tag:blogger.com,1999:blog-40596098014494880142024-03-08T14:16:30.889-08:00KIM HENARES - THE LIAR BIR COMMISSIONER, LAWYERS FOR TAX EVADERAnonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-4059609801449488014.post-61909902288393361262016-08-06T05:56:00.000-07:002016-08-06T05:56:06.505-07:00EX-BIR HENARES CHEATED THE PEOPLE OF THE PHILIPPINES BILLIONS IN TAXES<!--[if gte mso 9]><xml>
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<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">Philippine Daily
Inquirer (PDI) chair Marixi Prieto firm “Dunkin’ Donuts” is a bigtime tax
cheat. It deliberately under-declared its sales on the tax return to evade
payment of rightful taxes. It owes the FILIPINO people P1.56 BILLION unpaid tax
deficit; but former Philippines’s internal revenue chief KIM HENARES
intentionally failed to either collect it or pursue tax evasion case against
the company despite clear existence of actual fraud.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">I am a former BIR revenue officer. In 2008, I was tasked to conduct an
investigation of the 2007 financial records of <b style="mso-bidi-font-weight: normal;">GOLDEN DONUTS, INC</b>. (<b style="mso-bidi-font-weight: normal;">GDI</b>),
the Philippines’s exclusive franchise holder of the American food brand “<b style="mso-bidi-font-weight: normal;">Dunkin’ Donuts</b>”, for internal revenue tax
purposes, where I discovered and appropriately documented several
irregularities that culminated in the <b style="mso-bidi-font-weight: normal;">PhP
1.56 Billion</b> deficiency tax assessment against the company.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">In <b style="mso-bidi-font-weight: normal;">2010</b>, I personally
reported GDI’s omissions to <b style="mso-bidi-font-weight: normal;">former BIR
Commissioner Kim Henares</b> and recommended to her the criminal prosecution of
the company for tax evasion under the much-vaunted <b style="mso-bidi-font-weight: normal;">Run After Tax Evaders (RATE)</b> program of the Bureau; but she
intentionally failed to pursue tax evasion case against the company or enforce
the collection of the said deficiency tax, because GDI’s secretary – <b style="mso-bidi-font-weight: normal;">Ms. Marixi Rufino-Prieto</b> who also
happens to be the <b style="mso-bidi-font-weight: normal;">Philippine Daily
Inquirer’s</b> chairperson – is <b style="mso-bidi-font-weight: normal;">former
President Benigno Simeon C. Aquino 3<sup>rd</sup>’s</b> friend.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">Initially, she had the case evaluated by the RATE team under <b style="mso-bidi-font-weight: normal;">former Deputy Commissioner Estela V. Sales</b>
to determine existence of fraud which resulted in the <b style="mso-bidi-font-weight: normal;">AFFIRMATIVE</b> as relayed to me by a BIR official who requested
anonymity. My informant said that the RATE team was then already preparing the
memorandum to recommend the criminal prosecution of GDI for tax evasion but
discontinued upon instruction from a high-ranking official of the BIR whose
name my informant did not disclose.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">I then conferred with former DCIR Estela Sales about the status of the case
but she told me – “assessment na lang daw kasi kaibigan ni <b style="mso-bidi-font-weight: normal;">PNoy</b> ang taxpayer at nakakadirekta ito kay comm” (referring to
former CIR Henares). So, the case was referred to Assistant Commissioner, now
Deputy Commissioner <b style="mso-bidi-font-weight: normal;">NESTOR S. VALEROSO </b>who
was then the Regional Director of BIR Regional Office in Quezon City.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">I was also informed by my former group supervisor <b style="mso-bidi-font-weight: normal;">Mr. GREGORIO S. TUMANGUIL</b> that <b style="mso-bidi-font-weight: normal;">Ms.
Prieto </b>met with <b style="mso-bidi-font-weight: normal;">Mr. Valeroso </b>and
informed the latter that she had already talked to CIR Henares about the tax
assessment against GDI and expressed that they cannot afford to lose their
franchise with <b style="mso-bidi-font-weight: normal;">Dunkin’ Donuts of
America.</b></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">Both <b style="mso-bidi-font-weight: normal;">Henares </b>and <b style="mso-bidi-font-weight: normal;">Valeroso, </b>who were supposed to execute
tax laws fairly and reasonably to protect the interest of the Filipino people,
deliberately failed to enforce the collection of the afore-said tax deficiency,
at least without fraud charges, giving undue advantage to the tax evader and
undue injury to the Philippine Government.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">On <b style="mso-bidi-font-weight: normal;">June 24, 2013</b>, I resigned
from the service as a result of my dissatisfaction and disenchantment with
Henares over her selective and insincere anti-tax evasion drive that spared the
said company for political patronage.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">On <b style="mso-bidi-font-weight: normal;">March 17, 2014</b>, after
several reminders sent to her and in order to protect the interest of the <b style="mso-bidi-font-weight: normal;">FILIPINO</b> people to whom the <b style="mso-bidi-font-weight: normal;">PhP 1.56 Billion</b> tax deficit of GDI
already legally belong, I filed <b style="mso-bidi-font-weight: normal;">administrative
</b>and <b style="mso-bidi-font-weight: normal;">criminal charges </b>against
Henares and Sales before the <b style="mso-bidi-font-weight: normal;">Office of
the Ombudsman; </b>but it dismissed the case without conducting a thorough
investigation and without requiring respondents Henares and Sales to submit GDI’s
tax case docket and copy of its actual “<b style="mso-bidi-font-weight: normal;">protest</b>”
which are necessary in the investigation.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">The Ombudsman, in its dismissal resolution, did not discuss the merits
of the case and did not state the facts and law upon which the conclusion given
were drawn.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">I feel in my layman’s understanding that the Ombudsman gravely erred in
dismissing the case; thus, on <b style="mso-bidi-font-weight: normal;">December
4, 2015</b>, within the period to file an appeal, I filed a <b style="mso-bidi-font-weight: normal;">PETITION FOR REVIEW </b>before the <b style="mso-bidi-font-weight: normal;">COURT OF APPEALS </b>which also dismissed
the case for lack of jurisdiction and affirmed the Ombudsman’s resolution.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">I express my firm stance that both the Ombudsman and CA have gravely
erred in dismissing the case without fairly considering the primary and serious
issues raised in my complaint. Thus, on <b style="mso-bidi-font-weight: normal;">July
22, 2016</b>, within the 60-day period granted by law, I filed a <b style="mso-bidi-font-weight: normal;">PETITION FOR CERTIORARI</b> before the <b style="mso-bidi-font-weight: normal;">SUPREME COURT</b>.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">The PhP 1.56 Billion deficiency tax assessment against GDI that remained
undisturbed after review and evaluation conducted by the Assessment Division of
the Bureau’s Regional Office in Quezon City, and already covered by Formal
Letter of Demand and Assessment Notices (FANs), all bearing Demand No.
41-B072-07 and all dated October 29, 2010, and which attained finality, were my
very findings. Such findings were the product of days and nights of toil and
hard work for almost two (2) years, not to mention the pressures that I had to
endure from the outside and even from some of my superiors in the Bureau.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">For doing an out-of-the-box job, I was threatened with disciplinary
action by my superiors; and for reporting irregularities, I was threatened with
criminal action by no less than former BIR Commissioner Henares herself who was
supposed to uphold an examiner’s tax assessment. <b style="mso-bidi-font-weight: normal;">May GOD help me</b>?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-language: EN-PH;">HENARES’S ALIBIS TO
CONCEAL THE REAL TRUTH ABOUT DD’s TAX EVASION CASE.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">She claimed that my tax
assessment against DD allegedly showed inaccuracies;</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">She claimed that the tax
assessment against DD has not attained finality; and that the function to
determine finality of an assessment is vested by law upon the Commissioner of
Internal Revenue or her duly authorized representatives;</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">She claimed that she has no
knowledge of DD’s irregularities;</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">She claimed that she did not
order “two re-investigations” of DD’s tax case; and</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Henares’s and her minions’
other “alibis” in not filing fraud case against DD by claiming that the CD
which I presented to the RATE team for evaluation was not compliant with the
requirements prescribed under RMO 29-2002.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">DISCUSSED BELOW ARE HENARES’S ALIBIS IN REFUSING
TO COLLECT DD’S TAX DEFICIT AND IN NOT PURSUING TAX FRAUD CASE AGAINST THE
COMPANY:</span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;"></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On her claim that my tax
assessment against DD allegedly showed inaccuracies.</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On
February 28, 2014, Henares told GMA-7 in a newscast that she had DD’s tax case
re-investigated for several times (twice), allegedly because my tax assessment
against the company showed inaccuracies. She was giving her side after the
station interviewed me.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif;">“Pinaimbestigahan natin ng
ilang beses, at sa mga imbestigasyon na yan, lumalabas na hindi naman tama yung
assessment ni Mr. Othello [Dalanon], Henares said.”</span></i></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On
March 17, 2014, I filed Formal Complaint against Kim Henares and Estela Sales
before the <b style="mso-bidi-font-weight: normal;">Office of the Ombudsman</b>.
In the said complaint, I clearly stated my audit findings which include, among
other things, the following:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l4 level1 lfo3; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">That DD’s duly-registered books
of accounts (hardbound computer-generated) reflected a <b style="mso-bidi-font-weight: normal;">NET INCOME</b> amounting to <b style="mso-bidi-font-weight: normal;">PhP
135.2-M</b> while its AITR showed a <b style="mso-bidi-font-weight: normal;">NET
LOSS</b> amounting to <b style="mso-bidi-font-weight: normal;">PhP 44.9-M</b>;</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l4 level1 lfo3; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">That DD’s sales as reflected in
the said books was <b style="mso-bidi-font-weight: normal;">PhP 1.928-B</b> while
the total amount of sales reflected in its AITR was only <b style="mso-bidi-font-weight: normal;">PhP 1.031-B</b>. This shows a huge discrepancy (substantial
under-declaration) amounting to <b style="mso-bidi-font-weight: normal;">PhP897-M</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">[According
to the SUPREME COURT in the case of <u>Paper Industries Corporation of the
Philippines <i style="mso-bidi-font-style: normal;">vs. </i>Court of Appeals, et
al., 250 SCRA 434</u> – the books of accounts prevail over tax return when they
reflect higher sales, because they are kept and prepared under control and
supervision of the taxpayer; and they embody what must appear to be admission against
interest.]</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l4 level1 lfo3; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">c.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">That other independent relevant
documents, such as but not limited to: Franchise Agreement, Technical Service
Agreement, and Final Withholding Tax Returns, indicate that DD’s sales topped <b style="mso-bidi-font-weight: normal;">PhP 2.366-B</b> but the amount recorded in
its registered books was only <b style="mso-bidi-font-weight: normal;">PhP
1.928-B</b>. This again shows an unrecorded and undeclared sales amounting to <b style="mso-bidi-font-weight: normal;">PhP 438-M</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">According
to Henares, these findings were flawed that is why she had DD’s case
re-investigated for several times (twice).</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">However,
she and <b style="mso-bidi-font-weight: normal;">Estela Sales</b>, in their
counter-affidavits, and even the supporting affidavits of <b style="mso-bidi-font-weight: normal;">ATTY. ROMMEL CURIBA</b> and <b style="mso-bidi-font-weight: normal;">Mr.
WILFREDO REYES</b>, both of the BIR national office, did not give any
justifications or explanations to dispute the above-enumerated glaring and
crucial issues.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">It
is just <b style="mso-bidi-font-weight: normal;">AMAZING</b> that despite
respondents’ failure to give rejoinders to the above vital accounts, the <b style="mso-bidi-font-weight: normal;">Ombudsman </b>dismissed the case. Clearly,
it did not conduct a thorough investigation as it did not even require
respondents to submit DD’s tax case docket and copy of its actual “protest”
which are very essential in the investigation.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
Ombudsman, in its dismissal resolution, did not discuss the merits of the case
and did not state the facts and law upon which the conclusion given were drawn.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On her claim that the tax
assessment against DD has not attained finality; and that the function to
determine finality of an assessment is vested by law upon the Commissioner of
Internal Revenue or her duly authorized representatives;</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
expressed my firm stance that the <b style="mso-bidi-font-weight: normal;">PhP
1.56-B</b> tax assessment against DD attained finality based on the following
grounds:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l2 level1 lfo4; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">That DD failed to file a <b style="mso-bidi-font-weight: normal;">VALID</b> protest against the <b style="mso-bidi-font-weight: normal;">FANs</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l2 level1 lfo4; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">That DD failed to submit the
required documents within the period required by law.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Henares,
in her counter-affidavit, states: “Mr. Dalanon, as then Revenue Officer, has no
authority – and could not arrogate upon himself – to decide and declare that a
certain assessment is already final, executory, and demandable. <b style="mso-bidi-font-weight: normal;"><u>THIS IS A FUNCTION VESTED BY LAW UPON
THE COMMISSIONER OF INTERNAL REVENUE OR HER DULY AUTHORIZED REPRESENTATIVES</u>.</b>”
(Emphasis supplied)</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Henares’s
statement does not find basis in <b style="mso-bidi-font-weight: normal;">LAW</b>.
Her claim is erroneous, because it is the <b style="mso-bidi-font-weight: normal;">LAW</b>
that determines finality of an assessment as clearly provided under Revenue
Regulations (RR) No. 12-99 in relation to Section 228 of the 1997 NIRC, as
amended.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">PhP 1.56-B</b> deficiency tax assessment
against DD attained finality based on the following facts and law, and
regulations:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l5 level1 lfo5; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">DD failed to
file a VALID protest against the Formal Letter of Demand and Assessment Notices
(FANs</span></u></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">).</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">DD’s
alleged letter of protest merely stated “protest against PAN adopted <i style="mso-bidi-font-style: normal;">in toto</i>”. It did not state the <b style="mso-bidi-font-weight: normal;">FACTS</b>, the applicable <b style="mso-bidi-font-weight: normal;">LAW</b>, <b style="mso-bidi-font-weight: normal;">RULES</b> and <b style="mso-bidi-font-weight: normal;">REGULATIONS</b>,
or <b style="mso-bidi-font-weight: normal;">JURISPRUDENCE</b> on which the
protest was based. It is neither a <b style="mso-bidi-font-weight: normal;">REQUEST
FOR RECONSIDERATION</b> nor <b style="mso-bidi-font-weight: normal;">REINVESTIGATION</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">What
DD filed instead was a REQUEST FOR CANCELLATION and WITHDRAWAL of the tax
assessment. <b style="mso-bidi-font-weight: normal;">A request for cancellation
or withdrawal is significantly different from a request for reconsideration or
reinvestigation which is what the law requires</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
rules on protesting an assessment is found in Section 3 subsection 3.1.5 of RR
No. 12-99, that reads:</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">“Disputed
Assessment. – The taxpayer or his duly authorized representative may protest
administratively against the aforesaid formal letter of demand and assessment
notice within thirty (30) days from date of receipt thereof.”</span></b></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">“The
taxpayer shall state the FACTS, applicable LAW, RULES and REGULATIONS, or JURISPRUDENCE
on which his protest is based, otherwise, his protest shall be considered VOID
and WITHOUT FORCE and EFFECT.”</span></b></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">“If
the taxpayer fails to file a VALID PROTEST against the formal letter of demand
and assessment notice within thirty (30) days from date of receipt thereof, the
assessment shall become FINAL, EXECUTORY and DEMANDABLE.”</span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
said Regulations must be taken in relation to Section 228 of the 1997 NIRC,
which reads:</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .75in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">“Protesting
an Assessment. – Such assessment may be protested administratively by filing a
REQUEST FOR RECONSIDERATION or REINVESTIGATION within thirty (30) days from
receipt of the assessment in such form and manner as may be prescribed by
implementing rules and regulations. x x x otherwise, the assessment shall
become FINAL.”</span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Clearly,
what the law demands is a <b style="mso-bidi-font-weight: normal;">VALID</b>
administrative protest against the formal letter of demand and assessment
notice which required the taxpayer to comply with the following:</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .25in; margin-top: 0in; mso-list: l3 level1 lfo6; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The protest must be through a
REQUEST FOR RECONSIDERATION or REINVESTIGATIONS;</span></b></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .25in; margin-top: 0in; mso-list: l3 level1 lfo6; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The protest must be in the form
and manner as prescribed under RR No. 12-99, which provides that said protest
MUST STATE the FACTS, the LAW, RULES and REGULATIONS, or JURISPRUDENCE on which
the protest is based; and</span></b></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .25in; margin-top: 0in; mso-list: l3 level1 lfo6; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Must be filed within thirty
(30) days from receipt of the assessment.</span></b></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">COURT OF TAX APPEALS</b> in the case of <u>Allied
Banking Corporation vs. Commissioner of Internal Revenue (CTA Case No. 4581,
March 25, 1992</u>), cited that, “failure to comply with any or all of these
requirements results in the assessment against the taxpayer becoming final and
unappealable.”</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
letter should not just state “protest against PAN adopted in toto” because the
administrative protest required to be filed as an answer to the formal letter
of demand and assessment notice is distinct and not the same as the protest
filed against the PAN.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">COURT OF TAX APPEALS</b> emphasized in
the case of <u>Security Bank Corporation vs. Commissioner of Internal Revenue
(CTA Case No. 6564, November 28, 2006</u>) and further accentuated in the case
of <u>Bank of the Philippine Islands vs. Commissioner of Internal Revenue (CTA
Case No. 7397, April 9, 2008</u>) that:</span></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">“A
protest to the preliminary assessment notice is not the same as the protest
required to be filed as an answer to the final assessment notice. In fact, a
preliminary assessment notice may or may not even be protested to by the
taxpayer, and the fact of non-protest shall not in any way make the preliminary
assessment notice final and unappealable. What is clear from 319-A of the Tax
Code of 1977, as amended, is that failure on the part of the taxpayer to
protest or reply to a preliminary assessment notice paves the way for the
issuance of a final assessment notice. However, evident under said Section (now
Section 228 of the 1997 Tax Code) is that failure on the part of the taxpayer
to fila a valid administrative protest through a request for reconsideration or
reinvestigation on the final assessment notice, shall result in the finality of
the said FAN.” </span></b><span style="font-family: "Century Gothic",sans-serif;">(Annotation
supplied)</span></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">SUPREME COURT</b> in the case of <u>Allied
Banking Corporation vs. Commissioner of Internal Revenue (G.R. No. 175097,
February 5, 2010</u>) heightened that:</span></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">“It
is the Formal Letter of Demand and Assessment Notice that must be
administratively protested or disputed within 30 days, and not the PAN.”</span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l5 level1 lfo5; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">DD failed to
submit the required documents within the period required by law</span></u></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">.</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">That
DD failed its <b style="mso-bidi-font-weight: normal;">invalid </b>protest
against the Formal Letter of Demand and Assessment Notices (FANs) on November
30, 2010 but it submitted documents only on March 24, 2011. Hence, it was
already 114 days after the date of its filing of the protest.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Section
228 of the 1997 NIRC, as amended, provides:</span></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif;">“Within
sixty (60) days from filing of the protest, all relevant supporting documents
shall have been submitted; otherwise, the assessment shall become final.”</span></b></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">In
the instant case, when DD submitted documents in support of its protest, it was
already beyond the sixty (60)-day period in violation of the above-cited
provisions of the 1997 NIRC.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Either
of the above-cited grounds, the assessment against DD attained finality.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">In
a meeting held sometime on April, 2011 at the National Office in connection
with the instant case which was attended to by <b style="mso-bidi-font-weight: normal;">ATTY. CLARO ORTIZ</b>, Head Revenue Executive Assistant (now ACIR); <b style="mso-bidi-font-weight: normal;">ATTY. SIXTO DY</b>, Chief, National
Investigation Division; <b style="mso-bidi-font-weight: normal;">ATTY. ABEGAIL
GAMBOA</b>, Chief of Staff of DCIR Estela Sales, and <b style="mso-bidi-font-weight: normal;">myself</b>, it was ascertained that the tax assessment has become <b style="mso-bidi-font-weight: normal;">FINAL, EXECUTORY</b> and <b style="mso-bidi-font-weight: normal;">DEMANDABLE</b>, in view of GDI’s failure to
comply with the requirements as prescribed. “<b style="mso-bidi-font-weight: normal;"><u>These are scraps of paper</u></b>”, that’s Atty. Ortiz saying.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Atty.
Ortiz knew so well that the PhP 1.56-B tax assessment against DD has become <b style="mso-bidi-font-weight: normal;">FINAL, EXECUTORY </b>and<b style="mso-bidi-font-weight: normal;"> DEMANDABLE</b>. </span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Once the deficiency tax
assessment attained finality, it is no longer appealable; and there is now no
reason why the BIR cannot continue with the collection of the said tax.</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
above-cited grounds, were clearly stated in my Motion for Reconsideration filed
with the Ombudsman to justify the reversal of its dismissal resolution, but the
same were disregarded.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">It
is just <b style="mso-bidi-font-weight: normal;">SURPRISING</b> that the
Ombudsman dismissed the case without carefully scrutinizing tax laws, rules and
regulations.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On Henares’s claim that she has
no knowledge of DD’s irregularities.</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Henares,
in her counter-affidavit, denied knowledge of DD’s irregularities; but admitted
that she received my audit report on 10 September 2010.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">As
I said, I personally reported DD’s omissions to Henares and recommended to her
the criminal prosecution of DD for tax evasion under the much-vaunted Run After
Tax Evaders (RATE) program of the BIR.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">ATTY. JETHRO M. SABARIAGA</span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">
who was then her Chief of Staff, knew very well that I personally talked to
Henares about the case. In fact, <b style="mso-bidi-font-weight: normal;">Atty.
Sabariaga</b> first read my audit report before it was given to Henares.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div align="center" class="MsoNoSpacing" style="margin-left: .25in; text-align: center;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">“<b style="mso-bidi-font-weight: normal;">Othello, di ka ba natatakot sa ginagawa mo?</b>”</span></i></div>
<div align="center" class="MsoNoSpacing" style="margin-left: .25in; text-align: center;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">That’s
Atty. Sabariaga asking.</span></div>
<div align="center" class="MsoNoSpacing" style="margin-left: .25in; text-align: center;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">To
which I replied – <i style="mso-bidi-font-style: normal;">trabaho lang ho sir.</i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">If
Henares didn’t know about DD’s tax case as she claimed; then, what did <b style="mso-bidi-font-weight: normal;">Atty. Sabariaga</b> report to her after
reading my audit report? Did Atty. Sabariaga tell Henares about the filmed
story of “<b style="mso-bidi-font-weight: normal;">ASIONG SALONGA</b>”?</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">It
was Henares who introduced me to then Deputy Commissioner Estela Sales to whom
the former referred the case for evaluation by the RATE team to determine
existence of fraud – <i style="mso-bidi-font-style: normal;">“<b style="mso-bidi-font-weight: normal;">ganito ang gusto kong mga kaso</b>!” </i>– <b style="mso-bidi-font-weight: normal;">Estela Sales</b> even exclaimed.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
evaluation conducted by the RATE team to determine existence of fraud resulted
in the <b style="mso-bidi-font-weight: normal;">AFFIRMATIVE</b> as relayed to me
by a BIR official who requested anonymity. My informant told me that the RATE
team was then already preparing the memorandum to recommend the criminal
prosecution of DD for tax evasion, but discontinued upon instruction from a
high-ranking official of the BIR whose name my informant did not disclose.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">There
are documents to prove that Henares was properly apprised of DD’s tax case.
These were attached to my Formal Complaint filed before the Ombudsman and
Petition for Review with the CA.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">It
is just <b style="mso-bidi-font-weight: normal;">ASTONISHING</b> that the
Ombudsman dismissed the case without fairly conducting an investigation to
arrive at a fair and reasonable resolution.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On her claim that she did not
order “two re-investigations” of DD’s tax case.</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Henares,
in her counter-affidavit, denied that she ordered “two re-investigations”.
However, on February 28, 2014, she told GMA-7 in a newscast that she had DD’s
tax case re-investigated for several times (twice), as the company’s
representatives complained to her that my tax assessment allegedly showed
inaccuracies.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif;">“Pinaimbestigahan natin ng
ilang beses, at sa mga imbestigasyon na yan, lumalabas na hindi naman tama yung
assessment ni Mr. Othello [Dalanon], Henares said.”</span></i></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Clearly
the former Commissioner <b style="mso-bidi-font-weight: normal;">LIED</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Just
to reiterate. The PhP 1.56-B deficiency tax assessment against DD attained
finality; thus, re-investigations are no longer warranted.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<u><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Once
the deficiency tax assessment attained finality, the right of the Government to
collect the deficiency tax becomes absolute; thus, it precludes the taxpayer
from questioning the correctness of the assessment and from raising any
justification or defense that would pave the way for a re-investigation</span></u><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">There
is no <b style="mso-bidi-font-weight: normal;">LAW</b> that authorizes the
Commissioner to order several re-investigation of a <b style="mso-bidi-font-weight: normal;">FINAL</b>, <b style="mso-bidi-font-weight: normal;">EXECUTORY</b> and <b style="mso-bidi-font-weight: normal;">DEMANDABLE</b> assessment.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">However,
notwithstanding the ensuing finality of the afore-said deficiency tax
assessment against DD, Henares had it re-investigated for several times
(twice).</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The HOCUS-POCUS
re-investigations ordered by Henares.</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo7; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The “<b style="mso-bidi-font-weight: normal;">first re-investigation</b>”, which is no longer warranted because my
tax assessment which remained undisturbed after review and evaluation by
high-ranking officers in the district and regional levels of the Bureau and
already covered by FANs, all bearing Demand No. <b style="mso-bidi-font-weight: normal;">41-B072-07</b> and all dated October 29, 2010, attained finality, was
assigned to Revenue Officer <b style="mso-bidi-font-weight: normal;">STANLEY ONG</b>
under Group Supervisor <b style="mso-bidi-font-weight: normal;">GREGORIO S.
TUMANGUIL</b>, then both of RDO No. 41, Mandaluyong City. <b style="mso-bidi-font-weight: normal;">Mr. Ong was</b> the same revenue officer who conducted the review of
GDI tax case and recommended for the issuance of the statutory notices of
assessment (PAN and FANs) when he was yet with the Assessment Division of the
Regional Office in Quezon City.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
am not a lawyer though I believe that revenue officer Ong who conducted the “<b style="mso-bidi-font-weight: normal;">first re-investigation</b>” could no longer
disturb my tax assessment by himself for reasons of principle of estoppel. The <b style="mso-bidi-font-weight: normal;">equitable principle of estoppel </b>forbids
the revenue officer who conducted the “first re-investigation” from taking
inconsistent position against his concurrence to my original audit findings
that culminated in the deficiency tax assessment amounting to <b style="mso-bidi-font-weight: normal;">PhP 1.56-B</b> which is already <b style="mso-bidi-font-weight: normal;">FINAL</b>, <b style="mso-bidi-font-weight: normal;">EXECUTORY</b> and <b style="mso-bidi-font-weight: normal;">DEMANDABLE</b>
but which was re-investigated by no other than him.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
result of the “<b style="mso-bidi-font-weight: normal;">first re-investigation</b>”
conducted by revenue officers <b style="mso-bidi-font-weight: normal;">Ong</b>
and <b style="mso-bidi-font-weight: normal;">Tumanguil</b> was a <b style="mso-bidi-font-weight: normal;">HOCUS-POCUS</b>. – This can be proven, if
DD’s tax case docket which is under the custody of the BIR is presented if ever
an investigation is conducted.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo7; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The “<b style="mso-bidi-font-weight: normal;">second re-investigation</b>”, which is also no longer necessary because
my tax assessment attained finality, was referred to <b style="mso-bidi-font-weight: normal;">ATTY. GRACE CRUZ</b> of the National Investigation Division, BIR
national office. I strongly admire <b style="mso-bidi-font-weight: normal;">Atty.
Cruz </b>of her investigative expertise in administrative cases. Lest I be
misconstrued. I am not saying that <b style="mso-bidi-font-weight: normal;">Atty.
Cruz</b> is short of proficiency in tax accounting and tax auditing. <b style="mso-bidi-font-weight: normal;">NO REPORT OF RE-INVESTIGATION WAS SUBMITTED
BY ATTY. CRUZ</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">So,
how can former BIR Commissioner Henares claim that her groups of revenue
officers who conducted the two (2) separate re-investigations came up with the
same findings that my tax assessment against DD was incorrect?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On Henares’s and her minions’ other
“alibis” in not filing tax fraud case against DD by claiming that the CD which
I presented to the RATE team for evaluation was not compliant with the
requirements prescribed under RMO 29-2002.</span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Henares
and her minions used the CD which I submitted to the RATE team as scapegoat in
not filing tax fraud case against DD.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
RATE coordinator, members, and Mr. Wilfredo Reyes, the pioneer CAATTs user,
failed to consider and evaluate the documents attached to the docket of DD tax
case and the findings for deficiency tax assessment which were based on entries
per DD’s duly-registered books of accounts (hardbound computer-generated), as I
have appropriately validated; and other independent relevant documents, such as
but not limited to: Franchise agreement, Technical Service Agreement, and other
BIR returns filed by DD, such as: VAT returns and Final Withholding Tax
Remittance returns.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The
CD, which was neither mentioned nor objected to by DD in Its <b style="mso-bidi-font-weight: normal;">INVALID </b>protest, is used by Henares and
her minions as scapegoat in not filing tax evasion case against DD by claiming
that said CD is not compliant with the requirements prescribed under RMO No.
29-2002 – that it should be properly labeled with the name of the taxpayer,
taxable year and serial no. and volume no. and signed by the taxpayer and RDO.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
pointed out that DD adopts a “computer-assisted accounting system” wherein it
is still required to register a “hardbound computer-generated books of
accounts” which were the bases of my audit findings. Thus, the CD, which they
used as scapegoat in not filing fraud case against DD, need not be strictly
compliant with the requirements provided under the aforesaid RMO in regards to
the markings to be inscribed thereon.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">RMO
No. 29-2002 clearly provides that in case the taxpayer has no capability to
submit in CD-ROM form, procedures under the <b style="mso-bidi-font-weight: normal;">MANUAL SYSTEM</b> shall prevail.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">In
other words, if the taxpayer adopts a computer system of accounting but has no
capability to integrate the different components of accounting system (i.e.,
books of accounts and other related accounting records) in a CD-ROM form, it
shall still be required to register a “hardbound computer-generated books of
accounts”, as in the case of DD.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
suggested to the RATE team that they may recommend for the issuance of a
subpoena duces tecum (SDT) to compel DD produce its duly-registered hardbound
computer-generated books of accounts, but the suggestion was just ignored.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">What is crystal clear is that, HENARES
deliberately DECEIVED the FILIPINO people by making excuses to CONCEAL THE REAL
TRUTH about this BIGTIME TAX EVASION CASE.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">*** *** ***</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">THE CHRONOLOGY OF EVENTS AFFECTING MY CASE AGAINST
HENARES AND SALES:</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">March 17,
2014</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
filed criminal and administrative charges against Henares and Sales before the
Ombudsman for Grave Misconduct, Gross Neglect of Duty, and for violation of
Sec. 3(e), (f) of R.A. 3019, and Sec. 269(e), (h) of the NIRC.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">August 24,
2015</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
received the Ombudsman resolution dated March 24, 2015 dismissing the criminal
and administrative charges against the respondents.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">September 1,
2015</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
filed a Motion for Reconsideration which the Ombudsman denied in an order dated
September 10, 2015 which I received on November 19, 2015.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">December 4,
2015</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
filed a Petition for Review before the Court of Appeals to seek the reversal of
the Ombudsman’s decision dismissing the case against the respondents.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">December 18,
2015</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;"><span style="mso-tab-count: 1;"> </span>The Court of Appeals issued a
Resolution dismissing the petition.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">January 4,
2016</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;"><span style="mso-tab-count: 1;"> </span>I filed a Motion for
Reconsideration.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">May 27, 2016</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I
received CA’s resolution dated May 17, 2016 denying my Motion for
Reconsideration.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">July 12,
2016</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">My
counsel submitted to the Office of CIR Caesar R. Dulay a copy of my 2013
Complaint.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">July 18,
2016</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;"><span style="mso-tab-count: 1;"> </span>I submitted to the Office of CIR
Dulay documents regarding DD tax case.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">July 22,
2016</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Within
the 60-day period granted by law, I filed a <b style="mso-bidi-font-weight: normal;">Petition for Certiorari</b> before the <b style="mso-bidi-font-weight: normal;">SUPREME COURT</b>.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The <b style="mso-bidi-font-weight: normal;">P1.56-B</b> deficiency tax assessment
against DD that remained undisturbed after review and evaluation conducted by
the Assessment Division of the Bureau’s Regional Office in Quezon City, and already
covered by FANs, and which attained finality, were my very findings. Such
findings were the product of days and nights of toil and hard work for almost
two (2) years, not to mention the pressures that I had to endure from the
outside and even from some of my superiors in the Bureau.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">And for
doing an out-of-the-box job, I was threatened with disciplinary action by my
superiors; and for reporting irregularities, I was threatened with criminal
action by no less than former BIR Commissioner Henares herself who was supposed
to uphold an examiner’s tax assessment. <b style="mso-bidi-font-weight: normal;">MAY
GOD HELP ME</b>?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">*** *** ***</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I have been posting the issue on social media for
more than two (2) years now. Every time I post it on my google account, I
always share the same with Henares thru her official email account, and with
the Department of Finance and BIR contact center. But until now, Henares failed
to give any satisfactory explanations or defense to clarify it. Not even one of
her minions and none from DD company has attempted to give any explanations or
justifications to refute my postings.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">They know very well that my tax assessment against
DD is SOLID as the ROCK OF GIBRALTAR!!!</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">IT’s MORE FUN IN THE PHILIPPINES!</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Othello
Dalanon</span></div>
Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com1tag:blogger.com,1999:blog-4059609801449488014.post-3629744771698076312016-06-30T08:28:00.000-07:002016-06-30T08:28:17.294-07:00THE MULTI-MILLION TAX EVASION CASE INTENTIONALLY NOT PURSUED BY FORMER CIR KIM HENARES<!--[if gte mso 9]><xml>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">INTRODUCTION</span></b></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">I am a former revenue officer of the Bureau of Internal
Revenue (BIR) where I served for more than 28 long years.</span></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">In 2008, as then revenue officer of the said agency, I was
tasked to conduct an investigation of the 2007 financial records of <b style="mso-bidi-font-weight: normal;">GOLDEN DONUTS, INC. (GDI)</b>, the
exclusive Philippine Franchisee of the global brand “<b style="mso-bidi-font-weight: normal;">Dunkin’ Donuts</b>”, for internal revenue tax purposes.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">My investigation disclosed several <b style="mso-bidi-font-weight: normal;">fraudulent acts or criminal tax violations</b> deliberately perpetrated
by GDI that culminated in the <b style="mso-bidi-font-weight: normal;">P1.56-B</b>
deficiency tax assessment against the said company.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">I personally reported GDI’s omissions to <b style="mso-bidi-font-weight: normal;">BIR Commissioner</b> <b style="mso-bidi-font-weight: normal;">Kim Henares</b> and recommended to her the criminal prosecution of the
company for tax evasion under the much-vaunted <b style="mso-bidi-font-weight: normal;">Run After Tax Evaders</b> (<b style="mso-bidi-font-weight: normal;">RATE</b>)
program of the Bureau; but Henares intentionally failed to either pursue tax
evasion case against the company or enforce collection of its deficiency tax
because the company’s secretary – Ms. <b style="mso-bidi-font-weight: normal;">Marixi
Rufino-Prieto</b> who also happens to be the <b style="mso-bidi-font-weight: normal;">Philippine Daily Inquirer’s</b> <b style="mso-bidi-font-weight: normal;">chairperson</b>
– is <b style="mso-bidi-font-weight: normal;">President BS Aquino’s</b> friend.</span></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">At first, she promptly had the case evaluated by the RATE
team, under Deputy Commissioner <b style="mso-bidi-font-weight: normal;">Estela
Sales</b>, to determine existence of fraud which resulted in the <b style="mso-bidi-font-weight: normal;">affirmative</b> as relayed to me by a BIR
official who requested anonymity. In fact, the RATE team was then already preparing
the memorandum to recommend the criminal prosecution of GDI for tax evasion but
discontinued as per instruction from a high-ranking official of the Bureau
whose name my informant did not disclose.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">I conferred with Deputy Commissioner Estela Sales about the
status of the case but she told me – “<i style="mso-bidi-font-style: normal;"><u>assessment
na lang daw kasi kaibigan ni <b style="mso-bidi-font-weight: normal;">PNoy</b>
ang taxpayer at nakakadirekta ito kay comm</u></i>”, (referring to CIR Henares).
