P211,052,016.94, inclusive of surcharge and penalties, pursuant to Sections 248 and 249 of the NIRC of 1997, as amended. 9-t---

DECISION CTA Case No. 8530 There are two (2) main issues to be resolved by the Court, namely: 1. Whether the 2007 tax assessment has prescribed; and 2. Whether petitioner is liable to pay the assessed deficiency income tax, VAT, EWT, and percentage tax for taxable year 2007, in the total amount of P211,052,016.94, inclusive of surcharge and penalties. DISCUSSION Prescription According to Section 203 of the NIRC of 1997, as amended, the government can assess internal revenue taxes within three (3) years from the last day prescribed by law for the filing of the tax return, or the actual date of filing of such return, whichever comes later. Hence, an assessment notice issued after the three-year prescriptive period is not anymore valid and effective. Section 203 of the NIRC of 1997, as amended, provides: "SEC. 203. Period of Limitation Upon Assessment and Collection. - Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That in a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day." Pursuant to Section 77 of the NIRC of 1997, as amended, a corporate taxpayer (on a calendar year basis of reporting) must file its Annual Income Tax Return on or before April 15 of the following year. In this case, petitioner filed its Annual Income Tax Return for Jt-

DECISION CTA Case No. 8530 calendar year 2007 on April 15, 200836, but subsequently filed amendments thereto on May 16, 200837 and May 21, 200838 � Applying Section 203, respondent had until May 23, 2011 (May 21, 2011, being a Saturday), within which to assess petitioner for deficiency income tax for CY 2007. Meanwhile, Section 114(A)39 of the NIRC of 1997, as amended, and Section 4.114-1(A) of RR No. 16-2005 provide that Quarterly VAT Returns shall be filed within twenty-five (25) days following the close of each taxable quarter. Summarized below are the dates of filing of petitioner's Income Tax Return, Quarterly VAT Returns, and Percentage Tax Return, and the corresponding dates within which respondent should assess petitioner for deficiency income tax, VAT, and percentage tax for CY 2007: Period Covered Exhibit Date Filed Last Day to File Last Day to "RR" April 25, 2007 Return Assess 1st Qtr Jan. 1-Mar. 31, July 25, 2007 2007 "SS" October 24, 2007 April 25, 2007 April 26, 201040 July 25, 2007 July 26, 201041 2nd Qtr Aprill-June 30, "TT" April 30, 2008 October 25, 2007 2007 "DO" October 25, 2010 (Amended January 25, 2008 3rd Qtr July 1-Sept. 30, Return) May 2, 201142 2007 4th Qtr Oct. 1-Dec. 31, 2007 As regards the EWT, Section 2.58(A)(2)(b) of RR No. 17-03, in relation to Section 7 of RR No. 09-01, as last amended by RR No. 26- 02, provides that the electronic filing of EWT Returns of taxpayers engaged in manufacturing such as herein petitioner must be made within fourteen (14) days following the end of the month. The dates of filing of petitioner's Monthly EWT Returns as well as the last day for respondent to assess deficiency EWT for CY 2007 are summarized below: ?-v 36 BIR Records, p. 524. 37 Exhibit "X". 38 Exhibit "RRR-1", docket, p. 1152. 39 SEC. 114. Return and Payment of Value-added Tax. - (A) In General. - Every person liable to pay the value-added tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer: Provided, however, That VAT-registered persons shall pay the value-added tax on a monthly basis. 40 April 25, 2010 fell on a Sunday. 41 July 25, 2010 fell on a Sunday. 42 April 30, 2011 fell on a Saturday.

DECISION CTA Case No. 8530 Month Exhibit Date Filed Last Day to File Last Day to Assess Covered Return February 15, 201043 "UU" February 14, 2007 Jan-07 "UU-1" March 14, 2007 February 14, 2007 March 15, 201044 Feb-07 "UU-2" April 13, 2007 March 14, 2007 April 16, 2010 Mar-07 "UU-3" May 11, 2007 April 16, 200745 May 14, 2010 Apr-07 "UU-4" June 14, 2007 May 14, 2007 June 14, 2010 May-07 "UU-5" July 13, 2007 June 14, 2007 July 16, 2010 Jun-07 "UU-6" August 14, 2007 July 16, 2007 Jul-07 "UU-7" August 14, 2007 August 16, 201046 Aug-07 "UU-8" September 12, 2007 September 14, 2010 Sep-07 "UU-9" October 16, 2007 September 14, 2007 October 18, 201047 Oct-07 "UU-10" October 15, 2007 November 15, 201048 Nov-07 "UU-11" November 14, 2007 November 14, 2007 December 14, 2010 Dec-07 December 14, 2007 December 14, 2007 January 24, 2008 January 14, 2008 January 24, 2011 With respect to percentage tax on shares of stock sold and exchanged through initial public offering (IPO), Section 127(C)(2) of the NIRC of 1997, as amended, provides that the Percentage Tax Return must be filed within thirty (30) days from the date of listing of the shares of stock in the local stock exchange. For its IPO of common shares on November 15, 200749, petitioner filed its Percentage Tax Return on March 26, 2008. Counting from March 26, 2008, respondent had until March 28, 201150 within which to assess petitioner for deficiency percentage tax on the November 15, 2007 IPO transaction. Therefore, the last day for respondent to issue an assessment for CY 2007 was on May 23, 2011 for income tax, on May 2, 2011, at the latest for VAT, on January 24, 2011, at the latest for EWT, and on March 28, 2011 for percentage tax. However, petitioner received the FAN only on December 22, 201151 or beyond the three-year prescriptive period provided by law. While respondent does not deny that the assessment notices were issued beyond the three-year prescriptive period, she claims that the period was extended by the waivers executed by petitioner.52 On the other hand, petitioner assails the validity of the~ 43 February 14, 2010 fell on a Sunday. 44 March 14, 2010 fell on a Sunday. 45 April 14, 2007 fell on a Saturday. 46 August 14, 2010 fell on a Saturday. 47 October 16, 2010 fell on a Saturday. 48 November 14, 2010 fell on a Sunday. 49 Exhibit "Y", Petitioner's Notes to Financial Statements, Note 16(e). 50 March 26, 2011 fell on a Saturday. 51 Exhibit "Q". 52 Amended Answer, docket, p. 184.

DECISION CTA Case No. 8530 three Waivers it executed through its representative due to the following defects: 53 First Execution Date of Last Day Date of Type and Signed by Waiver54 Date Acceptance of Receipt by Amount of representatives of June Petitioner petitioner who are Second byCIR Effectivity Tax not authorized by Waiver55 10,2010 June 21, Dec. 31, of the Not 2010 accepted Not indicated its Board of Third 2010 June 30, Waiver Directors Waiver56 indicated Not 2011 June 24, Not indicated May 13, indicated Dec. 31, May 30, 2011 2010 Not indicated 2011 2011 Oct. 8, 2010 June 9, 2011 However, as can be gleaned from the above-quoted provision, there are certain exceptions. Section 222 of the NIRC of 1997, as amended, provides that: "SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. - (a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be filed without assessment, at any time within ten (10) years after the discovery of the falsity, fraud, or omission: Provided, That in a fraud assessment which has become final and executory, the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for the collection thereof. (b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. fv- 53 Exhibit "QQ", Q&A no. 24; Exhibit "MMMM", Q&A no. 7. 54 Exhibit "S". 55 Exhibit "T". 56 Exhibit "U".

DECISION CTA Case No. 8530 (c) Any internal revenue tax which has been assessed within the period of limitation as prescribed in paragraph (a) hereof may be collected by distraint or levy or by a proceeding in court within five (5) years following the assessment of the tax. (d) Any internal revenue tax, which has been assessed within the period agreed upon as provided in paragraph (b) hereinabove, may be collected by distraint or levy or by a proceeding in court within the period agreed upon in writing before the expiration of the five (5)-year period. The period so agreed upon may be extended by subsequent written agreements made before the expiration of the period previously agreed upon. (e) Providect however, That nothing in the immediately preceding Section and paragraph (a) hereof shall be construed to authorize the examination and investigation or inquiry into any tax return filed in accordance with the provisions of any tax amnesty law or decree." (Emphasis supplied) From the foregoing, it can be seen that the period to assess and collect taxes may only be extended upon a written agreement between the BIR Commissioner and the taxpayer executed before the expiration of the three-year prescriptive period. Revenue Memorandum Order (RMO) No. 20-90 issued on April 4, 1990 and Revenue Delegation Authority Order (RDAO) No. 05-01 issued on August 2, 2001 lay down the procedure for the proper execution of a waiver, to wit: 1. The waiver must be in the proper form prescribed by RMO 20-90. The phrase "but not after ___ 19 _", which indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription, should be filled up. 2. The waiver must be signed by the taxpayer himself or his duly authorized representative. In the case of a corporation, the waiver must be signed by any of its responsible officials. In case the authority is delegated by 5k:-

DECISION CTA Case No. 8530 the taxpayer to a representative, such delegation should be in writing and duly notarized. 3. The waiver should be duly notarized. 4. The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR has accepted and agreed to the waiver. The date of such acceptance by the BIR should be indicated. However, before signing the waiver, the CIR or the revenue official authorized by him must make sure that the waiver is in the prescribed form, duly notarized, and executed by the taxpayer or his duly authorized representative. 5. Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed. 6. The waiver must be executed in three copies, the original copy to be attached to the docket of the case, the second copy for the taxpayer and the third copy for the Office accepting the waiver. The fact of receipt by the taxpayer of his/her file copy must be indicated in the original copy to show that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement. 57 In the case of Philippine Journalist~ Inc. vs. Commissioner of Internal Revenue8, the Supreme Court held: "A waiver of the statute of limitations under the NIRC, to a certain extent, is a derogation of the taxpayers' right to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly construed. The waiver of the statute of limitations is not a waiver of the right to invoke the defense of prescription as erroneously held by the Court of Appeals. It is an agreement between the taxpayer and jk- 57 Commissioner ofInternal Revenue vs. Kudos Metal Corporation, G.R. No. 178087, May 5, 2010 58 G.R. No. 162852, December 16, 2004.

DECISION CTA Case No. 8530 the BIR that the period to issue an assessment and collect the taxes due is extended to a date certain. The waiver does not mean that the taxpayer relinquishes the right to invoke prescription unequivocally particularly where the language of the document is equivocal. For the purpose of safeguarding taxpayers from any unreasonable examination, investigation or assessment, our tax law provides a statute of limitations in the collection of taxes. Thus, the law on prescription, being a remedial measure, should be liberally construed in order to afford such protection. As a corollary, the exceptions to the law on prescription should perforce be strictly construed. RMO No. 20-90 explains the rationale of a waiver: ... The phrase 'but not after 19_' should be filled up. This indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three- year period of prescription. The period agreed upon shall constitute the time within which to effect the assessment/collection of the tax in addition to the ordinary prescriptive period. (Emphasis supplied) As found by the CTA, the Waiver of Statute of Limitations, signed by petitioner's comptroller on September 22, 1997 is not valid and binding because it does not conform with the provisions of RMO No. 20-90. It did not specify a definite agreed date between the BIR and petitioner, within which the former may assess and collect revenue taxes. Thus, petitioner's waiver became unlimited in time, violating Section 222(b) of the NIRC. The waiver is also defective from the government side because it was signed only by a revenue district officer, not the Commissioner, as mandated by the NIRC and RMO No. 20-90. The waiver is not a unilateral act by the taxpayer or the BIR, but is a bilateral agreement between two parties to extend the period to a date certain. The conformity of the BIR must be made by either the Commissioner or the Revenue District Officer. This case involves taxes amounting to more than One Million Pesos (P1,000,000.00) and executed almost seven fh-

DECISION CTA Case No. 8530 months before the expiration of the three-year prescription period. For this, RMO No. 20-90 requires the Commissioner of Internal Revenue to sign for the BIR." However, in the recent case of Commissioner of Internal Revenue vs. Next Mobile Inc. (formerly Nextel Communications Phils., Inc.)/9 the Supreme Court held that while the general rule is that when a waiver does not comply with the requisites for validity specified under RMO No. 20-90 and RDAO No. 01-05 is considered invalid and ineffective to extend the prescriptive period to assess taxes, parties who do not come to court with clean hands cannot be allowed to benefit from their own wrongdoing. The pertinent parts of the decision are quoted hereunder: "The general rule is that when a waiver does not comply with the requisites for its validity specified under RMO No. 20-90 and RDAO 01-05, it is invalid and ineffective to extend the prescriptive period to assess taxes. However, due to its peculiar circumstances, We shall treat this case as an exception to this rule and find the Waivers valid for the reasons discussed below: First, the parties in this case are in pari delicto or 'in equal fault.' In pari delicto connotes that the two parties to a controversy are equally culpable or guilty and they shall have no action against each other. However, although the parties are in pari delicto, the Court may interfere and grant relief at the suit of one of them, where public policy requires its intervention, even though the result may be that a benefit will be derived by one party who is in equal guilt with the other. Here, to uphold the validity of the Waivers would be consistent with the public policy embodied in the principle that taxes are the lifeblood of the government, and their prompt and certain availability is an imperious need. Taxes are the nation's lifeblood through which government agencies continue to operate and which the State discharges its functions for the welfare of its constituents. As between the parties, it would be more equitable if petitioner's lapses were allowed to pass and ~ 59 G.R. No. 212825, December 7, 2015.

DECISION CTA Case No. 8530 consequently uphold the Waivers in order to support this principle and public policy. Second, the Court has repeatedly pronounced that parties must come to court with clean hands. Parties who do not come to court with clean hands cannot be allowed to benefit from their own wrongdoing. Following the foregoing principle, respondent should not be allowed to benefit from the flaws in its own Waivers and successfully insist on their invalidity in order to evade its responsibility to pay taxes. Third, respondent is estopped from questioning the validity of its Waivers. While it is true that the Court has repeatedly held that the doctrine of estoppel must be sparingly applied as an exception to the statute of limitations for assessment of taxes, the Court finds that the application of the doctrine is justified in this case. Verily, the application of estoppel in this case would promote the administration of the law, prevent injustice and avert the accomplishment of a wrong and undue advantage. Respondent executed five Waivers and delivered them to petitioner, one after the other. It allowed petitioner to rely on them and did not raise any objection against their validity until petitioner assessed taxes and penalties against it. Moreover, the application of estoppel is necessary to prevent the undue injury that the government would suffer because of the cancellation of petitioner's assessment of respondent's tax liabilities. Final/~ the Court cannot tolerate this highly suspicious situation. In this case, the taxpayer, on the one hand, after voluntarily executing waivers, insisted on their invalidity by raising the very same defects it caused. On the other hand, the BIR miserably failed to exact from respondent compliance with its rules. The SIR's negligence in the performance of its duties was so gross that it amounted to malice and bad faith. Moreover, the BIR was so lax such that it seemed that it consented to the mistakes in the Waivers. Such a situation is dangerous and open to abuse by unscrupulous taxpayers ;r- who intend to escape their responsibility to pay taxes by mere expedient of hiding behind technicalities.

DECISION CTA Case No. 8530 It is true that petitioner was also at fault here because it was careless in complying with the requirements of RMO No. 20-90 and RDAO 01-05. Nevertheless, petitioner's negligence may be addressed by enforcing the provisions imposing administrative liabilities upon the officers responsible for these errors. The SIR's right to assess and collect taxes should not be jeopardized merely because of the mistakes and lapses of its officers, especially in cases like this where the taxpayer is obviously in bad faith." The Court finds that the factual circumstances of the present case are similar to that of the afore-quoted case. While the requirements of RMO No. 20-90 and RDAO No. 05-01 must strictly be complied with by respondent, petitioner is estopped from questioning the validity of the waivers it voluntarily executed because petitioner cannot be allowed to benefit from the same defects it caused. In view thereof, the Court is convinced that respondent's right to assess was extended by the executed waivers. Hence, when the FAN was issued and subsequently received on December 22, 2011, respondent still had the right to assess petitioner for the following deficiency taxes: Income Tax Period Covered Date Filed Last Day to File Last Day to Assess CY 2007 Return April 15, 2008, as May 23, 201160 VAT 2nd Quarter 200761 amended on May 16, April 15, 2008 EWT 3'd Quarter 200763 July 26, 201062 4th Quarter 200764 2008 and May 21, July 25, 2007 October 25, 2010 2008 October 25, 2007 May 200767 January 25, 2008 May 2, 201166 June 200768 July 25, 2007 June 14, 2010 July 200769 June 14, 2007 July 16, 2010 August 200771 October 24, 2007 July 16, 2007 August 16, 201070 April 30, 200865 August 14, 2007 September 14, 2010 September 14, 2007 June 14, 2007 July 13, 2007 August 14, 2007 September 12, 2007 60 May 21, 2011 fell on a Saturday. 61 Exhibit "SS". 62 July 25, 2010 fell on a Sunday. 63 Exhibit "TT". 64 Exhibit "DD". 65 Amended Return. 66 April 30, 2011 fell on a Saturday. 67 Exhibit "UU-4". 68 Exhibit "UU-5". 69 Exhibit "UU-6". 70 August 14, 2010 fell on a Saturday. 71 Exhibit "UU-7".

DECISION October 16, 2007 October 15, 2007 October 18, 201073 CfA Case No. 8530 November 14, 2007 November 14, 2007 November 15, 201075 Page 17 of 52 December 14, 2007 December 14, 2007 December 14, 2010 January 24, 2008 January 14, 2008 September 200772 January 24, 2011 October 200774 November 200776 December 200777 However, when the First Waiver was executed on June 10, 2010/8 respondent's right to assess had already prescribed for the following: VAT Period Covered Date Filed Last Day to File Last Day to EWT Return Assess 1st Quarter 200779 April 25, 2007 January 200781 February 14, 2007 April 25, 2007 April 26, 201080 February 200782 February 14, 2007 February 14, 2010 March 200783 March 14, 2007 April 200784 April 13, 2007 March 14, 2007 March 14, 2010 May 11, 2007 April 16, 2007 April 16, 2010 May 14, 2007 May 14, 2010 The Court shall now determine whether petitioner is liable for the deficiency taxes assessed by respondent. Liability for Deficiency EWT, Income Tax, VAT, and Percentage Tax I. DEFICIENCY EWT - P1,510,450.60 Upon comparison of the purchases per petitioner's Summary List of Purchases against its income payments reflected in the Monthly Alphalist of Payees, respondent found discrepancies amounting to P34,800,115.79 which were not allegedly subjected to EWT as required under RR No. 02-98, as amended by RR No. 06-01 and RR No. 17-03, in relation to Revenue Memorandum Circular (RMC) No. 72-04. As such, respondent assessed petitioner for the Jz.- 72 Exhibit "UU-8". 73 October 16, 2010 fell on a Saturday. 74 Exhibit "UU-9". 75 November 14, 2010 fell on a Sunday. 76 Exhibit "UU-10". 77 Exhibit "UU-11". 78 Exhibit "S". 79 Exhibit "RR". 80 April 25, 2010 fell on a Sunday. 81 Exhibit "UU". 82 Exhibit "UU-1 ". 83 Exhibit "UU-2". 84 Exhibit "UU-3".

