Kepwealth Inc. vs. Commissioner of Internal Revenue

DECISION

RINGPIS-LIBAN, J.

THE CASE

T he Petition for Review flied on ~ eptember 17, 2020, prays that the assailed Decision issued by respondent Commissioner of Internal Revenue against petitioner for its alleged deficiency donor's tax in amount of P98,318,731.68, inclusive of interest and penalties be cancelled, reversed and set aside.¹

THE PARTIES

Petitioner Kepwealth, Inc. is a corporation duly organized and existing under the laws of the Republic of the Philippines.² It is registered with the Bureau of Internal Revenue (BIR) with Tax Identification lumber (TIN) 205- 041-890-000.³ Petitioner's principal office address is at 3-B Country Space I, 133 Sen. Gil Puyat Avenue, Salcedo Village, Barangay Bel-_-\ir, Makati Ciry.⁴

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CTA CASE NO. 10353 Respondent is a public officer duly appointed by the President of the Philippines, and is the head of the BIR, the government agency officially responsible for the assessment and collection of all national internal revenue taxes, fees, and chargcs⁵

THE FACTS OF THE CASE

On October 27, 2017, petitioner sold its common shares in Kepwealth Property Phils., Inc. (KPPI) to these buyers"'

Buyer

No. of Common Shares

Total Purchase Price

Price per

Sold

Share Sold

Las Tuazon & Sons RealtY Inc.

35o,o9o (Lu 'liwo;on) (the l_.Ju 'fi;a:;on shares) 1"8,311 ,389.84 1"23 34 Crown Castle Holdings.Com, Inc.

4,195,410 -- (Cimvn Ca.rt/e) (the Cmum Castle shares) f'lll ,928,225.94 1"23.34 Petitioner then applied for the Certificate Auth01i;::_ing Registration for the sale of its KPPI common shares to LaJ Tua:;_pn and Croum Cm-t!e. During the CAR processing, respondent, through Revenue District Office No. 49, claimed that petitioner is liable for donor's tax pursuant to Section 100 of the Tax Code7 because petitioner allegedly sold the Las Tuazon Shares and Crown Castle Shares (Sale Shares) for less than their full and adequate consideration. On February 20, 2018, petitioner, through ills. Felicidad V. Razon, received the Letter of A11tb01ity (LO.\), authorizing the examination of petitioner's accounting records for donor's tax for the period "October 27, 2017 to October 27,2017" 8 Thereafter, on illarch 6, 2018, petitioner, through ills. Kristina Frias, received the Notire for Informal Conferenre, requesting petitioner to offer Its explanation or present its objection to the initial findings of respondent. 9 On July 19, 2018, petitioner received respondent's Pre/imina!]' AJJmmwt Notire (PAN) dated july 16,2018. The PAN contains the assessed donor's tax of petitioner in the total amount of P85,585,729.48, inclusive of surcharge, interest and penalties, for taxable year 2017 ;/ 5 Par. 2, Petition for Rn,ieu.~; \·is-;1-\·is par. ~. An .. ·n,er (lr'?t/r S pedal and ... ~(lirma!l!'f D~(e1ue.,), Docket - \ · ol. L pp. - and 578, respecti•:ely.

(, Par. 2, Stipulated Facr;;, J SF, Docker - \ · ol. \ ·, pp. ~ 180 ro 2181. 'Par. 3, Stipulated Facrs,_!SF, Docker- \'ol. \', p. 2181. -~Par. -1-, Sr.ipulated Facr~,JSF, Docket- \'ol. \", p. 2181, Exhibit '"R·l ", DIR Record:;- Folder 1, p. 2. 'J Par. 5, Stipulated f-"acrs,JSF, Docket- \'ol. \', p. 2181; Exhibrr "R-3", BIR Records- Folder 1, p. 38-+. 111 Par. 6, Stipulated Facts,.JSF, Docket- \'ol. \·, p. 2181; Exhibit "'P-11 ",Docket- \'ol. II, pp. 792 to 7 94; and Exhibit "R-5" ro "R-'", BIR Records- Folder 1, pp. -1-0..., to -1-lU. 1

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CTA CASE NO. 10353 Subsequently, on .\ugust 3, 2018, petitioner then filed with the BIR the letter of even date," requesting for the withdrawal and cancellation of the said PAN.