So, the case was referred to the BIR Regional Office in Quezon City headed then
by Regional Director <b style="mso-bidi-font-weight: normal;">Nestor S. Valeroso</b>.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">I was also informed by Mr. <b style="mso-bidi-font-weight: normal;">Gregorio S. Tumanguil</b>, my former group supervisor, that <b style="mso-bidi-font-weight: normal;">Ms. Prieto</b> met with <b style="mso-bidi-font-weight: normal;">Mr. Valeroso</b> and informed the latter
that she had already talked to <b style="mso-bidi-font-weight: normal;">CIR</b> <b style="mso-bidi-font-weight: normal;">Henares</b> about the tax assessment
against GDI and expressed that they cannot afford to lose their franchise with <b style="mso-bidi-font-weight: normal;">Dunkin’ Donuts of America</b>.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Both Henares and Valeroso, who are supposed to execute tax
laws fairly and reasonably to protect the interest of the Filipino people,
deliberately failed to at least enforce collection of the afore-said tax
deficiency, sans fraud charges, giving undue advantage to the taxpayer and
undue injury to the Philippine Government.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">On June 24, 2013, I resigned from the service as a result of
my dissatisfaction and disenchantment with Henares over her selective and insincere
anti-tax evasion drive that spared the said company for political patronage.</span></div>
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<br /></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">On March 17, 2014, after several reminders sent to CIR
Henares and in order to protect the interest of the Filipino people to whom the
P1.56-B tax deficit of GDI already legally belong, I filed <b style="mso-bidi-font-weight: normal;">administrative</b> and <b style="mso-bidi-font-weight: normal;">criminal
charges</b> against Henares and Deputy Commissioner Estela Sales, before the <b style="mso-bidi-font-weight: normal;">Office of the Ombudsman</b>; but it
dismissed the case without conducting a thorough investigation and without
requiring respondents Henares and Sales to submit GDI’s tax case docket and
copy of its actual “protest” which are necessary in the investigation.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The Ombudsman, in its dismissal resolution, did not discuss
the merits of the case and did not state the facts and law upon which the
conclusion given were drawn.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">I feel in my layman’s understanding that the Ombudsman
gravely erred in dismissing the case; thus, on December 4, 2015, within the
period to file an appeal, I filed a Petition for Review before the <b style="mso-bidi-font-weight: normal;">Court of Appeals</b> which also dismissed
the case for lack of jurisdiction and affirmed the Ombudsman’s resolution. </span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">I express my firm stance that both the Ombudsman and CA have
gravely erred in dismissing the case without fairly considering the primary and
serious issues raised in my complaint. Thus, I am considering the filing of an
appeal before the <b style="mso-bidi-font-weight: normal;">SUPREME COURT </b>as
final recourse.</span></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">I pray that the <b style="mso-bidi-font-weight: normal;">SC </b>will
consider each and every crucial issue which were disregarded by both the
Ombudsman and the Court of Appeals.</span></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">FACTS OF
GDI’s TAX CASE</span></b></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">As mentioned earlier, my tax investigation resulted in the <b style="mso-bidi-font-weight: normal;">P1.56-B</b> deficiency tax assessment
against GDI. The said tax assessment was the resultant of the several
irregularities which I have properly documented, that include, among others,
the following:</span></div>
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<br /></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">GDI’s
duly registered books of accounts (hardbound computer-generated), as I have
appropriately validated, reflected a <b style="mso-bidi-font-weight: normal;">Net
Income</b> amounting to <b style="mso-bidi-font-weight: normal;">P135.2-M</b>
while its Annual Income Tax Return (AITR) showed a <b style="mso-bidi-font-weight: normal;">Net Loss</b> amounting to <b style="mso-bidi-font-weight: normal;">P44.9-M</b>;</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">GDI’s
sales as reflected in the said books was <b style="mso-bidi-font-weight: normal;">P1.928-B</b>
while the total amount of sales as reflected in its AITR was only <b style="mso-bidi-font-weight: normal;">P1.032-B</b>. This shows a huge discrepancy
(under-declaration) amounting to <b style="mso-bidi-font-weight: normal;">P897-M</b>.</span></div>
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<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; line-height: 107%; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt;">According to the SUPREME COURT in the case of <u>Paper
Industries Corporation of the Philippines vs. Court of Appeals, et al., 250
SCRA 434</u> –</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">
the books of accounts prevail over tax return when they reflect higher sales,
because they are kept and prepared under control and supervision of the
taxpayer; and they embody what must appear to be admission against interest.</span></b></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Other
independent relevant documents, such as but not limited to: Franchise
Agreement, Technical Service Agreement, and Final Withholding Tax Returns,
indicate that GDI’s sales topped <b style="mso-bidi-font-weight: normal;">P2.366-B</b>
but the amount recorded in its books was only <b style="mso-bidi-font-weight: normal;">P1.928-B</b>. This again shows an unrecorded and undeclared sales
amounting to <b style="mso-bidi-font-weight: normal;">P438-M</b>.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The above-enumerated issues were clearly stated in my Formal
Complaint filed before the Office of the Ombudsman and also in my Petition for
Review filed before the Court of Appeals. </span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Henares and Sales, in their counter-affidavits, and even the
supporting affidavits of Atty. <b style="mso-bidi-font-weight: normal;">Rommel
Curiba</b>, RATE team leader, and Mr. <b style="mso-bidi-font-weight: normal;">Wilfredo
Reyes</b>, the Pioneer CAATTs user, did not give any justifications or
explanations to dispute the above-enumerated glaring and crucial issues.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">THE
AFORESAID P1.56-B TAX ASSESSMENT ATTAINED FINALITY; BUT HENARES INTENTIONALLY
FAILED TO ENFORCE COLLECTION THEREOF.</span></b></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Kim Henares, in her counter-affidavit, states: “Mr. Dalanon,
as then Revenue Officer, has no authority – and could not arrogate upon himself
– to decide and declare that a certain assessment is already final, executory,
and demandable. This is a function vested by law upon the Commissioner of
Internal Revenue or her duly authorized representatives.”</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The foregoing statement does not find basis in law. I submit
that Henares’s claim is erroneous, because it is the law that determines
finality of an assessment as clearly provided under Revenue Regulations (RR)
No. 12-99 in relation to Section 228 of the 1997 National Internal Revenue Code
(1997 NIRC), as amended.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The afore-said deficiency tax assessment attained finality
based on the following facts and law, and regulations:</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">A.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">GDI
FAILED TO FILE A VALID PROTEST.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">GDI’s alleged letter of protest merely stated “protest
against PAN [Preliminary Assessment Notice] adopted in toto”. It did not state
the facts, the applicable law, rules and regulations, or jurisprudence on which
the protest was based. It is neither a request for reconsideration nor reinvestigation.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">What GDI filed instead was a Request for Cancellation and
Withdrawal of the tax assessment. A request for cancellation or withdrawal is
significantly different from a request for reconsideration or reinvestigation
which is what the law requires.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The rules on protesting an assessment is found in Section 3
subsection 3.1.5 of RR No. 12-99, that reads:</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">“Disputed Assessment. – The taxpayer or
his duly authorized representative may protest administratively against the
aforesaid formal letter of demand and assessment notice within thirty (30) days
from date of receipt thereof.”</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">“The taxpayer shall state the FACTS,
applicable LAW, RULES and REGULATIONS, or JURISPRUDENCE on which his protest is
based, otherwise, his protest shall be considered VOID and WITHOUT FORCE and
EFFECT.”</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">“If the taxpayer fails to file a VALID
PROTEST against the formal letter of demand and assessment notice within thirty
(30) days from date of receipt thereof, the assessment shall become FINAL,
EXECUTORY and DEMANDABLE.”</span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"></span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The said Regulations must be taken in relation to Section
228 of the 1997 NIRC, which reads:</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">“Protesting an Assessment. – Such
assessment may be protested administratively by filing a REQUEST FOR
RECONSIDERATION or REINVESTIGATION within thirty (30) days from receipt of the
assessment in such form and manner as may be prescribed by implementing rules
and regulations. x x x otherwise, the assessment shall become FINAL.”</span></b></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Clearly, what the law demands is a <b style="mso-bidi-font-weight: normal;">VALID</b> administrative protest against the formal letter of demand
and assessment notice which required the taxpayer to comply with the following:</span></div>
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<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; mso-list: l1 level1 lfo3; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Century Gothic"; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">The protest must be through a request
for reconsideration or reinvestigation;</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Century Gothic"; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">The protest must be in the form and
manner as prescribed under RR No. 12-99, which provides that said protest must
state the facts, the law, rules and regulations, or jurisprudence on which the
protest is based; and</span></b></div>
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<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; mso-list: l1 level1 lfo3; text-align: justify; text-indent: -.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Century Gothic"; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman";">Must be filed within thirty (30) days
from receipt of the assessment.</span></b></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The <b style="mso-bidi-font-weight: normal;">COURT OF TAX
APPEALS</b> in the case of <u>Allied Banking Corporation vs. Commissioner of
Internal Revenue (CTA Case No. 4581, March 25, 1992</u>, cited that, “failure
to comply with any or all of these requirements results in the assessment
against the taxpayer becoming final and unappealable.”</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The letter should not just state “protest against PAN
adopted in toto”, because the administrative protest required to be filed as an
answer to the formal letter of demand and assessment notice is distinct and not
the same as the protest filed against the PAN.</span></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">The <b style="mso-bidi-font-weight: normal;">COURT OF TAX
APPEALS</b> emphasized in the case of <u>Security Bank Corporation vs.
Commissioner of Internal Revenue (CTA Case No. 6564, November 28, 2006</u> and
further accentuated in the case of <u>Bank of the Philippine Islands vs.
Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008</u>) that:</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">“A
protest to the preliminary assessment notice is not the same as the protest
required to be filed as an answer to the final assessment notice. In fact, a
preliminary assessment notice may or may not even be protested to by the
taxpayer, and the fact of non-protest shall not in any way make the preliminary
assessment notice final and unappealable. What is clear from 319-A of the Tax
Code of 1977, as amended, is that failure on the part of the taxpayer to
protest or reply to a preliminary assessment notice paves the way for the
issuance of a final assessment notice. However, evident under said Section (now
Section 228 of the 1997 Tax Code) is that failure on the part of the taxpayer
to file a valid administrative protest through a request for reconsideration or
reinvestigation on the final assessment notice, shall result in the finality of
the said FAN.” (Annotation supplied)</span></b></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">The <b style="mso-bidi-font-weight: normal;">SUPREME COURT </b>in
the case of <u>Allied Banking Corporation <i style="mso-bidi-font-style: normal;">vs.
</i>Commissioner of Internal Revenue</u> (<u>G.R. No. 175097</u>, <u>February
5, 2010</u>) heightened that:</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">“It
is the Formal Letter of Demand and Assessment Notice that must be
administratively protested or disputed within 30 days, and not the PAN.”</span></b></div>
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<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 14.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">B.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">GDI
FAILED TO SUBMIT THE REQUIRED DOCUMENTS WITHIN THE PERIOD REQUIRED BY LAW.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">That GDI filed its invalid protest against the Formal Letter
of Demand and Assessment Notices (FANs) on November 30, 2010 but it submitted
documents only on March 24, 2011. Hence, it was already 114 days after the date
of its filing of the protest.</span></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">Section 228 of the 1997 National Internal Revenue Code (1997
NIRC), as amended, provides:</span></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">“Within
sixty (60) days from filing of the protest, all relevant supporting documents
shall have been submitted; otherwise, the assessment shall become final.”</span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;"></span></b></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">In the instant case, when GDI submitted documents in support
of its protest, it was already beyond the sixty (60)-day period in violation of
the above-cited provisions of the 1997 NIRC.</span></div>
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<br /></div>
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<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 14.0pt;">Either of the above-cited grounds, the assessment against
GDI attained finality. These grounds were clearly stated in my Formal Complaint
and Motion for Reconsideration filed with the Ombudsman to justify the reversal
of its dismissal resolution, but were disregarded.</span></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">In a meeting held sometime on April, 2011 at the National
Office in connection with the instant case which was attended to by Atty. <b style="mso-bidi-font-weight: normal;">Claro Ortiz</b>, Head Revenue Executive
Assistant (now ACIR); Atty. <b style="mso-bidi-font-weight: normal;">Sixto Dy</b>,
Chief, National Investigation Division; Atty. <b style="mso-bidi-font-weight: normal;">Abegail Gamboa</b>, Chief of Staff of DCIR Estela Sales; and myself, it
was ascertained that the tax assessment has become final, executory and
demandable, in view of GDI’s failure to comply with the requirements as
prescribed. “These are scraps of paper”, that’s Atty. Ortiz saying.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Atty. Ortiz knows so well that the P1.56-B tax assessment
against GDI has become final, executory and demandable. And here is Kim
Henares, the Philippines’s internal revenue head tagged as the “unyielding tax
collector”, lawyering for GDI “Dunkin’ Donuts” – a bigtime tax cheat!!!</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Once the deficiency tax assessment attained finality, it is
no longer appealable; and there is now no reason why the BIR cannot continue
with the collection of the said tax.</span></i></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">THE
HOCUS-POCUS RE-INVESTIGATION.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Henares, in
her counter-affidavit, denied that she ordered “two re-investigations. SHE
LIED. <span style="mso-spacerun: yes;"> </span></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">In a
telecast interview by GMA-7, she said that representatives of GDI complained to
her that my tax assessment against the company was faulty, that is why she had
it re-investigated for several times (twice), conducted by different groups of
revenue officers who supposedly arrived at the same results, purportedly
finding my tax assessment to be incorrect.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">Just to reiterate. The PhP 1.56 billion deficiency tax
assessment against GDI attained finality. Thus, re-investigations are no longer
warranted.<br />
</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
Once the deficiency tax assessment attained finality, the right of the
government to collect the deficiency tax becomes absolute; thus, it precludes
the taxpayer from questioning the correctness of the assessment and from
raising any justification or defense that would pave the way for a
re-investigation. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">There is no LAW that authorizes the Commissioner to order
several re-investigations of a FINAL, EXECUTORY and DEMANDABLE assessment.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
However, notwithstanding the ensuing finality of the afore-said deficiency tax
assessment against GDI, Henares had it re-investigated for several times
(twice).</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
The “first re-investigation”, which is no longer warranted because my tax
assessment which remained undisturbed after review and evaluation by
high-ranking officers in the district and regional levels of the Bureau and
already covered by Final Assessment Notices (FANs) bearing Demand No.
41-B072-07 and all dated October 29, 2010 obtained finality, was assigned to
Revenue Officer <b style="mso-bidi-font-weight: normal;">STANLEY ONG</b>, under
Group Supervisor <b style="mso-bidi-font-weight: normal;">GREGORIO S. TUMANGUIL</b>.
Mr. Stanley Ong was the same revenue officer who conducted the review of the
case and recommended for the issuance of the statutory notices of assessment
(PAN and FANs) when he was yet with the Assessment Division of the Regional
Office in Quezon City.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
I am not a lawyer though I believe that Revenue Officer Stanley Ong who
conducted the “first re-investigation” could no longer disturb my tax
assessment by himself for reasons of principle of estoppel. The equitable
principle of estoppel forbids the revenue officer who conducted the “first
re-investigation” from taking inconsistent position against his concurrence to
my original audit findings that culminated in the deficiency tax assessment
amounting to P1.56 billion which is already FINAL, EXECUTORY and DEMANDABLE but
which was re-investigated by no other than him.<br />
<br />
The result of the “first re-investigation” conducted by Revenue Officers
Stanley Ong and Gregorio Tumanguil, both of BIR Revenue District Office (RDO)
No. 41, Mandaluyong City, was a HOCUS-POCUS.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
The “second re-investigation”, which again is no longer necessary because my
tax assessment obtained finality, was referred to Atty. <b style="mso-bidi-font-weight: normal;">GRACE CRUZ</b> of the National Investigation Division, BIR National
Office in Diliman, Quezon City. I strongly admire Atty. Cruz of her
investigative expertise in administrative cases. Lest I be misconstrued.
I am not saying that Atty. Cruz is short of proficiency in tax accounting and
tax auditing. No result of re-investigation was submitted by Atty. Cruz. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
So, how can BIR Commissioner Kim Henares claim that her groups of revenue
officers who conducted the two (2) separate re-investigations came up with the
same findings that my tax assessment against GDI was incorrect? </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
<br />
</span><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;">HENARES’s OTHER ‘PALUSOT’ IN NOT FILING FRAUD CASE VS GDI.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
Henares and her minions claimed that the compact disc (CD), which I presented
to the RATE “Run after Tax Evaders” team, was allegedly not compliant
with the requirements prescribed under Revenue Memorandum Order (RMO) No.
29-2002.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
The RATE coordinator, members, and Mr. Wilfredo Reyes, the pioneer CAATTs
(Computer-Assisted Audit Tools and Techniques) user, failed to consider and
evaluate the documents attached to the docket of GDI case and the findings for
deficiency tax assessment which were based on entries per duly-registered books
of accounts (hardbound computer-generated), as I have appropriately validated;
and other independent relevant documents, such as but not limited to, Franchise
Agreement; Technical Service Agreement, and other BIR returns filed by GDI,
such as: VAT returns and Final Withholding Tax Remittance Returns.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
The CD, which was neither mentioned nor objected to by GDI in its INVALID
protest, is used by Henares and her minions as scapegoat in not filing tax
evasion case against GDI by claiming that said CD is not compliant with the
requirements prescribed under RMO No. 29-2002 - that it should be properly
labeled with the name of the taxpayer, taxable year and serial no. and volume
no. and signed by the taxpayer and RDO.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
I pointed out that GDI adopts a “computer-assisted accounting system” wherein
it is still required to register a “hardbound computer-generated books of
accounts” which were the bases of my audit findings. Thus, the CD, which they
used as scapegoat in not filing fraud case against GDI, need not be strictly
compliant with the requirements provided under the aforesaid RMO in regards to
the markings to be inscribed thereon.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
RMO No. 29-2002 clearly provides that in case the taxpayer has no capability to
submit in CD-ROM form, procedures under the MANUAL SYSTEM shall prevail. In
other words, if the taxpayer adopts a computer system of accounting but has no
capability to integrate the different components of accounting system (i.e.,
books of accounts and other related accounting records) in a CD-ROM form, it
shall still be required to register a “hardbound computer-generated books of
accounts”, as in the case of GDI.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
I suggested to the RATE team that they may recommend for the issuance of a
Subpoena Duces Tecum (SDT) to compel GDI produce its duly-registered hardbound
computer-generated books of accounts, but the suggestion was just ignored.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt;"><br />
What is crystal clear is that, Henares deliberately deceived the FILIPINO
people by making excuses to conceal the real truth about this bigtime tax
evasion case.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<span style="font-family: "Century Gothic",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">Othello
Dalanon</span>Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com1tag:blogger.com,1999:blog-4059609801449488014.post-72321778814454259482016-04-02T10:30:00.000-07:002016-04-02T21:39:57.671-07:00PHILIPPINES's INTERNAL REVENUE CHIEF KIM HENARES DELIBERATELY DECEIVED THE FILIPINO PEOPLE.<!--[if gte mso 9]><xml>
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Message Header"/>
<w:LsdException Locked="false" Priority="11" QFormat="true" Name="Subtitle"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Salutation"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Date"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text First Indent"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text First Indent 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Note Heading"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Block Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Hyperlink"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="FollowedHyperlink"/>
<w:LsdException Locked="false" Priority="22" QFormat="true" Name="Strong"/>
<w:LsdException Locked="false" Priority="20" QFormat="true" Name="Emphasis"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Document Map"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Plain Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="E-mail Signature"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Top of Form"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Bottom of Form"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Normal (Web)"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Acronym"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Address"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Cite"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Code"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Definition"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Keyboard"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Preformatted"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Sample"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Typewriter"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Variable"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Normal Table"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="annotation subject"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="No List"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 6"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 7"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 8"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 6"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 7"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 8"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Contemporary"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Elegant"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Professional"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Subtle 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Subtle 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Balloon Text"/>
<w:LsdException Locked="false" Priority="39" Name="Table Grid"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Theme"/>
<w:LsdException Locked="false" SemiHidden="true" Name="Placeholder Text"/>
<w:LsdException Locked="false" Priority="1" QFormat="true" Name="No Spacing"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading"/>
<w:LsdException Locked="false" Priority="61" Name="Light List"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 1"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 1"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 1"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 1"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 1"/>
<w:LsdException Locked="false" SemiHidden="true" Name="Revision"/>
<w:LsdException Locked="false" Priority="34" QFormat="true"
Name="List Paragraph"/>
<w:LsdException Locked="false" Priority="29" QFormat="true" Name="Quote"/>
<w:LsdException Locked="false" Priority="30" QFormat="true"
Name="Intense Quote"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 1"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 1"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 1"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 1"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 1"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 1"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 1"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 2"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 2"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 2"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 2"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 2"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 2"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 2"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 2"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 2"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 2"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 2"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 2"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 2"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 3"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 3"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 3"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 3"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 3"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 3"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 3"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 3"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 3"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 3"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 3"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 3"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 3"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 3"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 4"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 4"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 4"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 4"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 4"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 4"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 4"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 4"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 4"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 4"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 4"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 4"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 4"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 4"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 5"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 5"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 5"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 5"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 5"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 5"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 5"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 5"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 5"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 5"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 5"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 5"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 5"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 5"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 6"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 6"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 6"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 6"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 6"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 6"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 6"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 6"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 6"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 6"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 6"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 6"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 6"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 6"/>
<w:LsdException Locked="false" Priority="19" QFormat="true"
Name="Subtle Emphasis"/>
<w:LsdException Locked="false" Priority="21" QFormat="true"
Name="Intense Emphasis"/>
<w:LsdException Locked="false" Priority="31" QFormat="true"
Name="Subtle Reference"/>
<w:LsdException Locked="false" Priority="32" QFormat="true"
Name="Intense Reference"/>
<w:LsdException Locked="false" Priority="33" QFormat="true" Name="Book Title"/>
<w:LsdException Locked="false" Priority="37" SemiHidden="true"
UnhideWhenUsed="true" Name="Bibliography"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" QFormat="true" Name="TOC Heading"/>
<w:LsdException Locked="false" Priority="41" Name="Plain Table 1"/>
<w:LsdException Locked="false" Priority="42" Name="Plain Table 2"/>
<w:LsdException Locked="false" Priority="43" Name="Plain Table 3"/>
<w:LsdException Locked="false" Priority="44" Name="Plain Table 4"/>
<w:LsdException Locked="false" Priority="45" Name="Plain Table 5"/>
<w:LsdException Locked="false" Priority="40" Name="Grid Table Light"/>
<w:LsdException Locked="false" Priority="46" Name="Grid Table 1 Light"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark"/>
<w:LsdException Locked="false" Priority="51" Name="Grid Table 6 Colorful"/>
<w:LsdException Locked="false" Priority="52" Name="Grid Table 7 Colorful"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 1"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 1"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 1"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 1"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 1"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 2"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 2"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 2"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 2"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 3"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 3"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 3"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 3"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 3"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 4"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 4"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 4"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 4"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 4"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 4"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 4"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 5"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 5"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 5"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 5"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 5"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 5"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 5"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 6"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 6"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 6"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 6"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 6"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 6"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 6"/>
<w:LsdException Locked="false" Priority="46" Name="List Table 1 Light"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark"/>
<w:LsdException Locked="false" Priority="51" Name="List Table 6 Colorful"/>
<w:LsdException Locked="false" Priority="52" Name="List Table 7 Colorful"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 1"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 1"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3 Accent 1"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4 Accent 1"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark Accent 1"/>
<w:LsdException Locked="false" Priority="51"
Name="List Table 6 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="52"
Name="List Table 7 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 2"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 2"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3 Accent 2"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4 Accent 2"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark Accent 2"/>
<w:LsdException Locked="false" Priority="51"
Name="List Table 6 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="52"
Name="List Table 7 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 3"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 3"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3 Accent 3"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4 Accent 3"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark Accent 3"/>
<w:LsdException Locked="false" Priority="51"
Name="List Table 6 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="52"
Name="List Table 7 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 4"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 4"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3 Accent 4"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4 Accent 4"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark Accent 4"/>
<w:LsdException Locked="false" Priority="51"
Name="List Table 6 Colorful Accent 4"/>
<w:LsdException Locked="false" Priority="52"
Name="List Table 7 Colorful Accent 4"/>
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<br />
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">PHILIPPINES’s INTERNAL REVENUE CHIEF KIM HENARES
COMMITTED CRIMINAL AND ADMINISTRATIVE OFFENSES AGAINST THE REPUBLIC OF THE
PHILIPPINES WHEN SHE REFUSED TO COLLECT A FINAL TAX ASSESSMENT DUE FROM LARGE
TAXPAYER.</span></b></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Philippine Daily
Inquirer chairperson Marixi Rufino-Prieto firm GOLDEN DONUTS, INC. (GDI), the
exclusive Philippine Franchisee of the global brand “Dunkin’ Donuts” owes the
Filipino people P1.56 billion unpaid tax deficit; but Bureau of Internal
Revenue Commissioner Kim S. Jacinto-Henares intentionally failed to collect it
or pursue tax evasion case against the company for deliberately perpetrating
fraudulent acts or criminal tax violations to evade payment of correct taxes.</span></div>
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<br /></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">On March 17,
2014, I filed criminal and administrative charges against Henares and her Deputy
Commissioner Estela Sales before the Office of the Ombudsman, but it dismissed
the case without conducting a thorough investigation and without requiring
Henares and Sales to submit GDI’s tax case docket and copy of its actual “protest”
which are very necessary in the investigation. </span></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The
Ombudsman, in its dismissal resolution, did not discuss the merits of the case
and did not state the facts and law upon which the conclusion given were drawn.</span></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">I feel in my
layman’s understanding that the Ombudsman gravely erred in dismissing the case;
so, on December 4, 2015 within the period to file an appeal, I filed a Petition
for Review before the Court of Appeals. The CA required Henares and Sales to
submit their respective comments/opposition which they complied. I am just
awaiting for the CA’s resolution.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">THE FACTS:</span></b></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">In 2008, as
then Revenue Officer of the Bureau of Internal Revenue, I was tasked to conduct
an investigation of the 2007 financial records of GDI for internal revenue tax
purposes.</span></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">My investigation
revealed several irregulaties which include, among others, the following:</span></div>
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<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">GDI’s duly-registered books of
accounts (hardbound computer-generated) reflected a Net Income amounting to
P135.2-M while its Annual Income Tax Return (AITR) reflected a Net Loss of
P44.9-M;</span></div>
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<br /></div>
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<br /></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">GDI’s sales as reflected in the
said books was P1.928-B while the total sales reflected in its AITR was only
P1.031-B. This shows a huge discrepancy (under-declaration) amounting to
P897-M;</span></div>
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<br /></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">According
to the SUPREME COURT in the case of Paper Industries Corporation of the
Philippines v. Court of Appeals, et al., 250 SCRA 434 – the books of accounts
prevail over tax return when they reflect higher sales, because they are kept
and prepared under control and supervision of the taxpayer; and they embody
what must appear to be admission against interest.</span></div>
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<br /></div>
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<br /></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Other independent relevant
documents, such as but not limited to: Franchise Agreement, Technical Service
Agreement, and Final Withholding Tax Returns, indicate that GDI’s sales topped
P2.366-B but the amount recorded in its books was only P1.928-B. This shows an
unrecorded and undeclared sales amounting to P438-M.</span></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">I personally
reported GDI’s omissions to Kim Henares and recommended to her the criminal
prosecution of GDI for tax evasion under the much-vaunted Run After Tax Evaders
(RATE) Program of the Bureau. However, she intentionally failed to
appropriately act on the case, so I filed criminal and administrative charges
against her and Deputy Commissioner Estela Sales before the Office of the
Ombudsman.</span></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The
above-enumerated issues were clearly stated in my formal complaint. All these,
including those discrepancies enumerated in my audit report, culminated in the
P1.56-B deficiency tax assessment against GDI.</span></div>
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<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Henares and
Sales, in their counter-affidavits, and even the supporting affidavits of Atty.
Rommel Curiba, RATE team leader, and Wilfredo Reyes, the Pioneer CAATTs user,
did not give any justifications or explanations to dispute the above-enumerated
glaring and crucial issues. </span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">THE AFORESAID P1.56-B TAX ASSESSMENT ATTAINED
FINALITY; BUT HENARES INTENTIONALLY FAILED TO ENFORCE COLLECTION THEREOF.</span></b></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Kim Henares,
in her counter-affidavit, states: “Mr. Dalanon, as then Revenue Officer, has no
authority – and could not arrogate upon himself – to decide and declare that a
certain assessment is already final, executory, and demandable. This is a
function vested by law upon the Commissioner of Internal Revenue or her duly
authorized representatives.”</span></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The
foregoing statement does not find basis in law. I submit that Henares’s claim
is erroneous, because it is the law that determines finality of an assessment
as clearly provided under Revenue Regulations (RR) No. 12-99 in relation to
Section 228 of the 1997 National Internal Revenue Code (1997 NIRC), as amended.</span></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The afore-said
deficiency tax assessment attained finality based on the following facts and
law, and regulations:</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -.25in;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">A.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">GDI
FAILED TO FILE A VALID PROTEST.</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">GDI’s
alleged letter of protest merely stated “protest against PAN [Preliminary
Assessment Notice] adopted in toto”. It did not state the facts, the applicable
law, rules and regulations, or jurisprudence on which the protest was based. It
is neither a request for reconsideration nor reinvestigation.</span></div>
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<br /></div>
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">What GDI
filed instead was a Request for Cancellation and Withdrawal of the tax
assessment. A request for cancellation or withdrawal is significantly different
from a request for reconsideration or reinvestigation which is what the law
requires.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
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<br /></div>
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The rules on
protesting an assessment is found in Section 3 subsection 3.1.5 of RR No.
12-99, that reads:</span></div>
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<br /></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">“Disputed
Assessment. – The taxpayer or his duly authorized representative may protest
administratively against the aforesaid formal letter of demand and assessment
notice within thirty (30) days from date of receipt thereof.”</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">“The
taxpayer shall state the FACTS, applicable LAW, RULES and REGULATIONS, or
JURISPRUDENCE on which his protest is based, otherwise, his protest shall be
considered VOID and WITHOUT FORCE and EFFECT.”</span></div>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">“If the
taxpayer fails to file a VALID PROTEST against the formal letter of demand and
assessment notice within thirty (30) days from date of receipt thereof, the
assessment shall become FINAL, EXECUTORY and DEMANDABLE.”</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
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<div class="MsoNoSpacing" style="text-align: justify;">
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The said
Regulations must be taken in relation to Section 228 of the 1997 NIRC, which
reads:</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">“Protesting
an Assessment. – Such assessment may be protested administratively by filing a
REQUEST FOR RECONSIDERATION or REINVESTIGATION within thirty (30) days from
receipt of the assessment in such form and manner as may be prescribed by
implementing rules and regulations. x x x otherwise, the assessment shall
become FINAL.”</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Clearly,
what the law demands is a VALID administrative protest against the formal
letter of demand and assessment notice which required the taxpayer to comply
with the following:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The protest must be through a
request for reconsideration or reinvestigation;</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The protest must be in the form
and manner as prescribed under RR No. 12-99, which provides that said protest
must state the facts, the law, rules and regulations, or jurisprudence on which
the protest is based; and</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Must be filed within thirty
(30) days from receipt of the assessment.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The COURT OF
TAX APPEALS in the case of Allied Banking Corporation vs. Commissioner of
Internal Revenue (CTA Case No. 4581, March 25, 1992, cited that, “failure to
comply with any or all of these requirements results in the assessment against
the taxpayer becoming final and unappealable.”</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The letter
should not just state “protest against PAN adopted in toto”, because the
administrative protest required to be filed as an answer to the formal letter
of demand and assessment notice is distinct and not the same as the protest
filed against the PAN.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The COURT OF
TAX APPEALS emphasized in the case of Security Bank Corporation vs.
Commissioner of Internal Revenue (CTA Case No. 6564, November 28, 2006 and
further accentuated in the case of Bank of the Philippine Islands vs.
Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008) that:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">“A
protest to the preliminary assessment notice is not the same as the protest
required to be filed as an answer to the final assessment notice. In fact, a
preliminary assessment notice may or may not even be protested to by the
taxpayer, and the fact of non-protest shall not in any way make the preliminary
assessment notice final and unappealable. What is clear from 319-A of the Tax
Code of 1977, as amended, is that failure on the part of the taxpayer to
protest or reply to a preliminary assessment notice paves the way for the
issuance of a final assessment notice. However, evident under said Section (now
Section 228 of the 1997 Tax Code) is that failure on the part of the taxpayer
to file a valid administrative protest through a request for reconsideration or
reinvestigation on the final assessment notice, shall result in the finality of
the said FAN.” (Annotation supplied)</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">The
<b style="mso-bidi-font-weight: normal;">SUPREME COURT </b>in the case of <u>Allied
Banking Corporation <i style="mso-bidi-font-style: normal;">vs. </i>Commissioner
of Internal Revenue</u> (<u>G.R. No. 175097</u>, <u>February 5, 2010</u>)
heightened that:</span></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">“It
is the Formal Letter of Demand and Assessment Notice that must be
administratively protested or disputed within 30 days, and not the PAN.”</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -.25in;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-list: Ignore;">B.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">GDI FAILED TO SUBMIT THE REQUIRED DOCUMENTS WITHIN THE
PERIOD REQUIRED BY LAW.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">That
GDI filed its invalid protest against the Formal Letter of Demand and
Assessment Notices (FANs) on November 30, 2010 but it submitted documents only
on March 24, 2011. Hence, it was already 114 days after the date of its filing
of the protest.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Section
228 of the 1997 National Internal Revenue Code (1997 NIRC), as amended,
provides:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">“Within
sixty (60) days from filing of the protest, all relevant supporting documents
shall have been submitted; otherwise, the assessment shall become final.”</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">In
the instant case, when GDI submitted documents in support of its protest, it
was already beyond the sixty (60)-day period in violation of the above-cited
provisions of the 1997 NIRC.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Either
of the above-cited grounds, the assessment against GDI attained finality. These
grounds were clearly stated in my Formal Complaint and Motion for
Reconsideration filed with the Ombudsman to justify the reversal of its
dismissal resolution, but were disregarded.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">In a meeting
held sometime on April, 2011 at the National Office in connection with the
instant case which was attended to by Atty. Claro Ortiz, Head Revenue Executive
Assistant (now ACIR); Atty. Sixto Dy, Chief, National Investigation Division;
Atty. Abegail Gamboa, Chief of Staff of DCIR Estela Sales; and myself, it was
ascertained that the tax assessment has become final, executory and demandable,
in view of GDI’s failure to comply with the requirements as prescribed. “These
are scraps of paper”, that’s Atty. Ortiz saying.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Atty. Ortiz
knows so well that the P1.56-B tax assessment against GDI has become final,
executory and demandable. And here is Kim Henares, the Philippines’s internal
revenue head tagged as the “unyielding tax collector”, lawyering for GDI
“Dunkin’ Donuts” – a bigtime tax cheat!!!</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Once the deficiency tax assessment attained
finality, it is no longer appealable; and there is now no reason why the bir
cannot continue with the collection of the said tax.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">THE HOCUS-POCUS RE-INVESTIGATION.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Henares, in a telecast interview by GMA-7, said that
representatives of GDI complained to her that my tax assessment against the
company was faulty, that is why she had it re-investigated for several times (twice),
conducted by different groups of revenue officers who supposedly arrived at the
same results, purportedly finding my tax assessment to be incorrect. SHE
LIED!!!</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br />
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Just
to reiterate. The PhP 1.56 billion deficiency tax assessment against GDI
attained finality. Thus, re-investigations are no longer warranted.<br />
<br />
<br />
Once the deficiency tax assessment attained finality, the right of the
government to collect the deficiency tax becomes absolute; thus, it precludes
the taxpayer from questioning the correctness of the assessment and from
raising any justification or defense that would pave the way for a
re-investigation. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">There is no
LAW that authorizes the Commissioner to order several re-investigations of a
FINAL, EXECUTORY and DEMANDABLE assessment.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
However, notwithstanding the ensuing finality of the afore-said deficiency tax
assessment against GDI, Henares had it re-investigated for several times (twice).</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><span style="mso-spacerun: yes;"> </span><br />
<br />
The “first re-investigation”, which is no longer warranted because my tax
assessment which remained undisturbed after review and evaluation by
high-ranking officers in the district and regional levels of the Bureau and
already covered by Final Assessment Notices (FANs) bearing Demand No.
41-B072-07 and all dated October 29, 2010 obtained finality, was assigned to
Revenue Officer STANLEY ONG, under Group Supervisor GREGORIO S. TUMANGUIL. Mr.
Stanley Ong was the same revenue officer who conducted the review of the case
and recommended for the issuance of the statutory notices of assessment (PAN
and FANs) when he was yet with the Assessment Division of the Regional Office
in Quezon City.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
I am not a lawyer though I believe that Revenue Officer Stanley Ong who
conducted the “first re-investigation” could no longer disturb my tax
assessment by himself for reasons of principle of estoppel. The equitable
principle of estoppel forbids the revenue officer who conducted the “first re-investigation”
from taking inconsistent position against his concurrence to my original audit
findings that culminated in the deficiency tax assessment amounting to P1.56
billion which is already FINAL, EXECUTORY and DEMANDABLE but which was
re-investigated by no other than him.<br />
<br />
<br />
The result of the “first re-investigation” conducted by Revenue Officers
Stanley Ong and Gregorio Tumanguil, both of BIR Revenue District Office (RDO) No.
41, Mandaluyong City, was a HOCUS-POCUS.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
The “second re-investigation”, which again is no longer necessary because my
tax assessment obtained finality, was referred to Atty. GRACE CRUZ of the
National Investigation Division, BIR National Office in Diliman, Quezon City. I
strongly admire Atty. Cruz of her investigative expertise in administrative
cases. Lest I be misconstrued. I am not saying that Atty. Cruz is short
of proficiency in tax accounting and tax auditing. No result of
re-investigation was submitted by Atty. Cruz. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
So, how can BIR Commissioner Kim Henares claim that her groups of revenue
officers who conducted the two (2) separate re-investigations came up with the
same findings that my tax assessment against GDI was incorrect? </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br />
<br />
<br />
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">ANOTHER “PALUSOT”
OF KIM HENARES.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
Henares and her minions claimed that the compact disc (CD), which I presented
to the RATE “Run after Tax Evaders” team, was allegedly not compliant
with the requirements prescribed under Revenue Memorandum Order (RMO) No.
29-2002.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
The RATE coordinator, members, and Mr. Wilfredo Reyes, the pioneer CAATTs
(Computer-Assisted Audit Tools and Techniques) user, failed to consider and
evaluate the documents attached to the docket of GDI case and the findings for
deficiency tax assessment which were based on entries per duly-registered books
of accounts (hardbound computer-generated), as I have appropriately validated;
and other independent relevant documents, such as but not limited to, Franchise
Agreement; Technical Service Agreement, and other BIR returns filed by GDI,
such as: VAT returns and Final Withholding Tax Remittance Returns.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
The CD, which was neither mentioned nor objected to by GDI in its INVALID
protest, is used by Henares and her minions as scapegoat in not filing tax
evasion case against GDI by claiming that said CD is not compliant with the
requirements prescribed under RMO No. 29-2002 - that it should be properly
labeled with the name of the taxpayer, taxable year and serial no. and volume
no. and signed by the taxpayer and RDO.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
I pointed out that GDI adopts a “computer-assisted accounting system” wherein
it is still required to register a “hardbound computer-generated books of
accounts” which were the bases of my audit findings. Thus, the CD, which they
used as scapegoat in not filing fraud case against GDI, need not be strictly
compliant with the requirements provided under the aforesaid RMO in regards to
the markings to be inscribed thereon.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
RMO No. 29-2002 clearly provides that in case the taxpayer has no capability to
submit in CD-ROM form, procedures under the MANUAL SYSTEM shall prevail. In
other words, if the taxpayer adopts a computer system of accounting but has no
capability to integrate the different components of accounting system (i.e.,
books of accounts and other related accounting records) in a CD-ROM form, it
shall still be required to register a “hardbound computer-generated books of
accounts”, as in the case of GDI.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
I suggested to the RATE team that they may recommend for the issuance of a
Subpoena Duces Tecum (SDT) to compel GDI produce its duly-registered hardbound
computer-generated books of accounts, but the suggestion was just ignored.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
What is crystal clear is that, Henares deliberately deceived the FILIPINO
people by making excuses to conceal the real truth about this bigtime tax
evasion case.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br />
<br />
<br />
ATTY. KIM HENARES, JUST SPEAK THE WHOLE TRUTH AND NOTHING BUT THE TRUTH. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">DONUT LIE. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">DONUT EAT
YOUR WORDS.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">DONUT BETRAY
THE FILIPINO PEOPLE.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">www.othelloedalanon.blogspot.com</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Othello
Dalanon</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"><br /></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "century gothic" , sans-serif; font-size: 14.0pt;"></span><span lang="EN-US" style="font-family: "century gothic" , sans-serif; font-size: 14.0pt; line-height: 107%;">BIR, DOF, Department of Finance, Tax Watch,
Golden Donuts, Inc., Dunkin’ Donuts, Dunkin’ Brands, Inc., Daang Matuwid, Tax
Experts, Office of the President, Office of the Ombudsman, Supreme Court,
Jurisprudence, Revenue Regulations, Revenue Memorandum Order, Revenue
Memorandum Circular, Business Registration, BIR Tax Online, National Internal
Revenue Code, Law, Tax, Taxation, Philippine Income Tax, Tax Reform, Tax Cut,
VAT, Income Tax, House of Representatives, Senate, Value-Added Tax, Electronic
Filing and Payment System (eFPS)</span></div>
Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-65394254840781620822015-12-27T08:17:00.002-08:002015-12-27T08:19:32.676-08:00PHILIPPINES's INTERNAL REVENUE CHIEF BETRAYED THE FILIPINO PEOPLE<!--[if gte mso 9]><xml>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The formal
complaint I filed with the Office of the Ombudsman vs Kim Henares and Estela
Sales in connection with the P1.56-B tax case involving Golden Donuts, Inc.
(GDI) includes, among other issues, the following:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That GDI’s duly-registered
books of accounts reflected a Net Income of P135.2-M while the tax return
reflected a Net Loss of P44.9-M.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That GDI’s duly-registered
books of accounts reflected higher sales than that reflected on the tax return.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Sales
per duly-registered books was P1.928-B while per tax return was P1.031-B. A
huge discrepancy (under-declaration) amounting to P897-M.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">SUPREME COURT</b> ruled in the case of
Paper Industries Corporation of the Philippines versus Court of Appeals, et
al., 250 SCRA 434 that “where the books of accounts reflected a Sales or
Receipts higher than that reflected in the return, the books of accounts should
prevail. This is so, because the books of accounts are kept by the taxpayer and
are prepared under its control and supervision; and they reflected what may be
deemed to be admission against interest.”</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Other independent relevant
documents further revealed that GDI’s sales topped P2.366-B but the amount
recorded in the duly-registered books was P1.928-B. A huge discrepancy
amounting to P438-M.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Henares and
Sales, in their counter-affidavits, and even the supporting affidavits of Atty.