DECISION CTA Case No. 8530 corresponding deficiency EWT in the amount of P1,510,450.60, inclusive of interest, computed as follows: 85 Income Payment SupplierI Payee Per Summary Monthly Alpha List of NoEWT EWT Tax Due List of Payees Rate p 50 756.85 A2F CARGO SERVICES, INC. Purchases 21 308.83 AB COMMUNICATION ABS PROMOTION p 1 768 176.72 p 1 260 608.23 p 507 568.49 10% 6 586.51 CORPORATION 11 869 177.70 1,065 441.56 2% ACNIELSEN (PHILIPPINES), 12 934 619.26 9 480.84 INC. 35,000.00 51 757 161.71 51 427 836.32 329 325.39 2% CHYNNA ORTALEZA 3 000.03 BENJAMIN TANG 5 650 864.12 5 176 822.35 474 041.77 2% DG SPHEROIDS 13,015.46 CORPORATION 515 463.91 282130.60 233 333.31 15% DILlMAN SCIENCE 194 227.05 174 226.83 20 000.22 15% 724.00 RESEARCH INSTITUTE 542.10 30,292 134.66 28 990 589.00 1301545.66 1% 100.00 81 200.00 8 800.00 72,400.00 1% 205.04 27 104.79 2% 3 257.44 DIRECT LINK WORLDWIDE 42 106.29 15 001.50 4 999.83 2% 4 863 891.83 4 858 892.00 22.32 DM9 10 251.83 2% EVERGREEN CUISINE MGT. 112 865.33 102 613.50 162 871.76 2% 26 392.50 CORP. 20,000.00 GREAT EASTERN HOTEL 164 299.44 1427.68 2 231.91 1% 500.00 HENGSTLER 1 780 372.77 1 778 140.86 1311.11 INTERNATIONAL 20 027 250.00 17 388 000.00 2 639 250.00 1% INTERNATIONAL 15% 1 395.00 PHARMACEUTICALS 133 333.33 10% 1100.27 4 999.99 10% JENNYLYN MERCADO 313 927.66 180 594.33 359.93 JONATHAN BORJA 42 888.89 37 888.90 13 111.11 2% 17 116.65 69 750.00 55 672.73 JONATHAN ROXAS 22,000.00 8 888.89 2% 91,007.00 55 013.50 8 039.97 LEONCIO T. DURAN III 209 250.00 139 500.00 499.99 MANSMITH AND FIELDERS 108 324.00 53 310.50 17 996.37 2% MEDIAFORCE 114 111.00 15% 1 438.91 INTEGRATION 23 816 349.69 23 798 353.32 MIKE TAN 234 672.33 120 561.33 2 783,636.30 2% 1 030.00 910,069.98 10% 535.71 MULTIMEDIA EXPONENTS 5 592 783.83 2,809 147.53 15% 11,587,609.08 10,677,539.10 53 599.83 23 936.49 ONE TIME VENDOR OUTSOURCE PR INC 934 272.16 880 672.33 24 999.57 2% 4 236.55 PARADIGM 71 945.66 2% ENTERTAINMENT 11 867 263.63 11 842,264.06 3 886.46 PRODUCTION 5 691121.41 5 619,175.75 51 500.00 2% PHIL AMERICAN 26 785.63 2% 2 331.88 INSURANCE 102 598.74 51 098.74 190.00 PHIL-ASIA NUTRACEUTICAL 357.99 CORPORATION 29,166.65 PHILTOWN HOTEL 35 420.13 8 634.50 1196 824.67 2% 1 599.00 PILIPINAS SHELL 211 827.29 2% 842.38 PETROLEUM 3 904 118.94 2 707 294.27 194 322.83 2% CORPORATION 3 480 973.23 3 269 145.94 116 593.98 2% PRUDENTIAL GUARANTEE 4 080 781.33 3 886 458.50 9 500.00 2% AND INSURANCE 2 690 404.48 2 573 810.50 17 899.61 2% RIZAL COMMERCIAL BANKING CORPORATION 194444.34 15% ROBINSONS SAVINGS 159 900.00 1% BANK CORP 42 118.79 2% SAFETY ORGANIZATION 22 000.00 12 500.00 SGV DEVT DIMENSION 363 346.39 345 446.78 INTL SHERWIN ORDONEZ 315 005.67 120 561.33 STRESADING WATER 213 270.00 53 370.00 SUPPLY TRADING SULO HOTEL 111489.79 69 371.00 85 Exhibit "Q", Annex "A", Details of Discrepancies, items I.d and II and Annex "A-1 ".

DECISION CTA Case No. 8530 TBWA / SANTIAGO 23 169 637.95 23 110 455.18 59 182.77 2% 1183.66 MANGADA 428 478.39 1 049.50 2% 20.99 32,850.00 TNT EXPRESS WORLDWIDE 429 527.89 317 720.31 90,650.00 1�/o 906.50 TOPNOTCH AWARDS AND NOVELTIES 123,500.00 1 929 515.71 85 146.45 2% 1 702.93 TOYOTA BALINTAWAK 215 384.50 NORTH 402 866.76 14 999.48 2% 299.99 TOYOTA PASONG TAMO, 54 000.00 134 615.42 2% 2 692.31 INC. 1 944 515.19 349 999.92 972 439.29 94 218.78 2% 1884.38 VISIVO PRODUCTION INC 40 223.21 2% 3J8 CAR ACCESSORIES 94 218.78 32 850.00 136 840.00 1% 804.46 SHOP 40 223.21 P219 693 547.55 1 368.40 136 840.00 ABERDEEN COURT 104 575.84 2% 2 091.52 ADBOARD 104 575.84 ADHESIVE AND PAINTS 75_LOOO.OO 1�/o 750.00 APPLICATION SYSTEM 75,000.00 1127 004.34 15% 169 050.65 ALFAJAR HATS CAPS 1127 004.34 EMBROIDERY 22 400.00 2% 448.00 ANG ESTHER CATHY 22 400.00 BANAHAW LUXURY 22 926.72 15% 3 439.01 TRANSPORT 22 926.72 10 000.00 15% 1 500.00 BILO, PRINCESS 10 000.00 MANANSALA 48 500.00 2% 970.00 BRIOSO EDNA 102 500.00 5 000.00 15% 750.00 BSET OPTION CONSSULTANT CARANDANG EMILIANO 5 000.00 14 400.00 2% 288.00 CENTER FOR GLOBAL BEST 14 400.00 PRACTICES 50 000.00 so 000.00 2% 1000.00 CHINESE GENERAL 13 314.56 HOSPITAL 13 314.56 2% 266.29 CORPORATE ACHIEVERS 12 240.00 15% 1836.00 INSmUTE 57 000.00 2% 1140.00 6 893.00 15% 1 033.95 DE CLARIN KRISTINA 12 240.00 30,000.00 15% 4 500.00 11 000.00 2% ECOP 57 000.00 13 000.00 2% 220.00 28 925.00 15% 260.00 GALINDEZ LAURENCE 6 893.00 106 115.17 2% 4 338.75 2 122.30 GONZALES ANA MARIE 30,000.00 GSI PHILIPPINES INC 11 000.00 LA COMIDA 13 000.00 LUMO RYAN 28 925.00 MANILA GALLERIA SUITES 1 078 554.46 442 714.20 2% 8 854.28 MDC ELECTRICAL 442 714.20 CONTRACTOR 40 000.00 40 000.00 2% 800.00 NUTRACEUTICALSYSTEMS INC 14 705.88 15% 2 205.88 20 000.00 1S% 3 000.00 OROBIA MA. ANGELINA 14 705.88 PADERNAL ANDRES 20 000.00 43 837.50 1% 438.38 PANDAN SEAFOOD AND GRILL 43 837.50 18 317 681.17 1% 183 176.81 SPLASH 23 698.08 1% 236.98 PHARMACEUTICALS INC. 18 317 681.17 ZOOM IN PACKAGE INS 23 698.08 23 658.42 2% 473.17 TAGAYTAY HIGHLANDS 23 658.42 INTERNATIONAL 24 050.00 24 050.00 2% 481.00 THE RED GINGER FARM 123 500.00 GARDEN 90 650.00 2% 1 813.00 TOPNOTCH AWARDS AND NOVELTIES TOWER CLUB INC 19 250.00 19 250.00 2% 385.00 Deficiency EWT P254,493 663.34 P34,800 115.79 p 845 679.1486 Add: 20% interest p.a. 01.16.08 to 12.20.11 , 664 771.46 1,510,450.61 Total Amount Payable 86 Should be P845,679.15.

DECISION CTA Case No. 8530 Petitioner argues that respondent's computation failed to consider many items such as: (1) income payments per alphalist; (2) incorrect pick up of amounts; (3) incorrect EWT rate used; (4) payment exempted from withholding tax; and (5) reimbursement by employees. 87 It avers that contrary to respondent's claim, the income payments to several payees, namely, Chyna Ortaleza, Jennylyn Mercado, Jonathan Roxas, Mansmith and Fielders, Mike Tan, Multimedia Exponents, DS Spheroids Corporation, Sherwin Ordonez, Sulo Hotel, 3J8 Car Accessories, and Ana Marie Gonzales were already subjected to EWT under the classification of "One Time Vendor". 88 To support its assertion, petitioner submitted the "Breakdown of Payees under One Time Vendor per Alpha list',s9 which showed income payments totalling P10,677,539.01, with the related EWT payment of P393,773.32. An examination of the said schedule reveals that the following income payments indeed formed part of the P10,677,539.01 income payments, which were subjected to EWT under "One Time Vendor": Supplier/Payee ATC Income Payment EWT EWT Paid Rate CHYNNA ORTALEZA p 35 000.00 DG SPHEROIDS CORPORATION WCOll p 233 333.33 15% 13 015.49 JENNYLYN MERCADO WC158 1 301 548.76 1% 20,000.00 JONATHAN ROXAS WCOll 133 333.33 15% 2 200.00 SHERWIN ORDONEZ WI010 22 000.00 10% 29 166.67 TOPNOTCH AWARDS AND NOVELTIES WCOll 194 444.44 15% 1 813.00 ALFAJAR HATS CAPS EMBROIDERY WC120 90 650.00 2% 750.00 GONZALES, ANA MARIE WC158 75 000.00 1% 3 000.00 THE RED GINGER FARM AND GARDEN WI010 30 000.00 10% 481.00 WC120 24 050.00 2% PlOS 426.16 Total P2,104,359.86 Considering that the above income payments were doubly subjected to EWT by respondent, the same shall be stricken down in the computation of the assessment. Nevertheless, since petitioner applied a lower EWT rate of 10�/o instead of the 15�/o imposed by respondent on the income payment to Ana Marie Gonzales and failed,.&:-- 87 Exhibit "QQ", Q&A no. 57. 88 Exhibit "QQ", Q&A no. 57. 89 Exhibit "EE".

DECISION CfA Case No. 8530 to justify the same, petitioner is still liable for the 5�/o EWT difference of Pl,S00.00.90 On the other hand, while the following payees were included under "One Time Vendor", the related income payments do not match with those shown under "One Time Vendor". Without supporting documents such as invoices, receipts, and reconciliation schedule, the Court cannot ascertain whether these income payments pertain to the same transactions under "One Time Vendor". Thus, the deficiency EWT assessment on these income payments shall stand. Income Payment SupplierI Payee Per Summary Monthly Alpha NoEWT EWT EWTDue List of List of Payees p Rate P1100.27 MANSMITH AND 2% 17 116.65 FIELDERS Purchases p 55 013.50 15% 55 672.73 2% MIKE TAN p 108 324.00 53 310.50 114 111.00 2% 842.38 MULTIMEDIA 2% 1 884.38 EXPONENTS 234 672.33 120 561.33 2 783 636.30 SULO HOTEL 5 592 783.83 2 809 147.53 42 118.79 3J8 CAR ACCESSORIES SHOP 111489.79 69 371.00 94 218.78 94 218.78 Petitioner further claims that the BIR deficiency EWT schedule included the following payments to employees, representing reimbursement of expenses, which are not subject to withholding tax: 91 Abenojar Noli Edgar Amount Anq, Esther Cathy p 26 000.00 Silo Princess Manansala 1127 004.34 De Clarin Kristina 22 926.72 Galindez Laurence 12 240.00 Mulimbayan Angelita 6 893.00 Orobia Ma. Anqelina 10 043.60 Trinidad Josephine M. 14 705.88 20 000.00 To support its stand, petitioner presented copies of actual reimbursements of its employees with other documents.92 The Court finds petitioner's contention unmeritorious./'--- 90 P30,000.00 x 15% less P3,000.00. 91 Exhibit "QQ", Q&A no. 57. 92 Exhibit "GG".

DECISION CTA Case No. 8530 Of the above alleged reimbursements, those pertaining to Noli Edgar Abenojar, Angelita Mulimbayan, and Josephine M. Trinidad in the respective amounts of P26,000.00, P10,043.60, and P20,000.00 were not included in the SIR's deficiency EWT schedule. As to the remaining purported reimbursements, only the reimbursement to Cathy Ang in the amount of P125.00 was supported, which does not even tie-up with the assessed amount of P1,127,004.34. Thus, the assessment on the alleged employee reimbursements shall not be disturbed. Petitioner also points out that respondent erred in using EWT rate of 2�/o instead of 1�/o on its income payments to Pilipinas Shell Petroleum Corporation since the transaction entered into by petitioner with the former involved purchase of goods, specifically, various petroleum products.93 The Court does not agree. Contrary to its assertion, petitioner used the EWT rates of 2�/o and 10�/o and the Alphanumeric Tax Codes (ATC) of WC12094 and WC14095, respectively, for some of its income payments to Pilipinas Shell Petroleum Corporation; which it subjected to withholding taxes as can be gleaned on its Monthly Alpha list of Payees96 � Therefore and in the absence of contrary evidence, petitioner's income payments to Pilipinas Shell Petroleum Corporation in the total amount of P1,196,824.67 shall be subjected to the same 2�/o EWT rate as assessed by respondent. Considering that petitioner failed to account, support or give justification to the remaining discrepancies, respondent's assessment on the same shall be sustained. It is well-settled that tax assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving otherwise. Failure to present proof of error in the assessment will justify the )z-- judicial affirmance of said assessment.9 93 Exhibit "QQ", Q&A nos. 57 and 60. 94 EWT on income payments to prime contractors/sub-contractors. 95 EWT on gross commission or service fees of customs, insurance, stocks, real estate, immigration and commercial brokers, and fees of agents of professional entertainers. 96 Exhibit "HH". 97 Marcos II vs. Court ofAppeals, eta!., G.R. No. 120880, June 5, 1997.

DECISION CTA Case No. 8530 In fine, petitioner is still liable to pay basic deficiency Ewr for CY 2007 in the total amount of P742,048.43 on income payments of P32,714,648.04, computed as follows: Supplier Per Summary Income Payment WithoutEWT EWT Tax Due List of p 507 568.49 Rate p 50 756.85 A2F CARGO SERVICES INC. Monthly Alpha Purchases List of Payees 1 065 441.56 10% 21 308.83 AB COMMUNICATION p 1 768 176.72 p 1 260 608.23 ABS PROMOTION 2% CORPORATION 12 934,619.26 11 869 177.70 ACNIELSEN (PHILIPPINES), 329 325.39 2% 6 586.51 INC. 51 757 161.71 51 427 836.32 BENJAMIN TANG 474 041.77 2% 9 480.84 DILlMAN SCIENCE 5 650 864.12 5 176 822.35 20 000.22 15% 3 000.03 RESEARCH INSTITUTE 194 227.05 174 226.83 72 400.00 1% 724.00 DIRECT LINK WORLDWIDE 81 200.00 8 800.00 27 104.79 2% 542.10 42 106.29 15 001.50 4 999.83 2% 100.00 DM9 4 863 891.83 4 858 892.00 EVERGREEN CUISINE MGT. 10 251.83 2% 205.04 CORP. 112 865.33 102 613.50 162 871.76 2% 3 257.44 GREAT EASTERN HOTEL 164 299.44 1427.68 HENGSTLER INTERNATIONAL 1 780 372.77 2 231.91 1% 22.32 INTERNATIONAL 1 778 140.86 PHARMACEUTICALS 20 027 250.00 2 639 250.00 1% 26 392.50 JONATHAN BORJA 42 888.89 17 388 000.00 4 999.99 10% 500.00 LEONCIO T. DURAN III 209 250.00 37 888.90 2% MANSMITH AND FIELDERS 108 324.00 69 750.00 2% 1,395.00 MEDIAFORCE INTEGRATION 139 500.00 55 013.50 1100.27 MIKE TAN 23 816 349.69 53 310.50 2% 234 672.33 23 798 353.32 17 996.37 15% 359.93 120 561.33 114 111.00 17,116.65 MULTIMEDIA EXPONENTS 5 592 783.83 2 809 147.53 2 783 636.30 2% 55 672.73 11 587 609.08 10 677 539.10 910 069.98 10% 91 007.00 ONE TIME VENDOR 53 599.83 15% OUTSOURCE PR INC 934 272.16 880 672.33 8 039.97 PARADIGM ENTERTAINMENT PRODUCTION 11 867 263.63 11 842 264.06 24 999.57 2% 499.99 PHIL AMERICAN INSURANCE 5 691121.41 5 619 175.75 71 945.66 2% 1 438.91 PHIL-ASIA NUTRACEUTICAL CORPORATION 102 598.74 51 098.74 51,500.00 2% 1 030.00 35 420.13 8 634.50 26 785.63 2% 535.71 PHILTOWN HOTEL PILIPINAS SHELL 3 904 118.94 2 707 294.27 1196 824.67 2% 23 936.49 PETROLEUM CORPORATION PRUDENTIAL GUARANTEE 3 480 973.23 3 269 145.94 211 827.29 2% 4 236.55 AND INSURANCE RIZAL COMMERCIAL 4 080 781.33 3 886 458.50 194 322.83 2% 3 886.46 BANKING CORPORATION ROBINSONS SAVINGS BANK 2 690 404.48 2,573 810.50 116 593.98 2% 2,331.88 CORP 22 000.00 12 500.00 9 500.00 2% 190.00 SAFETY ORGANIZATION 17 899.61 2% 357.99 SGV DEVT DIMENSION INTL 363 346.39 345 446.78 STRESADING WATER SUPPLY 159 900.00 1% 1 599.00 TRADING 213 270.00 53 370.00 42 118.79 2% 842.38 111 489.79 69 371.00 SULO HOTEL 59 182.77 2% 1183.66 TBWA / SANTIAGO 23 169 637.95 23 110 455.18 1 049.50 2% 20.99 MANGADA 429 527.89 428 478.39 85 146.45 2% 1702.93 TNT EXPRESS WORLDWIDE 402,866.76 317 720.31 TOYOTA BALINTAWAK 14 999.48 2% 299.99 NORTH 1 944 S15.19 1 929 515.71 134 615.42 2% 2 692.31 TOYOTA PASONG TAMO, 349 999.92 215 384.50 94 218.78 2% 1884.38 INC. 94 218.78 VISIVO PRODUCTION INC 40 223.21 40 223.21 2% 804.46 3J8 CAR ACCESSORIES SHOP 136 840.00 136 840.00 1% 1 368.40 ABERDEEN COURT 104 575.84 104 575.84 2% 2 091.52 ADBOARD 1127 004.34 1127 004.34 15% 169 050.65 ADHESIVE AND PAINTS APPLICATION SYSTEM 22 400.00 22 400.00 2% 448.00 ANG ESTHER CATHY 22 926.72 22 926.72 15% 3 439.01 BANAHAW LUXURY TRANSPORT BILO PRINCESS MANANSALA

DECISION CTA case No. 8530 BRIOSO EDNA 10 000.00 54 000.00 10 000.00 15% 1 500.00 BSET OPTION CONSSULTANT 102 500.00 972 439.29 48 500.00 2% 970.00 CARANDANG EMILIANO 32 850.00 750.00 CENTER FOR GLOBAL BEST 5 000.00 5 000.00 15% PRACTICES CHINESE GENERAL 14 400.00 14 400.00 2% 288.00 HOSPITAL CORPORATE ACHIEVERS so 000.00 50,000.00 2% 1000.00 INSTITUTE 13 314.56 13 314.56 2% 266.29 DE CLARIN KRISTINA 12 240.00 12 240.00 15% 1836.00 ECOP 57 000.00 57 000.00 2% 1140.00 6 893.00 GALINDEZ LAURENCE 30 000.00 6 893.00 15% 1 033.95 GONZALES ANA MARIE 30 000.00 15% 4 500.00 Less: Amt Remitted under . (20 000.00) "One Time Vendor" 11000.00 120 000.00} 15% (3 000.00) GSI PHILIPPINES INC 13 000.00 11 000.00 2% 220.00 LA COMIDA 28 925.00 13 000.00 2% 260.00 LUMO RYAN 1 078 554.46 28 925.00 15% 4 338.75 MANILA GALLERIA SUITES 106 115.17 2% 2 122.30 MDC ELECTRICAL 442 714.20 CONTRACTOR 442 714.20 2% 8 854.28 NUTRACEUTICAL SYSTEMS 40 000.00 INC 14 705.88 40 000.00 2% 800.00 OROBIA MA. ANGELINA 20 000.00 14 705.88 15% 2 205.88 PADERNAL ANDRES 20 000.00 15% 3 000.00 PANDAN SEAFOOD AND 43 837.50 GRILL 43 837.50 1% 438.38 SPLASH PHARMACEUTICALS, 18 317 681.17 INC. 23 698.08 18 317 681.17 1% 183 176.81 ZOOM IN PACKAGE INS 23 698.08 1% 236.98 TAGAYTAY HIGHLANDS 23 658.42 INTERNATIONAL 23 658.42 2% 473.17 TOPNOTCH AWARDS AND 123 500.00 NOVELTIES 90 650.00 2% 1813.00 TOWER CLUB INC 19 250.00 19 250.00 2% 385.00 Deficiency EWT P222,792,581.44 P190,077,933.40 P32,714,648.04 p 742,048.43 It must be noted that while respondent's right to assess petitioner of deficiency EWT for the months of January to April 2007 had already prescribed, petitioner was unable to establish that the above income payments pertained to the months of January to April 2007. Thus, the total income payments of P32,714,648.04 shall be considered as pertaining to the months of May to December 2007. II. DEFICIENCY INCOME TAX - P150,426,196.10 Respondent computed the deficiency income tax assessment for CY 2007 in the amount of P150,426,196.10, inclusive of interest, as follows: 98 Taxable Income/(loss) per returns p 134 592 153.00 Add (less) adjustment p 175 486 383.00 Net Taxable Income Claimed as Tax Exempt Under 3 940,913.00 Republic Act No. 7459 33 335 564.00 Discr~ancy on Net Taxable Income per ITR and Audit Disallowed Cost of Sales from Crown Asia Properties, Inc. 98 Exhibit "Q".