On July 4, 2019, petitioner received the romJa! AJJeJJment J\'otire (F.\N) dated June 19, 2019 with the Detai!J of D/grepancieJ. 1' Petitioner then flied with the BIR, on J uh· 31, 2019, the letter of even date (request for reconsideration), 11 requesting for the withdrawal and cancellation of the said FAN.

On "\ugust 5, 2020, petltloner received the Final DeciJion on Diputed Amwmnt (FDD"-\) dated "·\ugust 3, 2020. The FDD.\ upheld the donor's tax assessment, inclusive of surcharge, interest and compromise penalty, against petitioner in the amount off'98,318,731.68. 1" On September 17,2020, 15 petitioner filed the present Petition for Rez1iew. \Vithin the extended time granted by the Court, 16 respondent posted his Ai7Jwer (If"l"th Spetia! and AfflmJative DefenJeJ), 17 asserting that the Court lacks jurisdiction to entertain the present case, as the Petition for Rm.ew was filed bevond the prescribed thirty (30)-day period to file an appeal before this Court reckoned from the date of receipt of the FDD.\. Hence, according to respondent, the assessment has become final, executory and demandable pursuant to Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended. Respondent also contends that petitioner is liable for donor's tax, amounting to P98,318, 731.68, inclusive of interests and surcharge, as well as compromise penalty, amounting to P100,000.00; and prayed for the dismissal of the Petitio11 for Review.

Thereafter, respondent transmitted the BIR RecordJ for the present case on December 21, 2020, 1 " consisting of two (2) folders.

On January 4, 2021, petitioner filed its Reply to respondent's Amwe:;;- 11 Exhibit "P-12", Docket- \'ol. II. pp. "'796 to .S06. 12 Par.:, Sripubred Facts,JSf, Docket- \'ol. \·, p. 2181; Exhibit '·P-13, Docket- \'oL II, pp. 812 to 81-:; and Exhibit "R-9" ro "R-12", BIR Records- Folder I, pp. -1-31 and -1-39 to -1--1-3. n Exhibit "P-1-J.", Docket- \'ol. II, pp. 818 ro 82"7. 1 ~ Par. 8, Stipulated Facts,JSF, Docker- \"ol. \·, pp. 2181 to 2182; Exhibit "P-l.S", Docker- \"ol. \'I, pp. 282.) to 2826; and Exhibit "R-14", Docker - \-ol. -, pp. r 1-1- ro 3 -1'. IS Docket- \'ol. I, pp. 6 to 34.

J(, Respondenr's Jlo!ionjor F.x/ei!Jion r:/TiFJle !o File .-111/J/'er, and ( )rc\er dared \:on:mber 20, 2()2(_), Docker- \'ol. I, pp- S-;1 to s-_:. and s-6, n:spccri\·el:-- 1- Docket- \'ol. I, PP· S""'.S TOss-~.

IH Comp!iath"l!, Docket- \"ol. I, p. s--.

I'; Docket - \ 'ol. I, pp. (J36 to 6-J.:)

CTA CASE NO. 10353 In the Resolution dated March 12, 2021,211 the Court denied respondent's prayer to dismiss the present case.

The Pre-Trial Conference was initially set on .-\pril 19, 2021,21 and was reset to June 16, 202!." Respondent's Pre-Trial Brief was posted on c\pril 15, 2021 ;

23 while petitioner filed its Pre-T n'al Bmfon June 14, 202J.2" However, during the June 16, 2021 heating, the parties were instead ordered to immediately proceed and to personally appear, or through their authorized representative, before the Philippine i\Iediation Center-Court of Tax Appeals (Pl\IC-CTA) on july 12,2021, and the Pre-Trial Conference set on said day was cancelled25 Thereafter, the Pl\JC-CTA issued the No Agreement To iViediate dated July 12, 2021,26 stating that the parties decided not to have their case mediated. Thus, in the Resolution dated July 15, 2021,27 the Court set the Pre-Trial Conference anew on September 8, 2021, which was later reset to, and held on, November 22, 2021. 28 On January 6, 2022, the parties posted their/oint Stzpu!ation oJFarts,29 which was approved and adopted b,- the Court in the Pre-Trial Order dated '\larch 14, 2022. 30 Trial then ensued, with the parties presenting their respective testimonial and documentary evidence.