Romel Curiba, RATE Team Leader, and Mr. Wilfredo Reyes, the pioneer BIR CAATTs
user, did not state any justifications or explanations to refute the
above-enumerated issues.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
Ombudsman dismissed the case without investigating these issues scrupulously,
and without discussing the same in the dismissal resolution despite glaring
discrepancies.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
Ombudsman also did not secure GDI tax case docket from the BIR which is very
crucial in the investigation.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">No hearing
was conducted. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">THE HOCUS-POCUS</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Henares, in a telecast interview by GMA-7, said that
representatives of GDI complained to her that my tax assessment against the
company was faulty, that is why she had it re-investigated twice, conducted by
different groups of revenue officers who supposedly arrived at the same
results, purportedly finding my tax assessment to be incorrect. SHE LIED!!!</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Just to
reiterate. The PhP 1.56 billion deficiency tax assessment against GDI obtained
finality. Thus, re-investigations are no longer warranted.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Once the
deficiency tax assessment obtained finality, the right of the government to
collect the deficiency tax becomes absolute; thus, precludes the taxpayer from
questioning the correctness of the assessment and from raising any justification
or defense that would pave the way for a re-investigation.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">There is no
LAW that authorizes the Commissioner to order two (2) re-investigations of a
FINAL, EXECUTORY and DEMANDABLE assessment. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Notwithstanding
the ensuing finality of the afore-said deficiency tax assessment against GDI,
no less than the Commissioner herself allowed such re-investigations.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">The “first re-investigation”, which is
no longer warranted because my tax assessment which remained undisturbed after
review and evaluation by high-ranking officers in the district and regional
levels of the Bureau and already covered by Final Assessment Notices (FANs)
bearing Demand No. 41-B072-07 and all dated October 29, 2010 obtained finality,
was assigned to Revenue Officer <b style="mso-bidi-font-weight: normal;">STANLEY
ONG</b>, under Group Supervisor <b style="mso-bidi-font-weight: normal;">GREGORIO
S. TUMANGUIL</b>. Mr. <b style="mso-bidi-font-weight: normal;">STANLEY ONG</b> was
the same revenue officer who conducted the review of the case and recommended
for the issuance of the statutory notices of assessment (PAN and FANs) when he
was yet with the Assessment Division of the Regional Office in Quezon City.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">I am not a lawyer though I believe
that Revenue Officer <b style="mso-bidi-font-weight: normal;">STANLEY ONG</b> who
conducted the “first re-investigation” could no longer disturb my tax
assessment by himself for reasons of <b style="mso-bidi-font-weight: normal;">principle
of estoppel</b>. The equitable principle of estoppel forbids the revenue
officer who conducted the “first re-investigation” from taking inconsistent
position against his concurrence to my original audit findings that culminated
in the deficiency tax assessment amounting to P1.56 billion which is already
FINAL, EXECUTORY and DEMANDABLE but which was re-investigated by no other than
him. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">The result of the “first
re-investigation” conducted by revenue officers <b style="mso-bidi-font-weight: normal;">STANLEY</b> <b style="mso-bidi-font-weight: normal;">ONG</b> and <b style="mso-bidi-font-weight: normal;">GREGORIO TUMANGUIL</b>, both of BIR Revenue
District Office (RDO) no. 41, Mandaluyong City, was a <b style="mso-bidi-font-weight: normal;">HOCUS-POCUS</b>.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">The “second re-investigation”, which
again is no longer necessary because my tax assessment obtained finality, was
referred to <b style="mso-bidi-font-weight: normal;">ATTY. GRACE CRUZ</b> of the
National Investigation Division, BIR National Office in Diliman, Quezon City. I
strongly admire ATTY. CRUZ of her investigative expertise in administrative
cases. Lest I be misconstrued.<span style="mso-spacerun: yes;"> </span>I am not saying
that ATTY. CRUZ is short of proficiency in tax accounting and tax auditing. No
result of re-investigation was submitted by ATTY. CRUZ. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">So, how can Henares claim that her
groups of revenue officers who conducted the two (2) separate re-investigations
came up with the same findings that my tax assessment against GDI was
incorrect?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">What is
crystal clear is that, Henares deliberately deceived the <b style="mso-bidi-font-weight: normal;">FILIPINO</b> people by making excuses to conceal the real truth about
this bigtime tax evasion case.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">ON ANOTHER NOTE.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">Henares and her minions claimed that
the compact disc (CD), which I presented to the RATE “Run after Tax Evaders”
team,<span style="mso-spacerun: yes;"> </span>was allegedly not compliant with
the requirements prescribed under Revenue Memorandum Order (RMO) No. 29-2002.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The RATE
coordinator, members, and Mr. Wilfredo Reyes, the pioneer CAATTs
(Computer-Assisted Audit Tools and Techniques) user, failed to consider and
evaluate the documents attached to the docket of GDI case and the findings for
deficiency tax assessment which were based on entries per duly-registered books
of accounts (hardbound computer-generated), as I have appropriately validated;
and other independent relevant documents, such as but not limited to, Franchise
Agreement; Technical Service Agreement, and other BIR returns filed by GDI,
such as: VAT returns and Final Withholding Tax Remittance Returns.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The CD,
which was neither mentioned nor objected to by GDI in its <b style="mso-bidi-font-weight: normal;">INVALID</b> protest, is used by Henares and her minions as scapegoat in
not filing tax evasion case against GDI by claiming that said CD is not
compliant with the requirements prescribed under RMO No. 29-2002 - that it
should be properly labeled with the name of the taxpayer, taxable year and
serial no. and volume no. and signed by the taxpayer and RDO.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">I pointed
out that GDI adopts a “computer-assisted accounting system” wherein it is still
required to register a “hardbound computer-generated books of accounts” which
were the bases of my audit findings. Thus, the CD, which they used as scapegoat
in not filing fraud case against GDI, need not be strictly compliant with the
requirements provided under the aforesaid RMO in regards to the markings to be
inscribed thereon.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">RMO No.
29-2002 clearly provides that in case the taxpayer has no capability to submit
in CD-ROM form, procedures under the <b style="mso-bidi-font-weight: normal;">MANUAL
SYSTEM</b> shall prevail. In other words, if the taxpayer adopts a computer
system of accounting but has no capability to integrate the different
components of accounting system (i.e., books of accounts and other related
accounting records) in a CD-ROM form, it shall still be required to register a
“hardbound computer-generated books of accounts”, as in the case of GDI.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">I suggested
to the RATE team that they may recommend for the issuance of a Subpoena Duces
Tecum (SDT) to compel GDI produce its duly-registered hardbound
computer-generated books of accounts, but the suggestion was just ignored.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">ATTY. HENARES, JUST SPEAK THE WHOLE TRUTH AND
NOTHING BUT THE TRUTH!!!</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Othello Dalanon </span></b></div>
Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-5036799907125285572015-09-22T06:51:00.000-07:002015-09-30T21:31:59.690-07:00PHILIPPINES’s BIR CHIEF KIM HENARES DELIBERATELY DECEIVED THE FILIPINO PEOPLE.<!--[if gte mso 9]><xml>
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<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Bureau of
Internal Revenue (BIR) Commissioner Kim Henares’s excuses to conceal the real
truth about the <b style="mso-bidi-font-weight: normal;">P1.56-B tax evasion case</b>
involving Philippine Daily Inquirer (PDI) Chair Marixi Rufino-Prieto firm <b style="mso-bidi-font-weight: normal;">Golden Donuts, Inc.</b> (<b style="mso-bidi-font-weight: normal;">GDI</b>), the exclusive Philippine
Franchisee of the global brand “<b style="mso-bidi-font-weight: normal;">Dunkin’
Donuts</b>”:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That GDI’s representatives purportedly
complained to her that my tax assessment against the company was inaccurate;</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That she ordered two (2)
re-investigations conducted by different groups of revenue officers who
supposedly arrived at the same results, purportedly finding my tax assessment
to be incorrect;</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That the authority to decide
and declare finality of a certain assessment is a function vested by law upon
the Commissioner of Internal Revenue; and</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That the compact disc (CD)
which I presented to the RATE “Run After Tax Evaders” team was allegedly not
compliant with the requirements prescribed under Revenue Memorandum Order (RMO)
No. 29-2002.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The foregoing
assertions are discussed in the same sequence and manner, vis:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo2; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That GDI’s representatives purportedly
complained to her that my tax assessment against the company was inaccurate.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">My
firm stance:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">My
tax audit/investigation resulted in several findings of irregularities which
were properly supported by mathematical computations based on actual data
contained in GDI’s financial records and appropriately substantiated with
pieces of documentary evidence, culminated in the deficiency tax assessment
against GDI amounting to PhP 1.56-B, including increments. Among others, are as
follows:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;">
<b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;"><b>GDI
keeps two (2) sets of books of accounts</b>. </span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">One
is the duly-registered hardbound computer-generated books of accounts which
were the bases of my tax assessment, and the other is the unregistered
not-permanently-bound “manually-posted original books of accounts” which GDI
claimed as the basis of its Trial Balance for financial statements and income
tax return purposes.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Is
it not that keeping two (2) sets of books of accounts, a fraudulent act or
criminal tax violation?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;">
<b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;"><b>GDI
supplied false information on the tax return</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">GDI
adopts a “computer-assisted accounting system” with duly-registered hardbound
computer-generated books of accounts.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
compact disc (CD) submitted by GDI to the Bureau for audit, and the
duly-registered hardbound computer-generated books of accounts, as I have
appropriately validated, reflected a Net Taxable Income amounting to PhP 135.2
million while the Annual Income Tax Return (AITR) reflected a Net Loss of PhP
44.9 million.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">On
the basis of these information alone, it can readily be deduced that GDI
under-declared its income on the tax return.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Is
it not that supplying false information on the tax return, a fraudulent act or
criminal tax violation? </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;">
<b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">c.<span style="font: 7.0pt "Times New Roman";">
</span></span></span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;"><b>GDI under-declared its Sales on
the tax return in two (2) instances</b>:</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l0 level1 lfo4; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">i.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The CD and the duly-registered
books (hardbound computer-generated), as I have appropriately validated,
reflected a Sales amounting to PhP 1.928 billion while the amount reflected on
the AITR was only PhP 1.031 billion; a huge discrepancy (substantial
under-declaration) amounting to PhP 897 million.</span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">SUPREME COURT </b>ruled in the case of <u>Paper
Industries Corporation of the Philippines <i style="mso-bidi-font-style: normal;">vs.
</i>Court of Appeals, et al., 250 SCRA 434</u> that <i>“where the books of
accounts reflected a Sales or Receipts higher than that reflected in the
return, the books of accounts should prevail. This is so, because the books of
accounts are kept by the taxpayer and are prepared under its control and
supervision; and they reflected what may be deemed to be admission against
interest</i>.” </span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
representations made by GDI in the CD and duly-registered books submitted and
presented by it to the Bureau for audit and examination amounted to admissions
against interest which it cannot disown and change at its convenience of
pleasure.</span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Is
it not that substantial under-declaration of Sales on the tax return, a
fraudulent act or criminal tax violation?</span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l0 level1 lfo4; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">ii.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Other independent relevant
documents, such as but not limited to: (a) Franchise Agreement between GDI and
Dunkin’ Donuts of America, Inc.; (2) Technical Service Agreement between GDI
and its affiliate-Antares Management, Inc. (AMI); and other BIR filings of GDI
(i.e. final withholding tax remittance returns and VAT returns), further
revealed that GDI’s Sales topped PhP 2.366 billion but the amount recorded in
its duly-registered books (hardbound computer-generated) was only PhP 1.928
billion; a huge discrepancy (substantial unrecorded and undeclared sales)
amounting to PhP 438 million.</span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
information contained in the enumerated documents were utilized in further
determining GDI’s Sales on the basis of the provisions of Section 5(A) of the
1997 National Internal Revenue Code (1997 NIRC), as amended, which reads:</span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.25in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“<b>Power
of the Commissioner to obtain information, and to summon, examine, and take
testimony of persons</b>. – In ascertaining the correctness of any return, or in
making a return when none has been made, or in determining the liability of any
person for any internal revenue tax, or in collecting any such liability, or in
evaluating tax compliance, the Commissioner is authorized:</span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.25in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 117.0pt; margin-right: .5in; margin-top: 0in; mso-list: l4 level1 lfo5; text-align: justify; text-indent: -27.0pt;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">(A)<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">To examine any book, paper,
record, or other data which may be relevant or material to such inquiry;”</span></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
method of validation I used was already upheld by the Court of Tax Appeals in
the case of <u>Asia Coal Corporation <i style="mso-bidi-font-style: normal;">vs.</i>
Commissioner of Internal Revenue (CTA Case No. 6803, February 13, 2008</u>)
that <i>“the respondent may utilize any kind of document, x x x to determine the
correct sales of the petitioner…”</i></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Is
it not that deliberate non-recording of sales in the duly-registered books of
accounts and non-declaration of the same on the tax return, are fraudulent acts
or criminal tax violations?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;">
<b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">d.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;"><b>GDI
substantially under-remitted VAT</b>.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Under the VAT principle - Output VAT is concomitant to Sales
or Revenue account. Thus,
an under-declaration of Sales results in the under-remittance of VAT.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">For
year 2007, GDI substantially under-declared its Sales on the tax return,
consequently VAT was significantly under-remitted.</span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Is
it not that substantial under-remittance of VAT, a fraudulent act or criminal
tax violation?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Just
to say it again. All the above enumerated findings of irregularities, and all
other discrepancies stated in my audit memorandum report submitted, were
appropriately substantiated with pieces of documentary evidence submitted by
GDI itself.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo2; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That she ordered two (2)
re-investigations conducted by different groups of revenue officers who
supposedly arrived at similar results, purportedly finding my tax assessment to
be incorrect.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">My
firm stance:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
PhP 1.56 billion deficiency tax assessment against GDI obtained finality. Thus,
re-investigations are no longer warranted.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Once
the deficiency tax assessment obtained finality, the right of the government to
collect the deficiency tax becomes absolute; thus, precludes the taxpayer from
questioning the correctness of the assessment and from raising any
justification or defense that would pave the way for a re-investigation.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">There
is no LAW that authorizes the Commissioner to order two (2) re-investigations
of a FINAL, EXECUTORY and DEMANDABLE assessment.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">However,
notwithstanding the ensuing finality of the afore-said deficiency tax assessment
against GDI, no less than the Commissioner herself allowed such
re-investigations.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">The “first
re-investigation”, which is no longer warranted because my tax assessment which
remained undisturbed after review and evaluation by high-ranking officers in
the district and regional levels and already covered by Final Assessment Notices
(FANs) bearing Demand No. 41-B072-07 and all dated October 29, 2010 obtained
finality, was assigned to Revenue Officer Stanley Ong, under Group Supervisor
Gregorio S. Tumanguil, who was the same revenue officer who conducted the
review of the case and recommended for the issuance of the statutory notices of
assessment (PAN and FANs) when he was yet with the Assessment Division of the
Regional Office in Quezon City.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">I am not a
lawyer though I believe that Revenue Officer Stanley Ong who conducted the “first
re-investigation” could no longer disturb my tax assessment by himself for
reasons of principle of estoppel. The equitable principle of estoppel forbids
the revenue officer who conducted the “first re-investigation” from taking
inconsistent position against his concurrence to my original audit findings
that culminated in the deficiency tax assessment amounting to P1.56 billion
which is already FINAL, EXECUTORY and DEMANDABLE but which was re-investigated
by no other than him. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">The second
re-investigation, which again is no longer necessary because my tax assessment
obtained finality, was referred to Atty. Grace Cruz of the National
Investigation Division, BIR National Office in Diliman, Quezon City. I strongly
admire Atty. Cruz of her investigative expertise in administrative cases. Lest
I be misconstrued. I am not saying that Atty. Cruz is short of proficiency in tax
accounting and tax auditing. No result of re-investigation was submitted by
Atty. Cruz. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">So, how can
BIR Commissioner Kim Henares claim that her groups of revenue officers who
conducted the two (2) separate re-investigations came up with the same findings
that my tax assessment against GDI was incorrect?</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;">Just to
reiterate. The P1.56-B tax deficit of GDI has become due and demandable; thus,
it already legally belongs to the Filipino people.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo2; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That
the authority to decide and declare finality of a certain assessment is a
function vested by law upon the Commissioner of Internal Revenue.</span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;"></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">My
firm position:</span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt;"></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Her
assertion does not find basis in LAW.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">It
is the LAW that determines finality of a certain assessment as clearly provided
under Revenue Regulations (RR) No. 12-99 as amended by RR No. 18-2013 which the
Commissioner herself promulgated, in relation to Section 228 of the 1997 NIRC,
as amended.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
tax assessment against GDI became final, executory and demandable in two (2)
instances, vis:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l3 level1 lfo7; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">a.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">GDI’s
letter of protest against the Final Assessment Notices (FANs) is <b style="mso-bidi-font-weight: normal;">invalid</b> based on the following facts
and law, and regulations.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
alleged letter of protest merely stated “protest against PAN adopted <i style="mso-bidi-font-style: normal;">in toto</i>”. It did not state the <b style="mso-bidi-font-weight: normal;">facts</b>, the applicable <b style="mso-bidi-font-weight: normal;">law</b>, <b style="mso-bidi-font-weight: normal;">rules and regulations</b>, or <b style="mso-bidi-font-weight: normal;">jurisprudence</b>
on which the protest was based. It is neither a <b style="mso-bidi-font-weight: normal;">request for reconsideration</b> nor <b style="mso-bidi-font-weight: normal;">reinvestigation</b>.</span></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
rules on protesting an assessment is found in Section 3 subsection 3.1.5 of
Revenue Regulations (RR) No. 12-99, that reads:</span></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“<b style="mso-bidi-font-weight: normal;">Disputed Assessment. – </b>The taxpayer or his duly authorized
representative may protest administratively against the aforesaid formal letter
of demand and assessment notice within thirty (30) days from date of receipt
thereof.”</span></i></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“The taxpayer shall state the <b style="mso-bidi-font-weight: normal;">facts</b>, the applicable <b style="mso-bidi-font-weight: normal;">law</b>, <b style="mso-bidi-font-weight: normal;">rules and regulations</b>, or <b style="mso-bidi-font-weight: normal;">jurisprudence</b>
on which his protest is based, otherwise, his protest shall be considered <b style="mso-bidi-font-weight: normal;">void</b> <b style="mso-bidi-font-weight: normal;">and without force and effect</b>.”</span></i></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“If the taxpayer fails to file
a <b style="mso-bidi-font-weight: normal;">valid protest</b> against the formal
letter of demand and assessment notice within thirty (30) days from date of
receipt thereof, the assessment shall become <b style="mso-bidi-font-weight: normal;">final</b>, <b style="mso-bidi-font-weight: normal;">executory</b> and <b style="mso-bidi-font-weight: normal;">demandable</b>.”</span></i></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
said Regulations must be taken in relation to Section 228 of the 1997 Tax Code,
which reads:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“<b style="mso-bidi-font-weight: normal;">Protesting an Assessment. –</b></span></i></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Such assessment may be
protested administratively by filing a <b style="mso-bidi-font-weight: normal;">request
for reconsideration</b> or <b style="mso-bidi-font-weight: normal;">reinvestigation</b>
within thirty (30) days from receipt of the assessment in such form and manner
as may be prescribed by implementing rules and regulations. x x x otherwise,
the assessment shall become <b style="mso-bidi-font-weight: normal;">final</b>.”</span></i></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Clearly,
what the law demands is a valid administrative protest against the formal
letter of demand and assessment notice which required the taxpayer to comply
with the following:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; mso-list: l1 level1 lfo6; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">i.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The protest must be through a <b style="mso-bidi-font-weight: normal;">request for reconsideration or
reinvestigation</b>;</span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; mso-list: l1 level1 lfo6; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">ii.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The protest must be in the form
and manner as prescribed under RR No. 12-99, which provides that said protest
must state the <b style="mso-bidi-font-weight: normal;">facts</b>, the <b style="mso-bidi-font-weight: normal;">law</b>, <b style="mso-bidi-font-weight: normal;">rules and regulations</b>, or <b style="mso-bidi-font-weight: normal;">jurisprudence</b>
on which the protest is based; and</span></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; mso-list: l1 level1 lfo6; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">iii.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Must be filed within thirty
(30) days from receipt of the assessment.</span></div>
<div class="MsoListParagraph">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">COURT OF TAX APPEALS</b> in the case of <u>Allied
Banking Corporation <i style="mso-bidi-font-style: normal;">vs</i>. Commissioner
of Internal Revenue</u> (<u>CTA Case No. 4581</u>, <u>March 25, 1992</u>) cited
that, <i style="mso-bidi-font-style: normal;">“[f]ailure to comply with any or
all of these requirements results in the assessment against the taxpayer
becoming final and unappealable.”</i></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
letter should not just state “protest against PAN adopted <i style="mso-bidi-font-style: normal;">in toto”, </i>because the administrative protest required to be filed
as an answer to the formal letter of demand and assessment notice is distinct
and not the same as the protest filed against the PAN.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">COURT OF TAX APPEALS</b> emphasized in
the case of <u>Security Bank Corporation <i style="mso-bidi-font-style: normal;">vs</i>.
Commissioner of Internal Revenue</u> (<u>CTA Case No. 6564</u>, <u>November 28,
2006</u>) and further accentuated in the case of <u>Bank of the Philippine
Islands <i style="mso-bidi-font-style: normal;">vs</i>. Commissioner of Internal
Revenue</u> (<u>CTA Case No. 7397</u>, <u>April 9, 2008</u>) that:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“[A] protest to the preliminary
assessment notice is not the same as the protest required to be filed as an
answer to the final assessment notice. In fact, a preliminary assessment notice
may or may not even be protested to by the taxpayer, and the fact of
non-protest shall not in any way make the preliminary assessment notice final
and unappealable. What is clear from Section 319-A of the Tax Code of 1977, as
amended, is that failure on the part of the taxpayer to protest or reply to a
preliminary assessment notice paves the way for the issuance of a final
assessment notice. However, evident under said Section (now Section 228 of the
1997 Tax Code) is that failure on the part of the taxpayer to file a valid
administrative protest through a request for reconsideration or reinvestigation
on the final assessment notice, shall result in the finality of the said FAN.”
(Annotation supplied)</span></i></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
<b style="mso-bidi-font-weight: normal;">SUPREME COURT</b> in the case of <u>Allied
Banking Corporation <i style="mso-bidi-font-style: normal;">vs</i>. Commissioner
of Internal Revenue</u> (<u>G.R. No. 175097</u>, <u>February 5, 2010</u>)
heightened that:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“It is the Formal Letter of
Demand and Assessment Notice that must be administratively protested or
disputed within 30 days, and not the PAN.”</span></i></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l3 level1 lfo7; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">b.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">GDI
failed to submit the required documents in support of its protest required by
law.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Section
228 of the 1997 National Internal Revenue Code (1997 Tax Code), as amended,
provides:</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: .5in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">“Within
sixty (60) days from filing of the protest, all relevant supporting documents
shall have been submitted; otherwise, the assessment shall become final.”</span></div>
<div class="MsoNoSpacing" style="margin-right: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">In
the instant case, when GDI submitted documents in support of its protest, it
was already beyond the sixty (60)-day period in violation of the above-cited
provisions of the 1997 NIRC, as amended.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That
GDI filed its <b style="mso-bidi-font-weight: normal;">INVALID PROTEST </b>against
the Formal Letter of Demand and Final Assessment Notices (FANs) on November 30,
2010 but it submitted documents only on March 24, 2011. Hence, it was already
114 days after the date of its filing of the protest; notwithstanding that said
documents contained the same information as that already contained in the same
documents submitted by GDI on November 27, 2009 covered by its letter dated
November 27, 2009, which I have already considered, and the same were already
taken up in the Adjusted Final Audit Findings sent to GDI covered by the Post
Reporting Notice dated July 19, 2010 which became the bases of the Preliminary
Assessment Notices (PANs) and Final Assessment Notices (FANs).</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">In
a meeting held sometime on April, 2011 at the National Office in connection
with the instant case which was attended to by Atty. Claro Ortiz, Head Revenue
Executive Assistant; Atty. Sixto Dy, Chief, National Investigation Division;
Atty. Abegail Gamboa, Chief of Staff of DCIR Estela Sales; and myself, it was
ascertained that the tax assessment has become final, executory and demandable,
in view of GDI’s failure to comply with the requirements as prescribed. “<b>These
are scraps of paper</b>”, that’s Atty. Ortiz saying.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo2; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-family: "Century Gothic"; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Century Gothic";"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">That the compact disc (CD)
which I presented to the RATE “Run After Tax Evaders” team was allegedly not
compliant with the requirements prescribed under Revenue Memorandum Order (RMO)
No. 29-2002.</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">My
firm stance:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
RATE coordinator, members, and Mr. Wilfredo Reyes, the pioneer CAATTs
(Computer-Assisted Audit Tools and Techniques) user, failed to consider and
evaluate the documents attached to the docket of GDI case and the findings for
deficiency tax assessment which were based on entries per duly-registered books
of accounts (hardbound computer-generated), as I have appropriately validated;
and other independent relevant documents, such as but not limited to, Franchise
Agreement; Technical Service Agreement, and other BIR returns filed by GDI,
such as: VAT returns and Final Withholding Tax Remittance Returns.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
CD, which was neither mentioned nor objected to by GDI in its <b style="mso-bidi-font-weight: normal;">INVALID</b> <b>PROTEST</b>, that I presented to
the RATE team is used by Henares and her minions as scapegoat in not filing tax
evasion case against GDI by claiming that said CD is not compliant with the requirements
prescribed under RMO No. 29-2002 - that it should be properly labeled with the
name of the taxpayer, taxable year and serial no. and volume no. and signed by
the taxpayer and RDO.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">I
pointed out that GDI adopts a “computer-assisted accounting system” wherein it
is still required to register a “hardbound computer-generated books of
accounts” which were the bases of my audit findings. Thus, the CD, which they
used as scapegoat in not filing fraud case against GDI, need not be strictly
compliant with the requirements provided under the aforesaid RMO in regards to
the markings to be inscribed thereon.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">RMO
No. 29-2002 clearly provides that in case the taxpayer has no capability to
submit in CD-ROM form, procedures under the <b style="mso-bidi-font-weight: normal;">MANUAL SYSTEM</b> shall prevail. In other words, if the taxpayer adopts
a computer system of accounting but has no capability to integrate the
different components of accounting system (i.e., books of accounts and other
related accounting records) in a CD-ROM form, it shall still be required to
register a “hardbound computer-generated books of accounts”, as in the case of
GDI.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">I
suggested to the RATE team that they may recommend for the issuance of a
Subpoena Duces Tecum (SDT) to compel GDI produce its duly-registered hardbound
computer-generated books of accounts, but the suggestion was just ignored.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">BIR
Commissioner Kim Henares, tagged as the “unyielding tax-evader-buster”, lied
when she told GMA-7 in a telecast interview, that my tax assessment against GDI
was faulty, to conceal the real truth. What is crystal clear is that, she
appeared to be lawyering for a tax evader. Her continued intense refusal to
appropriately act on the case (i.e., to either enforce collection of the subject
due and demandable tax deficit or pursue tax evasion case against the subject
taxpayer), notwithstanding her knowledge of the findings of fraudulent acts or
criminal tax violations perpetrated by GDI, is a crystal clear manifestation of
coddling and defending “Dunkin’ Donuts” local seller – a bigtime tax evader.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Atty. Kim
Henares, just tell the whole truth and nothing but the truth.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">Othello E Dalanon</span>Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-42778581686534345582015-09-19T07:48:00.001-07:002015-09-19T07:50:51.912-07:00BIR's Kim Henares coddles and lawyers for tax evader!<!--[if gte mso 9]><xml>
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<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Philippines’s
Bureau of Internal Revenue Commissioner Kim Henares, who established a
reputation that of an unyielding tax-evader-buster, coddles and lawyers for Philippine
Daily Inquirer (PDI) Chair Marixi Rufino-Prieto firm Golden Donuts, Inc. (GDI),
the exclusive Philippine Franchisee of the global brand “Dunkin’ Donuts” – a
bigtime tax evader.</span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Othello E.
Dalanon, in his official capacity as former BIR Revenue Officer, conducted
investigation of the 2007 financial records of GDI for internal revenue tax
purposes where he discovered and documented irregularities perpetrated by the
said company that culminated in the tax assessment amounting to PhP 1.56
billion, including increments.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Dalanon
personally reported GDI’s omissions to Commissioner Henares and recommended to
her the criminal prosecution for tax evasion under the much-vaunted “Run After
Tax Evaders” (RATE) Program of the Bureau; but she intentionally failed to
pursue fraud case against the said company because its secretary – Marixi
Rufino-Prieto who also happens to be the Chairperson of Philippine Daily
Inquirer (PDI) – is President BS Aquino 3<sup>rd</sup>’s friend. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
aforesaid deficiency tax assessment obtained finality because GDI failed to
file a <b>VALID PROTEST</b> against the Formal Letter of Demand and Assessment Notice
(FAN).</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">However,
Henares intentionally did not enforce collection thereof, purportedly because
representatives of GDI complained to her that Dalanon’s tax assessment against
the said company was allegedly faulty; that is why she ordered two (2)
re-investigations conducted by different groups of revenue officers who
supposedly arrived at similar results, finding Dalanon’s assessment to be
incorrect, she said.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">There is no
LAW that authorizes the Commissioner to order two (2) re-investigations of a
FINAL, EXECUTORY and DEMANDABLE assessment. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Once the
deficiency tax assessment obtained finality, the right of the government to
collect the deficiency tax becomes absolute; thus, precludes the taxpayer from
questioning the correctness of the assessment and from raising any
justification or defense that would pave the way for a re-investigation. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Notwithstanding
the ensuing finality of the said assessment, the Commissioner allowed such
re-investigations. </span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The “first re-investigation”,
which is no longer warranted because Dalanon’s tax assessment which remained
undisturbed after review and evaluation conducted by high-ranking officers in
the district and regional levels of the agency, and already covered by Formal
Letter of Demand and Assessment Notices (FANs) bearing Demand No. 41-B072-07 and
all dated October 29, 2010 obtained finality, was assigned to Revenue Officer
Stanley Ong, under Group Supervisor Gregorio S. Tumanguil, who was the same
revenue officer that conducted the review of the case and recommended for the
issuance of the statutory notices of assessment (PAN and FAN) when he was yet
with the Assessment Division of the Regional Office in Quezon City.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Former Revenue
Officer Dalanon is not a lawyer though he believes that Revenue Officer Stanley
Ong who conducted the “first re-investigation” could no longer disturb the
former’s tax assessment for reasons of principle of estoppel. The equitable
principle of estoppel forbids the latter, who conducted the “first re-investigation”,
from taking inconsistent position against his concurrence to the former’s
original audit findings that culminated in the deficiency tax assessment
amounting to PhP 1.56-B which is already FINAL, EXECUTORY and DEMANDABLE but
which was re-investigated by no other than Revenue Officer Ong himself.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The “second re-investigation”,
which is also no longer necessary as Dalanon’s tax assessment obtained
finality, was referred to Atty. Grace Cruz of the National Investigation Division
in the National Office of the BIR. Dalanon strongly admires Atty. Cruz of her
investigative expertise in administrative cases. Lest it be misconstrued.
Dalanon is not saying that Atty. Cruz is short of proficiency in tax accounting
and tax auditing. No result of re-investigation was submitted by Atty. Cruz.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">So, how can
Henares claim that her groups of revenue officers who conducted the supposed
two (2) separate re-investigations came up with the same findings that
Dalanon’s assessment against GDI was incorrect?</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Henares also
claims that the authority to decide and declare finality of a certain
assessment is a function vested by law upon the Commissioner of Internal
Revenue.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Her
assertion does not find basis in LAW.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">It is the
LAW that determines finality of a certain assessment as clearly provided under
Revenue Regulations (RR) No. 12-99 as amended by RR No. 18-2013 which the
Commissioner herself promulgated, in relation to Section 228 of the 1997
National Internal Revenue Code (1997 Tax Code), as amended.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Just to
reiterate. The P1.56 billion tax deficit of GDI “Dunkin’ Donuts” has become DUE
and DEMANDABLE, thus, it already legally belongs to the FILIPINO people; but
Henares intentionally did not collect.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Atty. Kim Henares, just tell the truth and nothing
but the truth!!!</span></b><span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;"></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">Othello E
Dalanon</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<span style="font-family: "Century Gothic",sans-serif; font-size: 14.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">#KimHenares #MarixiPrieto #BIR #GoldenDonuts
#DunkinDonuts #DunkinBrands #PDI #Tax #Philippines #IncomeTax #VAT #Assessment
#Revenue #TaxFraud #TaxEvasion #TaxReturn #TaxReform #Investigation #Audit
#Books #Commissioner #Transparency #GracePoe #SonnyAngara #ChizEscudero
#TaxWatch #WorldNews #USNews #Coffee #Restaurant #Starbucks #KrispyKreme #Food
#Breakfast #Sale #Franchise #DaanMatuwid #TuwidnaDaan #Ombudsman #EstelaSales
#NestorValeroso #JonasDPAmora #IsabelPaulino #GregorioTumanguil #StanleyOng
#DOF</span>Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-55959145021830905242015-04-14T15:57:00.001-07:002015-04-14T15:57:13.697-07:00TAX EVASION CASE INTENTIONALLY NOT FILED BY KIM HENARES<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">BIR’s
KIM HENARES INTENTIONALLY FAILED TO EITHER COLLECT DUE AND DEMANDABLE TAX
DEFICIT OF GOLDEN DONUTS, INC. (GDI) OR SUE IT FOR FRAUD FOR UNDER-DECLARING
REVENUE ON THE TAX RETURN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Golden Donuts, Inc.
(GDI)</span></b><span style="font-family: "Verdana",sans-serif;">, the exclusive
Philippine Franchisee of the global brand “<b>Dunkin’
Donuts</b>”, flagrantly perpetrated fraudulent acts or criminal tax violations
that culminated to deficiency tax assessment amounting to <b>P1,564,426,808.08</b>, including increments, for year 2007, discovered
and documented by Othello Dalanon in his official capacity as former BIR
Examiner.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Dalanon
personally reported GDI’s omissions to <b>Commissioner
Henares</b> and recommended to her the criminal prosecution for tax evasion
under the much-vaunted “Run After Tax Evaders” program of the Bureau; but she
intentionally did not pursue fraud case against the company because its
secretary – <b>Marixi Prieto</b> who also
happens to be the <b>chairperson of the
Philippine Daily Inquirer</b> – is <b>President
Aquino’s friend</b>, according to BIR Deputy Commissioner Estela Sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Ms.