DECISION CfA Case No. 8530 Various income payments not subjected to EWT 34 800 115.79 247 562 975.79 Taxable Income/(loss) per investigation p 382,155 128.79 Income Tax Due p 133 754 295.08 Less: Tax credit/payments p 44 140 667.00 Prior Year's Excess Tax Credits Payments for the First Three_Quarters - Creditable Tax Withheld Tax Paid in Return Previously Filed 13 918 677.86 Payment per returns Total Tax Credits/ Payments - Less: Unsupported tax credit - Tax Credits/Payments carried over as tax credit 58 059 344.86 next year - Deficiency Income Tax Add: 20% interest p.a. 04.16.08 to 12.20.11 10 952,091.45 47 107 253.41 Total Amount Pa_yable p 86,647 041.67 63 779 154.43 P150,426 196.10 As can be seen from the foregoing computation, the assessment arose from the following items: A. Net Taxable Income Claimed as Tax Exempt Under RA No. 7459 p 175 486 383.00 3 940 913.00 B. Discrepancy on Net Taxable Income per ITR and Audit 33 335 564.00 c. Disallowed Cost of Sales from Crown Asia Properties Inc. 34 800 115.79 10 952 091.45 D. Various income payments not subjected to EWT E. Disallowed Tax Credits/Payments carried over as tax credit next year The above-enumerated items will be discussed in seriatim. A. Net Taxable Income Claimed as Tax Exempt under RA No. 7459- P175,486,383.00 Respondent's verification disclosed that petitioner declared the amount of P175,486,383.00 as exempt from income tax under RA No. 7459 otherwise known as the Inventors and Inventions Incentives Act of the Philippines. However, respondent alleges that the person entitled to the tax exemption is Dr. Rolando B. Hortaleza, being the registered inventor and under whose name the patent was registered and not Splash Corporation. Hence, the amount claimed as exempt from income tax was assessed pursuant to Sections 31 and 32 of the NIRC of 1997, as amended, and RA No. 7459. The assessed amount was arrived at by respondent as follows: 99 fo- 99 Exhibit "Q", Annex "A", Details of Discrepancies, item La.

DECISION f' 809 454 688.00 CTA Case No. 8530 Page 26 of 52 388 436 784.00 Sales/Revenue/Receipts/Fees f' 421 017 904.00 Cost of sales Gross income 259 401 271.00 Deductions Taxable income per income tax returns f' 161 616/633.00 Add: Adjustment to taxable income Net taxable income on claimed exempt transaction 13 869 750.00 Net income per books f' 175 486 383.00 Add: Non-deductible expenses/other taxable income p 166 777 403.00 Provision for doubtful accounts- net of write off Provision for retirement expense p 4 700 286.00 Provision for inventory obsolescence Unrealized foreign exchange loss in 2007 4 680 721.00 Non-deductible portion of interest expense Non-deductible portion of obsolete stock charges to cost of sales 268 847.00 Interest expense Total 3 404 174.00 Less: Non-taxable income and income subjected to final tax 1478 767.00 Interest income subjected to final tax Pension expense paid related to current service cost 482 896.00 Amortization of past service cost MTM Gain on derivative asset 90 632.00 Unrealized forei~n exchange loss in 2006 realized in 2007 Total p 15 106 323.00 Net taxable income per investigation f' 2 819 822.00 Net taxable income _Q_er income tax return Difference - adjustment to taxable income 1 818 100.00 777 034.00 692 634.00 289 753.00 p 6 397 343.00 p 175,486,383.00 161 616 633.00 p 13,869,750.00 Section 6 of RA No. 7459 provides: "SECTION 6. Tax Exemption. - To promote, encourage, develop and accelerate commercialization of technologies developed by local researchers or adapted locally from foreign sources including inventions, any income derived from these technologies shall be exempted from all kinds of taxes during the first ten (10) years from the date of the first sale, subject to the rules and regulations of the Department of Finance: Provided, that this tax exemption privilege pertaining to invention shall be extended to the legal heir or assignee upon the death of the inventor. ~

DECISION CfA Case No. 8530 The technologies, their manufacture or sale, shall also be exempt from payment of license, permit fees, customs duties and charges on imports." (Emphasis supplied) Records show that patented inventions of Dr. Hortaleza, which are being manufactured and sold by petitioner, are covered by Utility Model (UM) Registration Certificate No. 2-1997-15095100, UM Registration Certificate No. 2-2001000110101, UM Registration Certificate No. 2-2001-000291102, UM Registration Certificate No. 2- 2004-000075103, UM Registration Certificate No. 2-2003-000284104, UM Registration Certificate No, 1-2005-000239105, and UM Registration Certificate No. 2-2007-000428106. Moreover, respondent in SIR Ruling Nos. 506-4004, 717-2006, 391-2007, 557-2007, 680- 2007, 141-2008, 317-2008, 318-2008, 286-2008, and 430-2009 confirmed that pursuant to RA No. 7459, sales of the patented inventions of Dr. Hortaleza, which are being manufactured and sold by petitioner, are exempt from income tax for a period of ten (10) years from the date of its first sale on a commercial scale, to wit: "In reply, please be informed that Section 6 of RA No. 7459 provides: 'Sec. 6. Tax Exemption. - To promote, encourage, develop and accelerate commercialization of technologies developed by local researchers or adapted locally from foreign sources including inventions, any income derived from these technologies shall be exempted from all kinds of taxes during the first ten (10) years from the date of the first sale, subject to the rules and regulations of the Department of Finance: Provided, that this tax exemption privilege pertaining to invention shall be extended to the legal heir or assignee upon the death of the inventor. Jv 100 Exhibit "FFF-1 ". 101 Exhibit "FFF-2". 102 Exhibit "FFF-3". 103 Exhibit "FFF-4". 104 Exhibit "FFF-5". 105 Exhibit "FFF-6". 106 Exhibit "FFF-7".

DECISION CfA Case No. 8530 The technologies, their manufacture or sale, shall also be exempt from payment of license, permit fees, customs duties and charges on imports.' XXX XXX XXX The said exemption can be availed of during the first ten (10) years from the date of the first sale on a commercial scale, provided that said exemption privileges pertaining to the invention shall be extended to the legal heir or assignee upon the death of the inventor. It is important to note that the Final Resolution of the Office of the President (OP) in OP Case No. 03-G-422 dated February 2, 2004, affirming the finding of the Department of Finance denying the appeal of an inventor relative to his tax exemption privileges granted by this Office, clarifies that the only tax exemption granted by the first paragraph of Section 6 of RA 7459 merely refers to income tax." Furthermore, in Commissioner of Internal Revenue vs. Splash Corporatiorf07, which involved the same parties in the present case, this Court held that petitioner, who is the manufacturer and seller of the inventions made by Dr. Hortaleza, is entitled to tax incentives under RA No. 7459 for the first 10 years from the date of first sale of the inventions involved. Since the income of petitioner for CY 2007, in the total amount of P175,486,383.00, should have been exempt pursuant to RA No. 7459, the same must be cancelled in the assessment. B. Discrepancy on Net Taxable Income per ITR and Audit- P3,940,913.00 Respondent's verification disclosed that petitioner's Taxable Income of P134,592,153.00 declared under Regular Rate in Part II of its Annual Income Tax Return108 (AITR) for CY 2007 was understated by P3,940,913.00 when compared with Net Taxable Income of P138,533,066.00 reflected in Section E [Reconciliation of Net Income~ 107 CfA EB No. 330, May 5, 2008. 108 Exhibit "RRR-1 ".

DECISION CTA Case No. 8530 Per Books Against Taxable Income] of the same AITR. Thus, pursuant to Sections 31 and 32 of the NIRC of 1997, as amended, respondent assessed petitioner for the corresponding deficiency income tax. 109 Petitioner counter-argues that its net taxable income declared per AITR amounting to P134,592,153.00 is in order. To support its claim, petitioner presented a new schedule of Reconciliation of Net Income Per Books Against Taxable Income110, which showed the following details: TOTAL EXEMPT REGULAR P103 904 458.59 Income before Income tax P272 047 715.01 P168 143 317.42 Non-Deductible Expenses/Other 4 700 285.64 12 782 806.07 Add: Taxable Income 4 517 485.27 12 285 665.71 Provision for doubtful accounts 268 831.01 731107.62 Provision for retirement exoense Provision for inventory obsolescence 3,285 456.21 8 935 063.29 Unrealized foreign exchange loss in 2 705 440.96 7 357 665.00 2007 1 427 195.92 3 881 374.46 Deficiencv tax Non-deductible interest expense 87 471.72 237 886.39 Interest expense from PAS 39 466 055.20 1 267 474.73 Non-deductible obsolete stock 17 458 221.92 47 479 043.27 Less: Non-taxable income and income subjected to final tax 2 721 82.91 7 401 292.38 Interest income subiect to FT 668 478.99 760 527.57 MTM gain on derivative asset 279 648.84 4 772 037.10 Unrealized foreign exchange loss in 2 039 509.38 2006 recognized in 2007 1.754 695.90 Pension expense paid related to 749 935.23 current service cost Amortization of past service cost 6 174 241.87 16 791 348.98 Taxable income (loss) 179,427 297.47 134 592 152.88 Net taxable income per ITR Difference 134 592 153.00 (0) 109 Exhibit "Q", Annex "A", Details of Discrepancies, item I.b 110 Exhibit "V"

DECISION CTA Case No. 8530 The Court agrees with petitioner. The Court notes that the net income per books of P272,047,715.00 reflected in the new reconciliation schedule tallies with the net income before income tax per petitioner's 2007 Audited Financial Statements (AFS), specifically, the Statement of Income111 � Likewise, the reconciling items shown in the schedule represent valid non-taxable income or non-deductible expense items which can be traced to petitioner's 2007 AFS and AITR112 � In other words, the discrepancy of P3,940,913.00 found by respondent was a mere result of the error made by petitioner under Section E [Reconciliation of Net Income Per Books Against Taxable Income] portion of its 2007 AITR. Thus, the deficiency income tax assessment on this item should be cancelled. C. Disallowed Cost of Sales from Crown Asia Properties, Inc. - P33,335,564.00 On November 28, 2007, a Memorandum of Agreement on Joint Venture (MOA-JV)113 was executed by and between petitioner and Crown Asia Properties, Inc. (Developer), wherein the Developer undertook to develop a parcel of land [with an aggregate area of two thousand fifteen (2,015) square meters] owned by petitioner into a mixed-use residential and commercial condominium project. Under the MOA-JV, petitioner receives consideration (1) payable in cash amounting to P105,000,000.00 and (2) a minimum of 3,383.4 square meters of gross office/condotel areas and 26 parking slots or 7.5�/o of the condominium building, whichever is greater. The cash consideration is collectible as follows: November 30, 2007- P30 million and P18.75 million in each of the quarters ending March 31, 2007, June 30, 2008, September 30, 2008 and December 31, 2008. 114 In 2007, petitioner accounted for the cash component of the payment by the Developer as sale of land using the "cost recovery method". Accordingly, sales and cost of sales both amounting to ~ 111 Exhibit "Y". 112 Exhibit "X". 113 Exhibit "W". 114 Exhibit "Y", Notes to Financial Statements, Note 11.

DECISION CfA Case No. 8530 PlOS million has been recognized in the 2007 statement of income.115 Likewise, in its 2007 AITR, petitioner recognized the amount of PlOS million both as part of its Sales Revenues of P2,201,377,342.00116 and Cost of Sales of Pl,081,726,765.00. 117 Respondent opined that since petitioner will receive two separate and distinct considerations for its land, the acquisition cost of the land should be allocated to the two transactions in accordance with RR No. 02-40. Thus, respondent computed the allocation and the resulting disallowable cost of sales in the amount of P33,335,564.00 in the following manner: 118 Total Cost of Land to be allocated: Acquisition Cost per Books f 241 800,000.00 Less: Overstatement of Acauisition Cost 10 075 000.00 Acquisition Cost per Deed of Sale Add: Capitalized Incidental Charges 231 725 000.00 Cost of Parcel of Land to be Allocated 7 156 454.00 p 238 881 454.00 Assigned Value to the Condominium Units to be received: Per agreement, Splash Corporation shall receive 3,383.4 sq. m. of the officejcondotel areas and 26 parking slots or 7.5�/o of the condominium building, whichever is greater. No. of sq. m. of office/condotel areas 3 383.40 Add: No. of sq. m. of 12 parkinq lots at 12 sq. m. each Total no. of sq. m. of office/condotelfoarkina slots 312.00 Multiply by zonal value per sq. m. Assigned value to the condominium units to be received 3 695.40 f 65 000.00 P240,20 1,000.00 115 Exhibit "Y", Notes to Financial Statements, Note 11. 116 Exhibit "RRR-1", line 15C. 117 Exhibit "RRR-1", line 16C. 118 Exhibit "Q", Annex "A", Details of Discrepancies, item I.e.

DECISION CTA Case No. 8530 Attribution of the Cost of Land: Assigned value of the condominium units to be received Values Percentage Cash consideration of intangible property p 240,201 000.00 70% Total consideration in exchange of land 30% 105 000 000.00 100% P345,201,000.00 Cost of Parcel of Land to be allocated as follows: Cost of condominium units Values Percentage Cost of intangible property p 167 217,018.00 70% Cost of parcel of land 30% 71 664 436.00 100% P238 881 454.00 Disallowed Cost of Sales: Cash consideration of intangible property p 105 000 000.00 Allocated cost of sales of the intangible property 71 664 436.00 Disallowed cost of sales P33,335,564.00 Petitioner contends that its contribution of parcel of land to the joint venture project with Crown Asia does not constitute a sale of property in the course of trade or business, but a capital contribution to the project. Moreover, it cited a portion of BIR Ruling (DA-221-08) sought by Crown Asia119, wherein the BIR ruled that: "The MOA-JV executed between the LANDOWNER and DEVELOPER described above is an agreement between the parties for the construction and development of the aforementioned parcel of land into a mixed-use residential and commercial condominium project which is neither a contract of sale over real property nor an instrument which conveys title to real property. xxx" (Emphasis supplied) The Court is not persuaded.~ 119 Exhibit "00".

DECISION CTA Case No. 8530 Based on "Note 11 - Land for Development" of the 2007 Audited Financial Statements120, petitioner has expressly stated that the said land is currently held for sale to Crown Asia Properties, Inc. under a Memorandum of Agreement (MOA) dated November 28, 2007. It was also stated in Note 11 that the Company accounted for the cash component of the payment by the developer, which was discussed earlier, as a sale of land, using the "cost recovery method". With regard to BIR Ruling (DA-221-08), the opinion of the Commissioner reads as follows: "2.The allocation and distribution of the resulting net saleable floor area to the LANDOWNER and DEVELOPER in accordance with their respective equity contributions as stipulated in the Deed of Partition is not subject to income tax, withholding tax or capital gains tax, since the allocation/distribution is without consideration, not in connection with a sale and constitutes mere return of capital. Likewise, the said allocation and distribution is not subject to DST for want of consideration. XXX XXX XXX This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void." (Emphasis supplied) From the foregoing ruling, it can be seen that respondent based her opinion on the presumption that the MOA-JV executed by the parties does not involve any consideration, which is not actually the case, because aside from the officejcondotel units and parking slots, the amount of P105,000,000.00 was a consideration paid by Crown Asia to petitioner in exchange for the land. Therefore, in the absence of evidence to the contrary, the Court finds that the subject transaction involves a sale of land and not a mere capital contribution to the joint venture. In fact, petitioner treated the entire cash consideration of P105,000,000.00 je- 120 Exhibit "Y".

DECISION CfA Case No. 8530 as part of it Sales Revenues for taxable year 2007, and reported the corresponding Cost of Sales for the same amount. However, as correctly pointed out by respondent, the cost of the land is attributable not only to the cash consideration of P105,000,000.00 but also to the 7.5�/o share in officejcondotel units and parking slots that petitioner will receive from said Developer upon completion of the Project. Consequently, the said cost must be allocated between the cash consideration of P105,000,000.00 and the 7.5�/o share in officejcondotel units and parking slots. This is in accordance with the "Matching Principle" under the Generally Accepted Accounting Principles (GAAP) which dictates that for every revenue, there should be a matching cost/expense to be recognized. Costs directly associated with the revenue of a particular taxable period are properly allocable to that period. 121 As a result, the Court holds that respondent's finding with respect to disallowed Cost of Sales in the amount of P33,335,564.00 should be upheld. D. Various income payments not subjected to EWT - P34,800,115.79 Based on the finding that petitioner failed to withhold and remit the EWT on certain income payments in the amount of P34,800,115.79 as required under RR No. 02-98, respondent disallowed the said amount as deduction from petitioner's taxable gross income pursuant to Section 34(K) of the NIRC of 1997, as amended. As earlier discussed under the deficiency EWT assessment, petitioner failed to prove that it properly withheld and remitted the EWT due on its income payments of P32,714,648.04 as required under RR No. 02-98, as amended. Consequently, the said amount shall be disallowed from petitioner's claimed deductible expenses pursuant to Section 34(K) of the NIRC of 1997, as amended, which states that: "(K) Additional Requirements for Deductibility of Certain Payments.- Any amount paid or payable which is otherwise deductible from, or taken into account in 1-r-- 121 Merten's The Law of Federal Income Taxation, Section 12A.l01, Volume 2, (1995).

DECISION CTA Case No. 8530 computing gross income or for which depreciation or amortization may be allowed under this Section, shall be allowed as a deduction only if it is shown that the tax required to be deducted and withheld therefrom has been paid to the Bureau of Internal Revenue in accordance with this Section, sections 58 and 81 of this Code." E. Disallowed Tax Credits/ Payments carried over as tax credit the next year- P10,952,091.45 Respondent disallowed the amount of P10,952,091.45 representing the excess income tax credits carried over to the succeeding year 2008. However, no legal and factual bases were provided in the Details of Discrepancies122 to justify the disallowance of such amount. Despite petitioner's failure to refute the same, the Court finds it improper to uphold an assessment which is already void on its face. Section 228 of the NIRC of 1997, as amended, provides that the taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. Further, it was improper for respondent to disallow the said excess tax credits because any tax benefit derived by petitioner from the carry-over of the said amount redounds to the succeeding year 2008. Since the tax benefit will be in the succeeding year, at most, petitioner may only be assessed in the said succeeding year. In sum, petitioner is liable for basic deficiency income tax for CY 2007 in the amount of P12,165,482.90, computed as follows: Taxable Income Per Return p 33 335 564.00 p 134 592 153.00 Add (less) adjustments: 32 714 648.04 66 050 212.04 Disallowed Cost of Sales from Crown Asia Properties Inc. p 200 642 365.04 Various income payments not subjected to EWT Taxable Income/(loss) per investigation Income Tax Due p 70 224 827.76 Less: Tax credits p 44 140 667.00 Prior Year's Excess Tax Credits 122 Exhibit "Q".