Petitioner offered the testimonies of the following '>vitnesses, namely: (1) Mr. Alan I. Claveria, 31 petitioner's President; (2) l\fs. Felicidad V. Razon,32 petitioner's Treasurer; and (3) Prof. Joselito G. Florendo,33 petitioner's expert witness to opine on the computation of the book value per share (BVPS) of KPPI's common shares/ ~ 1 ' Docket- \'ol. II, pp. 665 ro 6....,-1-.

21 :\"otice of Pre-Trial Conference dated \!arch 12, 2(121, Docker- \'ol. II, pp. 6""'5 to 676. 22 ~otice ofReserting dated June 16, 1021, Docket- \'ol. II, p. 933. "Docket- \'ol. II, pp. 925 to 932.

2-f Docket- \'ol. II, pp. 936 to 957.

:?S 01inures of the hearing held on, Order, and Resolution dared, .June 16,2021, Docket- \'ol. I\', pp. 1-.:?.1 to 172-l.

21• Docket- \'ol. I\·, p. 2167.

"Docket- \'ol. I\·, p. 2169.

:?H f...'otice ofReserr.ing dated October 15, 2U21, and Order dared "\:oyember 22, 2021, Docket- \'ol. \·, pp. 21 7 0 and 2171, respectively.

"Docket- \'ol. \', pp. 2180 to 218.1.

1' 1 Docker- Yo!.\', pp. 2209 to 2216.

ll Exhibn "P-T"', Docket- \"ol. II, pp. (J81 to -04; \linutes of heanng held on, and Order dared .\Iarch 30, 2U22, Docker- \'ol. \·, pp. 221- to 2211-\; Lxhil)lt "P-29'', Docb:t- \"ol. \', pp. 2224 ro 2249; .\I.inures of hearing held on, and Order dated .June Cl, 21122, Docker- \'ol. \"l, pp. 2-1 H ro T19. '~Exhibit ''P-28", Docker- \'ol. III, pp. {rn ru 983; .\hnurcs of hearing held on, ami Order dared .\LI:· lt1, 21122, Docket-\ 'ol. \', pp. 2219 ro 222U.

·'-'Exhibit "P-31", Docker- \'ol. I\', pp. 1'"728 ro 1"'41; .\I.inures of hearing held on, and Order dated June (l, 2022, Docket- \'ol. \'1, pp. 2718 to 2719.

CTA CASE NO. 10353 Petitioner filed its Offer of Evidence on June 24, 2022.4 Respondent posted its Comment (to Petitioner's Offer of Evidence dated 24 June 2022) on July 19, 2022. In the Resolution dated September 20, 2022, the Court admitted petitioner’s offered exhibits, except for Exhibits “P-7”, “P-7-a”, “P-8”, “P-8-a”, “P-9”, “P- 9-a”, “P-10”, and “P-10-a”, for failure to submit the originals for comparison.

On October 4, 2022, petitioner then filed its Afoton for Reconsideration,’ to which respondent posted his Comment (Re: Petitioner’s Motion for Reconsideration dated 04 October 2022) on October 14, 2022.58 For his part, respondent offered the testimony of Revenue Officer (RO) Karen R. Esparraguerra.*” Respondent’s Formal Offer of Evidence was filed on October 21, 2022.*° Peutioner posted its Comment on/ Objection to Respondent’s Formal Offer of Evidence dated October 21, 2022 on November 3, 2022.*!

In the Resolution dated January 23, 2023, the Court: (1) granted pettioner’s Motion for Reconsideration, thereby admitting Exhibits “P-7-a”, “P-8”, “P-8-a”, “P-9”, “P-9-a”, “P-10”, and “P-10-a”; and (2) admitted respondent’s offered exhibits.

The Memorandum for the Petitioner was filed on March 8, 2023; while respondent filed his Afemorandum on March 21, 2023.44 The present case was submitted for decision on April 18, 2023.