Prieto talked to Henares and BIR Regional Director (now Assistant Commissioner
of Internal Revenue) Nestor Valeroso, on different occasion, who both gave
leniency to GDI.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
aforesaid deficiency tax assessment obtained finality because GDI failed to
file a VALID PROTEST against the Formal Letter of Demand and Assessment Notice
(FAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">However,
Henares intentionally did not collect it, purportedly because representatives
of GDI complained to her that Dalanon’s assessment was faulty. Thus, she
ordered two (2) re-investigations.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">There
is no LAW that authorizes the Commissioner to order two (2) re-investigations
of a FINAL, EXECUTORY and DEMANDABLE assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Once
the deficiency tax assessment obtained finality, the right of the government to
collect the deficiency tax becomes absolute; thus, precludes the taxpayer from
questioning the correctness of the assessment and from raising any
justification or defense that would pave the way for a re-investigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">She
also claims that the authority to decide and declare finality of a certain
assessment is a function vested by law upon the Commissioner of Internal
Revenue.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
assertion does not find basis in LAW.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
is the LAW that determines finality of a certain assessment as clearly provided
under Revenue Regulations (RR) No. 12-99 as amended by RR No. 18-2013 which the
Commissioner herself promulgated, in relation to Section 228 of the 1997
National Internal Revenue Code (1997 Tax Code), as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
claim that Dalanon’s assessment was faulty is WRONG.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">In
fact, she was not able to dispute Dalanon’s assessment. What is very clear is
that, while she bullies small taxpayers, constantly pesters Congressman Manny
Pacquiao, and actively prosecutes those are not allies of the current
administration; she fears, coddles and lawyers for Dunkin’ Donuts local seller
– a bigtime tax evader!!!<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Just
to reiterate. The P1.56 billion tax deficit of Dunkin’ Donuts franchisee has
become DUE and DEMANDABLE, thus, it already legally belongs to the FILIPINO
people whom PRESIDENT AQUINO considers as his “BOSSES?”, and therefore, Henares
is duty-bound to enforce collection thereof – but she refused to.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">GDI’s OMISSIONS<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l9 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">GDI has two (2) sets of books of
accounts</span></b><span style="font-family: "Verdana",sans-serif;"> – one was
the duly-registered hardbound computer-generated books of accounts which were
the bases of Dalanon’s assessment; and the other was the unregistered
not-permanently-bound “manually-posted from original books of accounts”,
records which GDI claims as the bases of its Trial Balance for Financial
Statements and Income Tax Return purposes;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l9 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It supplied false information on the
tax return</span></b><span style="font-family: "Verdana",sans-serif;"> – the
duly-registered books of accounts reflected a <u>net income</u> amounting to <b>P135.2 million </b>while the tax return
showed a <u>net loss</u> of <b>P44.9
million</b>;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l9 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It substantially under-declared sales
on the tax return in two (2) instances</span></b><span style="font-family: "Verdana",sans-serif;">:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l9 level2 lfo1; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Sales
per duly-registered books was <b>P1.928
billion</b> while the amount reflected on the tax return was <b>P1.031 billion </b>– a substantial
discrepancy (under-declaration) amounting to <b>P897 million</b>;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT</b> ruled in the case of Paper Industries Corporation of
the Philippines <i>vs</i> Court of Appeals,
et al., 250 SCRA 434 that <i>“<u>where the
books of accounts reflected a sales or receipts higher than that reflected on
the return</u>, <u>the books of accounts should prevail</u>. <u>This is so</u>,
<u>because the books of accounts are kept by the taxpayer and are prepared
under its control and supervision</u>; <u>and they reflected what may be deemed
to be admissions against interest</u>.” </i>The representations made by GDI in
the CD and duly-registered books submitted and presented by it to the Bureau
for audit and examination amounted to admissions against interest which it
cannot disown and change at its convenience of pleasure. Emphasis supplied.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l9 level2 lfo1; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Other
independent relevant documents, such as, but not limited to: Franchise
Agreement between Dunkin’ Donuts of America, Inc. and GDI; Technical Service
Agreement between GDI and its affiliate-Antares Management, Inc. (AMI); BIR
returns, etc., further revealed that GDI’s <u>sales</u> topped <b>P2.366 billion </b>but recorded per
duly-registered books was only <b>P1.928
billion </b>– a substantial unrecorded and consequently undeclared sales
amounting to <b>P438 million</b>.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The information contained in the
aforesaid documents were utilized in further determining GDI’s sales on the
basis of the provisions of Section 5(A) of the 1997 Tax Code.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The method of validation used by
Othello Dalanon was already upheld by the <b>COURT
OF TAX APPEALS </b>in the case of <u>Asia Coal Corporation <i>vs</i> Commissioner of Internal Revenue (CTA Case No. 6803, February
13, 2008)</u>, that “<i>the respondent may
utilize any kind of document, x x x to determine the correct sales of the
petitioner…”<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">All
the above enumerations are fraudulent acts or criminal tax violations covered
by the RATE (Run After Tax Evaders) Program of the Bureau; but Henares
intentionally did not pursue tax evasion case against the company.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Henares, in her position paper submitted to the Office of
the Ombudsman in connection with the formal complaint filed against her by
Othello Dalanon, failed to dispute the above-enumerated irregularities
perpetrated by GDI</span></u><span style="font-family: "Verdana",sans-serif;">.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">THE DEFICIENCY TAX
ASSESSMENT OBTAINED FINALITY<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
deficiency tax assessment against GDI amounting to P1.56 billion, including
increments, for year 2007, obtained finality because GDI’s letter of protest
against the Formal Letter of Demand and Assessment Notice (FAN) was INVALID.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
alleged letter of protest of GDI merely states “protest against PAN adopted <i>in toto</i>”. It does <b>not</b> state the facts, the applicable law, rules and regulations, or
jurisprudence on which its protest was based. It is neither a request for
reconsideration or reinvestigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
rules on protesting an assessment is found in Section 3 subsection 3.1.5 of RR
No. 12-99, as amended, that reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Disputed Assessment. – The taxpayer
or his duly authorized representative may protest administratively against the
aforesaid formal letter of demand and assessment notice within thirty (30) days
from date of receipt thereof.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“The taxpayer shall state the FACTS,
the applicable LAW, RULES and REGULATIONS or JURISPRUDENCE on which his protest
is based, otherwise, his protest shall be considered VOID and WITHOUT FORCE AND
EFFECT.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“If the taxpayer fails to file a VALID
PROTEST against the formal letter of demand and assessment notice within thirty
(30) days from date of receipt thereof, the assessment shall become FINAL,
EXECUTORY and DEMANDABLE.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
said Regulations must be taken in relation to Section 228 of the 1997 Tax Code,
as amended, which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Protesting an assessment. – Such
assessment may be protested administratively by filing a REQUEST FOR
RECONSIDERATION or REINVESTIGATION within thirty (30) days from receipt of the
assessment in such form and manner as may be prescribed by implementing rules
and regulations. x x x otherwise, the assessment shall become FINAL.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: 1.35pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Clearly, what the law demands is a
VALID administrative protest against the formal letter of demand and assessment
notice which required the taxpayer to comply with the following:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: 1.35pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be through a REQUEST FOR RECONSIDERATION or REINVESTIGATION;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be in the form and manner as prescribed under RR No. 12-99, as
amended, which provides that said protest must state the FACTS, the LAW, RULES
and REGULATIONS, or JURISPRUDENCE on which the protest is based; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Must
be filed within thirty (30) days from receipt of the assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 4581, March 25, 1992</u>), cited that, <i>“[f]ailure to comply with any or all of these
requirements results in the assessment against the taxpayer becoming final and
unappealable.”</i><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
letter of protest should not just state “protest against PAN adopted <i>in toto</i>” because the administrative
protest required to be filed as an answer to the formal letter of demand and
assessment notice is distinct and not the same as the protest filed against the
Preliminary Assessment Notice (PAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>emphasized in
the case of <u>Security Bank Corporation <i>vs
</i>Commissioner of Internal Revenue (CTA Case No. 6564, November 8, 2006)</u>
and further accentuated in the case of <u>Bank of the Philippine Islands <i>vs</i> Commissioner of Internal Revenue (CTA
Case No. 7397, April 9, 2008)</u> that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[A] protest to the preliminary
assessment notice is not the same as the protest required to be filed as an
answer to the final assessment notice. In fact, the preliminary assessment
notice may or may not even be protested to by the taxpayer, and the fact of
non-protest shall not in any way make the preliminary assessment notice final
and unappealable. What is clear from Section 319-A of the Tax Code of 1977, as
amended, is that failure on the part of the taxpayer to protest or reply to a
preliminary assessment notice paves the way for the issuance of a final
assessment notice. However, evident under said Section (now Section 228 of the
1997 Tax Code) is that failure on the part of the taxpayer to file a VALID
administrative protest through a REQUEST FOR RECONSIDERATION or REINVESTIGATION
on the final assessment notice, shall result in the finality of the said FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>SUPREME COURT </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (G.R. No. 175097, February 5, 2010)</u> heightened that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 18.7pt; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“It is the Formal Letter of Demand and
Assessment Notice that must be administratively protested or disputed within 30
days, and not the PAN.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI,
in its INVALID letter of protest against the FAN, likewise claimed that the
assessments are null and void <i>ab initio </i>because
it was allegedly issued in rampant violation of the due process requirements
prescribed under Section 228 of the Tax Code as implemented by RR No. 12-99.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
claim is not true. Records will show that the due process requirements were
promptly observed. There were at least five (5) notices served to GDI either
thru personal delivery or by mail before the formal letter of demand and
assessment notice (FAN) was issued. In fact, it even contested the PAN as
clearly admitted in GDI’s invalid letter of protest against the FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case <u>Bank
of the Philippine Islands <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 7397, April 9, 2008)</u>, has had the
occasion to say:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[W]hen the petitioner received the
final assessment notice and duly protested the same, petitioner’s right to due
process was properly protected and observed.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">OTHER
FACTS TO SHOW <i>PRIMA FACIE </i>EVIDENCE OF
ACTUAL FRAUD<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
scheme of the taxpayer to evade payment of correct taxes is very clear. It
substantially under-declared its Sales with the end view of evading payment of
correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Computation of percentage ratio of
under-declaration of sales:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on sales per CD and duly-registered books –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Discrepancy
in reconciliation of Central W’hse accts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per
CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales
reflected per Annual Income Tax Return (AITR)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales
based on CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">950,620,212.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by total
sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,982,149,129.66<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Percentage ratio
of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 47.96%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on franchise fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Franchise fee per CD, duly-registered books
and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 23,668,908.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales (or should be sales based
on franchise fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,361,883.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,890,800.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.3<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on management fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Management fee per CD, duly-registered
books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 47,337,817.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by management fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales (or should be sales based
on mgt. fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,890,850.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,361,933.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based on management fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,890,850.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.4<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on VAT on franchise fee paid to DBI (BIRF No. 1600) –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">VAT payments on purchase of services from
non-resident<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 2,840,123.69<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Franchise fee based on VAT payments<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">23,667,697.42<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales/should be sales based on
VAT on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,769,741.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,240,824.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based VAT on FF<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,769,741.67<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that omission or substantial
understatement or under-declaration of sales a fraudulent act or criminal tax
violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">GDI
keeps two (2) sets of books of accounts.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
duly-registered hardbound computer-generated books of accounts registered with
the BIR on January 15, 2008, which were the bases of the audit findings; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
unregistered not-permanently-bound “manually-posted from original books of
accounts” records which GDI claims as the basis of its trial balance for
financial statements and income tax return purposes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To these, a third set of books of
accounts may be added: Records of RDO No. 41, Mandaluyong City, showed that GDI
registered another set of bound books of accounts (General Journal and General
Ledger) on May 30, 2007.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that keeping two (2) set of
books of accounts a fraudulent act or criminal tax violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> <o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">GDI’s
duly-registered books of accounts reflected a net income of P135.2 million for
year 2007. Its AITR for the same period reflected a net loss of P44.9 million
as well as that of the prior years, as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Net Loss<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2002 P62,919,525.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2003
44,902,187.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2004
46,995,142.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005
67,077,226.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
57,254,963.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Notwithstanding the continuous
incurrence of losses, it was able to acquire and accumulate properties and
presented under Property, Plant and Equipment in its Financial Statements, as
follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Acquisitions<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005 P16,819,089.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
20,755,205.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2007
34,654,371.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2008
47,019,061.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can it afford such gargantuan
amount of acquisitions if it has really been continuously incurring losses? Is
this not indicative of under-declaration of sales, as a business has a very
least prospect to exist if it is continuously incurring losses?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">In
2008, it appropriated Retained Earnings amounting to P100 million for future
renovation of facilities and expansion of production center and outlets.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can the Board of Directors of the
corporation have the audacity to appropriate such huge amount of Retained
Earnings for future expansion of its center and outlets if the corporation is
really continuously incurring losses without infusing additional capital?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
financial records (the CD and the duly-registered books of accounts) and other
independent relevant documents, such as but not limited to: License Agreement between
GDI and DBI; Technical Service Agreement between GDI and its affiliate-Antares
Management Inc. (AMI); VAT payments on purchases of services from non-resident
(BIRF No. 1600); Monthly Remittance Returns of Final Taxes Withheld at Source
(BIRF No. 1601F); etc., submitted by it to the Bureau for audit and examination
evidently revealed existence of actual fraud.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<b><span style="font-family: "Verdana",sans-serif;">2007
DEFICIENCY TAX ASSESSMENT<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<b><span style="font-family: "Verdana",sans-serif;">Income tax liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Net
taxable income per AITR<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 0.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Discrepancies/Disallowances:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Understatement of Gross Income-<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Recorded per reg. books but not
declared per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">376,602,840.43<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unrecorded and undeclared<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">384,741,670.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Purchases not subjected to EWT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">772,225,727.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> VAT (input tax) credit included in
Cost of Sales <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 91,361,028.70<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Net
taxable income per investigation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,624,931,267.24<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Income
tax due thereon<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">568,725,943.53<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
50% surcharge for substantial understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">284,362,971.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 20% interest per annum from 4.16.08
to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 260,982,016.31<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
deficiency income tax and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 1,114,070,931.61<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Value-added Tax (VAT)
liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Sales
per CD and duly-registered books of accounts<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Difference in recon of A/R-Franchise vs Sales Accts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">53,378,730.98<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unrecorded & Undeclared Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">384,741,670.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Royalty income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">133,190,903.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Franchise income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">9,847,488.63<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Other non-operating income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 3,247,797.81<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
sales and other income subject to VAT per investigation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,513,176,990.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Output
tax thereon<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">301,581,238.84<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less:
Output tax per VAT returns<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 141,297,488.71<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Understatement
of VAT (output tax) payable<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">160,283,750.13<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Input tax attributable to accrued expenses payable-beg<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,531,629.37<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unsupported (over-claimed) VAT input
tax credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 27,032,432.06<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Deficiency
VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">188,847,811.56<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
50% surcharge for substantial understatement of VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">94,423,905.78<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 20% interest per annum from 1.26.08
to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 95,055,398.49<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
deficiency VAT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 378,325,115.83<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Expanded withholding tax
(EWT) liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on income payments made to suppliers of
goods<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 7,722,257.28<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on rentals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 510,288.50<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total expanded withholding tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,232,545.78<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 20% interest per annum from 1.16.08 to
7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">4,189,451.07<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 25,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency EWT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 12,446,996.85<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Final Tax (FT) liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax on cash dividends<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 481,396.81<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">120,349.20<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 1.16.08 to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">244,977.49<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">862,723.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Penalty for late remittance of FT on
goodwill paid to Panda:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
(Basic Tax remitted is P342,478.57)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">85,619.64<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 2.10.07 to 8.10.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">34,247.86<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency final tax on cash
dividends and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 998,591.00<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Fringe benefit tax (FBT)
liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe benefit tax<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 253,102.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,275.63<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 1.26.08 to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">127,394.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency FBT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 459,773.05<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">SUMMARY<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Income tax liability<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,114,070,931.61<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Value-added tax (VAT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">378,325,115.83<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Expanded withholding tax (EWT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">12,446,996.85<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax (FT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">998,591.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe benefit tax (FBT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
459,773.05<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grand Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,506,301,408.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">*</span><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Interests
were adjusted up to time of assessment which shall be further adjusted up to
time of payment.</span><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<b><span style="font-family: "Verdana",sans-serif;">DETAILS
OF THE CASE<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<b><span style="font-family: "Verdana",sans-serif;">Prefatory<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI,
a domestic corporation with business office located at GDI Building, Sheridan
corner Reliance Streets, Mandaluyong City, is the exclusive Philippine
Franchisee of DUNKIN’ DONUTS OF AMERICA, INC. (DDA), now DUNKIN’ BRANDS, INC.
(DBI). As such, it grants sub-franchise rights to various domestic entities
nationwide. It has six hundred forty-two (642) outlets all over the country.
Fifty-four (54) of which are directly owned by the corporation while the
remaining five hundred eighty-eight (588) are owned by the thirty-five (35)
sub-franchisees under GDI’s supervision.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
maintains a Central Warehouse (Commissary) wherefrom all of its sub-franchisees
purchase on a Cash-On-Delivery basis, all products, ingredients, commodity,
supplies, and merchandise.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
is a VAT-registered entity and belongs to the Top 10,000 Private Corporations.
It continues to grow with almost a thousand employees servicing the Filipinos
with affordable products like doughnuts, sandwiches, hot chocolates, coffee,
shakes and the likes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
corporation has forty-five (45) stockholders. Its major stockholder and
Chairman of the Board is Mr. Leopoldo L. Prieto. The officers of the
corporation are as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Walter C. Spakowski President<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> <b>Marixi R. Prieto Secretary<o:p></o:p></b></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;"> </span></b><span style="font-family: "Verdana",sans-serif;">Miguel
H. Prieto Treasurer<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Pedro E. Paraiso Chief Financial Officer<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Ernesto S. Co VP & General
Manager<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Jocelyn V. Santos VP Finance &
Administration<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
adopts a Computer Assisted Accounting System with duly-registered Hardbound
Computer-Generated Books of Accounts (hereinafter referred as <i>duly-registered books). </i>The CD submitted
by the corporation to the Bureau for audit, and the duly-registered books as
validated by Revenue Officer Othello E. Dalanon, reflected a NET TAXABLE INCOME
of P135,272,757.01 while the Annual Income Tax Return (AITR) reflected a NET
LOSS of P44,907,842.00, summarized as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Particulars<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Per
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Per
AITR<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">S a l e s<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,031,528,917.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 873,404,765.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross Income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">481,348,261.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">158,124,152.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gen/Admin and operating expenses<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 348,224,850.69<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 207,301,714.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net income from operation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">133,123,410.76<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 49,177,562.00)<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Non-operating and other income (net)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,149,347.15<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 4,269,719.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net taxable income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
135,272,757.91<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(P 44,907,843.00)<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On
the basis of the above information alone, it can readily be deduced that GDI
deliberately under-declared its income in the Annual Income Tax Return.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is
it not that deliberate under-declaration of income (substantial
under-declaration) constitutes fraudulent act or criminal tax violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Details discrepancies<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Income tax aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of gross income (recorded but undeclared) amounting to P376,602,840.43 which
arose from substantial under-declaration of sales.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Discrepancy
in recon of Central Warehouse accounts (S-1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per CD
and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of
sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross income per
CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">534,726,992.43<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross
income reflected per Annual Income Tax Return<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Understatement of
gross income (recorded but undeclared)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
376,602,840.43<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">S-1 Reconciliation of Central
Warehouse accounts –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Accounts
Receivable – Franchise total debit transactions<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,764,792,639.41<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT
factor<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 25/28<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net of VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,575,707,713.76<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Franchise
Operation Current net credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 115,238,517.84<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be
Sales-Central Warehouse<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,460,469,195.92<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales-Central
Warehouse per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,407,090,464.94<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Discrepancy in reconciliation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted in the above
computation that the amount of P376,602,840.43, though taken up per CD and
duly-registered books, was not included in the computation of taxable income in
the Annual Income Ta Return in gross violation of Section 31, in relation to
Section 32(A) of Republic Act No. 8424 otherwise known as the 1997 National
Internal Revenue Code (1997 NIRC), as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT </b>ruled in the case of <u>Paper Industries Corporation
of the Philippines <i>versus </i>Court of
Appeals, et al., 250 SCRA 434</u> that “<i>where
the books of accounts reflected a Sales or Receipts higher than that reflected
in the return, the books of accounts should prevail. This is so, because the
books of accounts are kept by the taxpayer and are prepared under its control
and supervision, and they reflected what may be deemed to be admission against
interest”.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It claimed that the information or
entries contained in the CD and duly-registered books are erroneous. It averred
that the same contained more than 2,500 errors posted in 84 accounts and should
not be the basis of the audit. It claimed that there were “double take-ups”.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The CD and the duly-registered books,
as duly validated by him, already contained GDI’s external auditors’
adjustments. The discrepancies or differences in Sales accounts between GDI’s
CD and duly-registered books on one hand and the AITR on the other were not
reflected by its external auditors as adjusting or correcting entries in the
said CD and duly-registered books.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">With the more than 2,500 erroneous
entries posted in 84 accounts, as GDI averred, to contain in the CD and
duly-registered books, it is believed to be unfeasible and amazing that GDI
which belongs to the high profile business in the Philippine industries and
with its highly competent accounting and auditing employees, supervisors, and
tax managers, the external auditors, and the reputable independent public
auditors that it (GDI) hired to conduct quarterly reviews of its financial
records would not notice such remarkable and significant errors.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT </b>already ruled in the case of Paper Industries
Corporation of the Philippines <i>versus </i>Court
of Appeals, et al., 250 SCRA 434 that <i>“<u>where
the books of accounts reflected a Sales or Receipts higher than that reflected
in the return, the books of accounts should prevail. This is so, because the
books of accounts are kept by the taxpayer and are prepared under its control
and supervision, and they reflected what may be deemed to be admissions against
interest</u>”. </i>The representations made by GDI in the CD and
duly-registered books submitted and presented by it to the Bureau for audit and
examination amounted to admissions against interest which it cannot disown and
change at its convenience of pleasure. Emphasis supplied.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon presented
another mathematical computation based on VAT Payable account reflected in the
CD and duly-registered books to validate the afore-cited undeclared gross
income as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total credit of
VAT Payable account per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 227,263,254.33<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: VAT not
taken up on Sales recorded in General Journal:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 220.25pt;" valign="top" width="294">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Net sales without VAT per general
journal <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 89.35pt;" valign="top" width="119">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">34,511,326.03<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 220.25pt;" valign="top" width="294">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 89.35pt;" valign="top" width="119">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 4,141,359.12<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">231,404,613.45<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by VAT
rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales as
reconstructed based on VAT Payable account<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,928,371,778.75<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Difference
in recon of Central Warehouse accounts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales based
on CD & duly-registered books, as reconstructed<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,981,750,509.73<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of
sales per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross income
based on reconstructed sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">534,328,372.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross
income per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared gross
income (taken up per books, not reflected per AITR)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
376,204,220.50<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">There were such other mathematical
computations presented by Revenue Officer Dalanon to show GDI’s inconsistent
declarations.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of gross income (unrecorded and undeclared) amounting to P384,741,670.34 that
arose from substantial unrecorded and undeclared sales.</span></b><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI is the exclusive Philippine
Franchisee of DBI. The License Agreement between said parties states, among
other things, that the former shall pay the latter a Franchise Fee equivalent
to 1% of the former’s net sales. In the said Agreement, the term “net sales” is
defined as ALL SALES, exclusive of sales taxes and services charges.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the franchise fee paid
by GDI to DBI amounted to P23,668,908.00. Said amount was included as part of
GDI’s overhead in the Cost of Sales account in the Income Statement and claimed
as deduction from its Net Sales per AITR. The franchise fee account per CD and
duly-registered books showed exactly the same amount as afore-cited.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of the foregoing, there
are other undeclared Sales amounting to P438,120,401.31 that resulted to the
aforesaid unrecorded and undeclared gross income, computed as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee per
CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 23,668,908.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by
franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of sales per CD and duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be total gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">919,468,662.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross income reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 58,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">761,344,510.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Recorded but undeclared gross income
(#1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 376,602,840.43<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unrecorded and undeclared gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
384,741,670.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To validate the above discrepancy,
Revenue Officer Dalanon presented herein-below another mathematical computation
based on information taken from other independent relevant document, such as
but not limited to, Technical Serevice and Assistance Agreement between GDI and
its affiliate-Antares Management, Inc. (AMI).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contracted the technical services
of AMI. The said Agreement between said parties states, among other things,
that the former shall pay the latter a management fee equivalent to 2% of the
former’s net sales of its shops, whether directly operated by it or
sub-franchised to others.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, Management Fee
(Technical Service and Assistance Fee) expense claimed by GDI as deduction from
gross income per AITR amounted to P47,337,817.00.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of the foregoing, the
unrecorded and undeclared gross income computed in the preceding presentation
is corroborated as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Management fee
per CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 47,337,817.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by
management fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,850.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be total gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">919,468,712.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross income reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">761,344,560.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Recorded but undeclared gross income
(#1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 376,741,840.43<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unrecorded and undeclared gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
384,741,720.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The conditions contained in the
aforesaid Agreements were utilized in determining the correct sales on the
basis of the provisions of Section 5(A) of the 1997 NIRC, as amended, which
reads – <i>“in determining the correctness
of any return x x x the Commissioner is authorized to examine any book, paper,
record, or other data which may be relevant or material to such inquiry”.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The method of validation used by
Revenue Officer Dalanon was already upheld by the <b>COURT OF TAX APPEALS</b> in the case of <u>Asia Coal Corporation <i>vs</i> Commissioner of Internal Revenue (CTA
Case No. 6803, February 13, 2008</u>) that <i>“the
respondent may utilize any kind of document, x x x to determine the correct
sales of the petitioner…”<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contended that the franchise fee
amounting to P23,668,908.00 is equivalent to 1% of the “system-wide sales’ of
its company-owned shops/outlets and those of its sub-franchisees. That the term
“system-wide sales” allegedly refers to GDI’s sales of its directly owned shops
and shops owned by its sub-franchisees excluding Central Warehouse
(Commissary). It averred that is Central Warehouse’s (Commissary’s) sales to
its sub-franchisees are not subject to the 1% franchise fee; and that its own
sales are as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Shop-Central warehouse (trading sales)<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 746,312,672.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Shop-Outlets (donuts sales)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 285,216,244.74<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,031,528,916.74<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">There
was no specific condition in the License Agreement between GDI and DBI that only
“donuts sales” (i.e., shops/outlets’s sales) shall be subject to 1% franchise
fee and that “trading sales” (i.e., central warehouse’s sales) are not. The
Agreement clearly provides that the <u>Franchise Fee shall be 1% of NET SALES
OF ALL SHOPS (whether operated by GDI or sublicensed to others</u>) exclusive
of sales taxes and service charges.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that GDI’s central warehouse
(commissary) a shop which it also operates? Is it not, that purchases of GDI’s
sub-franchisees from central warehouse, sales of GDI?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
amount of P23,668,908.00 representing Franchise Fee paid to DBI, which is the
basis in computing for the unrecorded and undeclared income as presented above,
was actually declared as incurred by GDI in its ordinary course of trade or
business during the year covered by the audit. It was in fact claimed as
deduction from Net Sales because it was included as part of the Overhead in the
Cost of Sales account as apparently stated in the Notes to FS No. 21.2;
Furthermore, the base amount can be validated as included in the Cost of Sales
account as shown in the documents submitted by GDI in connection with its
protest on Purchases (income payments to suppliers of goods) not subjected to
EWT.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">While
it is apparently stated in the License Agreement that the basis of the
Franchise Fee is ALL SALES (whether directly or indirectly owned by GDI), GDI
is not liable to pay DBI the Franchise Fee corresponding to 1% of the former’s
Sub-Franchisees’ sales. GDI is only responsible for the remittance of the
franchise fee paid by its Sub-Franchisees as stated in Notes to Financial
Statements No. 21.2. Therefore, the Grossed-Up Sales computed and presented in
the audit findings pertains to GDI alone. It does not include the Sales of
GDI’s Sub-Franchisees.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Why
did GDI claim the whole amount of P2,840,123.69 representing VAT (input tax) on
Franchise Fee paid to DBI as tax credit against the Output Tax? The fact that
GDI claimed said amount as tax credit against its Output Tax indicates that the
Franchise Fee amounting to P23,668,980.00 pertains to 1% of GDI’s Sales alone.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Let us compute GDI’s Sales based on
VAT it paid for its purchase of services from non-resident (BIR Form No. 1600).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 35.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">VAT payments on purchase of services from
non-resident<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,840,123.69<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee based on VAT payments<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,667,697.42<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be sales based
on VAT on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
2,366,769,741.67<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This further corroborates that GDI had
actually under-declared its sales for year 2007 with the end view of evading
payment of correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">There
are such other mathematical computations duly supported by pieces of
documentary evidence to validate Revenue Officer Dalanon’s firm stance that GDI
under-declared its sales for year 2007, such as:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">i.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Assuming
<i>arguendo </i>that GDI’s Central
Warehouse’s sales to it sub-franchisees do not form part of the NET SALES upon
which the 1% franchise fee shall be based; and that only its directly and
indirectly owned shops/outlets’ sales are subject to the said franchise fee;
let us reconcile GDI’s facts and contentions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Considering that GDI’s
sub-franchisees’ financial statements for year 2007 were not available at the
time of the audit/investigation to exactly determine with certainty its actual
sales, this leaves RO Dalanon to the determination of GDI’s sub-franchisees’
net sales on the basis of the available information contain the financial
records submitted and presented by GDI to the BIR for audit, such as but not
limited to: <i>Franchise Agreements between
GDI and its Sub-Franchisees; Schedule of Royalty Income received by GDI from
its Sub-Franchisees; Technical Service Agreement between GDI and its
affiliate-AMI; and Monthly Remittance Returns of Final Taxes Withheld at source
on Franchise Fee.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The Franchise Agreements between GDI
and its Sub-Franchisees state, among other things, that the former shall
receive from the latter a Royalty Fee equivalent to 6.6% based on the latter’s
SALES of the preceding month.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the Royalty Fee
(Income) received by GDI from its Sub-Franchisees amounted to P133,190,903.00.
A random work-back computation of GDI’s Sub-Franchisees sales at the rate of
6.6% would result to P2,018,043,998.79 presented as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Royalty income per AITR and schedule
submitted by GDI<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 133,190,903.92<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by royalty fee rate per
sub-franchise agreements<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">GDI’s sub-franchisees’ net sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,018,043,998.79<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of these data alone, let
us reconcile GDI’s owned owned outlets’ sales without first delving into a more
detailed analysis/scrutiny of its accounts and information contained in other
independent relevant documents submitted by GDI itself to the BIR for audit.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net sales claimed by GDI as its
“system-wide sales” subj. to 1%<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Les: GDI’s sub-franchisees’ nets sales
(preceding computation)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,018,043,998.79 <o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Would have been GDI’s owned shops’ sales,
excluding CW’s<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">348,846,801.21<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s company-owned shops’ sales as
claimed by it<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 285,216,244.74<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (where is this amount? This was
not declared?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 63,630,556.47<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that the above
reconciliation would already reveal an under-declaration of sales amounting to
P63,630,556.47.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">ii.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Delving
into a more detailed scrutiny of the data and information contained in GDI’s
financial records (CD and duly-registered books) and other independent relevant
documents would further reveal discrepancies which would prove GDI’s
inconsistent declarations and scheme in substantially under-declaring its sales
with the end view of evading payment of correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The following data were taken from
GDI’s CD and duly-registered books:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .75in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 538px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Date<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise
Fee<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Royalty
Fee<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">CW’s
sales<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Own-Shops
sales<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jan.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,724,667.96<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 7,421,176.65<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
57,248,319.95<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
22,583,523.83<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Feb.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,686,532.69<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,286,726.73<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">52,501,006.84<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">21,767,600.01<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Mar.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,848,303.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,976,470.11<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">55,277,706.99<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,968,236.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Apr.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,776,113.60<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,669,213.80<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,153,890.87<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,698,087.32<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">May.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,970,219.46<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,563,473.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,728,814.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,810,849.73<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jun.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,893,370.70<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,628,963.14<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,501,372.76<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,139,025.61<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jul.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,003,418.71<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,175,610.88<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,572,834.81<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,806,223.09<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Aug.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,110,619.13<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,703,008.94<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">70,658,181.05<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,916,641.70<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sep.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,056,332.90<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,511,646.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,043,467.16<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,692,482.60<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Oct.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,103,622.20<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,682,043.36<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">68,578,021.70<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,405,163.12<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Nov.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,919,289.59<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,936,445.63<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">64,878,372.65<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">20,854,621.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Dec.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,576,418.05<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">38,636,125.14<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">735,948,475.68<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">264,037,478.14<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Totals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 23,668,908.44<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P133,190,903.90<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,407,090,464.94<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">521,679,933.74<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Franchise
Fee-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contended that the franchise fee
amounting to P23,668,908.00 is equivalent to 1% of its “system-wide sales”
which means, sales of its company-owned shops/outlets and those of its
Sub-Franchisees’ excluding Central Warehouse’s sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Royalty
Income-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Royalty income is 6.6% based on
sub-franchisees’ sales for the preceding month (e.g. royalty income for Feb.07
is based on sub-franchisees’ sales for Jan.07; royalty income for Mar.07 is
based on Feb.07 sales, and onwards).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Sales
accounts (Central Warehouse and Company-owned outlets)-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI claimed that sales for the month
of Dec.07 purportedly contained errors. It contended that the same contained
“double take-ups”, and that its Central Warehouse’s sales and Company-owned
outlets’ sales for the period amounted to P75,170,682.74 and P27,573,789.14,
respectively.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">While it may be noted in the CD and
duly-registered books, as reproduced above, that there were abrupt and
significant increases that occurred in the month of Dec.07, the same should not
be concluded that there were indeed “double take-ups” and thus presume the
correctness of GDI’s declarations in the AITR and VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Assuming <i>arguendo </i>that there were “double take-ups” that occurred in the
month of Dec.07 as GDI averred, and the aforesaid franchise fee pertains to 1%
of its “system-wide sales” as it further claimed, let us reconcile its
company-owned outlets’ sales for the period from January to September 2007
alone, because the entries for these periods were not claimed by GDI to contain
errors, and that Royalty Income is based on the preceding month’s sales of the
sub-franchisees, e.g., royalty for Feb.07 is based on sub-franchisees’ sales for
the month of Jan.07 and onwards.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee (Jan-Sep.07) per CD &
duly-reg. books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 17,069,578.60<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales (</span><span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Jan-Sep.07</span><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">)
claimed by GDI as “system-wide”<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,706,957,860.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: SF’s Grossed-up sales for Jan-Sep.07
based on Royalty <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income (Feb-Oct.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 96.3pt;" valign="top" width="128">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">78,197,156.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Divide by royalty fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 96.3pt;" valign="top" width="128">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,184,805,401.21<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be GDI’s owned outlets’ sales from
Jan-Sep.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">522,152,458.79<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned outlets’ sales (</span><span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Jan-Sep.07</span><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">)
per CD & reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared company-owned outlets’ sales for
Jan-Sep.07 alone<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 309,769,788.24<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that for January to
September 2007 alone, GDI actually under-declared its company-owned outlets’
sales amounting to P309,769,788.24.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Given that sales for Dec.07
purportedly contained errors (i.e., double take-ups) as GDI averred, let us
thrash out and reconcile GDI’s company-owned outlets’ sales for the last
quarter of 2007 based on data reflected per GDI’s VAT return for the period.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales & other income per 4<sup>th</sup>
Qtr VAT returnss<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
324,582,285.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: CW’s sales (Oct-Dec.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">208,627,077.25<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">57,254,614.13<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Franchise income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">5,131,288.88<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Other income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,059,023.10<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">272,072,003.36<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">GDI’s owned shops’ sales reflected in 4<sup>th</sup>
Qtr VAT return<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">52,510,282.54<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned shops’ sales claimed by
it as the correct amount<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Total sales for 2007 as GDI claimed<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">285,216,244.74<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
</span><span style="font-family: "Verdana",sans-serif; font-size: 6.0pt; mso-bidi-font-size: 11.0pt;">Own-shops’ sales (jan-sep.07) per
CD&reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 72,833,574.19<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (where is this?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(P 20,323,291.65)<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI would want to demonstrate that its
sales for the last quarter of 2007 amounted to only P52,510,282.54 when its own
data and contention would reveal that its sales for the period was already
P72,822,574.19.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI cannot even reconcile its own
facts and contentions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">iii.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Below
is another mathematical computation based on another independent relevant documents
– Final Tax Remittance Returns (BIR Form No. 160F), to prove GDI’s inconsistent
declarations in the AITR and VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Income payments made to non-resident
foreign corporations are subject to Final Withholding Tax. Thus, the Franchise
Fee paid by GDI to DBI was subjected to Final Withholding Tax at the rate of
10% pursuant to Philippines-China Tax Treaty.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the actual Final Tax
Withheld by GDI from the Franchise Fee it paid to DBI and remitted to the BIR
per BIR Form No. 1601F amounted to P2,456,311.94.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of actual remittance of
Final Tax contained in BIR Form No. 1601F, let us reconcile GDI’s owned
outlets’ sales for the period from January to September 2007 alone, considering
that entries for these periods were not claimed by GDI to contain errors, given
that the supposed “double take-ups” occurred in the month of December 2007; and
based on its own contention that the Franchise Fee it paid to DBI is equivalent
to 1% of the “system-wide sales” f GDI’s owned outlets and those of its
Sub-Franchisees’ excluding central warehouse’s.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax remittance – Jan-Sep.07<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,749,576.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by FWT rate applied (Phils-China Tax
Treaty)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 10%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Tax base (Franchise Fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">17,495,769.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by FF rate per License Agreement
(DBI & GDI)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales claimed by GDI as
“system-wide sales”<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,749,576,900.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Grossed-up sales of GDI’s sub-F based
on royalty<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income (Feb-Oct.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 101.45pt;" valign="top" width="135">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">78,197,156.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Divide by royalty fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 101.45pt;" valign="top" width="135">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,184,805,401.21<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be GDI’s owned outlets’ sales
excluding CW’s sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">564,771,498.70<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned outlets’ sales
(Jan-Sep.07) per CD&reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (Undeclared owned outlets’
sales?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 352,388,828.24<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that the random
work-back computation presented above based on actual remittance of final tax
reflected in BIR Form No. 1601F for the period from Jan-Sep.07 alone would also
reveal that GDI under-declared its company-owned outlets’ sales amounting to
P352,388,828.24. This corroborates the discrepancy shown above.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Other mathematical computations and
reconciliations to prove the under-declaration of sales shall be provided if
warranted.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Purchases
amounting to P772,225,727.77 was not subjected to tax required to be withheld.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="4" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cost of sales per CD & duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,447,422,137.23<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Store labor cost<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,471,004.78<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Throw away<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">5,556,510.82<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> VAT credit included in Cost of Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 91,361,028.70<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 155,388,544.30<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,292,033,592.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add back: Throw away inadvertently deducted
in the previous computation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5,556,510.82<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Adjusted total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,297,590,103.75<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add(Deduct): Merchandise Inventory – end<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">127,322,114.17<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Merchandise Inventory –
beg<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> (40,850,274.01)<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 86,471,840.16<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic and importation) -
unadjusted<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,384,061,943.91<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Audit adjustments to reconcile with
purchases per CD&duly-registered book<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.15pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Net purchases (domestic and importation)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.95pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,384,061,943.91<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.15pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Merchandise purchases per CD&reg.books<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.95pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,371,684,175.71<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12,377,768.20<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic & importation)
per CD & duly-reg books per audit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,371,684,175.71<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Importation (other than capital goods
per VAT returns)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 26,659,331.16<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,345,024,844.55<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Other purchases charged to Gen/Admin
& operating expenses (adj)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 29,099,414.61<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Purchases subject to expanded withholding
tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,374,124,259.16<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Purchases subjected to EWT per BIRF
1601E<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">728,846,527.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Purchases of capital goods -<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Office equipment, furniture and fixtures<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(14,237,264.24)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Equipment for transfer<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(21,422,154.27)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Kitchen and Dining Equipment<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 3,970,117.59)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Store/office equipment<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 5,531,823.64)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Payments of prior year’s obligations-<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
A/P-Trade bal beg per CD & duly-reg books<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(69,023,057.78)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Accrued exp payable beg per CD/reg books<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> (12,763,578.09)<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 601,898,531.39<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Purchases not subjected to Expanded
Withholding Tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
772.225.727.77<o:p></o:p></span></u></div>
</td>
</tr>
<!--[if !supportMisalignedColumns]-->
<tr height="0">
<td style="border: none;" width="305"></td>
<td style="border: none;" width="1"></td>
<td style="border: none;" width="1"></td>
<td style="border: none;" width="126"></td>
<td style="border: none;" width="144"></td>
</tr>
<!--[endif]-->
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For failure to withhold tax required
to be withheld under Revenue Regulations 02-98, as amended, in relation to
Section 57(B) of the 1997 NIRC, as amended, the amount of P772,225,727.77 was
disallowed pursuant to Section 34(K) of the same Code which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“<i>Additional
requirements for deductibility of certain payments. – </i>any amount paid or
payable which is otherwise deductible from, or taken into account in 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.”<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To strengthen Revenue Officer
Dalanon’s stance for disallowing the afore-cited amount, quoted below are
Court’s decisions on deductibility of certain payments as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“The purpose of this requirement is to
insure the collection of the income tax on these payments which constitute
income to the recipients thereof and, therefore, includible in their gross
income (NIRC, Annotated, 2000 ed., De Leon, p. 292). Thus, when one engaged in
trade or business makes payments that are deductible from his gross income for
tax purposes, it is not enough that he proves that such payments have been
made. He must also show proof that he withheld the ta and remitted it to the
BIR before he can deduct the same as business expense (NIRC, Annotated, De
Leon, Supra).” </span></b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Systems and Encoding Corp. vs. Commissioner
of Internal Revenue, CTA Case No. 6999 dated December 16, 2008.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“The corporation is the government’s
withholding agent. Hence, it is duty-bound to withhold taxes upon income
payments subject to tax required to be withheld at the time such income
payments are paid or payable, whichever is earlier in order to be considered as
a deductible expense <i>(Section 2.57.4 of
Revenue Regulations No. 2-98). </i>Since the expense was not subjected to
withholding tax in the year it was accrued and claimed as expenses, the same
shall not be allowed as deduction from gross income.” </span></b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">TUTUBAN
PROPERTIES, INC. vs. CIR, CTA Case No. 6570, December 20, 2007.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">VAT
input tax included in Cost of Sales account per CD 7 duly-registered books
amounting to P91,361,028.70.</span></b><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The input tax per Summary List of
Purchases (SLP) and input tax submitted by GDI was only P85,276,481.48. This
amount was already applied as tax credit against output tax per VAT returns.
GDI likewise affirmed that its input tax was only the said amount. However, the
CD and the duly-registered books showed that an input tax amounting to
P91,361,028.70 formed part of its Cost of Sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">While Section 110(A) of the 1997 NIRC,
as amended, in relation to RR No. 16-2005 allows input tax for conversion into
or to form part of finished goods, the amount of P91,361,028.70 was disallowed
in view of the affirmation of GDI that its input ta was only P85,276,481.48 and
declared that the same was already applied as tax credit against its output tax
per VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Rentals
amounting to P10,205,770.03 was not subjected to EWT, hence, it was disallowed.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon inadvertently
not included this amount as disallowed expense in his original audit report.
However, said amount was included as part of the disallowed items after review
and evaluation conducted by Revenue Officer Stanley Ong when he was yet with the
Assessment Division of the Regional Office in Quezon City. The inclusion of the
same was proper. It increased the assessment on income tax aspect and the
corresponding surcharge and interest.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The same legal bases as cited in
number 3 above.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Value-added Tax (VAT)
aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of VAT amounting to P160,283,750.13<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Difference in recon of Central
Warehouse accounts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Unrecorded and undeclared sales:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Grossed-p sales based on Franchise Fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Less: Total per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,982,149,129.66<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 384,741,670.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per audit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Other income subject to VAT:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">133,190,903.90<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Franchise income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,847,488.63<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Other non-operating income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 3,247,797.81<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 146,286,190.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total amount subject to VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,513,176,990.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales subjected to VAT per VAT
returns<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,177,479,072.58<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,335,697,917.76<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Understatement of VAT (output tax) payable<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 160,283,750.13<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The undeclared sales as earlier
computed was subjected to VAT pursuant to Section 108(A) of R.A. No. 8424, as
amended by R.A. No. 9337 in relation to RR No. 16-2005, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It contested the above computed
discrepancy. It submitted a reconciliation which only showed a discrepancy
amounting to P58,519.78.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">He asserted his firm stance that the
understatement was P160,283,750.13 because all the data in determining the
aforesaid discrepancy were taken from GDI’s financial records (CD and the
duly-registered books) and other independent relevant documents subject by it
for audit.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Disallowed
input tax amounting to P1,531,629.37 attributable to Accrued Expenses Payable
beginning.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Scrutiny of GDI’s records, particularly
the Check Register, showed that it claims VAT (input tax) credit on its
payments of Accrued Expenses Payable which do not conform with the provisions
of the VAT law.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It is worth to mention at this point
the fundamental taxation principle that Input Tax is concomitant to an Expense
or Purchase Account as Output Tax is concomitant to Sales or Revenue Account.
Therefore, input tax amounting to P1,531,629.37 equivalent to 12% of the
beginning balance of Accrued Expenses Payable per CD and the duly-registered
books was disallowed.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For a clear view of the scheme adopted
by GDI, below are journal entries taken from the Check Register, as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Dr.
Accrued expenses payable P41,593.87<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Dr.
VAT credit 4,991.26<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Cr.
Withholding tax at source ( 415.94)<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Cr.
Security Bank – S/A (46,169.94)<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Accrued expenses payable beg per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 12,763,578.09<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Disallowed input tax attributable to
accrued expenses payable beginning<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,531,629.37<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Unsupported
(over-claimed) VAT (input tax) credit amounting to P27,032,432.06.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Audit revealed that VAT (input tax)
credit claimed per VAT returns was overstated by an amount of P27,032,432.06
computed as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">VAT credit (input tax) per VAT returns<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 116,680,666.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: VAT Credit (input tax) on -<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Domestic purchases per SLP<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">85,276,481.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Services by non-resident<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,840,123.69<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 88,116,605.17<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">28,564,061.49<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Input tax attributable to accrued
expenses payable beginning<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,531,629.37<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unsupported (over-claimed) VAT (input tax)
credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 27,031,432.12<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount was disallowed because GDI
failed to substantiate it with documentary evidence in order to be allowed as
tax credit against output tax as required under Section 110(A) of R.A. No. 8424
as amended by R.A. No. 9337 in relation to RR No. 16-2005, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Expanded withholding tax
(EWT) aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l11 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">EWT
on income payments to suppliers of goods – P7,722,257.28<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 1% EWT on
income payments to suppliers of goods, as computed in Number 3 under Income Tax
aspect, pursuant to Section 57(B) of the 1997 NIRC, as amended, in relation to
RR No. 02-98, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l11 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">EWT
on rentals – P510,288.50<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 5% EWT on rentals
which was not subjected to tax required to be withheld under RR No. 02-98, as
amended, in relation to Section 57(B) of R.A. No. 8424, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Rentals per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 41,913,127.23<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Rentals subjected to EWT per BIR Form
No. 1601E<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 31,707,357.20<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Rentals not subjected to EWT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">10,205,770.03<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by EWT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on Rentals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 510,288.50<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-right: .25in; tab-stops: 6.25in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Final Tax (FT) aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l3 level1 lfo9; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Final
tax on cash dividends amounting to P481,396.81 (uncontested)<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 10% Final Tax
on cash dividends pursuant to Section 24(B)(2) of the 1997 NIRC, as amended, in
relation to RR No. 02-98, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cash dividends per CD and duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 6,138,024.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cash dividends issued to domestic corporations:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Marilex Realty Development Corporation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">880,632.17<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Spare Enterprises, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">220,974.99<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
PAMM, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">111,217.33<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Metro Bakers, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 111,231.45<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,324,055.94<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cash dividends subject to final tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">4,813,968.06<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by FT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 10%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax due on cash dividends<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 481,396.81<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoListParagraph" style="margin-left: .25in; mso-add-space: auto; mso-list: l3 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Fringe Benefit Tax (FBT) amounting to
P253,102.50 (uncontested)<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Audit revealed that GDI purchased
service vehicles for use of its employees holding supervisory positions.