DECISION 13 918 677.86 CTA Case No. 8530 Page 36 of 52 58 059 344.86 Creditable Tax Withheld P12 165,482.90 Total Tax Credits Basic Deficiency Income Tax III. DEFICIENCY VALUE-ADDED TAX- P40,924,784.91 Respondent computed the deficiency VAT assessment in the amount of P40,924,784.91 by adding adjustments to petitioner's taxable sales/receipts/revenues per VAT returns for the year 2007, consisting of (A) undeclared sales to HBC in the amount of P77,867,333.19, and (B) cash sale from Crown Asia Properties, Inc. in the amount of PlOS,OOO,OOO.OO; and by disallowing petitioner's unsupported input tax in the amount of P1,487,742.89, as shown below: 123 Taxable Sales/Receipts/Revenues per return p 77 867 333.19 p 2 654 619 537.49 Add (Less) Adjustments: 105 000 000.00 182 867 333.19 Undeclared Sales to HBC p 2 837 486 870.68 Cash sale from Crown Asia Properties Inc. Taxable Sales/Receipts/Revenues per investigation Output Tax 340 498 424.48 2 906 093.75 Add: Output tax for the 4th Quarter 343 404 518.23 Total 256 508 343.92 Less: Input tax P257 996 086.81 86 896 174.31 63 910 016.68 Creditable VAT - 22 986 157.63 17 938,627.28 Carry over from previous period - - p 40,924 784.91 Less: Deferred VAT carried over to 257 996 086.81 2007 - 1487 742.89 Total Less: Carry forward to next quarter - Unsupported input tax P1 487 742.89 VAT Payable Less: Payments Deficiencv VAT due Add: 20% interest p.a. 01.26.08 to 12.20.11 Total Amount Payable 123 Exhibit "Q".

DECISION CfA Case No. 8530 A. Undeclared sales to HBC- P77,867,333.19 Respondent's verification disclosed that there is a discrepancy between petitioner's sales to HBC declared under Note 17 - Related Party Transactions of the AFS for taxable year 2007124, and the reported sales to HBC per Summary List of Sales (SLS). 125 Hence, the reported revenue for VAT purposes was allegedly understated by P77,867,333.19 and thereby assessed pursuant to Sections 106 and 108 of the NIRC of 1997, as amended. The same was computed as follows: 126 Sales to HBC per Note 17 of 2007 AFS p 148,071 540.00 Sales to HBC per SLS 70 204 206.81 Difference P77,867,333.19 Since prescription had set in, respondent's right to assess petitioner of deficiency VAT would only be limited to the 2nd, 3rd, and 4th quarters of 2007. Thus, from the sales discrepancy of P77,867,333.19 found by respondent, the amount of P10,634,706.68, broken down below, pertaining to the 1st quarter of 2007 shall be taken out: Prescribed Sales to HBC per Note 17 of 2007 AFS Date Gross Sales Sales Discounts Net Sales Invoice 3/15/2007 p 27,975.01 26 867.19 Exhibit 3/15/2007 p 1107.82 p 52 086.94 3/15/2007 54 234.64 432 400.99 No. 3/15/2007 509,456.26 2 147.70 38 998.55 HHH-1 3/16/2007 451948.22 5 619.94 HHH-2 3/16/2007 77 055.27 212 036.69 HHH-3 3/21/2007 6 621.43 1967 782.82 HHH-4 3/23/2007 249,822.33 6 949.67 304 022.24 HHH-5 3/23/2007 2 318,448.20 17 187.19 HHH-6 3/23/2007 358,200.00 1 001.49 111 525.75 HHH-7 3/28/2007 20 250.00 32 373.75 HHH-8 3/30/2007 131400.00 37 785.64 155 879.57 HHH-9 3/30/2007 38 142.86 427 328.25 HHH-10 3/30/2007 162 306.95 350 665.38 3 010 995.02 HHH-11 3/30/2007 444 948.21 83 371.50 HHH-12 3/30/2007 3 551145.58 54 177.76 415 493.45 HHH-13 3/30/2007 98 228.57 182 647.96 HHH-14 3/31/2007 489 535.74 3 062.81 868 039.36 HHH-15 215 196.42 HHH-16 1 022 726.75 19 874.25 HHH-17 HHH-18 5 769.11 6 427.38 17 619.96 540 150.56 14 857.07 74 042.29 32 548.46 154 687.39 124 Exhibit "Y". 125 Exhibit "BB". 126 Exhibit "Q", Annex "A", Details of Discrepancies, item II.a.

DECISION CfA Case No. 8530 3/31/2007 192 540.75 7 624.61 184,916.14 HHH-19 3/31/2007 1 744 963.37 263 925.73 1481 037.64 HHH-20 3/31/2007 96 673.06 HHH-21 3/31/2007 639 160.71 21 877.23 542 487.65 HHH-22 3/31/2007 144 642.86 122 765.63 HHH-23 3/31/2007 73 232.14 2,900.00 70 332.14 HHH-24 3/31/2007 33 637.50 5,087.68 28 549.82 HHH-25 3/31/2007 37 050.00 1 467.18 35 582.82 HHH-26 3/31/2007 22 982.14 3,476.05 19 506.09 HHH-27 3/31/2007 288 335.29 52 297.94 236 037.35 HHH-28 3/31/2007 552 993.76 83 640.30 469 353.46 HHH-29 3/31/2007 132 332.14 20 015.24 112 316.90 HHH-30 213 557.15 32 300.53 181 256.62 TOTAL P13,820,014.98 P1 991 215.56 P11,828,799.42 Less: Net Returns Date Gross Returns Returns Net Returns Credit 2/14/2007 P113,335.71 Discounts P99 168.75 Memo 2/14/2007 4 117.42 3 602.74 Exhibit 2/14/2007 1,177.47 P14 166.96 1 030.29 2/14/2007 3,393.04 514.68 2 968.91 No. 2/14/2007 2 920.53 147.18 2 555.46 JJJ-1 2/14/2007 491.29 424.13 429.88 JJJ-2 2/14/2007 1104.42 365.07 966.37 JJJ-3 2/14/2007 3 059.87 61.41 2 677.39 JJJ-4 2/14/2007 1400.09 138.05 1 225.08 JJJ-5 2/14/2007 4 101.61 382.48 3 588.91 JJJ-6 2/20/2007 4 509.10 175.01 3 945.46 JJJ-7 P139 610.55 512.70 JJJ-8 TOTAL 563.64 P122,159.24 JJJ-9 JJJ-10 P17 451.31 JJJ-11 GRAND TOTAL 11,706,640.18 Prescribed Sales to HBC per SLS 2007 (Exhibit "Z") 2007 Gross Sales Sales Returns I Net Sales P11 002 400.73 Discounts 11 707,724.16 January P12 963 064.18 P1,960 663.45 (21 638 191.39) P1 071,933.50 February 13 937 986.99 2,230 262.83 March 14 696 215.25 36 334 406.64 TOTAL P41 597 266.42 P40,525 332.92 Difference P10,634,706.68 Consequently, only the remamtng sales discrepancy of P67,232,626.51 pertaining to the last three quarters of 2007 may be the subject of respondent's assessment, computed as follows: J<-t-

DECISION CTA Case No. 8530 Sales to HBC per Per FAN Less: Prescribed Unprescribed Note 17 of 2007 FS (1st Qtr 2007) {2nd, 3rd and 4th Sales to HBC per SLS p 148,071 540.00 Difference 70 204 206.81 p 11 706,640.18 Qtrs. 2007) 1,071 933.50 P77,867,333.19 p 136 364 899.82 P10,634,706.68 69 132 273.31 P67,232,626.51 Petitioner claims that the difference does not amount to undeclared sales because sales to HBC as reflected in Note 17 of the 2007 Notes to AFS, represent gross sales; whereas, the sales reported in the SLS represent net sales, i.e., gross sales less discounts and returns. 127 In support thereof, petitioner presented the Schedule of Net Sales to HBC128 for the year 2007 and the related Sales Invoices to HBC129, Credit Memos130 for returns by HBC, and GL/SAP Reference- Sales Journal131� Upon examination of the Sales Invoices and Credit Memos as recorded in the GL/SAP References, the Court found that net sales (gross sales less sales discounts less net returns) to HBC for the last three quarters of 2007 as reported in Note 17 of the 2007 Notes to AFS amounted to P58,374,410.39 which when compared with that reflected per petitioner's net sales per petitioner's SLS in the amount of P69,132,273.31 would show an unaccounted difference of P10,757,862.92, computed as follows: Gross Sales132 p 149 888 915.25 p 13 820 014.98 p 136 068 900.27 Less: Sales Discounts133 (21 863 801.09) (1 991 215.56) (19 872 585.53) Net Returns134 (57 944 063.59) (122 159.24) (57 821 904.35) Net Sales per Note 17 of the p 70 081 050.57 p 11 706 640.18 p 58 374 410.39 2007 Notes to AFS 69 132 273.31 Net Sales per SLS P(10,757,862.92) Unaccounted Difference For failure to account for the HBC sales discrepancy of P10,757,862.92, petitioner shall be assessed of the corresponding deficiency VAT. Jr- 127 Exhibit "QQ", Q&A no. 47. 128 Exhibit "Z". 129 Exhibits "HHH-1" to "HHH-212". 130 Exhibits "JJJ-1" to "JJJ-625". 131 Exhibits "LLLL-1" to "LLL-439" and "MMM-1" to "MMM-661". 132 See Annex A. 133 See Annex A. 134 See Annex B.

DECISION CfA Case No. 8530 B. Cash Sale from Crown Asia Properties, Inc. - PlOS,OOO,OOO.OO This assessment was based on the same finding under the deficiency income tax assessment (item II.C) that the cash consideration received by petitioner under the MOA-JV it entered with Crown Asia Properties, Inc. represents proceeds from petitioner's sale of land to the former. Petitioner claims that this assessment is baseless considering that the sale of properties was not consummated. According to petitioner, the initial payment of Thirty Million Pesos (P30,000,000.00) in 2007 is not tantamount to a consummated sale to warrant the imposition of VAT on the transaction, much less on the P105 Million. Petitioner points out that Section 105, in relation to Sections 106 and 108 of the NIRC of 1997, as amended, provides that VAT is imposed on any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, or engages in similar transactions, and/or any person who imports goods and that the phrase "in the course of trade or business" requires the "regular conduct or pursuit of a commercial or an economic activity". 135 Petitioner further asserts that it is engaged in the manufacture and sale of personal care products. Petitioner explains that VAT becomes due when the following conditions occur: (a) there is a sale, barter, exchange, transfer or similar transaction, either for nominal or valuable consideration, intended to transfer ownership, and; (b) the sale is consummated, not merely perfected. Allegedly, the transaction between petitioner and the Developer does not constitute a sale. Therefore, pursuant to BIR Ruling (DA-221-08), the MOA executed between the Landowner and the Developer is neither a contract of sale over real property nor an instrument which conveys title to real property. Petitioner maintains that the said transaction lacks the elements of a sale as provided for in Article 1458 of the New Civil Code, thus: )'L- 135 Commissioner ofInternal Revenue vs. Court ofAppeals, eta!., G.R. No. 125355, March 30, 2000.

DECISION CTA Case No. 8530 "ART. 1458. 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 to pay therefor a price certain in money or its equivalent. xxx" Petitioner states that, as thus defined, the essential elements of sale are the following: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter; and (c) price certain in money or its equivalent. Petitioner argues that not all the essential elements of a contract of sale is present since it has no intention to transfer outright the ownership of the subject property to Crown Asia to warrant the imposition of VAT on the P105,000,000.00 cash consideration received from Crown Asia. The Court finds for respondent. Section 105 of the NIRC of 1997, as amended, provides: "SEC. 105. Persons Liable. -Any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value- added tax (VAT) imposed in Sections 106 to 108 of this Code. The value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. This rule shall likewise apply to existing contracts of sale or lease of goods, properties or services at the time of the effectivity of Republic Act No. 7716. The phrase 'in the course of trade or business means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. f

DECISION CTA Case No. 8530 The rule of regularity, to the contrary, notwithstanding, services as defined in this Code rendered in the Philippines by non-resident foreign persons shall be considered as being rendered in the course of trade or business." (Emphasis supplied) From the foregoing provisions, it is clear that the phrase "regular course of trade or business", for all intents and purposes, is not confined to the primary business that a taxpayer is engaged in - in this instant case, manufacturing and sale of personal care products - but is an all-encompassing phrase pertaining to the pursuit of business opportunities that produce profits for petitioner (economic activity), including those which are merely incidental to petitioner's trade and industry. In the case of CS Garments, Inc. vs. Commissioner of Internal Revenue36, the CTA En Bane defined the phrase "in the course of trade or business", as follows: "xxx A transaction will be characterized as having been entered into by a person in the course of trade or business if it is: (1) regularly conducted; and (2) undertaken in pursuit of a commercial or economic activity. Likewise, transactions that are made incidental to the pursuit of a commercial or economic activity are considered as entered into in the course of trade or business. 'Incidental' means something else as primary; something necessary, appertaining to, or depending upon another, which is termed the principal. Hence, an isolated transaction is not necessarily disqualified from being made incidentally in the course of trade or business. XXX XXX XXX Once an activity has been identified as a business, any supply [sale] made while carrying it on is likely to be made in the course or furtherance of business. No distinction is made between capital and revenue items. Thus, a supply [sale] in the course or furtherance of business includes: (1) the disposition of the assets and /r- 136 CTA EB No. 287, January 14, 2008.

DECISION CTA Case No. 8530 liabilities of a business, (2) the disposition of a business as going concern; and (3) anything done in connection with the termination or intended termination of a business." Moreover, the Supreme Court, in the case of Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue,137 finally settled the issue as to whether an isolated transaction, such as the sale of a motor vehicle by a person not regularly engaged in this business, partakes the nature of an incidental transaction and as such, shall be subject to VAT, to wit: "Mindanao II's sale of the Nissan Patrol is said to be an isolated transaction. However, it does not follow that an isolated transaction cannot be an incidental transaction for purposes of VAT liability. Indeed, a reading of Section 105 of the 1997 Tax Code would show that a transaction 'in the course of trade or business' includes 'transactions incidental thereto.' Mindanao II's business is to convert the steam supplied to it by PNOC- EDC into electricity and to deliver the electricity to NPC. In the course of its business, Mindanao II bought and eventually sold a Nissan Patrol. Prior to the sale, the Nissan Patrol was part of Mindanao II's property, plant, and equipment. Therefore, the sale of the Nissan Patrol is an incidental transaction made in the course of Mindanao II's business which should be liable for VAT." Clearly, from the foregoing, petitioner's sale of land to Crown Asia Properties, Inc. is an incidental transaction which should be subject to 12�/o VAT. With regard to petitioner's contention that the essential element of a sale which is to transfer the ownership and to deliver a determinate thing is not present in the said transaction, the Court is sti II not persuaded. We wish to point out that a portion of the said MOA-JV states: ~ 137 G.R. Nos. 193301 and 194637, March 11, 2013.

DECISION CfA Case No. 8530 "III. CONTRIBUTION OF THE PARTIES 3.1 The LANDOWNER shall contribute all right, title and interest in the Property. It shall transfer to the DEVELOPER the physical possession of the Property upon payment of the total amount of PESOS: THIRTY MILLION (Php 30,000,000.00) on November 30, 2007 and provide the DEVELOPER unhampered access thereto for purposes of the development of the Project. 32. The DEVELOPER shall be responsible for the planning, conceptualizing, design, construction and financing of the Project in accordance with the terms of this Agreement." (Emphasis Supplied) Even though the stipulation in the MOA did not explicitly state that petitioner will transfer ownership to the Developer, the Court finds that petitioner did not present any other evidence to prove that the transfer was not really a consummation of the sale. In fact, as previously discussed, petitioner itself reported the said transaction in the AFS138 and AITR139 for 2007 as a Sale of Land. Hence, the sudden insistence of petitioner that the transfer of land to the Developer does not actually constitute a sale, without corroborating evidence to support the same, is not convincing. As a result, respondent's basic deficiency VAT assessment on the sale or transfer of land by petitioner to Crown Asia Properties, Inc. pursuant to the MOA-JV dated November 28, 2007 should be upheld. C. Output Tax - P2,906,093. 75 According to respondent, her investigation revealed that per petitioner's books of accounts and financial statements, VAT payable for the fourth quarter is Pll,058,901.00 but what was paid in petitioner's 4th Quarter VAT Return was only for P8,152,807.25140� Hence, the unpaid VAT of P2,906,093.75, as computed below, was f- 138 Exhibit "Y", Statement of Income and Notes to Financial Statements, Notes 11 and 23. 139 Exhibit "RRR-1", line lSC. 140 Exhibit "DD", Line 26E.

DECISION CTA Case No. 8530 assessed pursuant to Section 110(8), in relation to Section 106, of the NIRC of 1997, as amended: 141 VAT payable per AFS p 11 133 496.00 Less: Input tax balance 74 595.00 VAT payable 4th Quarter return Less: VAT paid per 4th Quarter Return p 11 058 901.00 VAT Payable for the 4th Quarter 8 152 807.25 P2,906,093.75 On the other hand, petitioner contends that the alleged output tax deficiency was presumed by the BIR simply by comparing VAT paid versus output tax balance reflected per financial statements. Petitioner claims that said discrepancy is attributable to adjusting or reclassification entries not related to December VAT transaction per books. 142 To support its argument, petitioner presented before the Court its Schedule of Computation of VAT Payable for the 4th Quarter of 2007 as Exhibit "CC". Petitioner also alleges that what respondent failed to take into account is the fact that the balance of VAT payable per petitioner's financial statements for CY 2007 included other items not forming part of output VAT liability for that particular year. 143 Thus, the balance of VAT payable in the FS in the amount of P11,133,496.00 is supposedly overstated. 144 Petitioner notes that the balance of VAT payable reported in its FS for taxable year 2007 was arrived at after considering erroneous adjusting entries made in 2007 affecting the balance of VAT payable account. Petitioner reconciled the discrepancy as follows: 145 VAT Payable per 2007 FS P11,133,496.74 Reconciling items: 1 738 618.68 1. VAT on subsequent sales return (1 496 298.01) 2. VAT on set up charges to supplier {10 513,544.68) 3. Adjusting entries to deduct SNC transactions & balances 4. Reversal of entries previously booked pertaining to SNC balances 7 107 030.35 5. Erroneous entry on bank reconciling item (180 286.90) 6. Erroneous entry on bank reconciling item 360 573.80 141 Exhibit "Q", Annex "A", Details of Discrepancies, item !I.e. 142 Petition for Review, docket, p. 33. 143 Docket, pp. 1735-1737. 144 Exhibit "U4", Q&A no. 8. 145 Exhibit "U4", Q&A no. 9.

DECISION 3 217.27 CTA Case No. 8530 Page 46 of 52 p 8l152_L807.25 7. For reclassification to other account 8 152 807.25 VAT Payable, as corrected VAT paid in 4th Quarter VAT return p 0.00 Difference The Court is not convinced. It is evident from the above reconciliation that the audited and adjusted amount of VAT payable is P11,133,496.74, and therefore, it is the amount that should have been reported for tax purposes after considering all adjustments affecting the year 2007. It should be noted that the audited financial statements were dated May 9, 2008/46 which is later than the date when petitioner filed its amended 4th Quarterly VAT Return on April 30, 2008.147 Therefore, it cannot be said that the amount of P8,152,807.25, which was earlier reported, is the adjusted amount. In the absence of documentary proof that the adjustments made by the external auditor are indeed erroneous, the Court finds that respondent's assessment should be upheld. D. Unsupported input tax- P1,487,742.89 Invoking Section 113 of the NIRC of 1997, as amended, respondent disallowed petitioner's claimed input taxes in the amount of P1,487,742.89, as computed below, for being unsupported: 148 Input taxes per VAT returns , 254,644,327.81 Input taxes per Summary List of Purchases 254,022,908.85 Unsupported input tax credits p 621,418.96 Input taxes claimed under One Time Vendor with TIN No. 000-000-000-001 (per 866,323.93 Summary List of Purchases) Total disallowed input taxes p 1,487,742.89 Petitioner insists that it did not err in recording its input taxes under One Time Vendor. According to petitioner, it recorded and claimed input taxes with duly supported VAT invoices and receipts. 1;k 146 Exhibit "Y". 147 Exhibit "DD". 148 Exhibit "Q", Annex "A", Details of Discrepancies, item Il.d. 149 Petition for Review, docket, p. 33.