However, these were not subjected to the FBT required under RR No. 02-98, as
amended, in relation to Section 57(B) of the 1997 NIRC, as amended, computed as
follows:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: .25in; mso-add-space: auto; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Name
of employees<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cora
B. Lugtu<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">R.R.
Ledesma<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Ma.
C.M. Prieto<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Kind
of unit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Honda
Jazz 1.3 I-DSI<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Toyota
Altis 1.8EA/T<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Innova
Gas A/T<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Monthly
amortization<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 16,856.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 21,592.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 16,190.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply
by number of amortization<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Amortized
amount<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">606,816.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">777,312.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">582,840.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by (estimated DP is 20%)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Acquisition
cost<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">758,520.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">971,640.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">728,550.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by estimated useful life<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Monetary
value<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">151,704.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">194,328.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">145,710.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up
monetary value<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">223,094.12<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">285,776.47<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">214,279.41<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply
by normal tax rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe
Benefit Tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
78,082.94<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
100,021.76<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
74,997.79<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<span style="font-family: "Verdana",sans-serif; font-size: 20.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">While
KIM HENARES scares small taxpayers, constantly pesters MANNY PACQUIAO, and
actively prosecutes those are not allies of the AQUINO administration; she
fears, coddles and lawyers for DUNKIN’ DONUTS company – a BIGTIME TAX CHEAT!!!
– whose secretary is MARIXI PRIETO who also happens to be the chairperson of
Philippine Daily Inquirer (PDI) and friend of President Aquino, according to
Deputy Commissioner Estela Sales.</span>Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com1tag:blogger.com,1999:blog-4059609801449488014.post-37128229248103187162015-04-14T15:56:00.001-07:002015-04-14T15:56:20.621-07:00TAX EVASION CASE INTENTIONALLY NOT FILED BY KIM HENARES<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">BIR’s
KIM HENARES INTENTIONALLY FAILED TO EITHER COLLECT DUE AND DEMANDABLE TAX
DEFICIT OF GOLDEN DONUTS, INC. (GDI) OR SUE IT FOR FRAUD FOR UNDER-DECLARING
REVENUE ON THE TAX RETURN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Golden Donuts, Inc.
(GDI)</span></b><span style="font-family: "Verdana",sans-serif;">, the exclusive
Philippine Franchisee of the global brand “<b>Dunkin’
Donuts</b>”, flagrantly perpetrated fraudulent acts or criminal tax violations
that culminated to deficiency tax assessment amounting to <b>P1,564,426,808.08</b>, including increments, for year 2007, discovered
and documented by Othello Dalanon in his official capacity as former BIR
Examiner.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Dalanon
personally reported GDI’s omissions to <b>Commissioner
Henares</b> and recommended to her the criminal prosecution for tax evasion
under the much-vaunted “Run After Tax Evaders” program of the Bureau; but she
intentionally did not pursue fraud case against the company because its
secretary – <b>Marixi Prieto</b> who also
happens to be the <b>chairperson of the
Philippine Daily Inquirer</b> – is <b>President
Aquino’s friend</b>, according to BIR Deputy Commissioner Estela Sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Ms.
Prieto talked to Henares and BIR Regional Director (now Assistant Commissioner
of Internal Revenue) Nestor Valeroso, on different occasion, who both gave
leniency to GDI.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
aforesaid deficiency tax assessment obtained finality because GDI failed to
file a VALID PROTEST against the Formal Letter of Demand and Assessment Notice
(FAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">However,
Henares intentionally did not collect it, purportedly because representatives
of GDI complained to her that Dalanon’s assessment was faulty. Thus, she
ordered two (2) re-investigations.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">There
is no LAW that authorizes the Commissioner to order two (2) re-investigations
of a FINAL, EXECUTORY and DEMANDABLE assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Once
the deficiency tax assessment obtained finality, the right of the government to
collect the deficiency tax becomes absolute; thus, precludes the taxpayer from
questioning the correctness of the assessment and from raising any
justification or defense that would pave the way for a re-investigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">She
also claims that the authority to decide and declare finality of a certain
assessment is a function vested by law upon the Commissioner of Internal
Revenue.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
assertion does not find basis in LAW.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
is the LAW that determines finality of a certain assessment as clearly provided
under Revenue Regulations (RR) No. 12-99 as amended by RR No. 18-2013 which the
Commissioner herself promulgated, in relation to Section 228 of the 1997
National Internal Revenue Code (1997 Tax Code), as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
claim that Dalanon’s assessment was faulty is WRONG.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">In
fact, she was not able to dispute Dalanon’s assessment. What is very clear is
that, while she bullies small taxpayers, constantly pesters Congressman Manny
Pacquiao, and actively prosecutes those are not allies of the current
administration; she fears, coddles and lawyers for Dunkin’ Donuts local seller
– a bigtime tax evader!!!<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Just
to reiterate. The P1.56 billion tax deficit of Dunkin’ Donuts franchisee has
become DUE and DEMANDABLE, thus, it already legally belongs to the FILIPINO
people whom PRESIDENT AQUINO considers as his “BOSSES?”, and therefore, Henares
is duty-bound to enforce collection thereof – but she refused to.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">GDI’s OMISSIONS<o:p></o:p></span></b></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">GDI has two (2) sets of books of
accounts</span></b><span style="font-family: "Verdana",sans-serif;"> – one was
the duly-registered hardbound computer-generated books of accounts which were
the bases of Dalanon’s assessment; and the other was the unregistered
not-permanently-bound “manually-posted from original books of accounts”,
records which GDI claims as the bases of its Trial Balance for Financial
Statements and Income Tax Return purposes;<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It supplied false information on the
tax return</span></b><span style="font-family: "Verdana",sans-serif;"> – the
duly-registered books of accounts reflected a <u>net income</u> amounting to <b>P135.2 million </b>while the tax return
showed a <u>net loss</u> of <b>P44.9
million</b>;<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It substantially under-declared sales
on the tax return in two (2) instances</span></b><span style="font-family: "Verdana",sans-serif;">:<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Sales
per duly-registered books was <b>P1.928
billion</b> while the amount reflected on the tax return was <b>P1.031 billion </b>– a substantial
discrepancy (under-declaration) amounting to <b>P897 million</b>;<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT</b> ruled in the case of Paper Industries Corporation of
the Philippines <i>vs</i> Court of Appeals,
et al., 250 SCRA 434 that <i>“<u>where the
books of accounts reflected a sales or receipts higher than that reflected on
the return</u>, <u>the books of accounts should prevail</u>. <u>This is so</u>,
<u>because the books of accounts are kept by the taxpayer and are prepared
under its control and supervision</u>; <u>and they reflected what may be deemed
to be admissions against interest</u>.” </i>The representations made by GDI in
the CD and duly-registered books submitted and presented by it to the Bureau
for audit and examination amounted to admissions against interest which it
cannot disown and change at its convenience of pleasure. Emphasis supplied.<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Other
independent relevant documents, such as, but not limited to: Franchise
Agreement between Dunkin’ Donuts of America, Inc. and GDI; Technical Service
Agreement between GDI and its affiliate-Antares Management, Inc. (AMI); BIR
returns, etc., further revealed that GDI’s <u>sales</u> topped <b>P2.366 billion </b>but recorded per
duly-registered books was only <b>P1.928
billion </b>– a substantial unrecorded and consequently undeclared sales
amounting to <b>P438 million</b>.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">The information contained in the
aforesaid documents were utilized in further determining GDI’s sales on the
basis of the provisions of Section 5(A) of the 1997 Tax Code.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">The method of validation used by
Othello Dalanon was already upheld by the <b>COURT
OF TAX APPEALS </b>in the case of <u>Asia Coal Corporation <i>vs</i> Commissioner of Internal Revenue (CTA Case No. 6803, February
13, 2008)</u>, that “<i>the respondent may
utilize any kind of document, x x x to determine the correct sales of the
petitioner…”<o:p></o:p></i></span></div>
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<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">All
the above enumerations are fraudulent acts or criminal tax violations covered
by the RATE (Run After Tax Evaders) Program of the Bureau; but Henares
intentionally did not pursue tax evasion case against the company.<o:p></o:p></span></div>
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<br /></div>
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<u><span style="font-family: "Verdana",sans-serif;">Henares, in her position paper submitted to the Office of
the Ombudsman in connection with the formal complaint filed against her by
Othello Dalanon, failed to dispute the above-enumerated irregularities
perpetrated by GDI</span></u><span style="font-family: "Verdana",sans-serif;">.<o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Verdana",sans-serif;">THE DEFICIENCY TAX
ASSESSMENT OBTAINED FINALITY<o:p></o:p></span></b></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">The
deficiency tax assessment against GDI amounting to P1.56 billion, including
increments, for year 2007, obtained finality because GDI’s letter of protest
against the Formal Letter of Demand and Assessment Notice (FAN) was INVALID.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">The
alleged letter of protest of GDI merely states “protest against PAN adopted <i>in toto</i>”. It does <b>not</b> state the facts, the applicable law, rules and regulations, or
jurisprudence on which its protest was based. It is neither a request for
reconsideration or reinvestigation.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">The
rules on protesting an assessment is found in Section 3 subsection 3.1.5 of RR
No. 12-99, as amended, that reads:<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">“Disputed Assessment. – The taxpayer
or his duly authorized representative may protest administratively against the
aforesaid formal letter of demand and assessment notice within thirty (30) days
from date of receipt thereof.”<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">“The taxpayer shall state the FACTS,
the applicable LAW, RULES and REGULATIONS or JURISPRUDENCE on which his protest
is based, otherwise, his protest shall be considered VOID and WITHOUT FORCE AND
EFFECT.”<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">“If the taxpayer fails to file a VALID
PROTEST against the formal letter of demand and assessment notice within thirty
(30) days from date of receipt thereof, the assessment shall become FINAL,
EXECUTORY and DEMANDABLE.”<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">The
said Regulations must be taken in relation to Section 228 of the 1997 Tax Code,
as amended, which reads:<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Verdana",sans-serif;">“Protesting an assessment. – Such
assessment may be protested administratively by filing a REQUEST FOR
RECONSIDERATION or REINVESTIGATION within thirty (30) days from receipt of the
assessment in such form and manner as may be prescribed by implementing rules
and regulations. x x x otherwise, the assessment shall become FINAL.”<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNoSpacing" style="margin-right: 1.35pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Clearly, what the law demands is a
VALID administrative protest against the formal letter of demand and assessment
notice which required the taxpayer to comply with the following:<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be through a REQUEST FOR RECONSIDERATION or REINVESTIGATION;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be in the form and manner as prescribed under RR No. 12-99, as
amended, which provides that said protest must state the FACTS, the LAW, RULES
and REGULATIONS, or JURISPRUDENCE on which the protest is based; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Must
be filed within thirty (30) days from receipt of the assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 4581, March 25, 1992</u>), cited that, <i>“[f]ailure to comply with any or all of these
requirements results in the assessment against the taxpayer becoming final and
unappealable.”</i><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
letter of protest should not just state “protest against PAN adopted <i>in toto</i>” because the administrative
protest required to be filed as an answer to the formal letter of demand and
assessment notice is distinct and not the same as the protest filed against the
Preliminary Assessment Notice (PAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>emphasized in
the case of <u>Security Bank Corporation <i>vs
</i>Commissioner of Internal Revenue (CTA Case No. 6564, November 8, 2006)</u>
and further accentuated in the case of <u>Bank of the Philippine Islands <i>vs</i> Commissioner of Internal Revenue (CTA
Case No. 7397, April 9, 2008)</u> that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[A] protest to the preliminary
assessment notice is not the same as the protest required to be filed as an
answer to the final assessment notice. In fact, the preliminary assessment
notice may or may not even be protested to by the taxpayer, and the fact of
non-protest shall not in any way make the preliminary assessment notice final
and unappealable. What is clear from Section 319-A of the Tax Code of 1977, as
amended, is that failure on the part of the taxpayer to protest or reply to a
preliminary assessment notice paves the way for the issuance of a final
assessment notice. However, evident under said Section (now Section 228 of the
1997 Tax Code) is that failure on the part of the taxpayer to file a VALID
administrative protest through a REQUEST FOR RECONSIDERATION or REINVESTIGATION
on the final assessment notice, shall result in the finality of the said FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>SUPREME COURT </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (G.R. No. 175097, February 5, 2010)</u> heightened that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 18.7pt; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“It is the Formal Letter of Demand and
Assessment Notice that must be administratively protested or disputed within 30
days, and not the PAN.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI,
in its INVALID letter of protest against the FAN, likewise claimed that the
assessments are null and void <i>ab initio </i>because
it was allegedly issued in rampant violation of the due process requirements
prescribed under Section 228 of the Tax Code as implemented by RR No. 12-99.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
claim is not true. Records will show that the due process requirements were
promptly observed. There were at least five (5) notices served to GDI either
thru personal delivery or by mail before the formal letter of demand and
assessment notice (FAN) was issued. In fact, it even contested the PAN as
clearly admitted in GDI’s invalid letter of protest against the FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case <u>Bank
of the Philippine Islands <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 7397, April 9, 2008)</u>, has had the
occasion to say:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[W]hen the petitioner received the
final assessment notice and duly protested the same, petitioner’s right to due
process was properly protected and observed.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">OTHER
FACTS TO SHOW <i>PRIMA FACIE </i>EVIDENCE OF
ACTUAL FRAUD<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
scheme of the taxpayer to evade payment of correct taxes is very clear. It
substantially under-declared its Sales with the end view of evading payment of
correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Computation of percentage ratio of
under-declaration of sales:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on sales per CD and duly-registered books –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Discrepancy
in reconciliation of Central W’hse accts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per
CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales
reflected per Annual Income Tax Return (AITR)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales
based on CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">950,620,212.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by total
sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,982,149,129.66<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Percentage ratio
of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 47.96%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on franchise fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Franchise fee per CD, duly-registered books
and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 23,668,908.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales (or should be sales based
on franchise fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,361,883.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,890,800.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.3<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on management fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Management fee per CD, duly-registered
books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 47,337,817.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by management fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales (or should be sales based
on mgt. fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,890,850.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,361,933.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based on management fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,890,850.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.4<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on VAT on franchise fee paid to DBI (BIRF No. 1600) –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">VAT payments on purchase of services from
non-resident<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 2,840,123.69<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Franchise fee based on VAT payments<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">23,667,697.42<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales/should be sales based on
VAT on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,769,741.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,240,824.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based VAT on FF<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,769,741.67<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that omission or substantial
understatement or under-declaration of sales a fraudulent act or criminal tax
violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">GDI
keeps two (2) sets of books of accounts.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
duly-registered hardbound computer-generated books of accounts registered with
the BIR on January 15, 2008, which were the bases of the audit findings; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
unregistered not-permanently-bound “manually-posted from original books of
accounts” records which GDI claims as the basis of its trial balance for
financial statements and income tax return purposes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To these, a third set of books of
accounts may be added: Records of RDO No. 41, Mandaluyong City, showed that GDI
registered another set of bound books of accounts (General Journal and General
Ledger) on May 30, 2007.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that keeping two (2) set of
books of accounts a fraudulent act or criminal tax violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> <o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">GDI’s
duly-registered books of accounts reflected a net income of P135.2 million for
year 2007. Its AITR for the same period reflected a net loss of P44.9 million
as well as that of the prior years, as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Net Loss<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2002 P62,919,525.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2003
44,902,187.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2004
46,995,142.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005
67,077,226.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
57,254,963.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Notwithstanding the continuous
incurrence of losses, it was able to acquire and accumulate properties and
presented under Property, Plant and Equipment in its Financial Statements, as
follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Acquisitions<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005 P16,819,089.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
20,755,205.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2007
34,654,371.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2008
47,019,061.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can it afford such gargantuan
amount of acquisitions if it has really been continuously incurring losses? Is
this not indicative of under-declaration of sales, as a business has a very
least prospect to exist if it is continuously incurring losses?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">In
2008, it appropriated Retained Earnings amounting to P100 million for future
renovation of facilities and expansion of production center and outlets.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can the Board of Directors of the
corporation have the audacity to appropriate such huge amount of Retained
Earnings for future expansion of its center and outlets if the corporation is
really continuously incurring losses without infusing additional capital?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
financial records (the CD and the duly-registered books of accounts) and other
independent relevant documents, such as but not limited to: License Agreement between
GDI and DBI; Technical Service Agreement between GDI and its affiliate-Antares
Management Inc. (AMI); VAT payments on purchases of services from non-resident
(BIRF No. 1600); Monthly Remittance Returns of Final Taxes Withheld at Source
(BIRF No. 1601F); etc., submitted by it to the Bureau for audit and examination
evidently revealed existence of actual fraud.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<b><span style="font-family: "Verdana",sans-serif;">2007
DEFICIENCY TAX ASSESSMENT<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<b><span style="font-family: "Verdana",sans-serif;">Income tax liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Net
taxable income per AITR<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 0.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Discrepancies/Disallowances:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Understatement of Gross Income-<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Recorded per reg. books but not
declared per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">376,602,840.43<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unrecorded and undeclared<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">384,741,670.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Purchases not subjected to EWT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">772,225,727.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> VAT (input tax) credit included in
Cost of Sales <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 91,361,028.70<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Net
taxable income per investigation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,624,931,267.24<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Income
tax due thereon<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">568,725,943.53<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
50% surcharge for substantial understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">284,362,971.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 20% interest per annum from 4.16.08
to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 260,982,016.31<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
deficiency income tax and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 1,114,070,931.61<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Value-added Tax (VAT)
liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Sales
per CD and duly-registered books of accounts<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Difference in recon of A/R-Franchise vs Sales Accts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">53,378,730.98<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unrecorded & Undeclared Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">384,741,670.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Royalty income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">133,190,903.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Franchise income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">9,847,488.63<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Other non-operating income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 3,247,797.81<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
sales and other income subject to VAT per investigation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,513,176,990.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Output
tax thereon<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">301,581,238.84<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less:
Output tax per VAT returns<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 141,297,488.71<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Understatement
of VAT (output tax) payable<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">160,283,750.13<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Input tax attributable to accrued expenses payable-beg<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,531,629.37<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unsupported (over-claimed) VAT input
tax credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 27,032,432.06<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Deficiency
VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">188,847,811.56<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
50% surcharge for substantial understatement of VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">94,423,905.78<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 20% interest per annum from 1.26.08
to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 95,055,398.49<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
deficiency VAT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 378,325,115.83<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Expanded withholding tax
(EWT) liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on income payments made to suppliers of
goods<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 7,722,257.28<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on rentals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 510,288.50<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total expanded withholding tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,232,545.78<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 20% interest per annum from 1.16.08 to
7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">4,189,451.07<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 25,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency EWT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 12,446,996.85<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Final Tax (FT) liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax on cash dividends<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 481,396.81<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">120,349.20<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 1.16.08 to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">244,977.49<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">862,723.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Penalty for late remittance of FT on
goodwill paid to Panda:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
(Basic Tax remitted is P342,478.57)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">85,619.64<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 2.10.07 to 8.10.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">34,247.86<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency final tax on cash
dividends and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 998,591.00<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Fringe benefit tax (FBT)
liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe benefit tax<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 253,102.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,275.63<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 1.26.08 to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">127,394.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency FBT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 459,773.05<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">SUMMARY<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Income tax liability<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,114,070,931.61<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Value-added tax (VAT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">378,325,115.83<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Expanded withholding tax (EWT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">12,446,996.85<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax (FT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">998,591.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe benefit tax (FBT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
459,773.05<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grand Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,506,301,408.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">*</span><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Interests
were adjusted up to time of assessment which shall be further adjusted up to
time of payment.</span><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<b><span style="font-family: "Verdana",sans-serif;">DETAILS
OF THE CASE<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<b><span style="font-family: "Verdana",sans-serif;">Prefatory<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI,
a domestic corporation with business office located at GDI Building, Sheridan
corner Reliance Streets, Mandaluyong City, is the exclusive Philippine
Franchisee of DUNKIN’ DONUTS OF AMERICA, INC. (DDA), now DUNKIN’ BRANDS, INC.
(DBI). As such, it grants sub-franchise rights to various domestic entities
nationwide. It has six hundred forty-two (642) outlets all over the country.
Fifty-four (54) of which are directly owned by the corporation while the
remaining five hundred eighty-eight (588) are owned by the thirty-five (35)
sub-franchisees under GDI’s supervision.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
maintains a Central Warehouse (Commissary) wherefrom all of its sub-franchisees
purchase on a Cash-On-Delivery basis, all products, ingredients, commodity,
supplies, and merchandise.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
is a VAT-registered entity and belongs to the Top 10,000 Private Corporations.
It continues to grow with almost a thousand employees servicing the Filipinos
with affordable products like doughnuts, sandwiches, hot chocolates, coffee,
shakes and the likes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
corporation has forty-five (45) stockholders. Its major stockholder and
Chairman of the Board is Mr. Leopoldo L. Prieto. The officers of the
corporation are as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Walter C. Spakowski President<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> <b>Marixi R. Prieto Secretary<o:p></o:p></b></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;"> </span></b><span style="font-family: "Verdana",sans-serif;">Miguel
H. Prieto Treasurer<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Pedro E. Paraiso Chief Financial Officer<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Ernesto S. Co VP & General
Manager<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Jocelyn V. Santos VP Finance &
Administration<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
adopts a Computer Assisted Accounting System with duly-registered Hardbound
Computer-Generated Books of Accounts (hereinafter referred as <i>duly-registered books). </i>The CD submitted
by the corporation to the Bureau for audit, and the duly-registered books as
validated by Revenue Officer Othello E. Dalanon, reflected a NET TAXABLE INCOME
of P135,272,757.01 while the Annual Income Tax Return (AITR) reflected a NET
LOSS of P44,907,842.00, summarized as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Particulars<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Per
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Per
AITR<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">S a l e s<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,031,528,917.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 873,404,765.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross Income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">481,348,261.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">158,124,152.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gen/Admin and operating expenses<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 348,224,850.69<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 207,301,714.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net income from operation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">133,123,410.76<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 49,177,562.00)<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Non-operating and other income (net)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,149,347.15<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 4,269,719.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net taxable income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
135,272,757.91<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(P 44,907,843.00)<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On
the basis of the above information alone, it can readily be deduced that GDI
deliberately under-declared its income in the Annual Income Tax Return.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is
it not that deliberate under-declaration of income (substantial
under-declaration) constitutes fraudulent act or criminal tax violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Details discrepancies<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Income tax aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of gross income (recorded but undeclared) amounting to P376,602,840.43 which
arose from substantial under-declaration of sales.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Discrepancy
in recon of Central Warehouse accounts (S-1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per CD
and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of
sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross income per
CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">534,726,992.43<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross
income reflected per Annual Income Tax Return<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Understatement of
gross income (recorded but undeclared)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
376,602,840.43<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">S-1 Reconciliation of Central
Warehouse accounts –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Accounts
Receivable – Franchise total debit transactions<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,764,792,639.41<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT
factor<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 25/28<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net of VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,575,707,713.76<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Franchise
Operation Current net credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 115,238,517.84<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be
Sales-Central Warehouse<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,460,469,195.92<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales-Central
Warehouse per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,407,090,464.94<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Discrepancy in reconciliation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted in the above
computation that the amount of P376,602,840.43, though taken up per CD and
duly-registered books, was not included in the computation of taxable income in
the Annual Income Ta Return in gross violation of Section 31, in relation to
Section 32(A) of Republic Act No. 8424 otherwise known as the 1997 National
Internal Revenue Code (1997 NIRC), as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT </b>ruled in the case of <u>Paper Industries Corporation
of the Philippines <i>versus </i>Court of
Appeals, et al., 250 SCRA 434</u> that “<i>where
the books of accounts reflected a Sales or Receipts higher than that reflected
in the return, the books of accounts should prevail. This is so, because the
books of accounts are kept by the taxpayer and are prepared under its control
and supervision, and they reflected what may be deemed to be admission against
interest”.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It claimed that the information or
entries contained in the CD and duly-registered books are erroneous. It averred
that the same contained more than 2,500 errors posted in 84 accounts and should
not be the basis of the audit. It claimed that there were “double take-ups”.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The CD and the duly-registered books,
as duly validated by him, already contained GDI’s external auditors’
adjustments. The discrepancies or differences in Sales accounts between GDI’s
CD and duly-registered books on one hand and the AITR on the other were not
reflected by its external auditors as adjusting or correcting entries in the
said CD and duly-registered books.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">With the more than 2,500 erroneous
entries posted in 84 accounts, as GDI averred, to contain in the CD and
duly-registered books, it is believed to be unfeasible and amazing that GDI
which belongs to the high profile business in the Philippine industries and
with its highly competent accounting and auditing employees, supervisors, and
tax managers, the external auditors, and the reputable independent public
auditors that it (GDI) hired to conduct quarterly reviews of its financial
records would not notice such remarkable and significant errors.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT </b>already ruled in the case of Paper Industries
Corporation of the Philippines <i>versus </i>Court
of Appeals, et al., 250 SCRA 434 that <i>“<u>where
the books of accounts reflected a Sales or Receipts higher than that reflected
in the return, the books of accounts should prevail. This is so, because the
books of accounts are kept by the taxpayer and are prepared under its control
and supervision, and they reflected what may be deemed to be admissions against
interest</u>”. </i>The representations made by GDI in the CD and
duly-registered books submitted and presented by it to the Bureau for audit and
examination amounted to admissions against interest which it cannot disown and
change at its convenience of pleasure. Emphasis supplied.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon presented
another mathematical computation based on VAT Payable account reflected in the
CD and duly-registered books to validate the afore-cited undeclared gross
income as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total credit of
VAT Payable account per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 227,263,254.33<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: VAT not
taken up on Sales recorded in General Journal:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 220.25pt;" valign="top" width="294">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Net sales without VAT per general
journal <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 89.35pt;" valign="top" width="119">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">34,511,326.03<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 220.25pt;" valign="top" width="294">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 89.35pt;" valign="top" width="119">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 4,141,359.12<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">231,404,613.45<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by VAT
rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales as
reconstructed based on VAT Payable account<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,928,371,778.75<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Difference
in recon of Central Warehouse accounts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales based
on CD & duly-registered books, as reconstructed<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,981,750,509.73<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of
sales per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross income
based on reconstructed sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">534,328,372.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross
income per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared gross
income (taken up per books, not reflected per AITR)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
376,204,220.50<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">There were such other mathematical
computations presented by Revenue Officer Dalanon to show GDI’s inconsistent
declarations.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of gross income (unrecorded and undeclared) amounting to P384,741,670.34 that
arose from substantial unrecorded and undeclared sales.</span></b><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI is the exclusive Philippine
Franchisee of DBI. The License Agreement between said parties states, among
other things, that the former shall pay the latter a Franchise Fee equivalent
to 1% of the former’s net sales. In the said Agreement, the term “net sales” is
defined as ALL SALES, exclusive of sales taxes and services charges.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the franchise fee paid
by GDI to DBI amounted to P23,668,908.00. Said amount was included as part of
GDI’s overhead in the Cost of Sales account in the Income Statement and claimed
as deduction from its Net Sales per AITR. The franchise fee account per CD and
duly-registered books showed exactly the same amount as afore-cited.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of the foregoing, there
are other undeclared Sales amounting to P438,120,401.31 that resulted to the
aforesaid unrecorded and undeclared gross income, computed as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee per
CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 23,668,908.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by
franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of sales per CD and duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be total gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">919,468,662.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross income reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 58,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">761,344,510.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Recorded but undeclared gross income
(#1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 376,602,840.43<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unrecorded and undeclared gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
384,741,670.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To validate the above discrepancy,
Revenue Officer Dalanon presented herein-below another mathematical computation
based on information taken from other independent relevant document, such as
but not limited to, Technical Serevice and Assistance Agreement between GDI and
its affiliate-Antares Management, Inc. (AMI).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contracted the technical services
of AMI. The said Agreement between said parties states, among other things,
that the former shall pay the latter a management fee equivalent to 2% of the
former’s net sales of its shops, whether directly operated by it or
sub-franchised to others.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, Management Fee
(Technical Service and Assistance Fee) expense claimed by GDI as deduction from
gross income per AITR amounted to P47,337,817.00.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of the foregoing, the
unrecorded and undeclared gross income computed in the preceding presentation
is corroborated as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Management fee
per CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 47,337,817.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by
management fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,850.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be total gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">919,468,712.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross income reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">761,344,560.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Recorded but undeclared gross income
(#1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 376,741,840.43<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unrecorded and undeclared gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
384,741,720.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The conditions contained in the
aforesaid Agreements were utilized in determining the correct sales on the
basis of the provisions of Section 5(A) of the 1997 NIRC, as amended, which
reads – <i>“in determining the correctness
of any return x x x the Commissioner is authorized to examine any book, paper,
record, or other data which may be relevant or material to such inquiry”.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The method of validation used by
Revenue Officer Dalanon was already upheld by the <b>COURT OF TAX APPEALS</b> in the case of <u>Asia Coal Corporation <i>vs</i> Commissioner of Internal Revenue (CTA
Case No. 6803, February 13, 2008</u>) that <i>“the
respondent may utilize any kind of document, x x x to determine the correct
sales of the petitioner…”<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contended that the franchise fee
amounting to P23,668,908.00 is equivalent to 1% of the “system-wide sales’ of
its company-owned shops/outlets and those of its sub-franchisees. That the term
“system-wide sales” allegedly refers to GDI’s sales of its directly owned shops
and shops owned by its sub-franchisees excluding Central Warehouse
(Commissary). It averred that is Central Warehouse’s (Commissary’s) sales to
its sub-franchisees are not subject to the 1% franchise fee; and that its own
sales are as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Shop-Central warehouse (trading sales)<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 746,312,672.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Shop-Outlets (donuts sales)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 285,216,244.74<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,031,528,916.74<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">There
was no specific condition in the License Agreement between GDI and DBI that only
“donuts sales” (i.e., shops/outlets’s sales) shall be subject to 1% franchise
fee and that “trading sales” (i.e., central warehouse’s sales) are not. The
Agreement clearly provides that the <u>Franchise Fee shall be 1% of NET SALES
OF ALL SHOPS (whether operated by GDI or sublicensed to others</u>) exclusive
of sales taxes and service charges.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that GDI’s central warehouse
(commissary) a shop which it also operates? Is it not, that purchases of GDI’s
sub-franchisees from central warehouse, sales of GDI?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
amount of P23,668,908.00 representing Franchise Fee paid to DBI, which is the
basis in computing for the unrecorded and undeclared income as presented above,
was actually declared as incurred by GDI in its ordinary course of trade or
business during the year covered by the audit. It was in fact claimed as
deduction from Net Sales because it was included as part of the Overhead in the
Cost of Sales account as apparently stated in the Notes to FS No. 21.2;
Furthermore, the base amount can be validated as included in the Cost of Sales
account as shown in the documents submitted by GDI in connection with its
protest on Purchases (income payments to suppliers of goods) not subjected to
EWT.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">While
it is apparently stated in the License Agreement that the basis of the
Franchise Fee is ALL SALES (whether directly or indirectly owned by GDI), GDI
is not liable to pay DBI the Franchise Fee corresponding to 1% of the former’s
Sub-Franchisees’ sales. GDI is only responsible for the remittance of the
franchise fee paid by its Sub-Franchisees as stated in Notes to Financial
Statements No. 21.2. Therefore, the Grossed-Up Sales computed and presented in
the audit findings pertains to GDI alone. It does not include the Sales of
GDI’s Sub-Franchisees.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Why
did GDI claim the whole amount of P2,840,123.69 representing VAT (input tax) on
Franchise Fee paid to DBI as tax credit against the Output Tax? The fact that
GDI claimed said amount as tax credit against its Output Tax indicates that the
Franchise Fee amounting to P23,668,980.00 pertains to 1% of GDI’s Sales alone.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Let us compute GDI’s Sales based on
VAT it paid for its purchase of services from non-resident (BIR Form No. 1600).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 35.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">VAT payments on purchase of services from
non-resident<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,840,123.69<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee based on VAT payments<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,667,697.42<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be sales based
on VAT on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
2,366,769,741.67<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This further corroborates that GDI had
actually under-declared its sales for year 2007 with the end view of evading
payment of correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">There
are such other mathematical computations duly supported by pieces of
documentary evidence to validate Revenue Officer Dalanon’s firm stance that GDI
under-declared its sales for year 2007, such as:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">i.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Assuming
<i>arguendo </i>that GDI’s Central
Warehouse’s sales to it sub-franchisees do not form part of the NET SALES upon
which the 1% franchise fee shall be based; and that only its directly and
indirectly owned shops/outlets’ sales are subject to the said franchise fee;
let us reconcile GDI’s facts and contentions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Considering that GDI’s
sub-franchisees’ financial statements for year 2007 were not available at the
time of the audit/investigation to exactly determine with certainty its actual
sales, this leaves RO Dalanon to the determination of GDI’s sub-franchisees’
net sales on the basis of the available information contain the financial
records submitted and presented by GDI to the BIR for audit, such as but not
limited to: <i>Franchise Agreements between
GDI and its Sub-Franchisees; Schedule of Royalty Income received by GDI from
its Sub-Franchisees; Technical Service Agreement between GDI and its
affiliate-AMI; and Monthly Remittance Returns of Final Taxes Withheld at source
on Franchise Fee.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The Franchise Agreements between GDI
and its Sub-Franchisees state, among other things, that the former shall
receive from the latter a Royalty Fee equivalent to 6.6% based on the latter’s
SALES of the preceding month.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the Royalty Fee
(Income) received by GDI from its Sub-Franchisees amounted to P133,190,903.00.
A random work-back computation of GDI’s Sub-Franchisees sales at the rate of
6.6% would result to P2,018,043,998.79 presented as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Royalty income per AITR and schedule
submitted by GDI<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 133,190,903.92<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by royalty fee rate per
sub-franchise agreements<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">GDI’s sub-franchisees’ net sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,018,043,998.79<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of these data alone, let
us reconcile GDI’s owned owned outlets’ sales without first delving into a more
detailed analysis/scrutiny of its accounts and information contained in other
independent relevant documents submitted by GDI itself to the BIR for audit.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net sales claimed by GDI as its
“system-wide sales” subj. to 1%<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Les: GDI’s sub-franchisees’ nets sales
(preceding computation)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,018,043,998.79 <o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Would have been GDI’s owned shops’ sales,
excluding CW’s<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">348,846,801.21<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s company-owned shops’ sales as
claimed by it<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 285,216,244.74<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (where is this amount? This was
not declared?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 63,630,556.47<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that the above
reconciliation would already reveal an under-declaration of sales amounting to
P63,630,556.47.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">ii.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Delving
into a more detailed scrutiny of the data and information contained in GDI’s
financial records (CD and duly-registered books) and other independent relevant
documents would further reveal discrepancies which would prove GDI’s
inconsistent declarations and scheme in substantially under-declaring its sales
with the end view of evading payment of correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The following data were taken from
GDI’s CD and duly-registered books:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .75in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 538px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Date<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise
Fee<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Royalty
Fee<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">CW’s
sales<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Own-Shops
sales<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jan.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,724,667.96<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 7,421,176.65<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
57,248,319.95<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
22,583,523.83<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Feb.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,686,532.69<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,286,726.73<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">52,501,006.84<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">21,767,600.01<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Mar.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,848,303.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,976,470.11<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">55,277,706.99<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,968,236.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Apr.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,776,113.60<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,669,213.80<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,153,890.87<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,698,087.32<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">May.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,970,219.46<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,563,473.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,728,814.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,810,849.73<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jun.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,893,370.70<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,628,963.14<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,501,372.76<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,139,025.61<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jul.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,003,418.71<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,175,610.88<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,572,834.81<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,806,223.09<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Aug.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,110,619.13<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,703,008.94<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">70,658,181.05<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,916,641.70<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sep.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,056,332.90<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,511,646.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,043,467.16<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,692,482.60<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Oct.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,103,622.20<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,682,043.36<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">68,578,021.70<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,405,163.12<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Nov.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,919,289.59<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,936,445.63<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">64,878,372.65<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">20,854,621.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Dec.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,576,418.05<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">38,636,125.14<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">735,948,475.68<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">264,037,478.14<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Totals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 23,668,908.44<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P133,190,903.90<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,407,090,464.94<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">521,679,933.74<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Franchise
Fee-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contended that the franchise fee
amounting to P23,668,908.00 is equivalent to 1% of its “system-wide sales”
which means, sales of its company-owned shops/outlets and those of its
Sub-Franchisees’ excluding Central Warehouse’s sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Royalty
Income-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Royalty income is 6.6% based on
sub-franchisees’ sales for the preceding month (e.g. royalty income for Feb.07
is based on sub-franchisees’ sales for Jan.07; royalty income for Mar.07 is
based on Feb.07 sales, and onwards).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Sales
accounts (Central Warehouse and Company-owned outlets)-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI claimed that sales for the month
of Dec.07 purportedly contained errors. It contended that the same contained
“double take-ups”, and that its Central Warehouse’s sales and Company-owned
outlets’ sales for the period amounted to P75,170,682.74 and P27,573,789.14,
respectively.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">While it may be noted in the CD and
duly-registered books, as reproduced above, that there were abrupt and
significant increases that occurred in the month of Dec.07, the same should not
be concluded that there were indeed “double take-ups” and thus presume the
correctness of GDI’s declarations in the AITR and VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Assuming <i>arguendo </i>that there were “double take-ups” that occurred in the
month of Dec.07 as GDI averred, and the aforesaid franchise fee pertains to 1%
of its “system-wide sales” as it further claimed, let us reconcile its
company-owned outlets’ sales for the period from January to September 2007
alone, because the entries for these periods were not claimed by GDI to contain
errors, and that Royalty Income is based on the preceding month’s sales of the
sub-franchisees, e.g., royalty for Feb.07 is based on sub-franchisees’ sales for
the month of Jan.07 and onwards.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee (Jan-Sep.07) per CD &
duly-reg. books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 17,069,578.60<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales (</span><span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Jan-Sep.07</span><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">)
claimed by GDI as “system-wide”<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,706,957,860.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: SF’s Grossed-up sales for Jan-Sep.07
based on Royalty <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income (Feb-Oct.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 96.3pt;" valign="top" width="128">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">78,197,156.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Divide by royalty fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 96.3pt;" valign="top" width="128">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,184,805,401.21<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be GDI’s owned outlets’ sales from
Jan-Sep.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">522,152,458.79<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned outlets’ sales (</span><span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Jan-Sep.07</span><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">)
per CD & reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared company-owned outlets’ sales for
Jan-Sep.07 alone<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 309,769,788.24<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that for January to
September 2007 alone, GDI actually under-declared its company-owned outlets’
sales amounting to P309,769,788.24.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Given that sales for Dec.07
purportedly contained errors (i.e., double take-ups) as GDI averred, let us
thrash out and reconcile GDI’s company-owned outlets’ sales for the last
quarter of 2007 based on data reflected per GDI’s VAT return for the period.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales & other income per 4<sup>th</sup>
Qtr VAT returnss<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
324,582,285.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: CW’s sales (Oct-Dec.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">208,627,077.25<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">57,254,614.13<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Franchise income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">5,131,288.88<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Other income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,059,023.10<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">272,072,003.36<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">GDI’s owned shops’ sales reflected in 4<sup>th</sup>
Qtr VAT return<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">52,510,282.54<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned shops’ sales claimed by
it as the correct amount<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Total sales for 2007 as GDI claimed<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">285,216,244.74<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
</span><span style="font-family: "Verdana",sans-serif; font-size: 6.0pt; mso-bidi-font-size: 11.0pt;">Own-shops’ sales (jan-sep.07) per
CD&reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 72,833,574.19<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (where is this?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(P 20,323,291.65)<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI would want to demonstrate that its
sales for the last quarter of 2007 amounted to only P52,510,282.54 when its own
data and contention would reveal that its sales for the period was already
P72,822,574.19.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI cannot even reconcile its own
facts and contentions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">iii.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Below
is another mathematical computation based on another independent relevant documents
– Final Tax Remittance Returns (BIR Form No. 160F), to prove GDI’s inconsistent
declarations in the AITR and VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Income payments made to non-resident
foreign corporations are subject to Final Withholding Tax. Thus, the Franchise
Fee paid by GDI to DBI was subjected to Final Withholding Tax at the rate of
10% pursuant to Philippines-China Tax Treaty.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the actual Final Tax
Withheld by GDI from the Franchise Fee it paid to DBI and remitted to the BIR
per BIR Form No. 1601F amounted to P2,456,311.94.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of actual remittance of
Final Tax contained in BIR Form No. 1601F, let us reconcile GDI’s owned
outlets’ sales for the period from January to September 2007 alone, considering
that entries for these periods were not claimed by GDI to contain errors, given
that the supposed “double take-ups” occurred in the month of December 2007; and
based on its own contention that the Franchise Fee it paid to DBI is equivalent
to 1% of the “system-wide sales” f GDI’s owned outlets and those of its
Sub-Franchisees’ excluding central warehouse’s.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax remittance – Jan-Sep.07<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,749,576.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by FWT rate applied (Phils-China Tax
Treaty)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 10%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Tax base (Franchise Fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">17,495,769.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by FF rate per License Agreement
(DBI & GDI)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales claimed by GDI as
“system-wide sales”<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,749,576,900.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Grossed-up sales of GDI’s sub-F based
on royalty<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income (Feb-Oct.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 101.45pt;" valign="top" width="135">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">78,197,156.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Divide by royalty fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 101.45pt;" valign="top" width="135">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,184,805,401.21<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be GDI’s owned outlets’ sales
excluding CW’s sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">564,771,498.70<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned outlets’ sales
(Jan-Sep.07) per CD&reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (Undeclared owned outlets’
sales?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 352,388,828.24<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that the random
work-back computation presented above based on actual remittance of final tax
reflected in BIR Form No. 1601F for the period from Jan-Sep.07 alone would also
reveal that GDI under-declared its company-owned outlets’ sales amounting to
P352,388,828.24. This corroborates the discrepancy shown above.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Other mathematical computations and
reconciliations to prove the under-declaration of sales shall be provided if
warranted.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Purchases
amounting to P772,225,727.77 was not subjected to tax required to be withheld.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="4" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cost of sales per CD & duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,447,422,137.23<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Store labor cost<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,471,004.78<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Throw away<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">5,556,510.82<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> VAT credit included in Cost of Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 91,361,028.70<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 155,388,544.30<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,292,033,592.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add back: Throw away inadvertently deducted
in the previous computation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5,556,510.82<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Adjusted total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,297,590,103.75<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add(Deduct): Merchandise Inventory – end<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">127,322,114.17<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Merchandise Inventory –
beg<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> (40,850,274.01)<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 86,471,840.16<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic and importation) -
unadjusted<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,384,061,943.91<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Audit adjustments to reconcile with
purchases per CD&duly-registered book<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.15pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Net purchases (domestic and importation)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.95pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,384,061,943.91<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.15pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Merchandise purchases per CD&reg.books<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.95pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,371,684,175.71<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12,377,768.20<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic & importation)
per CD & duly-reg books per audit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,371,684,175.71<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Importation (other than capital goods
per VAT returns)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 26,659,331.16<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,345,024,844.55<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Other purchases charged to Gen/Admin
& operating expenses (adj)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 29,099,414.61<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Purchases subject to expanded withholding
tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,374,124,259.16<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Purchases subjected to EWT per BIRF
1601E<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">728,846,527.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Purchases of capital goods -<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Office equipment, furniture and fixtures<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(14,237,264.24)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Equipment for transfer<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(21,422,154.27)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Kitchen and Dining Equipment<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 3,970,117.59)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Store/office equipment<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 5,531,823.64)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Payments of prior year’s obligations-<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
A/P-Trade bal beg per CD & duly-reg books<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(69,023,057.78)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Accrued exp payable beg per CD/reg books<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> (12,763,578.09)<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 601,898,531.39<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Purchases not subjected to Expanded
Withholding Tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
772.225.727.77<o:p></o:p></span></u></div>
</td>
</tr>
<!--[if !supportMisalignedColumns]-->
<tr height="0">
<td style="border: none;" width="305"></td>
<td style="border: none;" width="1"></td>
<td style="border: none;" width="1"></td>
<td style="border: none;" width="126"></td>
<td style="border: none;" width="144"></td>
</tr>
<!--[endif]-->
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For failure to withhold tax required
to be withheld under Revenue Regulations 02-98, as amended, in relation to
Section 57(B) of the 1997 NIRC, as amended, the amount of P772,225,727.77 was
disallowed pursuant to Section 34(K) of the same Code which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“<i>Additional
requirements for deductibility of certain payments. – </i>any amount paid or
payable which is otherwise deductible from, or taken into account in 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.”<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To strengthen Revenue Officer
Dalanon’s stance for disallowing the afore-cited amount, quoted below are
Court’s decisions on deductibility of certain payments as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“The purpose of this requirement is to
insure the collection of the income tax on these payments which constitute
income to the recipients thereof and, therefore, includible in their gross
income (NIRC, Annotated, 2000 ed., De Leon, p. 292). Thus, when one engaged in
trade or business makes payments that are deductible from his gross income for
tax purposes, it is not enough that he proves that such payments have been
made. He must also show proof that he withheld the ta and remitted it to the
BIR before he can deduct the same as business expense (NIRC, Annotated, De
Leon, Supra).” </span></b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Systems and Encoding Corp. vs. Commissioner
of Internal Revenue, CTA Case No. 6999 dated December 16, 2008.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“The corporation is the government’s
withholding agent. Hence, it is duty-bound to withhold taxes upon income
payments subject to tax required to be withheld at the time such income
payments are paid or payable, whichever is earlier in order to be considered as
a deductible expense <i>(Section 2.57.4 of
Revenue Regulations No. 2-98). </i>Since the expense was not subjected to
withholding tax in the year it was accrued and claimed as expenses, the same
shall not be allowed as deduction from gross income.” </span></b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">TUTUBAN
PROPERTIES, INC. vs. CIR, CTA Case No. 6570, December 20, 2007.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">VAT
input tax included in Cost of Sales account per CD 7 duly-registered books
amounting to P91,361,028.70.</span></b><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The input tax per Summary List of
Purchases (SLP) and input tax submitted by GDI was only P85,276,481.48. This
amount was already applied as tax credit against output tax per VAT returns.
GDI likewise affirmed that its input tax was only the said amount. However, the
CD and the duly-registered books showed that an input tax amounting to
P91,361,028.70 formed part of its Cost of Sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">While Section 110(A) of the 1997 NIRC,
as amended, in relation to RR No. 16-2005 allows input tax for conversion into
or to form part of finished goods, the amount of P91,361,028.70 was disallowed
in view of the affirmation of GDI that its input ta was only P85,276,481.48 and
declared that the same was already applied as tax credit against its output tax
per VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Rentals
amounting to P10,205,770.03 was not subjected to EWT, hence, it was disallowed.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon inadvertently
not included this amount as disallowed expense in his original audit report.
However, said amount was included as part of the disallowed items after review
and evaluation conducted by Revenue Officer Stanley Ong when he was yet with the
Assessment Division of the Regional Office in Quezon City. The inclusion of the
same was proper. It increased the assessment on income tax aspect and the
corresponding surcharge and interest.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The same legal bases as cited in
number 3 above.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Value-added Tax (VAT)
aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of VAT amounting to P160,283,750.13<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Difference in recon of Central
Warehouse accounts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Unrecorded and undeclared sales:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Grossed-p sales based on Franchise Fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Less: Total per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,982,149,129.66<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 384,741,670.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per audit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Other income subject to VAT:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">133,190,903.90<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Franchise income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,847,488.63<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Other non-operating income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 3,247,797.81<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 146,286,190.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total amount subject to VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,513,176,990.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales subjected to VAT per VAT
returns<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,177,479,072.58<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,335,697,917.76<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Understatement of VAT (output tax) payable<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 160,283,750.13<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The undeclared sales as earlier
computed was subjected to VAT pursuant to Section 108(A) of R.A. No. 8424, as
amended by R.A. No. 9337 in relation to RR No. 16-2005, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It contested the above computed
discrepancy. It submitted a reconciliation which only showed a discrepancy
amounting to P58,519.78.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">He asserted his firm stance that the
understatement was P160,283,750.13 because all the data in determining the
aforesaid discrepancy were taken from GDI’s financial records (CD and the
duly-registered books) and other independent relevant documents subject by it
for audit.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Disallowed
input tax amounting to P1,531,629.37 attributable to Accrued Expenses Payable
beginning.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Scrutiny of GDI’s records, particularly
the Check Register, showed that it claims VAT (input tax) credit on its
payments of Accrued Expenses Payable which do not conform with the provisions
of the VAT law.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It is worth to mention at this point
the fundamental taxation principle that Input Tax is concomitant to an Expense
or Purchase Account as Output Tax is concomitant to Sales or Revenue Account.
Therefore, input tax amounting to P1,531,629.37 equivalent to 12% of the
beginning balance of Accrued Expenses Payable per CD and the duly-registered
books was disallowed.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For a clear view of the scheme adopted
by GDI, below are journal entries taken from the Check Register, as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Dr.
Accrued expenses payable P41,593.87<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Dr.
VAT credit 4,991.26<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Cr.
Withholding tax at source ( 415.94)<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Cr.
Security Bank – S/A (46,169.94)<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Accrued expenses payable beg per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 12,763,578.09<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Disallowed input tax attributable to
accrued expenses payable beginning<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,531,629.37<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Unsupported
(over-claimed) VAT (input tax) credit amounting to P27,032,432.06.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Audit revealed that VAT (input tax)
credit claimed per VAT returns was overstated by an amount of P27,032,432.06
computed as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">VAT credit (input tax) per VAT returns<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 116,680,666.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: VAT Credit (input tax) on -<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Domestic purchases per SLP<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">85,276,481.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Services by non-resident<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,840,123.69<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 88,116,605.17<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">28,564,061.49<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Input tax attributable to accrued
expenses payable beginning<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,531,629.37<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unsupported (over-claimed) VAT (input tax)
credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 27,031,432.12<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount was disallowed because GDI
failed to substantiate it with documentary evidence in order to be allowed as
tax credit against output tax as required under Section 110(A) of R.A. No. 8424
as amended by R.A. No. 9337 in relation to RR No. 16-2005, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Expanded withholding tax
(EWT) aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l11 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">EWT
on income payments to suppliers of goods – P7,722,257.28<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 1% EWT on
income payments to suppliers of goods, as computed in Number 3 under Income Tax
aspect, pursuant to Section 57(B) of the 1997 NIRC, as amended, in relation to
RR No. 02-98, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l11 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">EWT
on rentals – P510,288.50<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 5% EWT on rentals
which was not subjected to tax required to be withheld under RR No. 02-98, as
amended, in relation to Section 57(B) of R.A. No. 8424, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Rentals per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 41,913,127.23<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Rentals subjected to EWT per BIR Form
No. 1601E<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 31,707,357.20<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Rentals not subjected to EWT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">10,205,770.03<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by EWT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on Rentals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 510,288.50<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-right: .25in; tab-stops: 6.25in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Final Tax (FT) aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l3 level1 lfo9; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Final
tax on cash dividends amounting to P481,396.81 (uncontested)<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 10% Final Tax
on cash dividends pursuant to Section 24(B)(2) of the 1997 NIRC, as amended, in
relation to RR No. 02-98, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cash dividends per CD and duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 6,138,024.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cash dividends issued to domestic corporations:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Marilex Realty Development Corporation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">880,632.17<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Spare Enterprises, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">220,974.99<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
PAMM, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">111,217.33<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Metro Bakers, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 111,231.45<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,324,055.94<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cash dividends subject to final tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">4,813,968.06<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by FT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 10%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax due on cash dividends<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 481,396.81<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoListParagraph" style="margin-left: .25in; mso-add-space: auto; mso-list: l3 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Fringe Benefit Tax (FBT) amounting to
P253,102.50 (uncontested)<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Audit revealed that GDI purchased
service vehicles for use of its employees holding supervisory positions.
However, these were not subjected to the FBT required under RR No. 02-98, as
amended, in relation to Section 57(B) of the 1997 NIRC, as amended, computed as
follows:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: .25in; mso-add-space: auto; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Name
of employees<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cora
B. Lugtu<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">R.R.
Ledesma<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Ma.
C.M. Prieto<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Kind
of unit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Honda
Jazz 1.3 I-DSI<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Toyota
Altis 1.8EA/T<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Innova
Gas A/T<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Monthly
amortization<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 16,856.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 21,592.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 16,190.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply
by number of amortization<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Amortized
amount<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">606,816.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">777,312.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">582,840.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by (estimated DP is 20%)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Acquisition
cost<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">758,520.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">971,640.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">728,550.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by estimated useful life<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Monetary
value<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">151,704.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">194,328.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">145,710.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up
monetary value<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">223,094.12<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">285,776.47<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">214,279.41<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply
by normal tax rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe
Benefit Tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
78,082.94<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
100,021.76<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
74,997.79<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<span style="font-family: "Verdana",sans-serif; font-size: 20.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">While
KIM HENARES scares small taxpayers, constantly pesters MANNY PACQUIAO, and
actively prosecutes those are not allies of the AQUINO administration; she
fears, coddles and lawyers for DUNKIN’ DONUTS company – a BIGTIME TAX CHEAT!!!
– whose secretary is MARIXI PRIETO who also happens to be the chairperson of
Philippine Daily Inquirer (PDI) and friend of President Aquino, according to
Deputy Commissioner Estela Sales.</span>Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-15087033294905994692015-04-14T15:55:00.001-07:002015-04-14T15:55:38.311-07:00TAX EVASION CASE INTENTIONALLY NOT FILED BY KIM HENARES<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">BIR’s
KIM HENARES INTENTIONALLY FAILED TO EITHER COLLECT DUE AND DEMANDABLE TAX
DEFICIT OF GOLDEN DONUTS, INC. (GDI) OR SUE IT FOR FRAUD FOR UNDER-DECLARING
REVENUE ON THE TAX RETURN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Golden Donuts, Inc.
(GDI)</span></b><span style="font-family: "Verdana",sans-serif;">, the exclusive
Philippine Franchisee of the global brand “<b>Dunkin’
Donuts</b>”, flagrantly perpetrated fraudulent acts or criminal tax violations
that culminated to deficiency tax assessment amounting to <b>P1,564,426,808.08</b>, including increments, for year 2007, discovered
and documented by Othello Dalanon in his official capacity as former BIR
Examiner.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Dalanon
personally reported GDI’s omissions to <b>Commissioner
Henares</b> and recommended to her the criminal prosecution for tax evasion
under the much-vaunted “Run After Tax Evaders” program of the Bureau; but she
intentionally did not pursue fraud case against the company because its
secretary – <b>Marixi Prieto</b> who also
happens to be the <b>chairperson of the
Philippine Daily Inquirer</b> – is <b>President
Aquino’s friend</b>, according to BIR Deputy Commissioner Estela Sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Ms.
Prieto talked to Henares and BIR Regional Director (now Assistant Commissioner
of Internal Revenue) Nestor Valeroso, on different occasion, who both gave
leniency to GDI.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
aforesaid deficiency tax assessment obtained finality because GDI failed to
file a VALID PROTEST against the Formal Letter of Demand and Assessment Notice
(FAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">However,
Henares intentionally did not collect it, purportedly because representatives
of GDI complained to her that Dalanon’s assessment was faulty. Thus, she
ordered two (2) re-investigations.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">There
is no LAW that authorizes the Commissioner to order two (2) re-investigations
of a FINAL, EXECUTORY and DEMANDABLE assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Once
the deficiency tax assessment obtained finality, the right of the government to
collect the deficiency tax becomes absolute; thus, precludes the taxpayer from
questioning the correctness of the assessment and from raising any
justification or defense that would pave the way for a re-investigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">She
also claims that the authority to decide and declare finality of a certain
assessment is a function vested by law upon the Commissioner of Internal
Revenue.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
assertion does not find basis in LAW.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
is the LAW that determines finality of a certain assessment as clearly provided
under Revenue Regulations (RR) No. 12-99 as amended by RR No. 18-2013 which the
Commissioner herself promulgated, in relation to Section 228 of the 1997
National Internal Revenue Code (1997 Tax Code), as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
claim that Dalanon’s assessment was faulty is WRONG.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">In
fact, she was not able to dispute Dalanon’s assessment. What is very clear is
that, while she bullies small taxpayers, constantly pesters Congressman Manny
Pacquiao, and actively prosecutes those are not allies of the current
administration; she fears, coddles and lawyers for Dunkin’ Donuts local seller
– a bigtime tax evader!!!<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Just
to reiterate. The P1.56 billion tax deficit of Dunkin’ Donuts franchisee has
become DUE and DEMANDABLE, thus, it already legally belongs to the FILIPINO
people whom PRESIDENT AQUINO considers as his “BOSSES?”, and therefore, Henares
is duty-bound to enforce collection thereof – but she refused to.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">GDI’s OMISSIONS<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l9 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">GDI has two (2) sets of books of
accounts</span></b><span style="font-family: "Verdana",sans-serif;"> – one was
the duly-registered hardbound computer-generated books of accounts which were
the bases of Dalanon’s assessment; and the other was the unregistered
not-permanently-bound “manually-posted from original books of accounts”,
records which GDI claims as the bases of its Trial Balance for Financial
Statements and Income Tax Return purposes;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l9 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It supplied false information on the
tax return</span></b><span style="font-family: "Verdana",sans-serif;"> – the
duly-registered books of accounts reflected a <u>net income</u> amounting to <b>P135.2 million </b>while the tax return
showed a <u>net loss</u> of <b>P44.9
million</b>;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l9 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It substantially under-declared sales
on the tax return in two (2) instances</span></b><span style="font-family: "Verdana",sans-serif;">:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l9 level2 lfo1; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Sales
per duly-registered books was <b>P1.928
billion</b> while the amount reflected on the tax return was <b>P1.031 billion </b>– a substantial
discrepancy (under-declaration) amounting to <b>P897 million</b>;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT</b> ruled in the case of Paper Industries Corporation of
the Philippines <i>vs</i> Court of Appeals,
et al., 250 SCRA 434 that <i>“<u>where the
books of accounts reflected a sales or receipts higher than that reflected on
the return</u>, <u>the books of accounts should prevail</u>. <u>This is so</u>,
<u>because the books of accounts are kept by the taxpayer and are prepared
under its control and supervision</u>; <u>and they reflected what may be deemed
to be admissions against interest</u>.” </i>The representations made by GDI in
the CD and duly-registered books submitted and presented by it to the Bureau
for audit and examination amounted to admissions against interest which it
cannot disown and change at its convenience of pleasure. Emphasis supplied.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l9 level2 lfo1; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Other
independent relevant documents, such as, but not limited to: Franchise
Agreement between Dunkin’ Donuts of America, Inc. and GDI; Technical Service
Agreement between GDI and its affiliate-Antares Management, Inc. (AMI); BIR
returns, etc., further revealed that GDI’s <u>sales</u> topped <b>P2.366 billion </b>but recorded per
duly-registered books was only <b>P1.928
billion </b>– a substantial unrecorded and consequently undeclared sales
amounting to <b>P438 million</b>.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The information contained in the
aforesaid documents were utilized in further determining GDI’s sales on the
basis of the provisions of Section 5(A) of the 1997 Tax Code.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The method of validation used by
Othello Dalanon was already upheld by the <b>COURT
OF TAX APPEALS </b>in the case of <u>Asia Coal Corporation <i>vs</i> Commissioner of Internal Revenue (CTA Case No. 6803, February
13, 2008)</u>, that “<i>the respondent may
utilize any kind of document, x x x to determine the correct sales of the
petitioner…”<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">All
the above enumerations are fraudulent acts or criminal tax violations covered
by the RATE (Run After Tax Evaders) Program of the Bureau; but Henares
intentionally did not pursue tax evasion case against the company.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Henares, in her position paper submitted to the Office of
the Ombudsman in connection with the formal complaint filed against her by
Othello Dalanon, failed to dispute the above-enumerated irregularities
perpetrated by GDI</span></u><span style="font-family: "Verdana",sans-serif;">.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">THE DEFICIENCY TAX
ASSESSMENT OBTAINED FINALITY<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
deficiency tax assessment against GDI amounting to P1.56 billion, including
increments, for year 2007, obtained finality because GDI’s letter of protest
against the Formal Letter of Demand and Assessment Notice (FAN) was INVALID.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
alleged letter of protest of GDI merely states “protest against PAN adopted <i>in toto</i>”. It does <b>not</b> state the facts, the applicable law, rules and regulations, or
jurisprudence on which its protest was based. It is neither a request for
reconsideration or reinvestigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
rules on protesting an assessment is found in Section 3 subsection 3.1.5 of RR
No. 12-99, as amended, that reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Disputed Assessment. – The taxpayer
or his duly authorized representative may protest administratively against the
aforesaid formal letter of demand and assessment notice within thirty (30) days
from date of receipt thereof.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“The taxpayer shall state the FACTS,
the applicable LAW, RULES and REGULATIONS or JURISPRUDENCE on which his protest
is based, otherwise, his protest shall be considered VOID and WITHOUT FORCE AND
EFFECT.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“If the taxpayer fails to file a VALID
PROTEST against the formal letter of demand and assessment notice within thirty
(30) days from date of receipt thereof, the assessment shall become FINAL,
EXECUTORY and DEMANDABLE.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
said Regulations must be taken in relation to Section 228 of the 1997 Tax Code,
as amended, which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Protesting an assessment. – Such
assessment may be protested administratively by filing a REQUEST FOR
RECONSIDERATION or REINVESTIGATION within thirty (30) days from receipt of the
assessment in such form and manner as may be prescribed by implementing rules
and regulations. x x x otherwise, the assessment shall become FINAL.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: 1.35pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Clearly, what the law demands is a
VALID administrative protest against the formal letter of demand and assessment
notice which required the taxpayer to comply with the following:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: 1.35pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be through a REQUEST FOR RECONSIDERATION or REINVESTIGATION;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be in the form and manner as prescribed under RR No. 12-99, as
amended, which provides that said protest must state the FACTS, the LAW, RULES
and REGULATIONS, or JURISPRUDENCE on which the protest is based; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l7 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Must
be filed within thirty (30) days from receipt of the assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 4581, March 25, 1992</u>), cited that, <i>“[f]ailure to comply with any or all of these
requirements results in the assessment against the taxpayer becoming final and
unappealable.”</i><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
letter of protest should not just state “protest against PAN adopted <i>in toto</i>” because the administrative
protest required to be filed as an answer to the formal letter of demand and
assessment notice is distinct and not the same as the protest filed against the
Preliminary Assessment Notice (PAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>emphasized in
the case of <u>Security Bank Corporation <i>vs
</i>Commissioner of Internal Revenue (CTA Case No. 6564, November 8, 2006)</u>
and further accentuated in the case of <u>Bank of the Philippine Islands <i>vs</i> Commissioner of Internal Revenue (CTA
Case No. 7397, April 9, 2008)</u> that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[A] protest to the preliminary
assessment notice is not the same as the protest required to be filed as an
answer to the final assessment notice. In fact, the preliminary assessment
notice may or may not even be protested to by the taxpayer, and the fact of
non-protest shall not in any way make the preliminary assessment notice final
and unappealable. What is clear from Section 319-A of the Tax Code of 1977, as
amended, is that failure on the part of the taxpayer to protest or reply to a
preliminary assessment notice paves the way for the issuance of a final
assessment notice. However, evident under said Section (now Section 228 of the
1997 Tax Code) is that failure on the part of the taxpayer to file a VALID
administrative protest through a REQUEST FOR RECONSIDERATION or REINVESTIGATION
on the final assessment notice, shall result in the finality of the said FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>SUPREME COURT </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (G.R. No. 175097, February 5, 2010)</u> heightened that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 18.7pt; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“It is the Formal Letter of Demand and
Assessment Notice that must be administratively protested or disputed within 30
days, and not the PAN.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI,
in its INVALID letter of protest against the FAN, likewise claimed that the
assessments are null and void <i>ab initio </i>because
it was allegedly issued in rampant violation of the due process requirements
prescribed under Section 228 of the Tax Code as implemented by RR No. 12-99.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
claim is not true. Records will show that the due process requirements were
promptly observed. There were at least five (5) notices served to GDI either
thru personal delivery or by mail before the formal letter of demand and
assessment notice (FAN) was issued. In fact, it even contested the PAN as
clearly admitted in GDI’s invalid letter of protest against the FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case <u>Bank
of the Philippine Islands <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 7397, April 9, 2008)</u>, has had the
occasion to say:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[W]hen the petitioner received the
final assessment notice and duly protested the same, petitioner’s right to due
process was properly protected and observed.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">OTHER
FACTS TO SHOW <i>PRIMA FACIE </i>EVIDENCE OF
ACTUAL FRAUD<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
scheme of the taxpayer to evade payment of correct taxes is very clear. It
substantially under-declared its Sales with the end view of evading payment of
correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Computation of percentage ratio of
under-declaration of sales:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on sales per CD and duly-registered books –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Discrepancy
in reconciliation of Central W’hse accts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per
CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales
reflected per Annual Income Tax Return (AITR)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales
based on CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">950,620,212.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by total
sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,982,149,129.66<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Percentage ratio
of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 47.96%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on franchise fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Franchise fee per CD, duly-registered books
and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 23,668,908.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales (or should be sales based
on franchise fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,361,883.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,890,800.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.3<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on management fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Management fee per CD, duly-registered
books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 47,337,817.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by management fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales (or should be sales based
on mgt. fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,890,850.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,361,933.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based on management fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,890,850.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.4<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on VAT on franchise fee paid to DBI (BIRF No. 1600) –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">VAT payments on purchase of services from
non-resident<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 2,840,123.69<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Franchise fee based on VAT payments<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">23,667,697.42<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Grossed-up sales/should be sales based on
VAT on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">2,366,769,741.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less: Sales reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,335,240,824.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Divide by grossed-up sales/should be sales
based VAT on FF<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,366,769,741.67<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Percentage ratio of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that omission or substantial
understatement or under-declaration of sales a fraudulent act or criminal tax
violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">GDI
keeps two (2) sets of books of accounts.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
duly-registered hardbound computer-generated books of accounts registered with
the BIR on January 15, 2008, which were the bases of the audit findings; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l13 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
unregistered not-permanently-bound “manually-posted from original books of
accounts” records which GDI claims as the basis of its trial balance for
financial statements and income tax return purposes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To these, a third set of books of
accounts may be added: Records of RDO No. 41, Mandaluyong City, showed that GDI
registered another set of bound books of accounts (General Journal and General
Ledger) on May 30, 2007.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that keeping two (2) set of
books of accounts a fraudulent act or criminal tax violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> <o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">GDI’s
duly-registered books of accounts reflected a net income of P135.2 million for
year 2007. Its AITR for the same period reflected a net loss of P44.9 million
as well as that of the prior years, as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Net Loss<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2002 P62,919,525.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2003
44,902,187.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2004
46,995,142.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005
67,077,226.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
57,254,963.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Notwithstanding the continuous
incurrence of losses, it was able to acquire and accumulate properties and
presented under Property, Plant and Equipment in its Financial Statements, as
follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Acquisitions<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005 P16,819,089.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
20,755,205.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2007
34,654,371.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2008
47,019,061.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can it afford such gargantuan
amount of acquisitions if it has really been continuously incurring losses? Is
this not indicative of under-declaration of sales, as a business has a very
least prospect to exist if it is continuously incurring losses?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l13 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">In
2008, it appropriated Retained Earnings amounting to P100 million for future
renovation of facilities and expansion of production center and outlets.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can the Board of Directors of the
corporation have the audacity to appropriate such huge amount of Retained
Earnings for future expansion of its center and outlets if the corporation is
really continuously incurring losses without infusing additional capital?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
financial records (the CD and the duly-registered books of accounts) and other
independent relevant documents, such as but not limited to: License Agreement between
GDI and DBI; Technical Service Agreement between GDI and its affiliate-Antares
Management Inc. (AMI); VAT payments on purchases of services from non-resident
(BIRF No. 1600); Monthly Remittance Returns of Final Taxes Withheld at Source
(BIRF No. 1601F); etc., submitted by it to the Bureau for audit and examination
evidently revealed existence of actual fraud.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<b><span style="font-family: "Verdana",sans-serif;">2007
DEFICIENCY TAX ASSESSMENT<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<b><span style="font-family: "Verdana",sans-serif;">Income tax liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Net
taxable income per AITR<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 0.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Discrepancies/Disallowances:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Understatement of Gross Income-<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Recorded per reg. books but not
declared per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">376,602,840.43<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unrecorded and undeclared<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">384,741,670.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Purchases not subjected to EWT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">772,225,727.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> VAT (input tax) credit included in
Cost of Sales <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 91,361,028.70<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Net
taxable income per investigation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 1,624,931,267.24<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Income
tax due thereon<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">568,725,943.53<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
50% surcharge for substantial understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">284,362,971.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 20% interest per annum from 4.16.08
to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 260,982,016.31<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
deficiency income tax and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 1,114,070,931.61<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Value-added Tax (VAT)
liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Sales
per CD and duly-registered books of accounts<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Difference in recon of A/R-Franchise vs Sales Accts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">53,378,730.98<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unrecorded & Undeclared Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">384,741,670.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Royalty income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">133,190,903.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Franchise income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">9,847,488.63<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Other non-operating income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 3,247,797.81<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
sales and other income subject to VAT per investigation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 2,513,176,990.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Output
tax thereon<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">301,581,238.84<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Less:
Output tax per VAT returns<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 141,297,488.71<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Understatement
of VAT (output tax) payable<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">160,283,750.13<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
Input tax attributable to accrued expenses payable-beg<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">1,531,629.37<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> Unsupported (over-claimed) VAT input
tax credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 27,032,432.06<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Deficiency
VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">188,847,811.56<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Add:
50% surcharge for substantial understatement of VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">94,423,905.78<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 20% interest per annum from 1.26.08
to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;"> 95,055,398.49<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">Total
deficiency VAT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt;">P 378,325,115.83<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Expanded withholding tax
(EWT) liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on income payments made to suppliers of
goods<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 7,722,257.28<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on rentals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 510,288.50<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total expanded withholding tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,232,545.78<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 20% interest per annum from 1.16.08 to
7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">4,189,451.07<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 25,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency EWT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 12,446,996.85<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Final Tax (FT) liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax on cash dividends<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 481,396.81<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">120,349.20<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 1.16.08 to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">244,977.49<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">862,723.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Penalty for late remittance of FT on
goodwill paid to Panda:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
(Basic Tax remitted is P342,478.57)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">85,619.64<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 2.10.07 to 8.10.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">34,247.86<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency final tax on cash
dividends and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 998,591.00<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Fringe benefit tax (FBT)
liability<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe benefit tax<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 253,102.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: 25% surcharge for late remittance<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,275.63<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
20% interest per annum from 1.26.08 to 7.31.10*<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">127,394.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Penalty for late remittance (RMO 1-90)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 16,000.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total deficiency FBT and increments due<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 459,773.05<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">SUMMARY<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 586px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Income tax liability<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,114,070,931.61<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Value-added tax (VAT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">378,325,115.83<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Expanded withholding tax (EWT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">12,446,996.85<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax (FT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">998,591.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe benefit tax (FBT) liability<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
459,773.05<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grand Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.8in;" valign="top" width="173">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,506,301,408.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">*</span><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Interests
were adjusted up to time of assessment which shall be further adjusted up to
time of payment.</span><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<b><span style="font-family: "Verdana",sans-serif;">DETAILS
OF THE CASE<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<b><span style="font-family: "Verdana",sans-serif;">Prefatory<o:p></o:p></span></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI,
a domestic corporation with business office located at GDI Building, Sheridan
corner Reliance Streets, Mandaluyong City, is the exclusive Philippine
Franchisee of DUNKIN’ DONUTS OF AMERICA, INC. (DDA), now DUNKIN’ BRANDS, INC.
(DBI). As such, it grants sub-franchise rights to various domestic entities
nationwide. It has six hundred forty-two (642) outlets all over the country.
Fifty-four (54) of which are directly owned by the corporation while the
remaining five hundred eighty-eight (588) are owned by the thirty-five (35)
sub-franchisees under GDI’s supervision.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
maintains a Central Warehouse (Commissary) wherefrom all of its sub-franchisees
purchase on a Cash-On-Delivery basis, all products, ingredients, commodity,
supplies, and merchandise.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
is a VAT-registered entity and belongs to the Top 10,000 Private Corporations.
It continues to grow with almost a thousand employees servicing the Filipinos
with affordable products like doughnuts, sandwiches, hot chocolates, coffee,
shakes and the likes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
corporation has forty-five (45) stockholders. Its major stockholder and
Chairman of the Board is Mr. Leopoldo L. Prieto. The officers of the
corporation are as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Walter C. Spakowski President<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> <b>Marixi R. Prieto Secretary<o:p></o:p></b></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;"> </span></b><span style="font-family: "Verdana",sans-serif;">Miguel
H. Prieto Treasurer<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Pedro E. Paraiso Chief Financial Officer<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Ernesto S. Co VP & General
Manager<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Jocelyn V. Santos VP Finance &
Administration<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
adopts a Computer Assisted Accounting System with duly-registered Hardbound
Computer-Generated Books of Accounts (hereinafter referred as <i>duly-registered books). </i>The CD submitted
by the corporation to the Bureau for audit, and the duly-registered books as
validated by Revenue Officer Othello E. Dalanon, reflected a NET TAXABLE INCOME
of P135,272,757.01 while the Annual Income Tax Return (AITR) reflected a NET
LOSS of P44,907,842.00, summarized as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Particulars<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Per
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Per
AITR<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">S a l e s<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,031,528,917.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 873,404,765.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross Income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">481,348,261.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">158,124,152.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gen/Admin and operating expenses<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 348,224,850.69<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 207,301,714.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net income from operation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">133,123,410.76<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 49,177,562.00)<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Non-operating and other income (net)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,149,347.15<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 4,269,719.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.8in;" valign="top" width="269">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net taxable income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
135,272,757.91<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(P 44,907,843.00)<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On
the basis of the above information alone, it can readily be deduced that GDI
deliberately under-declared its income in the Annual Income Tax Return.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is
it not that deliberate under-declaration of income (substantial
under-declaration) constitutes fraudulent act or criminal tax violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Details discrepancies<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Income tax aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of gross income (recorded but undeclared) amounting to P376,602,840.43 which
arose from substantial under-declaration of sales.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Discrepancy
in recon of Central Warehouse accounts (S-1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per CD
and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of
sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross income per
CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">534,726,992.43<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross
income reflected per Annual Income Tax Return<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Understatement of
gross income (recorded but undeclared)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
376,602,840.43<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">S-1 Reconciliation of Central
Warehouse accounts –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Accounts
Receivable – Franchise total debit transactions<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,764,792,639.41<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT
factor<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 25/28<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net of VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,575,707,713.76<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Franchise
Operation Current net credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 115,238,517.84<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be
Sales-Central Warehouse<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,460,469,195.92<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales-Central
Warehouse per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,407,090,464.94<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Discrepancy in reconciliation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted in the above
computation that the amount of P376,602,840.43, though taken up per CD and
duly-registered books, was not included in the computation of taxable income in
the Annual Income Ta Return in gross violation of Section 31, in relation to
Section 32(A) of Republic Act No. 8424 otherwise known as the 1997 National
Internal Revenue Code (1997 NIRC), as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT </b>ruled in the case of <u>Paper Industries Corporation
of the Philippines <i>versus </i>Court of
Appeals, et al., 250 SCRA 434</u> that “<i>where
the books of accounts reflected a Sales or Receipts higher than that reflected
in the return, the books of accounts should prevail. This is so, because the
books of accounts are kept by the taxpayer and are prepared under its control
and supervision, and they reflected what may be deemed to be admission against
interest”.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It claimed that the information or
entries contained in the CD and duly-registered books are erroneous. It averred
that the same contained more than 2,500 errors posted in 84 accounts and should
not be the basis of the audit. It claimed that there were “double take-ups”.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The CD and the duly-registered books,
as duly validated by him, already contained GDI’s external auditors’
adjustments. The discrepancies or differences in Sales accounts between GDI’s
CD and duly-registered books on one hand and the AITR on the other were not
reflected by its external auditors as adjusting or correcting entries in the
said CD and duly-registered books.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">With the more than 2,500 erroneous
entries posted in 84 accounts, as GDI averred, to contain in the CD and
duly-registered books, it is believed to be unfeasible and amazing that GDI
which belongs to the high profile business in the Philippine industries and
with its highly competent accounting and auditing employees, supervisors, and
tax managers, the external auditors, and the reputable independent public
auditors that it (GDI) hired to conduct quarterly reviews of its financial
records would not notice such remarkable and significant errors.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT </b>already ruled in the case of Paper Industries
Corporation of the Philippines <i>versus </i>Court
of Appeals, et al., 250 SCRA 434 that <i>“<u>where
the books of accounts reflected a Sales or Receipts higher than that reflected
in the return, the books of accounts should prevail. This is so, because the
books of accounts are kept by the taxpayer and are prepared under its control
and supervision, and they reflected what may be deemed to be admissions against
interest</u>”. </i>The representations made by GDI in the CD and
duly-registered books submitted and presented by it to the Bureau for audit and
examination amounted to admissions against interest which it cannot disown and
change at its convenience of pleasure. Emphasis supplied.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon presented
another mathematical computation based on VAT Payable account reflected in the
CD and duly-registered books to validate the afore-cited undeclared gross
income as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total credit of
VAT Payable account per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 227,263,254.33<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: VAT not
taken up on Sales recorded in General Journal:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 220.25pt;" valign="top" width="294">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Net sales without VAT per general
journal <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 89.35pt;" valign="top" width="119">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">34,511,326.03<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 220.25pt;" valign="top" width="294">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 89.35pt;" valign="top" width="119">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 4,141,359.12<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">231,404,613.45<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by VAT
rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales as
reconstructed based on VAT Payable account<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,928,371,778.75<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Difference
in recon of Central Warehouse accounts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales based
on CD & duly-registered books, as reconstructed<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,981,750,509.73<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of
sales per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Gross income
based on reconstructed sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">534,328,372.50<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross
income per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared gross
income (taken up per books, not reflected per AITR)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
376,204,220.50<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">There were such other mathematical
computations presented by Revenue Officer Dalanon to show GDI’s inconsistent
declarations.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of gross income (unrecorded and undeclared) amounting to P384,741,670.34 that
arose from substantial unrecorded and undeclared sales.</span></b><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI is the exclusive Philippine
Franchisee of DBI. The License Agreement between said parties states, among
other things, that the former shall pay the latter a Franchise Fee equivalent
to 1% of the former’s net sales. In the said Agreement, the term “net sales” is
defined as ALL SALES, exclusive of sales taxes and services charges.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the franchise fee paid
by GDI to DBI amounted to P23,668,908.00. Said amount was included as part of
GDI’s overhead in the Cost of Sales account in the Income Statement and claimed
as deduction from its Net Sales per AITR. The franchise fee account per CD and
duly-registered books showed exactly the same amount as afore-cited.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of the foregoing, there
are other undeclared Sales amounting to P438,120,401.31 that resulted to the
aforesaid unrecorded and undeclared gross income, computed as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee per
CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 23,668,908.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by
franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of sales per CD and duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be total gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">919,468,662.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross income reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 58,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">761,344,510.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Recorded but undeclared gross income
(#1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 376,602,840.43<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unrecorded and undeclared gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
384,741,670.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To validate the above discrepancy,
Revenue Officer Dalanon presented herein-below another mathematical computation
based on information taken from other independent relevant document, such as
but not limited to, Technical Serevice and Assistance Agreement between GDI and
its affiliate-Antares Management, Inc. (AMI).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contracted the technical services
of AMI. The said Agreement between said parties states, among other things,
that the former shall pay the latter a management fee equivalent to 2% of the
former’s net sales of its shops, whether directly operated by it or
sub-franchised to others.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, Management Fee
(Technical Service and Assistance Fee) expense claimed by GDI as deduction from
gross income per AITR amounted to P47,337,817.00.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of the foregoing, the
unrecorded and undeclared gross income computed in the preceding presentation
is corroborated as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Management fee
per CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 47,337,817.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by
management fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,850.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cost of sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,447,422,137.23<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be total gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">919,468,712.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Gross income reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 158,124,152.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total understatement of gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">761,344,560.77<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Recorded but undeclared gross income
(#1)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 376,741,840.43<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unrecorded and undeclared gross income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
384,741,720.34<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The conditions contained in the
aforesaid Agreements were utilized in determining the correct sales on the
basis of the provisions of Section 5(A) of the 1997 NIRC, as amended, which
reads – <i>“in determining the correctness
of any return x x x the Commissioner is authorized to examine any book, paper,
record, or other data which may be relevant or material to such inquiry”.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The method of validation used by
Revenue Officer Dalanon was already upheld by the <b>COURT OF TAX APPEALS</b> in the case of <u>Asia Coal Corporation <i>vs</i> Commissioner of Internal Revenue (CTA
Case No. 6803, February 13, 2008</u>) that <i>“the
respondent may utilize any kind of document, x x x to determine the correct
sales of the petitioner…”<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contended that the franchise fee
amounting to P23,668,908.00 is equivalent to 1% of the “system-wide sales’ of
its company-owned shops/outlets and those of its sub-franchisees. That the term
“system-wide sales” allegedly refers to GDI’s sales of its directly owned shops
and shops owned by its sub-franchisees excluding Central Warehouse
(Commissary). It averred that is Central Warehouse’s (Commissary’s) sales to
its sub-franchisees are not subject to the 1% franchise fee; and that its own
sales are as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Shop-Central warehouse (trading sales)<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 746,312,672.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Shop-Outlets (donuts sales)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 285,216,244.74<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.3in;" valign="top" width="413">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,031,528,916.74<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">There
was no specific condition in the License Agreement between GDI and DBI that only
“donuts sales” (i.e., shops/outlets’s sales) shall be subject to 1% franchise
fee and that “trading sales” (i.e., central warehouse’s sales) are not. The
Agreement clearly provides that the <u>Franchise Fee shall be 1% of NET SALES
OF ALL SHOPS (whether operated by GDI or sublicensed to others</u>) exclusive
of sales taxes and service charges.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that GDI’s central warehouse
(commissary) a shop which it also operates? Is it not, that purchases of GDI’s
sub-franchisees from central warehouse, sales of GDI?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
amount of P23,668,908.00 representing Franchise Fee paid to DBI, which is the
basis in computing for the unrecorded and undeclared income as presented above,
was actually declared as incurred by GDI in its ordinary course of trade or
business during the year covered by the audit. It was in fact claimed as
deduction from Net Sales because it was included as part of the Overhead in the
Cost of Sales account as apparently stated in the Notes to FS No. 21.2;
Furthermore, the base amount can be validated as included in the Cost of Sales
account as shown in the documents submitted by GDI in connection with its
protest on Purchases (income payments to suppliers of goods) not subjected to
EWT.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">While
it is apparently stated in the License Agreement that the basis of the
Franchise Fee is ALL SALES (whether directly or indirectly owned by GDI), GDI
is not liable to pay DBI the Franchise Fee corresponding to 1% of the former’s
Sub-Franchisees’ sales. GDI is only responsible for the remittance of the
franchise fee paid by its Sub-Franchisees as stated in Notes to Financial
Statements No. 21.2. Therefore, the Grossed-Up Sales computed and presented in
the audit findings pertains to GDI alone. It does not include the Sales of
GDI’s Sub-Franchisees.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Why
did GDI claim the whole amount of P2,840,123.69 representing VAT (input tax) on
Franchise Fee paid to DBI as tax credit against the Output Tax? The fact that
GDI claimed said amount as tax credit against its Output Tax indicates that the
Franchise Fee amounting to P23,668,980.00 pertains to 1% of GDI’s Sales alone.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Let us compute GDI’s Sales based on
VAT it paid for its purchase of services from non-resident (BIR Form No. 1600).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 35.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">VAT payments on purchase of services from
non-resident<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,840,123.69<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee based on VAT payments<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,667,697.42<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 291.85pt;" valign="top" width="389">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales/or should be sales based
on VAT on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
2,366,769,741.67<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This further corroborates that GDI had
actually under-declared its sales for year 2007 with the end view of evading
payment of correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .5in; mso-list: l0 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">There
are such other mathematical computations duly supported by pieces of
documentary evidence to validate Revenue Officer Dalanon’s firm stance that GDI
under-declared its sales for year 2007, such as:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .5in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">i.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Assuming
<i>arguendo </i>that GDI’s Central
Warehouse’s sales to it sub-franchisees do not form part of the NET SALES upon
which the 1% franchise fee shall be based; and that only its directly and
indirectly owned shops/outlets’ sales are subject to the said franchise fee;
let us reconcile GDI’s facts and contentions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Considering that GDI’s
sub-franchisees’ financial statements for year 2007 were not available at the
time of the audit/investigation to exactly determine with certainty its actual
sales, this leaves RO Dalanon to the determination of GDI’s sub-franchisees’
net sales on the basis of the available information contain the financial
records submitted and presented by GDI to the BIR for audit, such as but not
limited to: <i>Franchise Agreements between
GDI and its Sub-Franchisees; Schedule of Royalty Income received by GDI from
its Sub-Franchisees; Technical Service Agreement between GDI and its
affiliate-AMI; and Monthly Remittance Returns of Final Taxes Withheld at source
on Franchise Fee.<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The Franchise Agreements between GDI
and its Sub-Franchisees state, among other things, that the former shall
receive from the latter a Royalty Fee equivalent to 6.6% based on the latter’s
SALES of the preceding month.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the Royalty Fee
(Income) received by GDI from its Sub-Franchisees amounted to P133,190,903.00.