DECISION CfA Case No. 8530 To support its claim, petitioner submitted as evidence a detailed Schedule150 of Payees under One Time Vendor. However, it must be noted that petitioner only provided the Court with the Company-prepared schedule, and not with the corroborating VAT sales invoices and official receipts representing its purchases for the year 2007. It bears stressing that pursuant to Section 110(A), in relation to Section 113(A), of the NIRC of 1997, as amended, the input tax must be supported by VAT sales invoice (in the case of purchase of goods or properties) and VAT official receipt (in the case of purchase of services). Without the invoices or official receipts, petitioner's claimed input taxes in the amount of P1,487,742.89 cannot be credited or applied against its output tax for taxable year 2007. While respondent's right to assess petitioner of deficiency VAT for the 1st quarter of 2007 had already prescribed, petitioner was unable to point out which portion of this assessment pertains to the 1st quarter of 2007. Thus, the entire assessment shall be considered as pertaining to the four quarters of 2007. In sum, petitioner is liable for basic deficiency VAT for CY 2007 in the amount of P14,933,021.20, computed as follows: Taxable Sales/Receipts/Revenues per return p 10 757,862.92 p 2654 619 537.49 Add: Adjustments 105 000 000.00 115 757 862.92 Undeclared sales to HBC P257 996 086.81 2770 377 400.41 Cash sale from Crown Asia Properties Inc. 1487 742.89 Taxable Sales/Receipts/Revenues per investigation 332 445 288.05 2906 093.75 Output Tax Add: Output tax for the 4th quarter 335 351 381.80 Total Less: lniJut tax 256 508 343.92 78 843 037.88 Less: Unsupported input tax 63 910 016.68 VAT Payable Less: Payments 14 933,021.20 Deficiency VAT due fo- IV. DEFICIENCY PERCENTAGE TAX- P 18,178,585.33 150 Exhibit "EE".

DECISION CTA Case No. 8530 Respondent claims that petitioner filed its Percentage Tax Return and paid the corresponding tax due only on March 26, 2008 relative to its sale of shares of stock through initial public offering on November 15, 2007. According to respondent, the return should have been filed and tax should have been paid on or before December 15, 2007 pursuant to Section 127 of the NIRC of 1997 and RR No. 06-08. Thus, respondent assessed petitioner of 25�/o surcharge, 20�/o interest, and compromise penalty totalling P18,178,585.33, computed as follows: 151 Proceeds from Primary Share Offer P8 479 280.00 P1 601t182 348.00 Net proceeds 1 882 400.16 87 673 652.00 !PO cost 50 000.00 Tax Base 1 695 856 000.00 Tax Rate: Over 25% but not over 33 1/3 % 2% Tax Due Add: 25% Surcharge 33 917 120.00 20% interest p.a. 12.16.07 to 03.26.08 10 411 680.16 Compromise Penalty 44,328,800.16 Total Tax Payable on March 26, 2008 33,917,120.00 Less: Tax paid Balance as of March 26 2008 10 411 680.16 Add: Interest from March 27 2008 to December 20 2011 7 766 905.17 Total Amount Due and Collectible P18,178,585.33 In its letter-requestl52 and attached Application for Abatement or Cancellation of Tax, Penalties and/or Interest (BIR Form No. 2110) filed with respondent on July 5, 2011, petitioner voluntarily offered to pay the amount of P1,895,641.78 representing 20�/o interest charges from December 14, 2007 to March 26, 2008 but requested the abatement/cancellation of surcharges and penalties incident to the late filing and payment of percentage tax on its sale of shares of stock through IPO on November 15, 2007. However, records show that no evidence was presented to prove that petitioner's application for abatement or cancellation of the surcharge and penalties was approved and granted by respondent. Thus, the Court finds that the assessment should be upheld except for the compromise penalty. Section 127(C)(2) of the NIRC of 1997, as amended, provides that the Percentage Tax Return must be filed within thirty (30) days from the date of listing of the shares of stock in the local stock/:- 151 Exhibit "Q", Annex "A", Details of Discrepancies, item IV. 152 Exhibit "LL".

DECISION CfA Case No. 8530 exchange. For its IPO of common shares on November 15, 2007153, petitioner should have filed the return and paid the corresponding tax on or before December 15, 2007. For its belated filing of the Percentage Tax Return and payment of corresponding tax due on March 26, 2008,154 petitioner shall be held liable to pay 25�/o surcharge and 20�/o interest from December 15, 2007 to March 26, 2008 amounting to P10,374,921.78, as computed below, pursuant to Sections 248(A)( 1) and 249(8) of the NIRC of 1997, as amended: Basic Tax Due p 33 917 120.00 25% Surcharge p 8 479 280.00 20% Deficiency Interest (P33 917 120 x 102/365 days x 20%) 1 895 641.78 Total PlO 374,921.78 V. COMPROMISE PENALTIES- P62,000.00 In addition to the compromise penalty of P50,000.00 included in the deficiency percentage tax assessment, the amount of P12,000.00155 was imposed by respondent against petitioner for non- filing of Summary List of Importation and Summary Alpha List of Withholding Taxes (SAWT). However, such imposition cannot be sustained. Pursuant to RMO No. 01-90, as amended by RMO No. 19-07, compromise penalties are only suggested in settlement of criminal liability, and may not be imposed or exacted on the taxpayer in the event that a taxpayer refuses to pay the same. It is well-settled that the Court has no jurisdiction to compel a taxpayer to pay the compromise penalty because by its very nature, it implies a mutual agreement between the parties in respect to the thing or subject matter that is so compromised, and the choice of paying or not paying it distinctly belongs to the taxpayer. 156 In the instant case, there was nothing in the records which would show that petitioner consented to the compromise penalties. In fact, compromise penalty for deficiency percentage tax in the amount of P50,000 is being appealed by petitioner for abatement. As a result, the compromise penalties totalling P62,000.00 must be cancelled. ~ 153 Exhibit "Y", Petitioner's Notes to Financial Statements, Note 16(e). 154 Exhibits "JJ" and "KK". 155 Exhibit "Q". 156 The Philippines International Fair, Inc. vs. The Collector of Internal Revenue, eta!., G.R. Nos. L-12928 and L-12932, March 31, 1962.

DECISION CTA Case No. 8530 In view of the foregoing, the assessments issued by respondent against petitioner for CY 2007 covering deficiency income tax, VAT, EWT and increments on the late filing of return and payment of percentage tax should be upheld in part. WHEREFORE, premises considered, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, petitioner is ORDERED TO PAY respondent the amount of FORTY-FIVE MILLION ONE HUNDRED SEVENTY-FIVE THOUSAND SIX HUNDRED TWELVE PESOS AND 45/100 (P45,175,612.45), inclusive of the twenty-five percent (25�/o) surcharge imposed under Section 248(A)(1) of the NIRC of 1997, as amended, and the twenty percent (20�/o) deficiency interest imposed under Section 249(8) of the same Code, computed as follows: Basic Tax 25% Surcharge 20% Interest Total 12 165 482.90 (In Philippine Pesos) 15 206 853.63 14 933 021.20 18 666 276.50 Income Tax 3 041 370.73 VAT 742 048.43 927 560.54 3J33 255.30 Ewr 27,8401_552.53 34 80Cl.r_690.67 Subtotal 185 512.11 Increments for 61_960,138.14 - late filing of return and - 8 479 280.00 1 895 641.78 10 374 921.78 payment of Percentage Tax 27,840,552.53 8,479,280.00 1,895,641.78 10 374,921.78 Subtotal 15,439,418.14 1,895,641.78 45 175,612.45 Total In addition, petitioner is ORDERED TO PAY: a) Deficiency interest at the rate of 20�/o per annum on the basic deficiency income tax, VAT, and EWT computed from the dates indicated below until full payment thereof pursuant to Section 249(8) of the NIRC of 1997, as amended: Tax Type Basic Tax Deficiency interest computed from Deficiency Income Tax Deficiency VAT p 12,165 482.90 April 15, 2008 Deficiency EWT 14,933,021.20 January 25, 2008 742,048.43 January 15, 2008

DECISION CTA Case No. 8530 b) Delinquency interest at the rate of 20�/o per annum on the total amount of P34,800,690.68, representing basic deficiency income tax, VAT, and EWT, plus 25�/o surcharge, computed from December 22, 2011 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended; c) Delinquency interest at the rate of 20�/o per annum on the increments for late filing of return and payment of percentage tax in the amount of P10,374,921.78, computed from December 22, 2011 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended; and d) Delinquency interest at the rate of 20�/o per annum on the 20�/o deficiency interest which have accrued as afore-stated in (a), computed from December 22, 2011, until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended. SO ORDERED. Q~~L:. ~~~9.. tlUANITO c. CASTANEDK,-JR. Associate Justice WE CONCUR: ~ ~-L~-4---//---- CAESAR A. CASANOVA AMELIA R. COTANGCO-MANALASTAS Associate Justice Associate Justice

DECISION CTA Case No. 8530 ATTESTATION I 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. ~~c~,Si_ J1iANITO c. CASTANEDK, JR. Associate Justice Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and Division Chairperson's Attestation, it is hereby certified 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. Presiding Justice

ANNEXA SPLASH CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 8530 Invoice Exhibit Date Gross Sales Sales Discounts Net Sales No. 3/15/2007 27,975.01 1,107.82 3/15/2007 54,234.64 2,147.70 26,867.19 HHH-1 3/15/2007 3/15/2007 509,456.26 77,055.27 52,086.94 HHH-2 3/16/2007 45,948.22 6,949.67 3/16/2007 6,621.43 1,001.49 432,400.99 HHH-3 3/21/2007 249,822.33 3/23/2007 37,785.64 38,998.55 HHH-4 3/23/2007 2,318,448.20 350,665.38 3/23/2007 358,200.00 5,619.94 HHH-5 3/28/2007 20,250.00 54,177.76 3/30/2007 131,400.00 3,062.81 212,036.69 HHH-6 3/30/2007 38,142.86 19,874.25 3/30/2007 162,306.95 5,769.11 1,967,782.82 HHH-7 3/30/2007 444,948.21 6,427.38 3/30/2007 17,619.96 304,022.24 HHH-8 3/30/2007 3,551,145.58 3/31/2007 98,228.57 540,150.56 17,187.19 HHH-9 3/31/2007 14,857.07 3/31/2007 489,535.74 74,042.29 111,525.75 HHH-10 3/31/2007 215,196.42 32,548.46 3/31/2007 1,022,726.75 32,373.75 HHH-11 3/31/2007 192,540.75 154,687.39 3/31/2007 1,744,963.37 7,624.61 155,879.57 HHH-12 3/31/2007 639,160.71 3/31/2007 144,642.86 263,925.73 427,328.25 HHH-13 3/31/2007 96,673.06 3/31/2007 73,232.14 21,877.23 3,010,995.02 HHH-14 3/31/2007 33,637.50 3/31/2007 37,050.00 2,900.00 83,371.50 HHH-15 4/20/2007 22,982.14 5,087.68 4/20/2007 288,335.29 1,467.18 415,493.45 HHH-16 4/23/2007 552,993.76 3,476.05 4/23/2007 132,332.14 52,297.94 182,647.96 HHH-17 4/23/2007 213,557.15 83,640.30 4/23/2007 4,580,657.53 20,015.24 868,039.36 HHH-18 4/23/2007 4,723.21 32,300.53 4/23/2007 423,396.83 692,824.37 184,916.14 HHH-19 4/13/2007 4/13/2007 3,160.27 714.38 1,481,037.64 HHH-20 4/25/2007 177,829.89 64,038.77 4/25/2007 151,177.50 542,487.65 HHH-21 4/24/2007 10,547,802.25 477.99 4/25/2007 7,113.20 122,765.63 HHH-22 4/25/2007 51,565.22 6,047.09 4/27/2007 312,717.85 1,595,355.18 70,332.14 HHH-23 4/27/2007 2,042.00 4/27/2007 39,375.00 47,298.59 28,549.82 HHH-24 4/30/2007 3,522,367.96 5,955.47 4/30/2007 547,715.97 35,582.82 HHH-25 4/30/2007 142,473.20 33,816.53 4/30/2007 2,418,599.99 365,813.27 19,506.09 HHH-26 4/30/2007 5,620.01 4/30/2007 37,157.14 93,162.97 236,037.35 HHH-27 4/30/2007 615,953.56 739,890.32 4/30/2007 4,891,837.56 7,827.57 469,353.46 HHH-28 4/30/2007 197,666.36 1,752.21 4/30/2007 112,316.90 HHH-29 4/30/2007 11,584.82 310.58 4/30/2007 7,842.86 2,555.39 181,256.62 HHH-30 4/30/2007 244,130.47 5/7/2007 64,529.99 378,464.94 3,887,833.16 HHH-31 5/9/2007 1,323,813.20 103,280.80 2,414,960.04 6,671.27 4,008.83 HHH-32 4,417.46 682,848.20 170,546.80 359,358.06 HHH-33 168,466.07 1,992.10 111,551.78 2,129.38 2,682.28 HHH-34 1,127,582.15 3,091.98 227,581.66 170,716.69 HHH-35 50,305.34 43,924.62 14,078.57 41,493.82 145,130.41 HHH-36 20,442.85 18,427.93 1,384,906.74 8,952,447.07 HHH-37 290,410.71 274,339.29 49,523.22 HHH-38 121,837.50 265,419.26 HHH-39 33,419.53 HHH-40 2,974,651.99 HHH-41 108,656.67 HHH-42 2,052, 786.72 HHH-43 31,537.13 HHH-44 522,790.59 HHH-45 4,151,947.24 HHH-46 189,838.79 HHH-47 9,832.61 HHH-48 7,532.28 HHH-49 61,974.60 HHH-50 1,079,682.73 HHH-51 2,036,495.10 HHH-52 579,567.40 HHH-53 161,794.80 HHH-54 107,134.32 HHH-55 957,035.35 HHH-56 48,313.24 HHH-57 11,949.19 HHH-58 17,350.87 HHH-59 1,157,325.08 HHH-60 246,486.09 HHH-61 232,845.47 HHH-62 103,409.57 HHH-63 page 1 of4

ANNEXA SPLASH CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 8530 Invoice Exhibit Date Gross Sales Sales Discounts Net Sales No. 5/10/2007 613,971.43 92,863.18 5/17/2007 291,407.14 44,075.32 521,108.25 HHH-64 5/28/2007 144,642.86 21,877.23 5/28/2007 144,642.86 21,877.23 247,331.82 HHH-65 5/29/2007 882,344.76 5/29/2007 5,833,684.29 10,550.28 122,765.63 HHH-66 5/29/2007 266,420.92 1,415.79 5/29/2007 9,360.54 40,899.38 122,765.63 HHH-67 5/29/2007 270,409.13 4,545.44 5/29/2007 114,783.93 87,044.55 4,951,339.53 HHH-68 5/31/2007 575,501.14 3,688.74 5/31/2007 93,150.00 203,683.55 255,870.64 HHH-69 5/31/2007 382,540.41 5/31/2007 1,346,667.87 267,678.08 7,944.75 HHH-70 5/31/2007 2,529,192.85 3,733.71 5/31/2007 1,769,772.31 14,746.88 229,509.75 HHH-71 5/31/2007 96,186.88 5/31/2007 24,685.71 16,444.38 110,238.49 HHH-72 6/4/2007 97,500.00 127,561.30 6/4/2007 635,946.42 21,877.24 488,456.59 HHH-73 6/19/2007 108,723.21 52,869.97 6/20/2007 843,380.37 5,703.90 89,461.26 HHH-74 6/25/2007 144,642.86 148,976.65 6/28/2007 349,553.57 9,375.61 1,142,984.32 HHH-75 6/28/2007 37,711.61 161,453.96 6/28/2007 984,969.63 19,835.36 2,146,652.44 HHH-76 6/28/2007 61,987.50 10,578.85 6/29/2007 1,067,464.27 794,054.06 1,502,094.23 HHH-77 6/29/2007 131,142.86 7,645.45 6/29/2007 69,942.85 5,778.77 20,952.00 HHH-78 6/30/2007 5,249,944.20 59,797.76 6/30/2007 50,548.44 49,831.48 82,753.12 HHH-79 6/30/2007 145,928.55 379,789.69 6/30/2007 395,357.14 1,786.64 539,759.54 HHH-80 10/15/2007 329,464.29 10/15/2007 2,511,005.39 1,896,283.40 92,278.83 HHH-81 10/15/2007 11,812.50 201,150.66 10/15/2007 12,537,407.89 2,829.45 715,819.07 HHH-82 10/15/2007 1,329,921.41 7,859.61 10/15/2007 18,707.14 41,605.65 122,765.62 HHH-83 10/15/2007 51,964.29 150,378.16 10/17/2007 275,078.58 2,372.46 296,683.60 HHH-84 10/17/2007 994,235.29 89,158.79 10/17/2007 15,685.71 18,256.70 32,007.71 HHH-85 10/17/2007 2,251,482.85 37,385.15 10/17/2007 120,705.35 3,257.28 835,992.98 HHH-86 10/17/2007 247,174.31 2,469.70 10/17/2007 21,535.71 4,861.62 52,611.89 HHH-87 10/17/2007 16,328.57 275,617.32 10/17/2007 32,142.86 342,899.32 906,010.31 HHH-88 10/17/2007 1,836,954.64 301,150.96 10/17/2007 2,267,102.86 436,102.35 111,307.50 HHH-89 10/17/2007 1,991,080.71 10/17/2007 2,883,321.37 1,064,901.72 59,364.00 HHH-90 10/17/2007 7,040,671.56 342,761.09 10/19/2007 2,266,188.85 4,455,890.14 HHH-91 10/19/2007 10,796,658.74 1,632,994.83 10/19/2007 1,293.19 42,902.99 HHH-92 10/20/2007 8,550.00 10/22/2007 326,566.07 49,393.13 140,149.78 HHH-93 10/22/2007 180.29 10/22/2007 1,191.96 335,559.38 HHH-94 10/22/2007 50,850.01 2,013.66 383,769.64 58,045.16 279,632.81 HHH-95 1,318,919.14 199,486.52 729,798.22 110,381.99 2,131,215.70 HHH-96 218,162.50 32,997.09 59,207.14 10,025.86 HHH-97 8,955.08 10,641,124.49 HHH-98 1,128,770.75 HHH-99 15,877.69 HHH-100 44,104.68 HHH-101 233,472.93 HHH-102 843,857.13 HHH-103 13,313.25 HHH-104 2,162,324.06 HHH-105 102,448.65 HHH-106 209,789.16 HHH-107 18,278.43 HHH-108 13,858.87 HHH-109 27,281.24 HHH-110 1,561,337.32 HHH-111 1,924,203.54 HHH-112 1,689,929.75 HHH-113 2,447,219.02 HHH-114 5,975,769.84 HHH-115 1,923,427.76 HHH-116 9,163,663.91 HHH-117 7,256.81 HHH-118 277,172.94 HHH-119 1,011.67 HHH-120 48,836.35 HHH-121 325,724.48 HHH-122 1,119,432.62 HHH-123 619,416.23 HHH-124 185,165.41 HHH-125 50,252.06 HHH-126 page 2 of4