A random work-back computation of GDI’s Sub-Franchisees sales at the rate of
6.6% would result to P2,018,043,998.79 presented as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Royalty income per AITR and schedule
submitted by GDI<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 133,190,903.92<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by royalty fee rate per
sub-franchise agreements<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">GDI’s sub-franchisees’ net sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,018,043,998.79<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of these data alone, let
us reconcile GDI’s owned owned outlets’ sales without first delving into a more
detailed analysis/scrutiny of its accounts and information contained in other
independent relevant documents submitted by GDI itself to the BIR for audit.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net sales claimed by GDI as its
“system-wide sales” subj. to 1%<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Les: GDI’s sub-franchisees’ nets sales
(preceding computation)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,018,043,998.79 <o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Would have been GDI’s owned shops’ sales,
excluding CW’s<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">348,846,801.21<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s company-owned shops’ sales as
claimed by it<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 285,216,244.74<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (where is this amount? This was
not declared?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 63,630,556.47<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that the above
reconciliation would already reveal an under-declaration of sales amounting to
P63,630,556.47.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">ii.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Delving
into a more detailed scrutiny of the data and information contained in GDI’s
financial records (CD and duly-registered books) and other independent relevant
documents would further reveal discrepancies which would prove GDI’s
inconsistent declarations and scheme in substantially under-declaring its sales
with the end view of evading payment of correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The following data were taken from
GDI’s CD and duly-registered books:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .75in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 538px;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Date<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise
Fee<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Royalty
Fee<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">CW’s
sales<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Own-Shops
sales<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jan.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,724,667.96<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 7,421,176.65<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
57,248,319.95<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
22,583,523.83<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Feb.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,686,532.69<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,286,726.73<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">52,501,006.84<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">21,767,600.01<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Mar.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,848,303.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,976,470.11<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">55,277,706.99<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,968,236.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Apr.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,776,113.60<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">7,669,213.80<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,153,890.87<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,698,087.32<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">May.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,970,219.46<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,563,473.45<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,728,814.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,810,849.73<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jun.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,893,370.70<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,628,963.14<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,501,372.76<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,139,025.61<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Jul.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,003,418.71<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,175,610.88<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,572,834.81<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,806,223.09<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Aug.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,110,619.13<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,703,008.94<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">70,658,181.05<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,916,641.70<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sep.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,056,332.90<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,511,646.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">63,043,467.16<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">23,692,482.60<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Oct.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,103,622.20<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,682,043.36<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">68,578,021.70<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">24,405,163.12<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Nov.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,919,289.59<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">8,936,445.63<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">64,878,372.65<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">20,854,621.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Dec.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,576,418.05<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">38,636,125.14<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">735,948,475.68<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">264,037,478.14<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.25pt;" valign="top" width="78">
<div align="center" class="MsoNoSpacing" style="text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Totals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 23,668,908.44<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P133,190,903.90<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,407,090,464.94<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">521,679,933.74<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Franchise
Fee-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI contended that the franchise fee
amounting to P23,668,908.00 is equivalent to 1% of its “system-wide sales”
which means, sales of its company-owned shops/outlets and those of its
Sub-Franchisees’ excluding Central Warehouse’s sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Royalty
Income-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Royalty income is 6.6% based on
sub-franchisees’ sales for the preceding month (e.g. royalty income for Feb.07
is based on sub-franchisees’ sales for Jan.07; royalty income for Mar.07 is
based on Feb.07 sales, and onwards).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<i><span style="font-family: "Verdana",sans-serif;">Sales
accounts (Central Warehouse and Company-owned outlets)-<o:p></o:p></span></i></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI claimed that sales for the month
of Dec.07 purportedly contained errors. It contended that the same contained
“double take-ups”, and that its Central Warehouse’s sales and Company-owned
outlets’ sales for the period amounted to P75,170,682.74 and P27,573,789.14,
respectively.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">While it may be noted in the CD and
duly-registered books, as reproduced above, that there were abrupt and
significant increases that occurred in the month of Dec.07, the same should not
be concluded that there were indeed “double take-ups” and thus presume the
correctness of GDI’s declarations in the AITR and VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Assuming <i>arguendo </i>that there were “double take-ups” that occurred in the
month of Dec.07 as GDI averred, and the aforesaid franchise fee pertains to 1%
of its “system-wide sales” as it further claimed, let us reconcile its
company-owned outlets’ sales for the period from January to September 2007
alone, because the entries for these periods were not claimed by GDI to contain
errors, and that Royalty Income is based on the preceding month’s sales of the
sub-franchisees, e.g., royalty for Feb.07 is based on sub-franchisees’ sales for
the month of Jan.07 and onwards.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee (Jan-Sep.07) per CD &
duly-reg. books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 17,069,578.60<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales (</span><span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Jan-Sep.07</span><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">)
claimed by GDI as “system-wide”<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,706,957,860.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: SF’s Grossed-up sales for Jan-Sep.07
based on Royalty <o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income (Feb-Oct.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 96.3pt;" valign="top" width="128">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">78,197,156.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Divide by royalty fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 96.3pt;" valign="top" width="128">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,184,805,401.21<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be GDI’s owned outlets’ sales from
Jan-Sep.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">522,152,458.79<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned outlets’ sales (</span><span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Jan-Sep.07</span><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">)
per CD & reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 273.85pt;" valign="top" width="365">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared company-owned outlets’ sales for
Jan-Sep.07 alone<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.7in;" valign="top" width="163">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 309,769,788.24<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that for January to
September 2007 alone, GDI actually under-declared its company-owned outlets’
sales amounting to P309,769,788.24.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Given that sales for Dec.07
purportedly contained errors (i.e., double take-ups) as GDI averred, let us
thrash out and reconcile GDI’s company-owned outlets’ sales for the last
quarter of 2007 based on data reflected per GDI’s VAT return for the period.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales & other income per 4<sup>th</sup>
Qtr VAT returnss<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
324,582,285.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: CW’s sales (Oct-Dec.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">208,627,077.25<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">57,254,614.13<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Franchise income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">5,131,288.88<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Other income 4<sup>th</sup> Qtr<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,059,023.10<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">272,072,003.36<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">GDI’s owned shops’ sales reflected in 4<sup>th</sup>
Qtr VAT return<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">52,510,282.54<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 292.5pt;" valign="top" width="390">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned shops’ sales claimed by
it as the correct amount<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Total sales for 2007 as GDI claimed<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">285,216,244.74<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
</span><span style="font-family: "Verdana",sans-serif; font-size: 6.0pt; mso-bidi-font-size: 11.0pt;">Own-shops’ sales (jan-sep.07) per
CD&reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 72,833,574.19<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 189.0pt;" valign="top" width="252">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (where is this?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div class="MsoNoSpacing">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 103.85pt;" valign="top" width="138">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(P 20,323,291.65)<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI would want to demonstrate that its
sales for the last quarter of 2007 amounted to only P52,510,282.54 when its own
data and contention would reveal that its sales for the period was already
P72,822,574.19.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI cannot even reconcile its own
facts and contentions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; mso-list: l8 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">iii.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Below
is another mathematical computation based on another independent relevant documents
– Final Tax Remittance Returns (BIR Form No. 160F), to prove GDI’s inconsistent
declarations in the AITR and VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Income payments made to non-resident
foreign corporations are subject to Final Withholding Tax. Thus, the Franchise
Fee paid by GDI to DBI was subjected to Final Withholding Tax at the rate of
10% pursuant to Philippines-China Tax Treaty.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For year 2007, the actual Final Tax
Withheld by GDI from the Franchise Fee it paid to DBI and remitted to the BIR
per BIR Form No. 1601F amounted to P2,456,311.94.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On the basis of actual remittance of
Final Tax contained in BIR Form No. 1601F, let us reconcile GDI’s owned
outlets’ sales for the period from January to September 2007 alone, considering
that entries for these periods were not claimed by GDI to contain errors, given
that the supposed “double take-ups” occurred in the month of December 2007; and
based on its own contention that the Franchise Fee it paid to DBI is equivalent
to 1% of the “system-wide sales” f GDI’s owned outlets and those of its
Sub-Franchisees’ excluding central warehouse’s.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 53.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax remittance – Jan-Sep.07<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 1,749,576.90<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by FWT rate applied (Phils-China Tax
Treaty)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 10%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Tax base (Franchise Fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">17,495,769.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by FF rate per License Agreement
(DBI & GDI)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales claimed by GDI as
“system-wide sales”<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,749,576,900.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Grossed-up sales of GDI’s sub-F based
on royalty<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income (Feb-Oct.07)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 101.45pt;" valign="top" width="135">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">78,197,156.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 177.55pt;" valign="top" width="237">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Divide by royalty fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 101.45pt;" valign="top" width="135">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 6.6%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,184,805,401.21<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Should be GDI’s owned outlets’ sales
excluding CW’s sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">564,771,498.70<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: GDI’s owned outlets’ sales
(Jan-Sep.07) per CD&reg.books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 212,382,670.55<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 279.0pt;" valign="top" width="372">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">DISCREPANCY (Undeclared owned outlets’
sales?)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 117.25pt;" valign="top" width="156">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 352,388,828.24<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It may be noted that the random
work-back computation presented above based on actual remittance of final tax
reflected in BIR Form No. 1601F for the period from Jan-Sep.07 alone would also
reveal that GDI under-declared its company-owned outlets’ sales amounting to
P352,388,828.24. This corroborates the discrepancy shown above.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Other mathematical computations and
reconciliations to prove the under-declaration of sales shall be provided if
warranted.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Purchases
amounting to P772,225,727.77 was not subjected to tax required to be withheld.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="4" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cost of sales per CD & duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,447,422,137.23<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Store labor cost<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">58,471,004.78<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Throw away<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">5,556,510.82<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> VAT credit included in Cost of Sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 91,361,028.70<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 155,388,544.30<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,292,033,592.93<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add back: Throw away inadvertently deducted
in the previous computation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5,556,510.82<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Adjusted total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,297,590,103.75<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add(Deduct): Merchandise Inventory – end<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">127,322,114.17<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="3" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> Merchandise Inventory –
beg<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> (40,850,274.01)<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 86,471,840.16<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic and importation) -
unadjusted<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,384,061,943.91<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Audit adjustments to reconcile with
purchases per CD&duly-registered book<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.15pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Net purchases (domestic and importation)<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.95pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,384,061,943.91<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.15pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Merchandise purchases per CD&reg.books<o:p></o:p></span></div>
</td>
<td colspan="2" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.95pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,371,684,175.71<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12,377,768.20<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic & importation)
per CD & duly-reg books per audit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,371,684,175.71<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Importation (other than capital goods
per VAT returns)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 26,659,331.16<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Net purchases (domestic)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,345,024,844.55<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Other purchases charged to Gen/Admin
& operating expenses (adj)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 29,099,414.61<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Purchases subject to expanded withholding
tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,374,124,259.16<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Purchases subjected to EWT per BIRF
1601E<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">728,846,527.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Purchases of capital goods -<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Office equipment, furniture and fixtures<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(14,237,264.24)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Equipment for transfer<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(21,422,154.27)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Kitchen and Dining Equipment<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 3,970,117.59)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Store/office equipment<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">( 5,531,823.64)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Payments of prior year’s obligations-<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
A/P-Trade bal beg per CD & duly-reg books<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">(69,023,057.78)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 228.65pt;" valign="top" width="305">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Accrued exp payable beg per CD/reg books<o:p></o:p></span></div>
</td>
<td colspan="3" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 95.45pt;" valign="top" width="127">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> (12,763,578.09)<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 601,898,531.39<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="4" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Purchases not subjected to Expanded
Withholding Tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
772.225.727.77<o:p></o:p></span></u></div>
</td>
</tr>
<!--[if !supportMisalignedColumns]-->
<tr height="0">
<td style="border: none;" width="305"></td>
<td style="border: none;" width="1"></td>
<td style="border: none;" width="1"></td>
<td style="border: none;" width="126"></td>
<td style="border: none;" width="144"></td>
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</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For failure to withhold tax required
to be withheld under Revenue Regulations 02-98, as amended, in relation to
Section 57(B) of the 1997 NIRC, as amended, the amount of P772,225,727.77 was
disallowed pursuant to Section 34(K) of the same Code which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“<i>Additional
requirements for deductibility of certain payments. – </i>any amount paid or
payable which is otherwise deductible from, or taken into account in 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.”<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To strengthen Revenue Officer
Dalanon’s stance for disallowing the afore-cited amount, quoted below are
Court’s decisions on deductibility of certain payments as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“The purpose of this requirement is to
insure the collection of the income tax on these payments which constitute
income to the recipients thereof and, therefore, includible in their gross
income (NIRC, Annotated, 2000 ed., De Leon, p. 292). Thus, when one engaged in
trade or business makes payments that are deductible from his gross income for
tax purposes, it is not enough that he proves that such payments have been
made. He must also show proof that he withheld the ta and remitted it to the
BIR before he can deduct the same as business expense (NIRC, Annotated, De
Leon, Supra).” </span></b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Systems and Encoding Corp. vs. Commissioner
of Internal Revenue, CTA Case No. 6999 dated December 16, 2008.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">“The corporation is the government’s
withholding agent. Hence, it is duty-bound to withhold taxes upon income
payments subject to tax required to be withheld at the time such income
payments are paid or payable, whichever is earlier in order to be considered as
a deductible expense <i>(Section 2.57.4 of
Revenue Regulations No. 2-98). </i>Since the expense was not subjected to
withholding tax in the year it was accrued and claimed as expenses, the same
shall not be allowed as deduction from gross income.” </span></b><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">TUTUBAN
PROPERTIES, INC. vs. CIR, CTA Case No. 6570, December 20, 2007.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">VAT
input tax included in Cost of Sales account per CD 7 duly-registered books
amounting to P91,361,028.70.</span></b><span style="font-family: "Verdana",sans-serif;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The input tax per Summary List of
Purchases (SLP) and input tax submitted by GDI was only P85,276,481.48. This
amount was already applied as tax credit against output tax per VAT returns.
GDI likewise affirmed that its input tax was only the said amount. However, the
CD and the duly-registered books showed that an input tax amounting to
P91,361,028.70 formed part of its Cost of Sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">While Section 110(A) of the 1997 NIRC,
as amended, in relation to RR No. 16-2005 allows input tax for conversion into
or to form part of finished goods, the amount of P91,361,028.70 was disallowed
in view of the affirmation of GDI that its input ta was only P85,276,481.48 and
declared that the same was already applied as tax credit against its output tax
per VAT returns.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Rentals
amounting to P10,205,770.03 was not subjected to EWT, hence, it was disallowed.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon inadvertently
not included this amount as disallowed expense in his original audit report.
However, said amount was included as part of the disallowed items after review
and evaluation conducted by Revenue Officer Stanley Ong when he was yet with the
Assessment Division of the Regional Office in Quezon City. The inclusion of the
same was proper. It increased the assessment on income tax aspect and the
corresponding surcharge and interest.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The same legal bases as cited in
number 3 above.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Value-added Tax (VAT)
aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Understatement
of VAT amounting to P160,283,750.13<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Factual basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Difference in recon of Central
Warehouse accounts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Unrecorded and undeclared sales:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Grossed-p sales based on Franchise Fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Less: Total per CD & duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,982,149,129.66<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 384,741,670.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total sales per audit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Add: Other income subject to VAT:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Royalty income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">133,190,903.90<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Franchise income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">9,847,488.63<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Other non-operating income<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 3,247,797.81<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 146,286,190.34<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total amount subject to VAT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">2,513,176,990.34<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales subjected to VAT per VAT
returns<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,177,479,072.58<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">1,335,697,917.76<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Understatement of VAT (output tax) payable<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 160,283,750.13<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Legal basis:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The undeclared sales as earlier
computed was subjected to VAT pursuant to Section 108(A) of R.A. No. 8424, as
amended by R.A. No. 9337 in relation to RR No. 16-2005, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s protest and contentions:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It contested the above computed
discrepancy. It submitted a reconciliation which only showed a discrepancy
amounting to P58,519.78.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Revenue Officer Dalanon’s arguments:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">He asserted his firm stance that the
understatement was P160,283,750.13 because all the data in determining the
aforesaid discrepancy were taken from GDI’s financial records (CD and the
duly-registered books) and other independent relevant documents subject by it
for audit.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Disallowed
input tax amounting to P1,531,629.37 attributable to Accrued Expenses Payable
beginning.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Scrutiny of GDI’s records, particularly
the Check Register, showed that it claims VAT (input tax) credit on its
payments of Accrued Expenses Payable which do not conform with the provisions
of the VAT law.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It is worth to mention at this point
the fundamental taxation principle that Input Tax is concomitant to an Expense
or Purchase Account as Output Tax is concomitant to Sales or Revenue Account.
Therefore, input tax amounting to P1,531,629.37 equivalent to 12% of the
beginning balance of Accrued Expenses Payable per CD and the duly-registered
books was disallowed.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For a clear view of the scheme adopted
by GDI, below are journal entries taken from the Check Register, as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Dr.
Accrued expenses payable P41,593.87<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Dr.
VAT credit 4,991.26<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Cr.
Withholding tax at source ( 415.94)<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> Cr.
Security Bank – S/A (46,169.94)<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Accrued expenses payable beg per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 12,763,578.09<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by VAT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Disallowed input tax attributable to
accrued expenses payable beginning<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
1,531,629.37<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l14 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Unsupported
(over-claimed) VAT (input tax) credit amounting to P27,032,432.06.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Audit revealed that VAT (input tax)
credit claimed per VAT returns was overstated by an amount of P27,032,432.06
computed as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">VAT credit (input tax) per VAT returns<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 116,680,666.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: VAT Credit (input tax) on -<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Domestic purchases per SLP<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">85,276,481.48<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Services by non-resident<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 2,840,123.69<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 88,116,605.17<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Total<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">28,564,061.49<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Input tax attributable to accrued
expenses payable beginning<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,531,629.37<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Unsupported (over-claimed) VAT (input tax)
credit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 27,031,432.12<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount was disallowed because GDI
failed to substantiate it with documentary evidence in order to be allowed as
tax credit against output tax as required under Section 110(A) of R.A. No. 8424
as amended by R.A. No. 9337 in relation to RR No. 16-2005, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Expanded withholding tax
(EWT) aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l11 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">EWT
on income payments to suppliers of goods – P7,722,257.28<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 1% EWT on
income payments to suppliers of goods, as computed in Number 3 under Income Tax
aspect, pursuant to Section 57(B) of the 1997 NIRC, as amended, in relation to
RR No. 02-98, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l11 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">EWT
on rentals – P510,288.50<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 5% EWT on rentals
which was not subjected to tax required to be withheld under RR No. 02-98, as
amended, in relation to Section 57(B) of R.A. No. 8424, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Rentals per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 41,913,127.23<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Rentals subjected to EWT per BIR Form
No. 1601E<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 31,707,357.20<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Rentals not subjected to EWT<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">10,205,770.03<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by EWT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">EWT on Rentals<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 510,288.50<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-right: .25in; tab-stops: 6.25in; text-align: justify; text-indent: .25in;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Final Tax (FT) aspect<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l3 level1 lfo9; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Final
tax on cash dividends amounting to P481,396.81 (uncontested)<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This amount represents 10% Final Tax
on cash dividends pursuant to Section 24(B)(2) of the 1997 NIRC, as amended, in
relation to RR No. 02-98, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 17.75pt; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td colspan="2" style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cash dividends per CD and duly-registered
books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 6,138,024.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Less: Cash dividends issued to domestic corporations:<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Marilex Realty Development Corporation<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">880,632.17<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Spare Enterprises, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">220,974.99<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
PAMM, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">111,217.33<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<br /></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 229.6pt;" valign="top" width="306">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">
Metro Bakers, Inc<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 94.5pt;" valign="top" width="126">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 111,231.45<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 1,324,055.94<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cash dividends subject to final tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">4,813,968.06<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply by FT rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 10%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td colspan="2" style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 324.1pt;" valign="top" width="432">
<div class="MsoNoSpacing">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Final tax due on cash dividends<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 108.25pt;" valign="top" width="144">
<div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 481,396.81<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoListParagraph" style="margin-left: .25in; mso-add-space: auto; mso-list: l3 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; font-weight: normal;">
</span></span></b><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">Fringe Benefit Tax (FBT) amounting to
P253,102.50 (uncontested)<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Audit revealed that GDI purchased
service vehicles for use of its employees holding supervisory positions.
However, these were not subjected to the FBT required under RR No. 02-98, as
amended, in relation to Section 57(B) of the 1997 NIRC, as amended, computed as
follows:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: .25in; mso-add-space: auto; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Name
of employees<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Cora
B. Lugtu<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">R.R.
Ledesma<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Ma.
C.M. Prieto<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Kind
of unit<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Honda
Jazz 1.3 I-DSI<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Toyota
Altis 1.8EA/T<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="center" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: center;">
<span style="font-family: "Verdana",sans-serif; font-size: 7.0pt; mso-bidi-font-size: 11.0pt;">Innova
Gas A/T<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Monthly
amortization<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 16,856.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 21,592.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P 16,190.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply
by number of amortization<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 36<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Amortized
amount<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">606,816.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">777,312.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">582,840.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by (estimated DP is 20%)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 80%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Acquisition
cost<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">758,520.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">971,640.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">728,550.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by estimated useful life<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 5<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Monetary
value<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">151,704.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">194,328.00<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">145,710.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide
by<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 68%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up
monetary value<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">223,094.12<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">285,776.47<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">214,279.41<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Multiply
by normal tax rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;"> 35%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 2.4in;" valign="top" width="230">
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Fringe
Benefit Tax<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
78,082.94<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
100,021.76<o:p></o:p></span></u></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.2in;" valign="top" width="115">
<div align="right" class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt; text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">P
74,997.79<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<span style="font-family: "Verdana",sans-serif; font-size: 20.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">While
KIM HENARES scares small taxpayers, constantly pesters MANNY PACQUIAO, and
actively prosecutes those are not allies of the AQUINO administration; she
fears, coddles and lawyers for DUNKIN’ DONUTS company – a BIGTIME TAX CHEAT!!!
– whose secretary is MARIXI PRIETO who also happens to be the chairperson of
Philippine Daily Inquirer (PDI) and friend of President Aquino, according to
Deputy Commissioner Estela Sales.</span>Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-17311144760952739432015-04-04T08:01:00.000-07:002015-04-04T08:02:04.936-07:00Philippine Daily Inquirer (INQUIRER.net) chairperson MARIXI PRIETO's Dunkin' Donuts firm is a BIGTIME TAX CHEAT!!!<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">BIR’s KIM HENARES
INTENTIONALLY FAILED TO EITHER COLLECT DUE AND DEMANDABLE TAX DEFICIT OF GOLDEN
DONUTS, INC. (GDI) OR SUE IT FOR FRAUD FOR UNDER-DECLARING REVENUE ON THE TAX
RETURN.<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">Golden Donuts, Inc.
(GDI)</span></b><span style="font-family: "Verdana",sans-serif;">, the exclusive
Philippine Franchisee of the global brand “<b>Dunkin’
Donuts</b>”, flagrantly perpetrated fraudulent acts or criminal tax violations
that culminated to deficiency tax assessment amounting to <b>P1,564,426,808.08</b>, including increments, for year 2007, discovered
and documented by Othello Dalanon in his official capacity as former BIR
Examiner.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Dalanon
personally reported GDI’s omissions to <b>Commissioner
Henares</b> and recommended to her the criminal prosecution for tax evasion
under the much-vaunted “Run After Tax Evaders” program of the Bureau; but she
intentionally did not pursue fraud case against the company because its
secretary – <b>Marixi Prieto</b> who also
happens to be the <b>chairperson of the
Philippine Daily Inquirer</b> – is <b>President
Aquino’s friend</b>, according to BIR Deputy Commissioner Estela Sales.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Ms.
Prieto talked to Henares and BIR Regional Director (now Assistant Commissioner
of Internal Revenue) Nestor Valeroso, on different occasion, who both gave
leniency to GDI.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
aforesaid deficiency tax assessment obtained finality because GDI failed to file
a VALID PROTEST against the Formal Letter of Demand and Assessment Notice
(FAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">However,
Henares intentionally did not collect it, purportedly because representatives
of GDI complained to her that Dalanon’s assessment was faulty. Thus, she
ordered two (2) re-investigations.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">There
is no LAW that authorizes the Commissioner to order two (2) re-investigations
of a FINAL, EXECUTORY and DEMANDABLE assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Once
the deficiency tax assessment obtained finality, the right of the government to
collect the deficiency tax becomes absolute; thus, precludes the taxpayer from
questioning the correctness of the assessment and from raising any
justification or defense that would pave the way for a re-investigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">She
also claims that the authority to decide and declare finality of a certain
assessment is a function vested by law upon the Commissioner of Internal
Revenue.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
assertion does not find basis in LAW.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
is the LAW that determines finality of a certain assessment as clearly provided
under Revenue Regulations (RR) No. 12-99 as amended by RR No. 18-2013 which the
Commissioner herself promulgated, in relation to Section 228 of the 1997
National Internal Revenue Code (1997 Tax Code), as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Her
claim that Dalanon’s assessment was faulty is WRONG.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">In
fact, she was not able to dispute Dalanon’s assessment. What is very clear is
that, while she bullies small taxpayers, constantly pesters Congressman Manny
Pacquiao, and actively prosecutes those are not allies of the current
administration; she fears, coddles and lawyers for Dunkin’ Donuts local seller
– a bigtime tax evader!!!<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Just
to reiterate. The P1.56 billion tax deficit of Dunkin’ Donuts franchisee has
become DUE and DEMANDABLE, thus, it already legally belongs to the FILIPINO
people whom PRESIDENT AQUINO considers as his “BOSSES?”, and therefore, Henares
is duty-bound to enforce collection thereof – but she refused to.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">GDI’s OMISSIONS<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l4 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">GDI has two (2) sets of books of
accounts</span></b><span style="font-family: "Verdana",sans-serif;"> – one was
the duly-registered hardbound computer-generated books of accounts which were
the bases of Dalanon’s assessment; and the other was the unregistered
not-permanently-bound “manually-posted from original books of accounts”,
records which GDI claims as the bases of its Trial Balance for Financial
Statements and Income Tax Return purposes;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l4 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It supplied false information on the
tax return</span></b><span style="font-family: "Verdana",sans-serif;"> – the
duly-registered books of accounts reflected a <u>net income</u> amounting to <b>P135.2 million </b>while the tax return showed
a <u>net loss</u> of <b>P44.9 million</b>;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l4 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Verdana",sans-serif;">It substantially under-declared sales
on the tax return in two (2) instances</span></b><span style="font-family: "Verdana",sans-serif;">:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l4 level2 lfo1; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Sales
per duly-registered books was <b>P1.928
billion</b> while the amount reflected on the tax return was <b>P1.031 billion </b>– a substantial
discrepancy (under-declaration) amounting to <b>P897 million</b>;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The <b>SUPREME COURT</b> ruled in the case of Paper Industries Corporation of
the Philippines <i>vs</i> Court of Appeals,
et al., 250 SCRA 434 that <i>“<u>where the
books of accounts reflected a sales or receipts higher than that reflected on
the return</u>, <u>the books of accounts should prevail</u>. <u>This is so</u>,
<u>because the books of accounts are kept by the taxpayer and are prepared
under its control and supervision</u>; <u>and they reflected what may be deemed
to be admissions against interest</u>.” </i>The representations made by GDI in
the CD and duly-registered books submitted and presented by it to the Bureau
for audit and examination amounted to admissions against interest which it
cannot disown and change at its convenience of pleasure. Emphasis supplied.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l4 level2 lfo1; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Other
independent relevant documents, such as, but not limited to: Franchise
Agreement between Dunkin’ Donuts of America, Inc. and GDI; Technical Service
Agreement between GDI and its affiliate-Antares Management, Inc. (AMI); BIR
returns, etc., further revealed that GDI’s <u>sales</u> topped <b>P2.366 billion </b>but recorded per
duly-registered books was only <b>P1.928
billion </b>– a substantial unrecorded and consequently undeclared sales
amounting to <b>P438 million</b>.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The information contained in the
aforesaid documents were utilized in further determining GDI’s sales on the
basis of the provisions of Section 5(A) of the 1997 Tax Code.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The method of validation used by
Othello Dalanon was already upheld by the <b>COURT
OF TAX APPEALS </b>in the case of <u>Asia Coal Corporation <i>vs</i> Commissioner of Internal Revenue (CTA Case No. 6803, February
13, 2008)</u>, that “<i>the respondent may
utilize any kind of document, x x x to determine the correct sales of the
petitioner…”<o:p></o:p></i></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">All
the above enumerations are fraudulent acts or criminal tax violations covered
by the RATE (Run After Tax Evaders) Program of the Bureau; but Henares
intentionally did not pursue tax evasion case against the company.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Henares, in her position paper submitted to the Office of
the Ombudsman in connection with the formal complaint filed against her by
Othello Dalanon, failed to dispute the above-enumerated irregularities
perpetrated by GDI</span></u><span style="font-family: "Verdana",sans-serif;">.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">THE DEFICIENCY TAX
ASSESSMENT OBTAINED FINALITY<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
deficiency tax assessment against GDI amounting to P1.56 billion, including
increments, for year 2007, obtained finality because GDI’s letter of protest
against the Formal Letter of Demand and Assessment Notice (FAN) was INVALID.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
alleged letter of protest of GDI merely states “protest against PAN adopted <i>in toto</i>”. It does <b>not</b> state the facts, the applicable law, rules and regulations, or
jurisprudence on which its protest was based. It is neither a request for
reconsideration or reinvestigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
rules on protesting an assessment is found in Section 3 subsection 3.1.5 of RR
No. 12-99, as amended, that reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Disputed Assessment. – The taxpayer
or his duly authorized representative may protest administratively against the
aforesaid formal letter of demand and assessment notice within thirty (30) days
from date of receipt thereof.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“The taxpayer shall state the FACTS,
the applicable LAW, RULES and REGULATIONS or JURISPRUDENCE on which his protest
is based, otherwise, his protest shall be considered VOID and WITHOUT FORCE AND
EFFECT.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 19.35pt; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“If the taxpayer fails to file a VALID
PROTEST against the formal letter of demand and assessment notice within thirty
(30) days from date of receipt thereof, the assessment shall become FINAL, EXECUTORY
and DEMANDABLE.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
said Regulations must be taken in relation to Section 228 of the 1997 Tax Code,
as amended, which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Protesting an assessment. – Such
assessment may be protested administratively by filing a REQUEST FOR
RECONSIDERATION or REINVESTIGATION within thirty (30) days from receipt of the
assessment in such form and manner as may be prescribed by implementing rules
and regulations. x x x otherwise, the assessment shall become FINAL.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: 1.35pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Clearly, what the law demands is a
VALID administrative protest against the formal letter of demand and assessment
notice which required the taxpayer to comply with the following:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: 1.35pt; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l3 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be through a REQUEST FOR RECONSIDERATION or REINVESTIGATION;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l3 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
protest must be in the form and manner as prescribed under RR No. 12-99, as
amended, which provides that said protest must state the FACTS, the LAW, RULES
and REGULATIONS, or JURISPRUDENCE on which the protest is based; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 45.0pt; margin-right: 1.35pt; margin-top: 0in; mso-list: l3 level1 lfo2; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Must
be filed within thirty (30) days from receipt of the assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .75in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 4581, March 25, 1992</u>), cited that, <i>“[f]ailure to comply with any or all of
these requirements results in the assessment against the taxpayer becoming
final and unappealable.”</i><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
letter of protest should not just state “protest against PAN adopted <i>in toto</i>” because the administrative
protest required to be filed as an answer to the formal letter of demand and
assessment notice is distinct and not the same as the protest filed against the
Preliminary Assessment Notice (PAN).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>emphasized in
the case of <u>Security Bank Corporation <i>vs
</i>Commissioner of Internal Revenue (CTA Case No. 6564, November 8, 2006)</u>
and further accentuated in the case of <u>Bank of the Philippine Islands <i>vs</i> Commissioner of Internal Revenue (CTA
Case No. 7397, April 9, 2008)</u> that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[A] protest to the preliminary assessment
notice is not the same as the protest required to be filed as an answer to the
final assessment notice. In fact, the preliminary assessment notice may or may
not even be protested to by the taxpayer, and the fact of non-protest shall not
in any way make the preliminary assessment notice final and unappealable. What
is clear from Section 319-A of the Tax Code of 1977, as amended, is that
failure on the part of the taxpayer to protest or reply to a preliminary
assessment notice paves the way for the issuance of a final assessment notice.