ANNEXA SPLASH CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 8530 Invoice Exhibit Date Gross Sales Sales Discounts Net Sales No. 10/22/2007 22,800.00 3,448.50 10/23/2007 19,351.50 HHH-127 10/23/2007 302,228.57 45,712.06 10/23/2007 11,764.29 465.87 256,516.51 HHH-128 10/23/2007 10/25/2007 245,199.07 37,086.37 11,298.42 HHH-129 10/26/2007 97,939.28 14,813.32 10/26/2007 77,779.26 11,764.13 208,112.70 HHH-130 10/26/2007 7,201.78 10/26/2007 19,778.57 1,089.27 83,125.96 HHH-131 10/26/2007 50,255.37 2,991.51 10/30/2007 80,807.16 1,990.11 66,015.13 HHH-132 10/31/2007 433,355.35 12,222.09 10/31/2007 118,597.50 65,545.05 6,112.51 HHH-133 10/31/2007 479,142.86 17,937.88 10/31/2007 72,470.35 16,787.06 HHH-134 10/31/2007 1,067,785.71 161,502.59 10/31/2007 25,660.72 1,016.16 48,265.26 HHH-135 10/31/2007 247,288.38 37,402.42 10/31/2007 68,464.28 10,355.22 68,585.07 HHH-136 11/5/2007 63,908.59 11/5/2007 1,613,852.03 41,689.51 367,810.30 HHH-137 11/7/2007 1,052,763.51 24,667.32 11/8/2007 74,502.55 100,659.62 HHH-138 11/8/2007 163,089.40 11,218.97 11/8/2007 492,578.57 5,351.01 406,672.51 HHH-139 11/8/2007 92,997.84 11/9/2007 74,175.00 7,681.34 906,283.12 HHH-140 11/9/2007 35,378.57 11/9/2007 614,860.73 949.56 24,644.56 HHH-141 11/12/2007 50,785.71 9,684.32 11/12/2007 23,978.58 2,032.32 209,885.96 HHH-142 11/12/2007 64,028.57 64,819.85 11/13/2007 51,321.42 12,517.01 58,109.06 HHH-143 11/13/2007 428,560.72 9,081.48 11/14/2007 82,757.13 14,464.24 1,549,943.44 HHH-144 11/14/2007 60,042.85 5,688.08 11/16/2007 95,631.42 1,011,074.00 HHH-145 11/16/2007 37,607.14 683.10 11/19/2007 17,250.00 36,947.70 138,422.08 HHH-146 11/19/2007 244,282.14 11/19/2007 14,250.00 564.30 418,076.02 HHH-147 11/19/2007 165,699.10 25,062.01 11/19/2007 193,328.58 29,240.94 62,956.03 HHH-148 11/20/2007 56,410.71 8,532.12 11/22/2007 35,967.87 30,027.56 HHH-149 11/23/2007 29,785.71 1,424.34 11/26/2007 54,139.30 1,179.52 521,862.89 HHH-150 11/26/2007 532,369.81 8,188.57 11/26/2007 52,842.87 80,520.98 43,104.37 HHH-151 11/28/2007 7,992.49 11/28/2007 5,239.29 23,029.02 HHH-152 11/28/2007 30,085.71 792.45 11/29/2007 40,901.79 4,550.46 54,344.25 HHH-153 11/30/2007 621,088.39 6,186.39 11/30/2007 58,371.42 93,939.67 49,289.10 HHH-154 11/30/2007 73,307.15 8,828.67 11/30/2007 29,292.85 2,902.97 363,740.87 HHH-155 11/30/2007 366,569.55 1,160.00 12/4/2007 24,685.71 55,443.68 70,240.12 HHH-156 12/4/2007 187,074.01 3,733.71 12/4/2007 41,550.01 28,294.97 50,961.37 HHH-157 12/5/2007 14,057.15 1,645.38 1,157,302.05 2,126.17 81,167.18 HHH-158 304,092.85 192,805.30 44,485.72 45,994.04 31,919.06 HHH-159 41,250.00 6,728.45 558,434.59 1,633.50 16,566.90 HHH-160 52,971.43 84,463.23 76,500.01 8,011.93 207,334.44 HHH-161 11,570.63 13,685.70 HHH-162 140,637.09 HHH-163 164,087.64 HHH-164 47,878.59 HHH-165 34,543.53 HHH-166 28,606.19 HHH-167 45,950.73 HHH-168 451,848.83 HHH-169 44,850.38 HHH-170 4,446.84 HHH-171 25,535.25 HHH-172 34,715.40 HHH-173 527,148.72 HHH-174 49,542.75 HHH-175 70,404.18 HHH-176 28,132.85 HHH-177 311,125.87 HHH-178 20,952.00 HHH-179 158,779.04 HHH-180 39,904.63 HHH-181 11,930.98 HHH-182 964,496.75 HHH-183 258,098.81 HHH-184 37,757.27 HHH-185 39,616.50 HHH-186 473,971.36 HHH-187 44,959.50 HHH-188 64,929.38 HHH-189 page 3 of4

ANNEXA SPLASH CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE CTA CASE NO. 8530 Invoice Exhibit Date Gross Sales Sales Discounts Net Sales No. 12/5/2007 48,471.43 7,331.31 12/6/2007 32,240.58 4,876.39 41,140.12 HHH-190 12/6/2007 12/6/2007 597,794.77 90,416.45 27,364.19 HHH-191 12/11/2007 9,870.54 1,492.92 12/11/2007 507,378.32 HHH-192 12/12/2007 174,857.14 26,447.14 12/12/2007 266,571.43 40,318.94 8,377.62 HHH-193 12/12/2007 12/13/2007 30,355.71 4,591.30 148,410.00 HHH-194 12/15/2007 37,607.14 5,688.08 12/17/2007 218,571.43 33,058.93 226,252.49 HHH-195 12/26/2007 246,216.42 37,240.26 12/26/2007 614,823.23 92,992.03 25,764.41 HHH-196 12/26/2007 87,878.56 3,480.00 12/27/2007 792,014.95 119,792.40 31,919.06 HHH-197 12/28/2007 148,575.01 22,471.98 12/29/2007 106,933.92 4,234.59 185,512.50 HHH-198 12/29/2007 57,861.65 8,751.57 12/29/2007 116,866.08 17,676.00 208,976.16 HHH-199 12/29/2007 12/29/2007 6,428.57 972.32 521,831.20 HHH-200 12/29/2007 56,410.72 8,532.13 289,371.42 43,767.43 84,398.56 HHH-201 TOTAL 187,119.68 7,409.99 4,835,653.33 731,392.81 672,222.55 HHH-202 150,717.85 22,796.10 149,888,915.25 21,863,801.09 126,103.03 HHH-203 102,699.33 HHH-204 49,110.08 HHH-205 99,190.08 HHH-206 5,456.25 HHH-207 47,878.59 HHH-208 245,603.99 HHH-209 179,709.69 HHH-210 4,104,260.52 HHH-211 127,921.75 HHH-212 128,025,114.16 page 4 of4

SPLASH CORPORATION vs. ANNEXB COMMISSIONER OF INTERNAL REVENUE Traced to CTA CASE NO. 8530 SAP G/L (Exhibit) t.;realt MMM-45 MMM-45 Memo (CM) MMM-46 MMM-46 No. MMM-46 MMM-46 Exhibit No. 5000- Amount Net of VAT Date MMM-46 99,168.75 2/14/2007 MMM-46 JJJ-1 19686 111,069.00 3,602.74 2/14/2007 MMM-46 4,035.07 1,030.29 2/14/2007 MMM-46 JJJ-2 19687 1,153.92 2,968.91 2/14/2007 MMM-51 3,325.18 2,555.46 2/14/2007 JJJ-3 19690 2,862.12 429.88 2/14/2007 MMM-108 481.46 966.37 2/14/2007 MMM-109 JJJ-4 19691 1,082.33 2,677.38 2/14/2007 MMM-307 2,998.67 1,225.08 2/14/2007 MMM-307 JJJ-5 19692 1,372.09 3,588.91 2/14/2007 MMM-307 4,019.58 3,945.46 2/20/2007 MMM-307 JJJ-6 19693 4,418.92 MMM-308 122,159.23 4/20/2007 MMM-308 JJJ-7 19694 136,818.34 2,067,453.63 4/20/2007 MMM-308 2,315,548.07 29,515,272.27 6/21/2007 MMM-308 JJJ-8 19695 33,057,104.94 6/21/2007 MMM-308 24,870.97 6/21/2007 MMM-308 JJJ-9 19696 27,855.49 85,372.82 6/21/2007 MMM-308 95,617.56 6/21/2007 MMM-308 JJJ-10 19697 145.32 6/21/2007 MMM-308 162.76 953.18 6/21/2007 MMM-308 JJJ-11 19844 1,067.56 20,507.17 6/21/2007 MMM-308 22,968.03 6,259.30 6/21/2007 MMM-308 1st Quarter Total - 7,010.42 17,837.88 6/21/2007 MMM-308 19,978.42 4,316.35 6/21/2007 MMM-308 JJJ-12 21428 4,834.31 4,770.56 6/21/2007 MMM-308 5,343.03 8,403.10 6/21/2007 MMM-308 JJJ-13 21467 9,411.47 1,895.46 6/21/2007 MMM-308 2,122.91 4,378.43 6/21/2007 MMM-308 JJJ-14 26994 4,903.84 1,420.66 6/21/2007 MMM-308 1,591.14 2,393.71 6/21/2007 MMM-308 JJJ-15 26995 2,680.96 1,658.55 6/21/2007 MMM-308 1,857.58 811.93 6/21/2007 MMM-308 JJJ-16 26996 4,236.26 6/21/2007 MMM-308 909.36 1,428.78 6/21/2007 MMM-308 JJJ-17 26997 4,744.61 3,358.20 6/21/2007 MMM-308 1,600.23 2,894.07 6/21/2007 MMM-308 JJJ-18 26998 3,761.18 18,359.38 6/21/2007 MMM-308 3,241.36 10,531.75 6/21/2007 MMM-308 JJJ-19 26999 20,562.51 987.45 6/21/2007 MMM-308 11,795.56 8,136.08 6/21/2007 MMM-308 JJJ-20 27000 1,105.94 983.31 6/21/2007 MMM-308 9,112.41 1,723.56 6/21/2007 MMM-308 JJJ-21 27001 1,101.31 608.06 6/21/2007 MMM-308 1,930.39 16,672.13 6/21/2007 MMM-308 JJJ-22 27002 1,126.13 6/21/2007 MMM-308 681.03 54,214.80 6/21/2007 MMM-308 JJJ-23 27003 18,672.78 2,343.80 6/21/2007 MMM-309 2,983.99 6/21/2007 MMM-309 JJJ-24 27004 1,261.27 3,024.21 6/22/2007 MMM-309 60,720.58 7,116.62 6/22/2007 JJJ-25 27005 16,454.04 6/22/2007 2,625.06 404.77 6/22/2007 JJJ-26 27006 3,342.07 11,441.95 6/22/2007 3,387.11 22,889.29 6/22/2007 JJJ-27 27007 7,970.61 5,263.41 6/22/2007 18,428.53 1,014.15 6/22/2007 JJJ-28 27008 6,724.63 453.34 4,908.38 JJJ-29 27009 12,814.98 1,913.22 25,636.00 JJJ-30 27010 5,895.02 JJJ-31 27011 1,135.85 7,531.58 JJJ-32 27012 5,497.39 2,142.81 JJJ-33 27013 JJJ-34 27014 JJJ-35 27015 JJJ-36 27016 JJJ-37 27017 JJJ-38 27018 JJJ-39 27019 JJJ-40 27020 JJJ-41 27021 JJJ-42 27022 JJJ-43 27023 JJJ-44 27024 JJJ-45 27025 JJJ-46 27026 JJJ-47 27027 JJJ-48 27028 JJJ-49 27029 JJJ-50 27030 JJJ-51 27033 JJJ-52 27034 JJJ-53 27035 JJJ-54 27036 JJJ-55 27037 JJJ-56 27038 11 page 1 of 11

ANNEXB Exhibit No. c::realt Amount Net of VAT Date Traced to JJJ-57 Memo{CM) 6/22/2007 SAP G/L JJJ-58 3,065.54 2,737.09 6/22/2007 {Exhibit) JJJ-59 No. 2,073.63 1,851.46 6/22/2007 MMM-309 JJJ-60 5000- 4,504.73 4,022.08 6/22/2007 MMM-309 JJJ-61 27039 3,302.03 2,948.24 6/22/2007 MMM-309 JJJ-62 27040 4,723.52 4,217.43 6/22/2007 MMM-309 JJJ-63 27041 8,334.94 7,441.91 6/22/2007 MMM-309 JJJ-64 27042 2,933.84 2,619.50 6/22/2007 MMM-309 JJJ-65 27043 13,906.84 12,416.82 6/22/2007 MMM-309 JJJ-66 27044 2,465.71 2,201.53 6/22/2007 MMM-309 27045 7,283.78 6,503.38 6/22/2007 MMM-309 JJJ-67 27047 19,067.54 17,024.59 6/22/2007 MMM-309 JJJ-68 27048 4,674.44 4,173.61 6/22/2007 MMM-309 27049 2,758.22 2,462.70 6/22/2007 MMM-309 JJJ-69 27050 6/22/2007 MMM-309 JJJ-70 27051 410.52 366.54 6/22/2007 MMM-309 JJJ-71 27052 3,203.31 2,860.10 6/22/2007 MMM-309 JJJ-72 27053 6,369.81 5,687.33 6/22/2007 MMM-309 JJJ-73 27054 32,991.59 29,456.78 6/22/2007 MMM-309 JJJ-74 27056 1,496.72 1,336.36 6/22/2007 MMM-309 JJJ-75 27057 9,388.26 8,382.38 6/22/2007 MMM-309 JJJ-76 27058 6,472.20 5,778.75 6/22/2007 MMM-309 JJJ-77 27059 21,717.80 19,390.89 6/22/2007 MMM-309 JJJ-78 27060 6/22/2007 MMM-309 JJJ-79 27061 279.55 249.60 6/22/2007 MMM-309 JJJ-80 27062 3,144.32 2,807.43 6/23/2007 MMM-309 27063 3,687.31 3,292.24 6/23/2007 MMM-310 JJJ-81 27064 15,647.88 13,971.32 6/23/2007 MMM-312 JJJ-82 27065 2,287.83 2,042.71 6/23/2007 MMM-312 JJJ-83 27137 2,691.72 2,403.32 6/23/2007 MMM-312 JJJ-84 27138 6/23/2007 MMM-312 JJJ-85 27139 574.57 513.01 6/23/2007 MMM-312 JJJ-86 27140 574.57 513.01 8/18/2007 MMM-312 JJJ-87 27141 10,871.89 9,707.04 8/20/2007 MMM-312 JJJ-88 27142 2,092.09 1,867.94 8/20/2007 MMM-396 JJJ-89 27143 718.11 641.17 8/24/2007 MMM-396 JJJ-90 29467 3,183,749.52 2,842,633.50 8/26/2007 MMM-396 JJJ-91 29472 83,873.46 74,887.02 8/26/2007 MMM-407 JJJ-92 29473 734,270.15 655,598.35 8/30/2007 MMM-410 JJJ-93 29792 391,801.66 349,822.91 8/30/2007 MMM-411 JJJ-94 29866 4,115,115.56 3,674,210.32 8/30/2007 MMM-420 JJJ-95 29878 7,077,644.74 6,319,325.66 8/30/2007 MMM-420 JJJ-96 30148 234,471.49 209,349.54 8/30/2007 MMM-420 JJJ-97 30150 243,974.89 217,834.72 8/30/2007 MMM-420 JJJ-98 30152 12,271.86 10,957.02 8/30/2007 MMM-420 JJJ-99 30153 131,702.48 117,591.50 8/30/2007 MMM-420 JJJ-100 30172 5,342.47 4,770.06 8/30/2007 MMM-420 JJJ-101 30173 3,367.46 3,006.66 8/31/2007 MMM-421 JJJ-102 30174 1,432.93 1,279.40 8/31/2007 MMM-421 30176 1,701.17 1,518.90 8/31/2007 MMM-421 JJJ-103 30177 4,250.94 3,795.48 8/31/2007 MMM-421 JJJ-104 30178 3,119.72 2,785.46 8/31/2007 MMM-421 JJJ-105 30179 5,998.41 5,355.72 8/31/2007 MMM-421 JJJ-106 30180 6,025.79 5,380.17 8/31/2007 MMM-421 JJJ-107 30182 9,030.45 8,062.90 8/31/2007 MMM-421 JJJ-108 30183 10,049.28 8,972.57 8/31/2007 MMM-421 JJJ-109 30184 9,852.01 8,796.44 8/31/2007 MMM-421 JJJ-110 30186 1,168.32 1,043.14 8/31/2007 MMM-421 30187 8,651.74 7,724.77 8/31/2007 MMM-421 JJJ-111 30188 1,536.72 1,372.07 8/31/2007 MMM-421 JJJ-112 30189 6,714.54 5,995.13 8/31/2007 MMM-421 JJJ-113 30191 6,259.26 5,588.63 8/31/2007 MMM-421 JJJ-114 30194 9,527.85 8,507.01 8/31/2007 MMM-421 JJJ-115 30198 1,249.87 1,115.96 MMM-421 JJJ-116 30199 1,953.79 1,744.46 30201 2,234.80 1,995.36 MMM-421 IJz.- JJJ-117 30202 8,343.55 7,449.60 JJJ-118 page 2 of 11 JJJ-119 11

ANNEXB Exhibit No. credit Amount Net of VAT Date Traced to JJJ-120 Memo (CM) 2,295.35 2,049.42 8/31/2007 SAP G/L JJJ-121 2,526.56 2,255.86 8/31/2007 (Exhibit) JJJ-122 No. 3,118.46 2,784.34 8/31/2007 MMM-422 5000- 4,168.81 3,722.15 8/31/2007 MMM-422 JJJ-123 30231 10,433.96 9,316.04 8/31/2007 MMM-422 JJJ-124 30232 9,637.51 8,604.92 8/31/2007 MMM-422 JJJ-125 30235 7,885.11 7,040.28 8/31/2007 MMM-422 JJJ-126 30236 8/31/2007 MMM-422 30237 36,983.64 33,021.11 8/31/2007 MMM-422 JJJ-127 30238 234.35 209.24 8/31/2007 MMM-422 JJJ-128 30239 8/31/2007 MMM-422 JJJ-129 30240 3,272.48 2,921.86 8/31/2007 MMM-422 JJJ-130 30241 11,258.00 10,051.79 8/31/2007 MMM-422 JJJ-131 30242 8/31/2007 MMM-422 JJJ-132 30243 2,650.79 2,366.78 8/31/2007 MMM-423 JJJ-133 30244 465.31 415.46 8/31/2007 MMM-423 JJJ-134 30245 8/31/2007 MMM-423 JJJ-135 30246 2,004.81 1,790.01 8/31/2007 MMM-423 JJJ-136 30247 15,780.81 14,090.01 8/31/2007 MMM-423 JJJ-137 30248 6,304.77 5,629.26 8/31/2007 MMM-423 JJJ-138 30249 8/31/2007 MMM-423 JJJ-139 30250 3,521.23 3,143.96 8/31/2007 MMM-423 JJJ-140 30251 2,981.62 2,662.16 8/31/2007 MMM-423 JJJ-141 30252 8/31/2007 MMM-423 JJJ-142 30253 854.51 762.96 8/31/2007 MMM-423 JJJ-143 30254 2,415.64 2,156.82 8/31/2007 MMM-423 JJJ-144 30255 1,040.37 8/31/2007 MMM-423 30256 2,733.24 928.90 8/31/2007 MMM-423 JJJ-145 30257 4,976.82 2,440.39 8/31/2007 MMM-423 JJJ-146 30258 1,757.37 4,443.59 8/31/2007 MMM-423 JJJ-147 30259 5,093.69 1,569.08 8/31/2007 MMM-423 JJJ-148 30260 8,285.50 4,547.94 8/31/2007 MMM-423 JJJ-149 30261 15,671.31 7,397.77 8/31/2007 MMM-423 JJJ-150 30262 13,992.24 8/31/2007 MMM-427 JJJ-151 30263 751.40 8/31/2007 MMM-427 JJJ-152 30369 8,441.26 670.89 8/31/2007 MMM-427 JJJ-153 30370 3,842.70 7,536.84 8/31/2007 MMM-427 JJJ-154 30372 3,189.75 3,430.98 8/31/2007 MMM-427 JJJ-155 30373 4,495.58 2,847.99 8/31/2007 MMM-427 JJJ-156 30378 9,327.16 4,013.91 8/31/2007 MMM-427 JJJ-157 30380 8,327.82 8/31/2007 MMM-427 JJJ-158 30383 682.11 8/31/2007 MMM-427 JJJ-159 30386 11,194.73 609.03 8/31/2007 MMM-427 JJJ-160 30389 9,995.29 8/31/2007 MMM-428 JJJ-161 30391 1,452.28 1,296.68 8/31/2007 MMM-428 JJJ-162 30395 292.91 8/31/2007 MMM-428 30398 261.53 8/31/2007 MMM-428 JJJ-163 30402 13,199.24 11,785.04 8/31/2007 MMM-428 JJJ-164 30404 2,373.77 2,119.44 8/31/2007 MMM-428 30405 13,179.23 11,767.17 8/31/2007 MMM-428 JJJ-165 30406 3,134.94 8/31/2007 MMM-428 JJJ-166 30407 5,175.59 2,799.05 8/31/2007 MMM-428 JJJ-167 30408 4,920.36 4,621.06 8/31/2007 MMM-428 JJJ-168 30409 8,258.08 4,393.18 8/31/2007 MMM-428 30411 3,147.39 7,373.29 8/31/2007 MMM-431 JJJ-169 30412 22,892.30 2,810.17 8/31/2007 MMM-431 JJJ-170 20,439.55 8/31/2007 MMM-431 JJJ-171 30491 281.68 8/31/2007 MMM-431 JJJ-172 30493 2,144.91 251.50 8/31/2007 MMM-432 JJJ-173 30495 1,915.10 8/31/2007 MMM-432 JJJ-174 30497 710.37 8/31/2007 MMM-432 30512 1,002.19 634.26 8/31/2007 MMM-432 JJJ-175 30513 894.81 MMM-432 JJJ-176 30514 733.62 655.02 9/1/2007 MMM-432 JJJ-177 30515 32,226.04 28,773.25 MMM-494 JJJ-178 30519 4,815.11 30523 5,392.92 481.05 page 3 of 11 JJJ-179 32174 538.78 8,275.39 JJJ-180 559.73 9,268.44 7,929.07 JJJ-181 626.90 559.73 JJJ-182 1,570.27 8,880.56 17,364.38 626.90 3,903.51 5,566.04 1,758.70 2,546.05 19,448.10 4,371.93 6,233.96 2,851.58 11

ANNEXB Exhibit No. �::redlt Amount Net of VAT Date Traced to JJJ-183 Memo (CM) 9/3/2007 SAP G/L JJJ-184 6,343.49 5,663.83 9/3/2007 (Exhibit) JJJ-185 No. 6,087.97 5,435.69 9/3/2007 MMM-436 JJJ-186 5000- 7,490.67 6,688.10 9/3/2007 MMM-436 JJJ-187 30345 1,181.77 1,055.15 9/3/2007 MMM-436 JJJ-188 4,775.80 4,264.11 9/5/2007 MMM-436 JJJ-189 30346 3,326.05 2,969.69 9/5/2007 MMM-436 JJJ-190 30347 4,398.61 3,927.33 9/5/2007 MMM-436 JJJ-191 30348 3,207.89 2,864.19 9/5/2007 MMM-436 JJJ-192 30349 6,574.80 5,870.36 9/5/2007 MMM-436 JJJ-193 30561 9,451.64 8,438.96 9/5/2007 MMM-436 JJJ-194 30562 7,289.26 6,508.27 9/5/2007 MMM-436 JJJ-195 30567 9/5/2007 MMM-436 JJJ-196 30569 77.30 69.02 9/5/2007 MMM-436 JJJ-197 30571 3,829.86 3,419.52 9/5/2007 MMM-436 JJJ-198 30573 9/5/2007 MMM-436 JJJ-199 30574 268.68 239.89 9/5/2007 MMM-436 JJJ-200 30575 5,983.07 5,342.03 9/5/2007 MMM-436 JJJ-201 30576 2,878.08 2,569.71 9/5/2007 MMM-436 JJJ-202 30578 2,595.46 2,317.38 9/5/2007 MMM-436 JJJ-203 30580 9/6/2007 MMM-436 JJJ-204 30583 537.36 479.79 9/12/2007 MMM-436 JJJ-205 7,780.90 6,947.23 9/12/2007 MMM-437 JJJ-206 30584 20,521.53 18,322.79 9/12/2007 MMM-451 JJJ-207 30585 4,476.84 3,997.18 9/12/2007 MMM-452 JJJ-208 30586 3,072.27 2,743.10 9/12/2007 MMM-452 JJJ-209 30587 3,636,353.11 3,246,743.85 9/12/2007 MMM-452 JJJ-210 30990 568,310.66 507,420.23 9/12/2007 MMM-452 JJJ-211 31023 20,374.92 18,191.89 9/12/2007 MMM-452 JJJ-212 31024 44,517.07 39,747.38 9/12/2007 MMM-453 JJJ-213 31025 9/12/2007 MMM-453 JJJ-214 31027 537.33 479.76 9/12/2007 MMM-453 JJJ-215 31028 2,676.87 2,390.06 9/12/2007 MMM-453 JJJ-216 31031 2,658.89 2,374.01 9/12/2007 MMM-453 JJJ-217 31032 2,445.19 2,183.21 9/12/2007 MMM-453 JJJ-218 31039 4,739.57 4,231.76 9/12/2007 MMM-453 JJJ-219 31041 1,915.84 1,710.57 9/12/2007 MMM-454 JJJ-220 31043 12,996.62 11,604.13 9/12/2007 MMM-454 JJJ-221 31044 9,711.10 8,670.63 9/12/2007 MMM-454 JJJ-222 31054 5,680.25 5,071.65 9/12/2007 MMM-454 JJJ-223 31057 3,628.80 3,240.00 9/12/2007 MMM-454 JJJ-224 31063 1,274.70 1,138.13 9/13/2007 MMM-454 JJJ-225 31064 1,321.48 1,179.89 9/13/2007 MMM-454 JJJ-226 31067 9/13/2007 MMM-455 JJJ-227 31068 25.72 22.96 9/13/2007 MMM-455 JJJ-228 31071 1,857.23 1,658.24 9/13/2007 MMM-455 JJJ-229 31072 2,328.49 2,079.01 9/13/2007 MMM-455 JJJ-230 31083 4,303.40 3,842.32 9/13/2007 MMM-455 JJJ-231 31085 9/13/2007 MMM-455 JJJ-232 31089 55.91 49.92 9/13/2007 MMM-455 JJJ-233 31090 730.19 651.96 9/13/2007 MMM-455 JJJ-234 31091 8,072.87 7,207.92 9/13/2007 MMM-455 JJJ-235 31095 1,489.16 1,329.61 9/13/2007 MMM-455 JJJ-236 31102 4,873.18 4,351.05 9/13/2007 MMM-456 JJJ-237 31104 4,314.61 3,852.33 9/13/2007 MMM-456 JJJ-238 31107 524.15 467.99 9/13/2007 MMM-456 JJJ-239 31109 3,232.53 2,886.19 9/13/2007 MMM-456 JJJ-240 31112 7,316.78 6,532.84 9/13/2007 MMM-456 JJJ-241 31114 5,875.79 5,246.24 9/13/2007 MMM-456 JJJ-242 31117 6,382.82 5,698.95 9/13/2007 MMM-456 JJJ-243 31119 4,547.74 4,060.48 9/13/2007 MMM-456 JJJ-244 31120 4,250.47 3,795.06 9/13/2007 MMM-456 JJJ-245 31121 4,210.62 3,759.48 9/13/2007 MMM-456 31125 7,055.51 6,299.56 MMM-456 31128 9,715.35 8,674.42 MMM-456 31131 3,401.40 3,036.96 311132 6,234.95 5,566.92 page 4 of 11 31135 10,312.68 9,207.75 31136 6,964.19 6,218.03 3,112.96 2,779.43 11

ANNEXB Exhibit No. credit Amount Net of VAT Date Traced to JJJ-246 Memo (CM) 2,808.11 2,507.24 9/13/2007 SAP G/L JJJ-247 892.50 796.88 9/13/2007 (Exhibit) JJJ-248 No. 8,962.06 8,001.84 9/13/2007 MMM-457 JJJ-249 5000- 10,657.34 9,515.48 9/13/2007 MMM-457 JJJ-250 31139 3,917.20 3,497.50 9/13/2007 MMM-457 JJJ-251 31141 2,067.95 1,846.38 9/13/2007 MMM-457 JJJ-252 31143 1,947.32 1,738.68 9/13/2007 MMM-457 JJJ-253 31145 11,034.95 9,852.63 9/13/2007 MMM-456 JJJ-254 31146 4,454.32 3,977.07 9/13/2007 MMM-456 JJJ-255 31147 15,362.75 9/13/2007 MMM-456 JJJ-256 31150 17,206.28 4,335.34 9/13/2007 MMM-456 JJJ-257 31153 4,855.58 1,264.96 9/13/2007 MMM-457 JJJ-258 31161 1,416.75 2,422.09 9/13/2007 MMM-457 JJJ-259 31165 2,712.74 15,299.82 9/13/2007 MMM-457 JJJ-260 31166 17,135.80 399.51 9/13/2007 MMM-457 JJJ-261 31167 9,022.59 9/13/2007 MMM-457 JJJ-262 31168 447.45 863.48 9/13/2007 MMM-457 JJJ-263 31169 10,105.30 219.31 9/13/2007 MMM-457 JJJ-264 31170 5,240.93 9/20/2007 MMM-457 JJJ-265 31171 967.10 2,540.34 9/20/2007 MMM-457 JJJ-266 31172 245.63 72,366.07 9/20/2007 MMM-471 JJJ-267 31173 5,869.84 10,422.39 9/20/2007 MMM-471 JJJ-268 31578 2,845.18 11,852.57 9/20/2007 MMM-472 JJJ-269 31579 81,050.00 25,421.63 9/20/2007 MMM-472 JJJ-270 31580 11,673.08 24,500.38 9/20/2007 MMM-472 JJJ-271 31581 13,274.88 9,169.25 9/20/2007 MMM-472 JJJ-272 31582 28,472.22 4,784.86 9/20/2007 MMM-472 JJJ-273 31583 27,440.42 2,657.05 9/20/2007 MMM-472 JJJ-274 31584 10,269.56 1,417.66 9/20/2007 MMM-472 JJJ-275 31585 5,359.04 1,731.50 9/20/2007 MMM-472 JJJ-276 31586 2,975.90 16,529.64 9/20/2007 MMM-472 JJJ-277 31587 1,587.78 6,048.00 9/20/2007 MMM-472 JJJ-278 31588 1,939.28 3,011.52 9/20/2007 MMM-472 JJJ-279 31589 18,513.20 691.51 9/20/2007 MMM-472 JJJ-280 31590 6,773.76 8,591.86 9/20/2007 MMM-472 JJJ-281 31591 3,372.90 28.13 9/20/2007 MMM-472 JJJ-282 31592 774.49 5,063.87 9/20/2007 MMM-472 JJJ-283 31593 9,622.88 2,193.29 9/20/2007 MMM-472 JJJ-284 31594 9/20/2007 MMM-472 JJJ-285 31595 31.50 118,155.42 9/20/2007 MMM-472 JJJ-286 31596 5,671.53 6,113.92 9/20/2007 MMM-472 JJJ-287 31597 2,456.49 12,135.56 9/20/2007 MMM-472 JJJ-288 31598 132,334.07 38,040.24 9/20/2007 MMM-472 JJJ-289 31599 6,847.59 5,763.35 9/20/2007 MMM-472 JJJ-290 31600 13,591.83 5,850.91 9/20/2007 MMM-472 JJJ-291 31601 42,605.07 8,422.23 9/20/2007 MMM-473 JJJ-292 31602 6,454.95 56,235.54 9/20/2007 MMM-473 JJJ-293 31609 6,553.02 5,006.48 9/20/2007 MMM-473 JJJ-294 31610 9,432.90 1,071.18 9/20/2007 MMM-473 JJJ-295 31612 62,983.80 6,337.80 9/20/2007 MMM-473 JJJ-296 31613 5,607.26 1,099.13 9/20/2007 MMM-473 JJJ-297 31614 1,199.72 21,974.23 9/20/2007 MMM-473 JJJ-298 31615 7,098.34 3,068.04 9/20/2007 MMM-473 JJJ-299 31616 1,231.03 2,462.59 9/20/2007 MMM-473 JJJ-300 31617 24,611.14 4,982.04 9/20/2007 MMM-473 JJJ-301 31619 3,436.20 4,045.67 9/20/2007 MMM-473 JJJ-302 31621 2,758.10 5,335.21 9/24/2007 MMM-473 JJJ-303 31622 5,579.89 7,263.78 9/24/2007 MMM-473 JJJ-304 31623 4,531.15 11,932.22 9/24/2007 MMM-475 JJJ-305 31624 5,975.43 1,441.78 9/24/2007 MMM-475 JJJ-306 31685 8,135.43 5,188.22 9/24/2007 MMM-475 JJJ-307 31686 13,364.09 1,009.77 9/24/2007 MMM-475 JJJ-308 31687 1,614.79 10,961.01 9/24/2007 MMM-475 31688 5,810.81 9,443.77 MMM-475 31689 1,130.94 MMM-476 31690 12,276.33 31691 10,577.02 page 5 of 11 11

ANNEXB Exhibit No. crea1t Amount Net of VAT Date Traced to JJJ-309 Memo (CM) 60,108.83 53,668.60 9/24/2007 SAP G/L JJJ-310 1,305.50 1,165.63 9/24/2007 (Exhibit) JJJ-311 No. 24,192.82 21,600.73 9/24/2007 MMM-476 JJJ-312 5000- 3,513.39 3,136.96 9/24/2007 MMM-476 JJJ-313 4,908.02 4,382.16 9/24/2007 MMM-476 JJJ-314 31692 705.52 629.93 9/24/2007 MMM-476 JJJ-315 31693 729.10 650.98 9/24/2007 MMM-476 JJJ-316 31694 1,183.65 1,056.83 9/24/2007 MMM-476 JJJ-317 31695 1,449.74 1,294.41 9/24/2007 MMM-476 JJJ-318 31696 2,604.82 2,325.73 9/24/2007 MMM-476 JJJ-319 31697 2,303.94 2,057.09 9/24/2007 MMM-476 JJJ-320 31698 3,043.40 2,717.32 9/24/2007 MMM-476 JJJ-321 31699 3,124.31 2,789.56 9/24/2007 MMM-476 JJJ-322 31701 2,663.57 2,378.19 9/24/2007 MMM-476 JJJ-323 31703 7,620.55 6,804.06 9/24/2007 MMM-476 JJJ-324 31704 1,039.23 927.88 9/24/2007 MMM-476 JJJ-325 31705 14,290.51 12,759.38 9/24/2007 MMM-476 JJJ-326 31706 3,937.48 3,515.61 9/24/2007 MMM-476 JJJ-327 31714 20,947.94 18,703.52 9/24/2007 MMM-476 JJJ-328 31715 3,424.36 3,057.46 9/24/2007 MMM-476 JJJ-329 31717 1,840.88 1,643.64 9/24/2007 MMM-476 JJJ-330 31718 2,135.55 1,906.74 9/24/2007 MMM-476 JJJ-331 31719 3,370.28 3,009.18 9/24/2007 MMM-477 JJJ-332 31720 2,372.39 2,118.21 9/24/2007 MMM-477 JJJ-333 31721 447.54 399.59 9/24/2007 MMM-477 JJJ-334 31722 5,943.11 5,306.35 9/24/2007 MMM-477 JJJ-335 31723 22,591.96 20,171.39 9/24/2007 MMM-477 JJJ-336 31724 2,075.12 1,852.79 9/24/2007 MMM-477 JJJ-337 31725 7,839.21 6,999.29 9/24/2007 MMM-477 JJJ-338 31726 3,103.04 2,770.57 9/24/2007 MMM-477 JJJ-339 31727 1,553.10 1,386.70 9/24/2007 MMM-477 JJJ-340 31728 12,218.22 10,909.13 9/24/2007 MMM-477 JJJ-341 31729 7,051.72 6,296.18 9/24/2007 MMM-477 JJJ-342 31730 7,836.99 6,997.31 9/24/2007 MMM-477 JJJ-343 31731 5,657.94 5,051.73 9/24/2007 MMM-477 JJJ-344 31732 4,277.19 3,818.92 9/24/2007 MMM-477 JJJ-345 31733 4,279.66 3,821.13 9/24/2007 MMM-477 JJJ-346 31734 29,207.59 26,078.21 9/24/2007 MMM-477 JJJ-347 31735 9,126.42 8,148.59 9/24/2007 MMM-477 JJJ-348 31736 7,950.38 7,098.55 9/24/2007 MMM-477 JJJ-349 31737 7,328.25 6,543.08 9/24/2007 MMM-477 JJJ-350 31738 7,187.14 6,417.09 9/24/2007 MMM-477 JJJ-351 31740 4,096.84 3,657.89 9/24/2007 MMM-477 JJJ-352 31741 3,830.19 3,419.81 9/24/2007 MMM-477 JJJ-353 31742 18,094.56 16,155.86 9/24/2007 MMM-477 JJJ-354 31745 4,666.82 4,166.80 9/24/2007 MMM-478 JJJ-355 31746 3,477.97 3,105.33 9/24/2007 MMM-478 JJJ-356 31747 1,190.31 1,062.78 9/24/2007 MMM-478 JJJ-357 31750 790.57 705.87 9/24/2007 MMM-478 JJJ-358 31751 3,716.87 3,318.63 9/24/2007 MMM-478 JJJ-359 31753 20,533.02 18,333.05 9/24/2007 MMM-478 JJJ-360 31754 13,587.04 12,131.29 9/24/2007 MMM-478 JJJ-361 31755 5,827.70 5,203.30 9/24/2007 MMM-478 JJJ-362 31756 89.55 79.96 9/24/2007 MMM-478 JJJ-363 31757 44,429.69 39,669.37 9/24/2007 MMM-478 JJJ-364 31758 13,666.03 12,201.81 9/24/2007 MMM-478 JJJ-365 31759 3,356.89 2,997.22 9/24/2007 MMM-478 JJJ-366 31760 5,444.24 4,860.93 9/24/2007 MMM-478 JJJ-367 31761 5,513.87 4,923.10 9/24/2007 MMM-478 JJJ-368 31762 8,258.90 7,374.02 9/24/2007 MMM-478 JJJ-369 31763 2,025.18 1,808.20 9/24/2007 MMM-478 JJJ-370 31764 8,178.74 7,302.45 9/24/2007 MMM-478 JJJ-371 31765 5,186.69 4,630.97 9/24/2007 MMM-478 31766 MMM-478 31767 MMM-478 31768 31769 page 6 of 11 31770 11