However, evident under said Section (now Section 228 of the 1997 Tax Code) is
that failure on the part of the taxpayer to file a VALID administrative protest
through a REQUEST FOR RECONSIDERATION or REINVESTIGATION on the final
assessment notice, shall result in the finality of the said FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>SUPREME COURT </b>in the case of <u>Allied
Banking Corporation <i>vs </i>Commissioner
of Internal Revenue (G.R. No. 175097, February 5, 2010)</u> heightened that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 18.7pt; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“It is the Formal Letter of Demand and
Assessment Notice that must be administratively protested or disputed within 30
days, and not the PAN.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI,
in its INVALID letter of protest against the FAN, likewise claimed that the
assessments are null and void <i>ab initio </i>because
it was allegedly issued in rampant violation of the due process requirements
prescribed under Section 228 of the Tax Code as implemented by RR No. 12-99.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
claim is not true. Records will show that the due process requirements were
promptly observed. There were at least five (5) notices served to GDI either
thru personal delivery or by mail before the formal letter of demand and
assessment notice (FAN) was issued. In fact, it even contested the PAN as
clearly admitted in GDI’s invalid letter of protest against the FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
<b>COURT OF TAX APPEALS </b>in the case <u>Bank
of the Philippine Islands <i>vs </i>Commissioner
of Internal Revenue (CTA Case No. 7397, April 9, 2008)</u>, has had the
occasion to say:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: .25in; margin-top: 0in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“[W]hen the petitioner received the
final assessment notice and duly protested the same, petitioner’s right to due
process was properly protected and observed.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<b><span style="font-family: "Verdana",sans-serif;">OTHER
FACTS TO SHOW <i>PRIMA FACIE </i>EVIDENCE OF
ACTUAL FRAUD<o:p></o:p></span></b></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> <o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l7 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
scheme of the taxpayer to evade payment of correct taxes is very clear. It
substantially under-declared its Sales with the end view of evading payment of
correct taxes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Computation of percentage ratio of
under-declaration of sales:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l7 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on sales per CD and duly-registered books –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Sales per CD and
duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">P 1,928,770,398.68<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Add: Discrepancy
in reconciliation of Central W’hse accts<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 53,378,730.98<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Total sales per
CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">1,982,149,129.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales
reflected per Annual Income Tax Return (AITR)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales
based on CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">950,620,212.66<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Divide by total
sales per CD and duly-registered books<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 1,982,149,129.66<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Percentage ratio
of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 47.96%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l7 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on franchise fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee per
CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">P 23,668,908.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Divide by
franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales
(or should be sales based on franchise fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,800.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales
reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">1,335,361,883.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by
grossed-up sales/should be sales based on franchise fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 2,366,890,800.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Percentage ratio
of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l7 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.3<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on management fee –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Management fee
per CD, duly-registered books and FS<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">P
47,337,817.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Divide by
management fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 2%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up sales
(or should be sales based on mgt. fee)<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">2,366,890,850.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales
reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">1,335,361,933.00<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Divide by grossed-up
sales/should be sales based on management fee<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 2,366,890,850.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Percentage ratio
of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l7 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.4<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Based
on VAT on franchise fee paid to DBI (BIRF No. 1600) –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: .25in; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">VAT payments on
purchase of services from non-resident<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">P 2,840,123.69<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Divide by VAT
rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 12%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Franchise fee
based on VAT payments<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">23,667,697.42<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Divide by
franchise fee rate<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 1%<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 8.0pt; mso-bidi-font-size: 11.0pt;">Grossed-up
sales/should be sales based on VAT on franchise fee</span><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"><o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">2,366,769,741.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Less: Sales
reflected per AITR<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 1,031,528,917.00<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Undeclared sales<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">1,335,240,824.67<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Divide by
grossed-up sales/should be sales based VAT on FF<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 2,366,769,741.67<o:p></o:p></span></u></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 4.2in;" valign="top" width="403"><div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;">Percentage ratio
of under-declaration<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.6in;" valign="top" width="154"><div align="right" class="MsoNoSpacing" style="text-align: right;">
<u><span style="font-family: "Verdana",sans-serif; font-size: 9.0pt; mso-bidi-font-size: 11.0pt;"> 56.42%<o:p></o:p></span></u></div>
</td>
</tr>
</tbody></table>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that omission or substantial
understatement or under-declaration of sales a fraudulent act or criminal tax
violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l7 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">GDI
keeps two (2) sets of books of accounts.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l7 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.1<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
duly-registered hardbound computer-generated books of accounts registered with
the BIR on January 15, 2008, which were the bases of the audit findings; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l7 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<span style="font-family: "Verdana",sans-serif;"><br /></span></div>
<div class="MsoNoSpacing" style="margin-left: 45.0pt; mso-list: l7 level2 lfo3; text-align: justify; text-indent: -27.0pt;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.2<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
unregistered not-permanently-bound “manually-posted from original books of
accounts” records which GDI claims as the basis of its trial balance for
financial statements and income tax return purposes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">To these, a third set of books of
accounts may be added: Records of RDO No. 41, Mandaluyong City, showed that GDI
registered another set of bound books of accounts (General Journal and General
Ledger) on May 30, 2007.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Is it not that keeping two (2) set of
books of accounts a fraudulent act or criminal tax violation?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: Verdana, sans-serif; text-indent: -0.25in;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><span style="font-family: Verdana, sans-serif; text-indent: -0.25in;">GDI’s
duly-registered books of accounts reflected a net income of P135.2 million for
year 2007. Its AITR for the same period reflected a net loss of P44.9 million
as well as that of the prior years, as follows:</span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Net Loss<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2002 P62,919,525.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2003
44,902,187.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2004
46,995,142.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005
67,077,226.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
57,254,963.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Notwithstanding the continuous
incurrence of losses, it was able to acquire and accumulate properties and
presented under Property, Plant and Equipment in its Financial Statements, as
follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: 2.0in; text-align: justify;">
<u><span style="font-family: "Verdana",sans-serif;">Year</span></u><span style="font-family: "Verdana",sans-serif;"> <u>Acquisitions<o:p></o:p></u></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2005 P16,819,089.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2006
20,755,205.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2007
34,654,371.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;"> 2008
47,019,061.00<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can it afford such gargantuan
amount of acquisitions if it has really been continuously incurring losses? Is
this not indicative of under-declaration of sales, as a business has a very
least prospect to exist if it is continuously incurring losses?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l7 level1 lfo3; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">In
2008, it appropriated Retained Earnings amounting to P100 million for future
renovation of facilities and expansion of production center and outlets.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">How can the Board of Directors of the
corporation have the audacity to appropriate such huge amount of Retained
Earnings for future expansion of its center and outlets if the corporation is
really continuously incurring losses without infusing additional capital?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">GDI’s
financial records (the CD and the duly-registered books of accounts) and other
independent relevant documents, such as but not limited to: License Agreement
between GDI and DBI; Technical Service Agreement between GDI and its
affiliate-Antares Management Inc. (AMI); VAT payments on purchases of services
from non-resident (BIRF No. 1600); Monthly Remittance Returns of Final Taxes
Withheld at Source (BIRF No. 1601F); etc., submitted by it to the Bureau for
audit and examination evidently revealed existence of actual fraud.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; mso-line-height-alt: 7.7pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-bidi-font-size: 9.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-PH;">Habang ang Dunkin Donuts ni Marixi Prieto ay
lumalago at yumayaman, walang kahit isang kusing na binabayarang buwis<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; mso-line-height-alt: 7.7pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-bidi-font-size: 9.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-PH;">Kim Henares, hindi ba maliwanag na tax evader itong
Dunkin Donuts ni Marixi Prieto. Umiral lang ang nerbiyos at takot mo kay Marixi
Prieto na kaibigan ni PNoy. Baka kasi ipasipa ka dyan sa puwesto mo, kaya ka
natakot, bagkus ay pinagtanggol mo pa.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; mso-line-height-alt: 7.7pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-bidi-font-size: 9.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-PH;">Ang ordinaryong empleyado ng gobyerno at pribadong
sector ay nagbabayad ng buwis dahil ito ay kinakaltas na sa buwanang sahod,
ngunit ang mayaman at lumalagong Dunkin' Donuts ni Marixi Prieto na mandaraya
na nga, ay walang binabayarang buwis. As in zero, nada, nothing, none, wala
talaga.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; mso-line-height-alt: 7.7pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-bidi-font-size: 9.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-PH;">Tama bang protektahan at ipatanggol mo ang Dunkin
Donuts, Ginang Kim Henares? <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; mso-line-height-alt: 7.7pt; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-bidi-font-size: 9.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-PH;">MAGKANO BA ANG DAHILAN, COMMISSIONER?<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">On another note.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
news article published in INTERAKSYON.COM on March 31, 2015 captioned “PROBE
BIR ON ‘FLAWED’ IMPLEMENTATION OF TAX LAWS – PARTYLIST” substantiates Othello
Dalanon’s contention that BIR’s Kim Henares promulgates tax rules and
regulations that are in conflict with the terms and provisions of a
pre-existing law, like:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">I
- Revenue Regulations (RR) 6-2013 –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On
April 11, 2013, she promulgated RR No. 6-2013 that took effect on May 14, 2013,
amending certain provisions of RR No. 006-08 on the methodology in determining
the Fair Market Value (FMV) of shares of stock not traded in the local stock
exchange for internal revenue tax purposes.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
aforesaid amending Regulations provide that in determining the FMV of unlisted
shares, the real property, if any, of the issuing corporation shall be adjusted
to its appraised value at the time of disposition of the unlisted shares of
stock. That the appraised value of the real property shall be the higher of –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
FMV as determined by the Commissioner, or<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
FMV as shown in the schedule of values fixed by the Provincial and City
Assessors, or<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l2 level1 lfo4; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
FMV as determined by Independent Appraiser.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Section
6(E) of Republic Act (RA) No. 8424 otherwise known as the 1997 National
Internal Revenue Code of the Philippines, as amended, provides:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Authority
of the Commissioner to prescribe real property values. – The Commissioner is
hereby authorized to divide the Philippines into different zones or areas and
shall, upon consultation with competent appraisers both from private and public
sectors, determine the fair market value of real properties located in each
zone or area. For purposes of computing any internal revenue tax, the value of
the property shall be whichever is the higher of –<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
FMV as determined by the Commissioner; or<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l6 level1 lfo5; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">The
FMV as shown in the schedule of values of the Provincial and City Assessor.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
may be noted that the afore-quoted provisions of RA No. 8424, as amended,
provide for only two (2) conditions in determining the FMV of real property.
However, RR No. 6-2013 provides for three (3) circumstances in determining such
FMV.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
term “fair market value as determined by the Commissioner” as provided under
Section 6(E) of the aforesaid Act is based on the zonal values of real
properties commonly termed as “zonal valuation” which already includes the
Independent Appraisers’ appraisal, given that the different Sub-Technical
Committees on Real Property Valuation (STCRPV) created pursuant to Department
of Finance Order No. 6-2010 as circularized under Revenue Memorandum Circular
(RMC) No. 027-10, relative to the establishment of zonal values, already
includes real property appraisers/real estate practitioners representing the
private sectors as members.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">However,
in RR No. 6-2013, the “independent appraisers’ appraisal” is added as a
separate condition in computing for the FMV of real property for purposes of
determining the FMV of unlisted shares of stock.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">II
– Revenue Regulations No. 2-2014 – On Optional Standard Deduction (OSD).<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Section
34(L) of RA No. 8424 (1997 NIRC), as amended, reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Optional
Standard Deduction (OSD). – In lieu of the deductions allowed under the
preceding Subsection, an individual subject to tax under Section 24, other than
a non-resident alien, may elect a standard deduction in an amount not exceeding
forty percent (40%) of his gross sales or gross receipts, as the case maybe. In
the case of a corporation subject to tax under Sections 27(A) and 28(A)(1), it
may elect a standard deduction in an amount not exceeding forty percent (40%)
of its gross income as defined in Section 32 of this Code. Unless the taxpayer
signifies in his return his intention to elect the optional standard deduction,
he shall be considered as having availed himself of the deductions allowed in
the preceding Subsections. Such election when made in the return shall be
irrevocable for the taxable year for which the return is made: Provided, that
an individual who is entitled to and claimed for the optional standard
deduction shall not be required to submit with his tax return such financial
statements otherwise required under this Code: Provided, further, That except
when the Commissioner otherwise permits, the said individuals shall keep such
records pertaining to this gross sales or gross receipts, or the said
corporation shall keep such records pertaining to his gross income as defined
in Section 32 of this Code during the taxable year, as may be required by the
rules and regulations promulgated by the Secretary of Finance, upon
recommendation of the Commissioner.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">On
January 24, 2014, Henares promulgated RR No. 2-2014, which provides:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“SECTION
5 – Mandatory Itemized Deductions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">A.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Corporations,
partnerships and other non-individuals are mandated to use the itemized
deductions in the following cases:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Those
exempt under the Tax Code, as amended [Section 30 and those exempted under
Section 27(C) and other special laws, with no other taxable income;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Those
with income subject to special/preferential tax rates; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l5 level1 lfo7; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Those
with income subject to income tax rate under Section 27(A) and 28(A)(1) of the
Tax Code, as amended, and also with income subject to special/preferential tax
rates.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Juridical
entities whose taxable base is the gross revenue or receipts (e.g.,
non-resident foreign international carriers) are not entitled to the itemized
deductions nor to the optional standard (OSD) under Section 34(L) of the Tax
Code, as amended.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l1 level1 lfo6; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">B.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Individual
taxpayers who are not entitled to avail of the OSD and thus use only the
itemized deduction method are as follows:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Those
exempt under the Tax Code, as amended, and other special laws with no other
taxable income [e.g., Barangay Micro Business Enterprises (BMBE)];<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Those
with income subject to special/preferential tax rates; and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo8; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;">
</span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Those
with income subject to income tax rate under Section 24 of the Tax Code, as
amended, and also with income subject to special/preferential tax rates.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">It
may be noted that while Section 34(L) of the Tax Code allows taxpayers to
choose between OSD and itemized deductions; RR No. 2-2014 made it mandatory
upon all taxpayers, except juridical entities whose taxable base is the gross
revenue or receipts, to use only itemized deductions.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">In
Othello Dalanon’s layman’s understanding, he feels that the provisions of RR
Nos. 6-2013 and 2-2014 have gone beyond the ambit of the Tax Code.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The
COURT OF APPEALS in the case of Commissioner of Internal Revenue vs. Tikicraft
Industries, Inc., et al., (CA-G.R. SP No. 24488, August 16, 1991) has had the
occasion to say that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“There
is no gainsaying that regulations are entitled to great respect from the courts
especially if followed for some considerable period of time (Molina vs.
Rafferty, 39 Phil. 169; People vs. Hernandez, 59 Phil. 272). While rules and
regulations promulgated by the administrative authorities are entitled to great
respect and weight from the courts, it is a well-ingrained through principle
that the rules and regulations issued by administrative officials to implement
a law in order to be valid must not go beyond the terms and provisions of the
latter. Thus in the case of Juan vs. Musngi (155 SCRA), the Supreme Court held:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“Article
7 of the Civil Code embodies the basic principle that administrative or
executive acts, orders and regulations shall be valid only when they are not
contrary to the laws or the Constitution. In further amplification this Court
had consistently ruled that administrative regulations under legislative
authority by a particular department must be in harmony with the provisions of
the law, and should be for the purpose of carrying into effect its general
provisions. By such regulation, of course, the law itself cannot be extended.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">“In
fine, the power of the Secretary of Finance to promulgate rules and
regulations, upon recommendation of the Commissioner of Internal Revenue, for
the effective enforcement of internal revenue laws, is subject to the
limitation that said rules and regulations should not be in conflict with the
terms and provisions of a pre-existing law.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-right: .25in; text-align: justify;">
<span style="font-family: "Verdana",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">Thank you</span></div>
Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-38693916104497023232015-01-21T11:36:00.000-08:002015-01-21T11:38:21.607-08:00<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b><span style="font-family: Verdana, sans-serif; font-size: 10pt;">PRESIDENT AQUINO’s APPOINTED LIAR BIR COMMISSIONER
KIM HENARES, WHOSE IMAGE PORTRAYS THAT OF AN UNYIELDING TAX-EVADER-BUSTER IS
HERSELF THE CUDDLER AND LAWYER OF MARIXI PRIETO’S DUNKIN DONUTS COMPANY – A
BIGTIME TAX EVADER.<o:p></o:p></span></b></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Golden Donuts, Inc.
(GDI), the exclusive Philippine Franchisee of the global brand "Dunkin'
Donuts", flagrantly perpetrated fraudulent acts or criminal tax violations
that culminated to deficiency tax assessment amounting to P1.56 billion,
including increments, for year 2007, discovered and documented by Othello
Dalanon in his official capacity as former BIR Examiner.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Dalanon personally
reported GDI's omissions to Commissioner Henares and recommended to her the
criminal prosecution for tax evasion under the much-vaunted "Run After Tax
Evaders" program of the Bureau; but she intentionally did not pursue fraud
case against the company because its secretary - Marixi Prieto who also happens
to be the chairperson of the Philippine Daily Inquirer (INQUIRER.net) - is
President Aquino's friend, according to Deputy Commissioner Estela Sales. <o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Ms. Prieto talked
to Henares and BIR Regional Director (now Assistant Commissioner of Internal
Revenue) Nestor Valeroso, on different occasion, who both gave leniency to GDI.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The aforesaid
deficiency tax assessment obtained finality because GDI failed to file a VALID
PROTEST against the Formal Letter of Demand and Assessment Notice (FAN).<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">However, Henares
intentionally did not collect it, purportedly because representatives of GDI
complained to her that Dalanon's assessment was faulty. Thus, she ordered two
(2) re-investigations.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">There is no LAW
that authorizes the commissioner to order two (2) re-investigations of a FINAL,
EXECUTORY and DEMANDABLE assessment.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Once the deficiency
tax assessment obtained finality, the right of the government to collect the
deficiency tax becomes absolute; thus, precludes the taxpayer from questioning
the correctness of the assessment and from raising any justification or defense
that would pave the way for a re-investigation.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">She also claims
that the authority to decide and declare finality of a certain assessment is a
function vested by law upon the Commissioner of Internal Revenue.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Her assertion does
not find basis in LAW.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">It is the LAW that
determines finality of a certain assessment as clearly provided under Revenue
Regulations No. 12-99 as amended by Revenue Regulations No. 18-2013 which the
commissioner herself promulgated, in relation to Section 228 of the 1997
National Internal Revenue Code (1997 Tax Code), as amended.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Her claim that
Dalanon's assessment was faulty is WRONG.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">In fact, she was
not able to dispute Dalanon's assessment. What is very clear is that, while she
sows fears among taxpayers, bullies private and government workers, marginal
income earners, and insists on probing Supreme Court Justices; she fears,
coddles and lawyers for Dunkin' Donuts' local seller – a big-time tax evader.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Just to reiterate.
The P1.56 billion tax deficit of Dunkin' Donuts' franchisee has become DUE and
DEMANDABLE, thus, it already legally belongs to the FILIPINO people whom
PRESIDENT AQUINO considers as his "bosses", and therefore, Henares is
duty-bound to enforce collection thereof - but she refused to.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b><span style="font-family: Verdana, sans-serif; font-size: 10pt;">GDI’s OMISSIONS THAT CULMINATED TO DEFICIENCY
TAX ASSESSMENT AMOUNTING TO P1.56 BILLION, INCLUDING INCREMENTS, FOR YEAR 2007
– DOCUMENTED BY OTHELLO DALANON</span></b><b><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">:<o:p></o:p></span></b></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">1. GDI has two (2)
sets of books of accounts – one was the duly-registered hardbound
computer-generated books of accounts which were the bases of Dalanon’s
assessment; and the other was the unregistered not-permanently-bound
“manually-posted from original books of accounts”, records which GDI claims as
the bases of its Trial Balance for Financial Statements and Income Tax Return
purposes;<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">2. It supplied
false information on the tax return – the duly-registered books of accounts
reflected a net income amounting to P135.2 million while the tax return showed
a net loss of P44.9 million;<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">3. It substantially
under-declared sales on the tax return in two (2) instances:<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">3.1 Sales per
duly-registered books was P1.928 billion while the amount reflected on the tax
return was P1.031 billion – a substantial discrepancy (under-declaration)
amounting to P897 million;<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The SUPREME COURT
ruled in the case of Paper Industries Corporation of the Philippines vs. Court
of Appeals, et al., 250 SCRA 434 that “where the books of accounts reflected a
sales or receipts higher than that reflected on the return, the books of
accounts should prevail. This is so, because the books of accounts are kept by
the taxpayer and are prepared under its control and supervision; and they
reflected what may be deemed to be admissions against interest.”<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The representations
made by GDI in the CD and duly-registered books submitted and presented by it
to the Bureau for audit and examination amounted to admissions against its own
interest which it cannot disown or change at its convenience of pleasure.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">3.2 Other
independent relevant documents, such as, but not limited to: Franchise
Agreement between Dunkin’ Donuts of America, Inc. and GDI, BIR returns, etc.,
further revealed that GDI’s sales topped P2.366 billion but recorded per
duly-registered books was only P1.928 billion – a substantial unrecorded and
consequently undeclared sales amounting to P438 million.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The information
contained in the aforesaid documents were utilized in further determining GDI’s
sales on the basis of the provisions of Section 5(A) of the 1997 Tax Code.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The method of
validation used by Othello Dalanon was already upheld by the COURT OF TAX
APPEALS in the case of Asia Coal Corporation vs. CIR (CTA Case No. 6803,
February 13, 2008), that “the respondent may utilize any kind of document, x x
x to determine the correct sales of the petitioner…”<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">All the above
enumerations are fraudulent acts or criminal tax violations covered by the RATE
(Run After Tax Evaders) Program of the Bureau; but Henares intentionally did
not pursue tax evasion case against the company.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b><u><span style="font-family: Verdana, sans-serif; font-size: 10pt;">Henares, in her position paper submitted to the
Office of the Ombudsman in connection with the formal complaint filed against
her by Othello Dalanon, failed to dispute the above-enumerated irregularities
perpetrated by GDI.<o:p></o:p></span></u></b></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<br /></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b><span style="font-family: Verdana, sans-serif; font-size: 10pt;">THE DEFICIENCY TAX ASSESSMENT AGAINST GDI
OBTAINED FINALITY</span></b><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">.</span><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;"><o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The
deficiency tax assessment against GDI amounting to P1.56 billion, including
increments, for year 2007, obtained finality because GDI’s letter of protest
against the Formal Letter of Demand and Assessment Notice (FAN) was INVALID.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The alleged
letter of protest of GDI merely states “protest against PAN adopted in toto”.
It does not state the facts, the applicable law, rules and regulations, or
jurisprudence on which its protest was based. It is neither a request for
reconsideration nor reinvestigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The rules on
protesting an assessment is found in Section 3 subsection 3.1.5 of RR No.
12-99, as amended, that reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“Disputed Assessment.
– The taxpayer or his duly authorized representative may protest
administratively against the aforesaid formal letter of demand and assessment
notice within thirty (30) days from date of receipt thereof.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The taxpayer
shall state the FACTS, the applicable LAW, RULES and REGULATIONS or
JURISPRUDENCE on which his protest is based, otherwise, his protest shall be
considered VOID and WITHOUT FORCE AND EFFECT.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">If the
taxpayer fails to file a VALID PROTEST against the formal letter of demand and
assessment notice within thirty (30) days from date of receipt thereof, the
assessment shall become FINAL, EXECUTORY and DEMANDABLE.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The said
Regulations must be taken in relation to Section 228 of the 1997 Tax Code, as
amended, which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“Protesting
an assessment. – Such assessment may be protested administratively by filing a
REQUEST FOR RECONSIDERATION or REINVESTIGATION within thirty (30) days from
receipt of the assessment in such form and manner as may be prescribed by
implementing rules and regulations. x x x otherwise, the assessment shall
become FINAL.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">Clearly,
what the law demands is a VALID administrative protest against the formal
letter of demand and assessment notice which required the taxpayer to comply
with the following:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The protest must be through a REQUEST FOR RECONSIDERATION or
REINVESTIGATION;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The protest must be in the form and manner as prescribed under RR
No. 12-99, as amended, which provides that said protest must state the FACTS,
the LAW, RULES and REGULATIONS, or JURISPRUDENCE on which the protest is based;
and<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">Must be filed within thirty (30) days from receipt of the
assessment.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The COURT OF
TAX APPEALS in the case of Allied Banking Corporation vs. Commissioner of
Internal Revenue (CTA Case No. 4581, March 25, 1992, cited that, “[f]ailure to
comply with any or all of these requirements results in the assessment against
the taxpayer becoming final and unappealable.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The letter of
protest should not just state “protest against PAN adopted in toto” because the
administrative protest required to be filed as an answer to the formal letter
of demand and assessment notice is distinct and not the same as the protest
filed against the PAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The COURT OF
TAX APPEALS emphasized in the case of Security Bank Corporation vs.
Commissioner of Internal Revenue (CTA Case No. 6564, November 8, 2006) and
further accentuated in the case of Bank of the Philippine Islands vs.
Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008) that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“[A] protest
to the preliminary assessment notice is not the same as the protest required to
be filed as an answer to the final assessment notice. In fact, a preliminary
assessment notice may or may not even be protested to by the taxpayer, and the
fact of non-protest shall not in any way make the preliminary assessment notice
final and unappealable. What is clear from Section 319-A of the Tax Code of
1977, as amended, is that failure on the part of the taxpayer to protest or
reply to a preliminary assessment notice paves the way for the issuance of a
final assessment notice. However, evident under said Section (now Section 228
of the 1997 Tax Code) is that failure on the part of the taxpayer to file a
VALID administrative protest through a REQUEST FOR RECONSIDERATION or
REINVESTIGATION on the final assessment notice, shall result in the finality of
the said FAN.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The SUPREME
COURT in the case of Allied Banking Corporation vs. Commissioner of Internal
Revenue (G.R. no. 175097, February 5, 2010) heightened that:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“It is the
Formal Letter of Demand and Assessment Notice that must be administratively
protested or disputed within 30 days, and not the PAN.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">GDI, in its
INVALID letter of protest against the FAN, likewise claimed that the
assessments are null and void ab initio because it was allegedly issued in
rampant violation of the due process requirements prescribed under Section 228
of the Tax Code as implemented by RR No. 12-99.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">GDI’s claim
is not true. Records will show that the due process requirements were promptly
observed. There were at least five (5) notices served to GDI either thru
personal delivery or by mail before the formal letter of demand and assessment
notice (FAN) was issued. In fact, it even contested the PAN as clearly admitted
in GDI’s invalid letter of protest against the FAN.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-PH; mso-bidi-font-family: Helvetica; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">The COURT OF TAX APPEALS in the case of Bank of the Philippine Islands
vs. Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008), has
had the occasion to say: “[W]hen the petitioner received the final assessment
notice and duly protested the same, petitioner’s right to due process was
properly protected and observed.”</span>Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com1tag:blogger.com,1999:blog-4059609801449488014.post-72454310489049246702014-12-31T07:30:00.000-08:002014-12-31T07:39:23.933-08:00<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: Comic Sans MS;"><b>Taxation - is fair if burden falls on those better able to pay, than on the poor.</b></span><br />
<span style="font-family: 'Comic Sans MS';"><br /></span>
<span style="font-family: 'Comic Sans MS';">The
VALUE-ADDED TAX (VAT) system in the Philippines took effect on January 1, 1988
by virtue of Executive Order (EO) No. 273, the law adopting the Value-Added Tax
as implemented by Revenue Regulations (RR) No. 05-87 at the rate of ten percent
(10%) on all taxable transactions. The tax rate was increased to twelve percent
(12%) starting February 1, 2006 by virtue of Republic Act No. 9337 as implemented
by RR No. 16-05 as amended by RR No. 04-07.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">VAT
is an indirect tax and the amount of tax may be shifted to or passed on to the
buyer, transferee, or lessee of goods, properties, or services. It is a tax on
consumption of goods, services, or certain transactions involving the same. It
forms a substantial portion of consumer expenditures.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">It
is a "tax credit method" wherein the VAT "input tax" paid
and incurred by a VAT-registered entity is creditable against the VAT
"output tax" which it shifts to or passes on to another
VAT-registered entity or buyer-end-user. In order words, Output Tax minus Input
Tax.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">Under
the said system, the VAT-registered seller or transferor of goods, properties,
or services merely acts as a collector or remittor of the tax actually paid by
or shifted to or passed on to the buyer-end-user or final consumer.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">While
it may be an effective method of tax collection, its implementation is
uncontrolled and unbounded, because it can be and actually have been abused by
tricky persons simply by overstating purchases or expenses to overstate tax
credit with the end view of evading remittance of correct amount of VAT.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">Given
the country's impoverished citizens, the uncontrolled and unbounded
implementation of the VAT system have become so onerous and inequitable to the
Filipino people who are not actually engage in business nor engage in
undertaking affairs for profit like, exempt entities or non-stock, non-profit
organizations whose affairs are not for profit such as: religious
organizations, charitable organizations, and non-stock, non-profit educational institutions, and the like, because the entire burden of the tax falls on them.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">The
power of taxation is said to be in good exercise when it is equitable; i.e., if
burden falls on those better able to pay. However, the present system seemingly
favors those business enterprises which are for profit, particularly the
VAT-registered ones because they are able to reclaim the VAT that was shifted
or passed on to them by the VAT-registered sellers or transferors of goods,
properties, or services since they are entitled to tax credit termed as
"input tax".<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">Even
those who are non-VAT-registered persons or entities but are engage in profit
oriented activities are not so burdened under the present tax scheme, because
the VAT that is shifted to or passed on to them can be converted to form part
of their costs and expenses which are deductible from their gross income,
reduces taxable income and consequently lessens income tax liability.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">Under
the present VAT scheme, the burden of tax falls on the Filipino people
(end-users) and not upon persons or entities who are better able to pay.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">The
implementing rules and regulations could have provided certain limitations on
input tax paid and incurred by a VAT-registered person that may be creditable
against output tax, because in principle and in truth, all natural and juridical
persons, whether or not engage in business for profit, are end-users in the
real sense of the word, and not only the Filipino people.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";"><br /></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Comic Sans MS";">Please help alleviate the Filipino people, especially the under-privilege, from the burden of tax. It should not only fall on them, but upon persons, firms, or companies engage in undertaking affairs for profit as well.</span></div>
Anonymoushttp://www.blogger.com/profile/09500012780134630503noreply@blogger.com0tag:blogger.com,1999:blog-4059609801449488014.post-76057576482462736222014-12-12T15:47:00.000-08:002014-12-12T15:47:01.466-08:00Tax evasion case intentionally not filed by the liar BIR Commissioner Kim Henares<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: Verdana, sans-serif; font-size: 10pt; line-height: 11.5pt;">Golden Donuts, Inc.
(GDI), the exclusive Philippine Franchisee of the global brand "Dunkin'
Donuts", flagrantly perpetrated fraudulent acts or criminal tax violations
that culminated to deficiency tax assessment amounting to P1.56 billion,
including increments, for year 2007, discovered and documented by Othello
Dalanon in his official capacity as former BIR Examiner.</span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Dalanon personally
reported GDI's omissions to Commissioner Henares and recommended to her the
criminal prosecution for tax evasion under the much-vaunted "Run After Tax
Evaders" program of the Bureau; but she intentionally did not pursue fraud
case against the company because its secretary - Marixi Prieto who also happens
to be the chairperson of the Philippine Daily Inquirer - is President Aquino's
friend, according to Deputy Commissioner Estela Sales. <o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Ms. Prieto talked
to Henares and BIR Regional Director (now Assistant Commissioner of Internal
Revenue) Nestor Valeroso, on different occasion, who both gave leniency to GDI.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The aforesaid
deficiency tax assessment obtained finality because GDI failed to file a VALID
PROTEST against the Formal Letter of Demand and Assessment Notice (FAN).<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">However, Henares
intentionally did not collect it, purportedly because representatives of GDI
complained to her that Dalanon's assessment was faulty. Thus, she ordered two
(2) re-investigations.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">There is no LAW
that authorizes the commissioner to order two (2) re-investigations of a FINAL,
EXECUTORY and DEMANDABLE assessment.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Once the deficiency
tax assessment obtained finality, the right of the government to collect the
deficiency tax becomes absolute; thus, precludes the taxpayer from questioning
the correctness of the assessment and from raising any justification or defense
that would pave the way for a re-investigation.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">She also claims
that the authority to decide and declare finality of a certain assessment is a
function vested by law upon the Commissioner of Internal Revenue.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Her assertion does
not find basis in LAW.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">It is the LAW that
determines finality of a certain assessment as clearly provided under Revenue
Regulations No. 12-99 as amended by Revenue Regulations No. 18-2013 which the
commissioner herself promulgated, in relation to Section 228 of the 1997
National Internal Revenue Code (1997 Tax Code), as amended.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Her claim that
Dalanon's assessment was faulty is WRONG.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">In fact, she was
not able to dispute Dalanon's assessment. What is very clear is that, while she
sows fears among taxpayers, bullies private and government workers, marginal
income earners, and insists on probing Supreme Court Justices; she fears,
coddles and lawyers for Dunkin' Donuts' local seller – a big-time tax evader.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Just to reiterate.
The P1.56 billion tax deficit of Dunkin' Donuts' franchisee has become DUE and
DEMANDABLE, thus, it already legally belongs to the FILIPINO people whom
PRESIDENT AQUINO considers as his "bosses", and therefore, Henares is
duty-bound to enforce collection thereof - but she refuses to.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b><span style="font-family: Verdana, sans-serif; font-size: 10pt;">GDI’s OMISSIONS THAT CULMINATED TO DEFICIENCY
TAX ASSESSMENT AMOUNTING TO P1.56 BILLION, INCLUDING INCREMENTS, FOR YEAR 2007
– DOCUMENTED BY OTHELLO DALANON</span></b><b><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">:<o:p></o:p></span></b></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">1. GDI has two (2)
sets of books of accounts – one was the duly-registered hardbound
computer-generated books of accounts which were the bases of Dalanon’s
assessment; and the other was the unregistered not-permanently-bound
“manually-posted from original books of accounts”, records which GDI claims as
the bases of its Trial Balance for Financial Statements and Income Tax Return
purposes;<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">2. It supplied
false information on the tax return – the duly-registered books of accounts
reflected a net income amounting to P135.2 million while the tax return showed
a net loss of P44.9 million;<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">3. It substantially
under-declared sales on the tax return in two (2) instances:<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">3.1 Sales per
duly-registered books was P1.928 billion while the amount reflected on the tax
return was P1.031 billion – a substantial discrepancy (under-declaration)
amounting to P897 million;<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The SUPREME COURT
ruled in the case of Paper Industries Corporation of the Philippines vs. Court
of Appeals, et al., 250 SCRA 434 that “where the books of accounts reflected a
sales or receipts higher than that reflected on the return, the books of
accounts should prevail. This is so, because the books of accounts are kept by
the taxpayer and are prepared under its control and supervision; and they
reflected what may be deemed to be admissions against interest.”<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The representations
made by GDI in the CD and duly-registered books submitted and presented by it
to the Bureau for audit and examination amounted to admissions against its own
interest which it cannot disown or change at its convenience of pleasure.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">3.2 Other
independent relevant documents, such as, but not limited to: Franchise
Agreement between Dunkin’ Donuts of America, Inc. and GDI, BIR returns, etc.,
further revealed that GDI’s sales topped P2.366 billion but recorded per
duly-registered books was only P1.928 billion – a substantial unrecorded and
consequently undeclared sales amounting to P438 million.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The information
contained in the aforesaid documents were utilized in further determining GDI’s
sales on the basis of the provisions of Section 5(A) of the 1997 Tax Code.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">The method of
validation used by Othello Dalanon was already upheld by the COURT OF TAX
APPEALS in the case of Asia Coal Corporation vs. CIR (CTA Case No. 6803,
February 13, 2008), that “the respondent may utilize any kind of document, x x
x to determine the correct sales of the petitioner…”<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">All the above
enumerations are fraudulent acts or criminal tax violations covered by the RATE
(Run After Tax Evaders) Program of the Bureau; but Henares intentionally did
not pursue tax evasion case against the company.<o:p></o:p></span></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b><u><span style="font-family: Verdana, sans-serif; font-size: 10pt;">Henares, in her position paper submitted to the
Office of the Ombudsman in connection with the formal complaint filed against
her by Othello Dalanon, failed to dispute the above-enumerated irregularities
perpetrated by GDI.<o:p></o:p></span></u></b></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b style="line-height: 11.5pt;"><span style="font-family: Verdana, sans-serif; font-size: 10pt;"><br /></span></b></div>
<div style="background: white; line-height: 11.5pt; margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt; text-align: justify;">
<b style="line-height: 11.5pt;"><span style="font-family: Verdana, sans-serif; font-size: 10pt;">THE DEFICIENCY TAX ASSESSMENT AGAINST GDI
OBTAINED FINALITY</span></b><span style="font-family: Verdana, sans-serif; font-size: 10pt; line-height: 11.5pt;">.</span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The
deficiency tax assessment against GDI amounting to P1.56 billion, including
increments, for year 2007, obtained finality because GDI’s letter of protest
against the Formal Letter of Demand and Assessment Notice (FAN) was INVALID.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The alleged
letter of protest of GDI merely states “protest against PAN adopted in toto”.
It does not state the facts, the applicable law, rules and regulations, or
jurisprudence on which its protest was based. It is neither a request for
reconsideration nor reinvestigation.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The rules on
protesting an assessment is found in Section 3 subsection 3.1.5 of RR No.
12-99, as amended, that reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“Disputed
Assessment. – The taxpayer or his duly authorized representative may protest
administratively against the aforesaid formal letter of demand and assessment
notice within thirty (30) days from date of receipt thereof.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;"> x x x<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The taxpayer
shall state the FACTS, the applicable LAW, RULES and REGULATIONS or
JURISPRUDENCE on which his protest is based, otherwise, his protest shall be
considered VOID and WITHOUT FORCE AND EFFECT.<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;"> x x x<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">If the
taxpayer fails to file a VALID PROTEST against the formal letter of demand and
assessment notice within thirty (30) days from date of receipt thereof, the
assessment shall become FINAL, EXECUTORY and DEMANDABLE.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The said
Regulations must be taken in relation to Section 228 of the 1997 Tax Code, as
amended, which reads:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“Protesting
an assessment. – Such assessment may be protested administratively by filing a
REQUEST FOR RECONSIDERATION or REINVESTIGATION within thirty (30) days from
receipt of the assessment in such form and manner as may be prescribed by
implementing rules and regulations. x x x otherwise, the assessment shall
become FINAL.”<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="text-align: justify;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">Clearly,
what the law demands is a VALID administrative protest against the formal
letter of demand and assessment notice which required the taxpayer to comply
with the following:<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(a)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The protest must be through a REQUEST FOR RECONSIDERATION or
REINVESTIGATION;<o:p></o:p></span></div>
<div class="MsoNoSpacing" style="margin-left: .25in; text-align: justify;">
<br /></div>
<div class="MsoNoSpacing" style="margin-left: .25in; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(b)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The protest must be in the form and manner as prescribed under RR
No. 12-99, as amended, which provides that said protest must state the FACTS,
the LAW, RULES and REGULATIONS, or JURISPRUDENCE on which the protest is based;
and<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;">(c)<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">Must be filed within thirty (30) days from receipt of the
assessment.<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The COURT OF
TAX APPEALS in the case of Allied Banking Corporation vs. Commissioner of
Internal Revenue (CTA Case No. 4581, March 25, 1992, cited that, “[f]ailure to
comply with any or all of these requirements results in the assessment against
the taxpayer becoming final and unappealable.”<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The letter of
protest should not just state “protest against PAN adopted in toto” because the
administrative protest required to be filed as an answer to the formal letter
of demand and assessment notice is distinct and not the same as the protest
filed against the PAN.<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The COURT OF
TAX APPEALS emphasized in the case of Security Bank Corporation vs.
Commissioner of Internal Revenue (CTA Case No. 6564, November 8, 2006) and
further accentuated in the case of Bank of the Philippine Islands vs.
Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008) that:<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“[A] protest
to the preliminary assessment notice is not the same as the protest required to
be filed as an answer to the final assessment notice. In fact, a preliminary
assessment notice may or may not even be protested to by the taxpayer, and the
fact of non-protest shall not in any way make the preliminary assessment notice
final and unappealable. What is clear from Section 319-A of the Tax Code of
1977, as amended, is that failure on the part of the taxpayer to protest or
reply to a preliminary assessment notice paves the way for the issuance of a
final assessment notice. However, evident under said Section (now Section 228
of the 1997 Tax Code) is that failure on the part of the taxpayer to file a
VALID administrative protest through a REQUEST FOR RECONSIDERATION or
REINVESTIGATION on the final assessment notice, shall result in the finality of
the said FAN.”<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The SUPREME
COURT in the case of Allied Banking Corporation vs. Commissioner of Internal
Revenue (G.R. no. 175097, February 5, 2010) heightened that:<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">“It is the
Formal Letter of Demand and Assessment Notice that must be administratively
protested or disputed within 30 days, and not the PAN.”<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">GDI, in its
INVALID letter of protest against the FAN, likewise claimed that the
assessments are null and void ab initio because it was allegedly issued in
rampant violation of the due process requirements prescribed under Section 228
of the Tax Code as implemented by RR No. 12-99.<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">GDI’s claim
is not true. Records will show that the due process requirements were promptly
observed. There were at least five (5) notices served to GDI either thru
personal delivery or by mail before the formal letter of demand and assessment
notice (FAN) was issued. In fact, it even contested the PAN as clearly admitted
in GDI’s invalid letter of protest against the FAN.<o:p></o:p></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: Helvetica;">The COURT OF
TAX APPEALS in the case of Bank of the Philippine Islands vs. Commissioner of
Internal Revenue (CTA Case No. 7397, April 9, 2008), has had the occasion to
say: “[W]hen the petitioner received the final assessment notice and duly
protested the same, petitioner’s right to due process was properly protected
and observed.”<o:p></o:p></span></div>
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