ANNEXB Exhibit No. t,;realt Amount Net of VAT Date Traced to JJJ-372 Memo (CM) 9/24/2007 SAP G/L JJJ-373 4,242.55 3,787.99 9/24/2007 (Exhibit) JJJ-374 No. 4,501.63 4,019.31 9/24/2007 MMM-478 JJJ-375 5000- 25,964.81 23,182.87 9/24/2007 MMM-478 JJJ-376 3,352.86 2,993.63 9/24/2007 MMM-478 JJJ-377 31771 15,973.35 14,261.92 9/25/2007 MMM-478 JJJ-378 31772 6,592.40 5,886.07 9/25/2007 MMM-478 JJJ-379 31773 1,358.64 1,213.07 9/25/2007 MMM-479 JJJ-380 31774 9/25/2007 MMM-479 JJJ-381 31775 89.55 79.96 9/25/2007 MMM-479 JJJ-382 31777 723.19 645.71 9/25/2007 MMM-479 JJJ-383 31778 1,348.43 1,203.96 9/25/2007 MMM-479 JJJ-384 31779 3,770.36 3,366.39 9/25/2007 MMM-479 JJJ-385 31780 5,902.40 5,270.00 9/25/2007 MMM-479 JJJ-386 31781 4,089.88 3,651.68 9/25/2007 MMM-479 JJJ-387 31782 6,554.64 5,852.36 9/25/2007 MMM-479 JJJ-388 31783 2,097.04 1,872.36 9/25/2007 MMM-479 JJJ-389 31784 5,375.23 4,799.31 9/25/2007 MMM-479 JJJ-390 31785 5,657.82 5,051.63 9/25/2007 MMM-479 JJJ-391 31786 7,946.53 7,095.12 9/25/2007 MMM-479 JJJ-392 31787 10,040.31 8,964.56 9/25/2007 MMM-479 JJJ-393 31788 538.93 481.19 9/25/2007 MMM-479 JJJ-394 31789 6,204.94 5,540.13 9/25/2007 MMM-479 JJJ-395 31790 3,189.65 2,847.90 9/25/2007 MMM-479 JJJ-396 31791 50,223.89 44,842.76 9/25/2007 MMM-479 JJJ-397 31792 7,461.14 6,661.73 9/25/2007 MMM-479 JJJ-398 31793 3,906.67 3,488.10 9/25/2007 MMM-479 JJJ-399 31794 7,871.03 7,027.71 9/25/2007 MMM-479 JJJ-400 31795 6,750.40 6,027.14 9/25/2007 MMM-479 JJJ-401 31796 4,610.98 4,116.95 9/25/2007 MMM-479 JJJ-402 31797 2,253.01 2,011.62 9/25/2007 MMM-479 JJJ-403 31798 3,197.19 2,854.63 9/25/2007 MMM-479 JJJ-404 31799 30,309.91 27,062.42 9/25/2007 MMM-479 JJJ-405 31800 129.93 116.01 9/25/2007 MMM-480 JJJ-406 31801 11,170.98 9,974.09 9/25/2007 MMM-480 JJJ-407 31802 11,576.01 10,335.72 9/25/2007 MMM-480 JJJ-408 31803 12,163.78 10,860.52 9/25/2007 MMM-480 JJJ-409 31804 11,509.64 10,276.46 9/25/2007 MMM-480 JJJ-410 31805 4,339.12 3,874.21 9/25/2007 MMM-480 JJJ-411 31806 5,655.12 5,049.21 9/25/2007 MMM-480 JJJ-412 31807 1,289.39 1,151.24 9/25/2007 MMM-480 JJJ-413 31808 11,215.55 10,013.88 9/25/2007 MMM-480 JJJ-414 31809 1,775.22 1,585.02 9/25/2007 MMM-480 JJJ-415 31810 2,964.15 2,646.56 9/25/2007 MMM-480 JJJ-416 31811 13,908.49 12,418.29 9/25/2007 MMM-480 JJJ-417 31812 4,385.80 3,915.89 9/25/2007 MMM-480 JJJ-418 31813 43,649.89 38,973.12 9/25/2007 MMM-480 JJJ-419 31814 9,237.35 8,247.63 9/25/2007 MMM-480 JJJ-420 31815 17,038.59 15,213.03 9/25/2007 MMM-480 JJJ-421 31816 1,570.49 1,402.22 9/25/2007 MMM-480 JJJ-422 31817 127.73 114.04 9/25/2007 MMM-480 JJJ-423 31818 10,482.72 9,359.57 9/25/2007 MMM-480 JJJ-424 31819 644.18 575.16 9/25/2007 MMM-480 JJJ-425 31820 15,474.94 13,816.91 9/25/2007 MMM-480 JJJ-426 31821 2,624.50 2,343.30 9/25/2007 MMM-480 JJJ-427 31822 4,932.52 4,404.04 9/25/2007 MMM-480 JJJ-428 31823 2,925.98 2,612.48 9/25/2007 MMM-480 JJJ-429 31825 1,191.87 1,064.17 9/25/2007 MMM-481 JJJ-430 31826 4,313.04 3,850.93 9/25/2007 MMM-481 JJJ-431 31830 2,611.11 2,331.35 9/25/2007 MMM-481 JJJ-432 31831 9,298.12 8,301.89 9/25/2007 MMM-481 JJJ-433 31832 5,489.75 4,901.56 9/25/2007 MMM-481 JJJ-434 31833 57,372.27 51,225.24 9/25/2007 MMM-481 31835 4,951.82 4,421.27 MMM-481 31837 149.11 133.13 MMM-481 31838 31840 page 7 of 11 31841 11

ANNEXB Exhibit No. l.;redit Amount Net of VAT Date Traced to Memo (CM) 9/25/2007 SAP G/L JJJ-435 53,238.94 47,534.77 9/25/2007 (Exhibit) JJJ-436 No. 85,483.98 76,324.98 9/25/2007 MMM-481 JJJ-437 5000- 20,380.54 18,196.91 9/25/2007 MMM-481 JJJ-438 14,600.67 13,036.31 9/25/2007 MMM-481 JJJ-439 31842 24,972.56 22,296.93 9/25/2007 MMM-481 JJJ-440 31843 56,489.29 50,436.87 9/25/2007 MMM-481 JJJ-441 31844 9/30/2007 MMM-481 JJJ-442 31846 3,722.35 3,323.53 9/30/2007 MMM-489 JJJ-443 31849 11,965.17 10,683.19 9/30/2007 MMM-490 JJJ-444 31851 4,565.92 9/30/2007 MMM-490 JJJ-445 32084 5,113.83 9/30/2007 MMM-490 JJJ-446 32085 3,696.43 3,300.38 9/30/2007 MMM-490 JJJ-447 32086 1,465.55 1,308.53 9/30/2007 MMM-490 JJJ-448 32087 9/30/2007 MMM-490 JJJ-449 32088 303.14 270.66 9/30/2007 MMM-490 JJJ-450 32089 2,858.58 2,552.30 9/30/2007 MMM-490 JJJ-451 32090 2,408.69 2,150.62 9/30/2007 MMM-490 JJJ-452 32091 8,754.30 7,816.34 9/30/2007 MMM-490 JJJ-453 32092 10,995.90 9,817.77 9/30/2007 MMM-490 JJJ-454 32093 2,727.66 2,435.41 9/30/2007 MMM-490 JJJ-455 32094 9/30/2007 MMM-490 JJJ-456 32095 111.33 99.40 9/30/2007 MMM-490 JJJ-457 32096 2,427.58 2,167.48 9/30/2007 MMM-490 JJJ-458 32097 28,007.08 25,006.32 9/30/2007 MMM-490 JJJ-459 32098 3,761.59 3,358.56 9/30/2007 MMM-490 JJJ-460 32099 3,509.62 3,133.59 9/30/2007 MMM-490 JJJ-461 32100 2,683.95 2,396.38 9/30/2007 MMM-490 JJJ-462 32101 22,484.47 20,075.42 9/30/2007 MMM-490 JJJ-463 32102 1,061.72 9/30/2007 MMM-490 JJJ-464 32103 1,992.74 947.96 9/30/2007 MMM-490 JJJ-465 32104 8,488.60 1,779.23 9/30/2007 MMM-490 JJJ-466 32105 7,579.11 9/30/2007 MMM-490 JJJ-467 32106 153.10 9/30/2007 MMM-490 JJJ-468 32107 10,448.82 136.70 9/30/2007 MMM-490 JJJ-469 32108 4,076.97 9,329.30 9/30/2007 MMM-490 JJJ-470 32109 21,840.40 3,640.15 9/30/2007 MMM-491 JJJ-471 32110 19,500.36 9/30/2007 MMM-491 JJJ-472 32111 1,882.93 1,681.19 9/30/2007 MMM-491 JJJ-473 32118 219.03 9/30/2007 MMM-491 JJJ-474 32132 195.56 9/30/2007 MMM-492 JJJ-475 32133 7,165.01 6,397.33 9/30/2007 MMM-492 JJJ-476 32137 3,183.03 2,841.99 9/30/2007 MMM-492 JJJ-477 32153 17,190.12 15,348.32 9/30/2007 MMM-492 JJJ-478 32154 9/30/2007 MMM-492 JJJ-479 32157 383.30 342.23 9/30/2007 MMM-492 JJJ-480 32158 17,123.61 15,288.94 9/30/2007 MMM-492 JJJ-481 32159 4,546.41 4,059.29 9/30/2007 MMM-493 JJJ-482 32160 9/30/2007 MMM-493 JJJ-483 32161 410.95 366.92 9/30/2007 MMM-493 JJJ-484 32169 10,302.81 9,198.94 9/30/2007 MMM-493 JJJ-485 32171 13,500.03 12,053.60 9/30/2007 MMM-493 JJJ-486 32175 5,888.44 5,257.54 9/30/2007 MMM-493 JJJ-487 32177 12,696.62 11,336.27 9/30/2007 MMM-493 JJJ-488 32178 6,577.98 5,873.20 9/30/2007 MMM-493 JJJ-489 32180 1,279.79 9/30/2007 MMM-493 JJJ-490 32181 1,433.37 2,996.84 9/30/2007 MMM-493 JJJ-491 32183 3,356.46 4,243.31 9/30/2007 MMM-493 JJJ-492 32184 4,752.51 9/30/2007 MMM-493 JJJ-493 32186 219.92 9/30/2007 MMM-493 JJJ-494 32187 246.31 3,457.57 9/30/2007 MMM-493 JJJ-495 32188 3,872.48 5,217.74 9/30/2007 MMM-494 JJJ-496 32190 5,843.87 1,795.21 9/30/2007 MMM-494 JJJ-497 32192 2,010.64 5,606.02 MMM-494 32194 6,278.74 26,528.69 MMM-494 32195 29,712.13 29,456.78 32196 32,991.59 29,055.38 page 8 of 11 32197 32,542.03 2,935.39 3,287.64 1,358.59 1,521.62 3,442.63 3,855.75 18,340.78 20,541.67 13,155.37 14,734.01 23,349.13 26,151.02 1,961.96 2,197.39 11

ANNEXB Exhibit No. credit Amount Net of VAT Date Traced to JJJ-498 Memo (C:M) 1,231.56 1,099.61 9/30/2007 SAP G/L JJJ-499 9,081.04 9/30/2007 (Exhibit) JJJ-500 No. 10,170.77 3,750.05 9/30/2007 MMM-494 JJJ-501 5000- 4,200.06 1,304.59 9/30/2007 MMM-494 JJJ-502 1,461.14 5,984.26 9/30/2007 MMM-494 JJJ-503 32199 6,702.37 3,440.03 9/30/2007 MMM-494 JJJ-504 32200 3,852.83 2,656.30 9/30/2007 MMM-494 JJJ-505 32202 2,975.06 3,343.60 9/30/2007 MMM-494 JJJ-506 32204 3,744.83 1,924.39 9/30/2007 MMM-494 JJJ-507 32206 2,155.32 8,253.71 9/30/2007 MMM-494 JJJ-508 32207 9,244.15 5,878.14 9/30/2007 MMM-494 JJJ-509 32208 6,583.52 3,767.46 9/30/2007 MMM-494 JJJ-510 32211 4,219.56 3,497.96 9/30/2007 MMM-494 JJJ-511 32212 3,917.72 5,436.55 9/30/2007 MMM-494 JJJ-512 32213 6,088.94 3,215.60 9/30/2007 MMM-494 JJJ-513 32214 3,601.47 3,720.72 9/30/2007 MMM-495 JJJ-514 32215 4,167.21 1,855.03 9/30/2007 MMM-495 JJJ-515 32234 2,077.63 1,829.68 9/30/2007 MMM-495 JJJ-516 32235 2,049.24 780.36 9/30/2007 MMM-495 JJJ-517 32236 10,031.35 9/30/2007 MMM-495 JJJ-518 32237 874.00 3,405.64 9/30/2007 MMM-495 JJJ-519 32238 11,235.11 3,116.57 9/30/2007 MMM-495 JJJ-520 32240 3,468.50 9/30/2007 MMM-495 JJJ-521 32241 3,814.32 1,311.30 9/30/2007 MMM-495 JJJ-522 32242 3,490.56 2,326.21 9/30/2007 MMM-495 JJJ-523 32243 3,884.72 7,442.93 9/30/2007 MMM-495 JJJ-524 32244 1,468.66 287.36 9/30/2007 MMM-495 JJJ-525 32245 2,605.35 2,299.26 9/30/2007 MMM-496 JJJ-526 32248 8,336.08 6,443.46 9/30/2007 MMM-496 JJJ-527 32249 5,157.40 9/30/2007 MMM-496 JJJ-528 32251 321.84 5,968.88 9/30/2007 MMM-496 JJJ-529 32252 2,575.17 7,655.01 9/30/2007 MMM-496 JJJ-530 32262 7,216.67 12,498.04 9/30/2007 MMM-496 JJJ-531 32265 5,776.29 2,717.13 9/30/2007 MMM-496 JJJ-532 32267 6,685.15 10,732.57 9/30/2007 MMM-496 JJJ-533 32269 8,573.61 1,787.04 9/30/2007 MMM-496 JJJ-534 32271 13,997.80 17,113.02 9/30/2007 MMM-496 JJJ-535 32272 3,043.19 7,403.02 9/30/2007 MMM-496 JJJ-536 32273 12,020.48 4,142.22 9/30/2007 MMM-496 JJJ-537 32274 2,001.48 9,205.76 9/30/2007 MMM-496 JJJ-538 32275 19,166.58 2,277.26 9/30/2007 MMM-497 JJJ-539 32276 8,291.38 5,757.15 9/30/2007 MMM-497 JJJ-540 32277 4,639.29 5,907.06 9/30/2007 MMM-497 JJJ-541 32279 10,310.45 10,690.21 9/30/2007 MMM-497 JJJ-542 32280 2,550.53 12,934.24 9/30/2007 MMM-497 JJJ-543 32281 6,448.01 4,438.31 9/30/2007 MMM-497 JJJ-544 32282 6,615.91 340.89 9/30/2007 MMM-497 JJJ-545 32283 11,973.04 5,701.33 9/30/2007 MMM-497 JJJ-546 32285 14,486.35 864.05 9/30/2007 MMM-497 JJJ-547 32287 4,970.91 30,890.42 9/30/2007 MMM-497 JJJ-548 32289 22,033.58 9/30/2007 MMM-497 JJJ-549 32291 381.80 2,902.91 9/30/2007 MMM-497 JJJ-550 32294 6,385.49 2,181.34 9/30/2007 MMM-497 JJJ-551 32295 3,837.80 9/30/2007 MMM-497 JJJ-552 32296 967.74 5,184.38 9/30/2007 MMM-497 JJJ-553 32297 34,597.27 10,174.91 9/30/2007 MMM-497 JJJ-554 32298 24,677.61 5,120.39 9/30/2007 MMM-497 JJJ-555 32300 910.39 9/30/2007 MMM-497 JJJ-556 32301 3,251.26 1,327.42 9/30/2007 MMM-497 JJJ-557 32302 2,443.10 3,540.78 9/30/2007 MMM-497 JJJ-558 32303 4,298.34 3,475.15 9/30/2007 MMM-497 JJJ-559 32304 5,806.51 4,278.86 9/30/2007 MMM-498 JJJ-560 32305 11,395.90 5,201.76 9/30/2007 MMM-498 32306 5,734.84 MMM-498 32309 1,019.64 MMM-498 32310 1,486.71 32311 3,965.67 page 9 of 11 32312 3,892.17 4,792.32 5,825.97 11

ANNEXB Exhibit No. credit Amount NetofVAT Date Traced to JJJ-561 Memo (CM) 9/30/2007 SAP G/L JJJ-562 2,164.84 1,932.89 9/30/2007 (Exhibit) JJJ-563 No. 772.60 689.82 9/30/2007 MMM-498 JJJ-564 5000- 9/30/2007 MMM-498 JJJ-565 8,085.67 7,219.35 9/30/2007 MMM-498 JJJ-566 32313 16,647.30 14,863.66 9/30/2007 MMM-498 JJJ-567 32315 9/30/2007 MMM-498 JJJ-568 32316 916.91 818.67 9/30/2007 MMM-498 JJJ-569 32317 5,637.72 5,033.68 9/30/2007 MMM-498 JJJ-570 32318 1,830.52 1,634.39 9/30/2007 MMM-498 JJJ-571 32319 2,960.88 2,643.64 9/30/2007 MMM-498 JJJ-572 32321 4,013.55 3,583.53 10/19/2007 MMM-498 JJJ-573 32323 3,198.94 2,856.20 10/19/2007 MMM-498 JJJ-574 32324 1,884.24 1,682.36 10/19/2007 MMM-519 JJJ-575 32325 3,537.83 3,158.78 10/19/2007 MMM-519 JJJ-576 32326 9,137.60 8,158.57 10/19/2007 MMM-519 JJJ-577 32909 11,250.08 10,044.71 10/19/2007 MMM-519 JJJ-578 32910 8,392.27 7,493.10 10/19/2007 MMM-519 JJJ-579 32911 10/19/2007 MMM-519 JJJ-580 32912 703.02 627.70 10/20/2007 MMM-519 JJJ-581 32913 1,821.61 1,626.44 10/20/2007 MMM-520 JJJ-582 32914 10/20/2007 MMM-520 JJJ-583 32915 234.33 209.22 10/20/2007 MMM-520 JJJ-584 32916 13,457.53 12,015.65 10/20/2007 MMM-520 JJJ-585 32919 13,811.48 12,331.68 10/20/2007 MMM-520 JJJ-586 32920 10/20/2007 MMM-520 JJJ-587 32921 2,198.80 1,963.21 10/20/2007 MMM-520 JJJ-588 32922 98,228.83 87,704.31 10/20/2007 MMM-520 JJJ-589 32923 61,505.38 54,915.52 10/20/2007 MMM-520 JJJ-590 32924 118,523.26 105,824.34 12/30/2007 MMM-520 JJJ-591 32925 75,381.77 67,305.15 12/31/2007 MMM-520 JJJ-592 32926 83,717.19 74,747.49 12/31/2007 MMM-658 JJJ-593 32927 55,332.72 49,404.21 12/31/2007 MMM-653 JJJ-594 32928 115,840.10 103,428.66 12/31/2007 MMM-654 JJJ-595 36842 37,753.94 33,708.88 12/31/2007 MMM-654 JJJ-596 36711 49,508.91 44,204.38 12/31/2007 MMM-654 JJJ-597 36716 58,440.04 52,178.61 12/31/2007 MMM-654 JJJ-598 36718 146,860.78 131,125.70 12/31/2007 MMM-654 JJJ-599 36721 39,531.13 35,295.65 12/31/2007 MMM-654 JJJ-600 36723 22,225.14 19,843.88 12/31/2007 MMM-654 JJJ-601 36725 903,598.85 806,784.69 12/31/2007 MMM-654 JJJ-602 36727 30,963.40 27,645.89 12/31/2007 MMM-654 JJJ-603 36730 259,995.03 232,138.42 12/31/2007 MMM-654 JJJ-604 36731 67,850.38 60,580.70 12/31/2007 MMM-654 JJJ-605 36732 54,598.02 48,748.23 12/31/2007 MMM-656 JJJ-606 36734 74,178.33 66,230.65 12/31/2007 MMM-656 JJJ-607 36737 26,873.85 23,994.51 12/31/2007 MMM-656 JJJ-608 36779 122,288.87 109,186.49 12/31/2007 MMM-657 JJJ-609 36786 216,528.84 193,329.32 12/31/2007 MMM-657 JJJ-610 36790 186,391.80 166,421.25 12/31/2007 MMM-657 JJJ-611 36793 103,092.36 92,046.75 12/31/2007 MMM-657 JJJ-612 36795 63,796.58 56,961.23 12/31/2007 MMM-657 JJJ-613 36798 19,902.32 17,769.93 12/31/2007 MMM-657 JJJ-614 36804 92,738.59 82,802.31 12/31/2007 MMM-657 JJJ-615 36807 27,500.85 24,554.33 12/31/2007 MMM-657 JJJ-616 36812 15,548.52 13,882.61 12/31/2007 MMM-657 JJJ-617 36815 59,128.21 52,793.04 12/31/2007 MMM-658 JJJ-618 36818 105,182.46 93,912.91 12/31/2007 MMM-658 JJJ-619 36819 14,642.10 13,073.30 12/31/2007 MMM-658 JJJ-620 36822 163,763.78 146,217.66 12/31/2007 MMM-658 JJJ-621 36825 215,682.46 192,573.63 12/31/2007 MMM-658 JJJ-622 36828 115,207.38 102,863.73 12/31/2007 MMM-658 JJJ-623 36829 51,621.76 46,090.86 12/31/2007 MMM-658 36830 67,850.33 60,580.65 MMM-658 36831 61,366.24 54,791.29 MMM-658 36832 47,207.00 42,149.11 36833 page 10 of 11 36834 3,530.62 3,152.34 10,335.53 9,228.15 64,122.45 57,252.19 11

\,;rea It ANNEXB Memo (CM} Traced to SAP G/L No. (Exhibit} MMM-658 Exhibit No. 5000- Amount Net of VAT Date MMM-658 111,248.82 99,329.30 12/31/2007 JJJ-624 36835 198,254.95 177,013.35 12/31/2007 JJJ-625 36836 64,760,532.88 57,821,904.36 2nd to 4th Quarter - GRAND TOTAL P64,897,351. 22 P57,944,063.59 11 page 11 of 11