THE ISSUES

The Court is confronted with this main issue: “Whether the Petitioner 1s Hable to pay the assessed deficiency Donor’s Tax amounting to P98,318,731.68, inclusive of surcharge and interests, and Compromise Penalty amounting to Php100,000.00 for taxable year 2017.”

4 Docket — Vol. VI, pp. 2720 to 2741.

*® Docket ~ Vol. 7, pp. 3678 to 3679.

* Docket — Vol. 7, pp. 3688 to 3689.

* Docket — Vol. 7, pp. 3693 to 3701.

38 Docket - Vol. 7, pp. 3719 to 3722.

9 Exhibit “R-15”, Docket — Vol. I, pp. 588 to 603; Minutes of the hearing held on, and Order dated, September 22, 2022, Docket - Vol. ~, pp. 3690 ta 3692.

* Docket — Vol. 7, pp. 3705 to 3712.

" Docket - Vol. 7, pp. 3725 to 3729.

? Docket — Vol. 7, pp. 3733 ro 3739,

CTA CASE NO. 10353

THE ARGUMENTS OF THE PARTIES

Petitioner's arguments:

Petitioner argues that the assailed Decision ignores and erroneoush· fails to apply Revenue Regulations (RR) No. 6-2013 which amended (a) the definition of the fair market value (l.-~1\) of shares of stock not traded and listed through the local stock exchange and (b) the manner of computing the FMY of shares under Section 7(c.2.2) in relation to Section 2(v) of RR '\Jo. 6-2008; that even assuming that Section 2(v) of RR No. 6-2008 should still be considered in the computation, the par value of KPPI's preferred shares should not be deducted in computing the F~I\' of the subject shares of stock (i.e., the Las Tuazon and Croum Castle shares) because KPPI's preferred shares are not given preference in the distribution of the corporation's assets in case of lic1uidation; that the assailed Decision upholds a method of computing the FM\' of shares which erroneously ignores the fact that KPPI's common shares and preferred shares have equal rights and privileges; and that the assailed Decision erroneously finds that petitioner is subject to donor\ tax on its sale of the subject shares of stock, even though there is no deemed gift because the consideration that petitioner received therefor is higher than the F:--.I\' thereof computed in accordance with RR No. 6-2013.

Respondent's counter-arguments:

Respondent insists that the Court has no jurisdiction over this case as the Petition for Review was ftled out of time; that the Supreme Court's (SC's) A.dministrativc Circular (.\C) No. 43-2020, as amended by "\C No. 43.\-2020, finds no application in this case; that petitioner is liable for donor's tax amounting to 1'98,218, 731.68, inclusi\·c of interests and surcharge, and compromise penalty amounting to P1 00,000.00; that it was duly notified of the assessment and was accorded due process of law; and that the donor's tax assessment has factual and legal basis.

THE COURT'S RULING

The Petition for Review was timely filed.

Hence, the Court has jurisdiction over the case.

Petitioner alleges that at the time it received the FDD:\ on A.ugust 5, 2020, the National Capital Region (NCR) was under the

~Iodified Enhanced

Community Quarantine (;\IECQ), and on the basis of the SC's AC No. 43-2020, with its addendum .\C No. 43.\-2020, it has until September 17, 2020 within which to file its petition//

CTA CASE NO. 10353 Respondent, on the other hand, asserts that the Petition for Review was filed out of time, and that SC's ~"-C "o. 43-2020, as amended by ~"-C No. 43"\~2020, does not apply in this case. ~"-ccording to the respondent, said AC only affected the filing of petitions and other court submissions from ~-\ugust 4 to 18, 2020 as the Court's operations resumed on .\ugust 19,2020. Thus, there is no hindrance for the petitioner to file its appeal before this Court on or before September [4], 2020 or the thirtieth (30'h) day from its receipt of the FDD.\ as provided under Section 228 of the National Internal Revenue Code (NIRC) of 1997, as amended. Respondent's view is without merit. The Petition for Review was timely filed. Apparently, the dispute on the timeliness of filing the present Petition arises on the interpretation of the following provision in SC's .\C No. 43~\-2020 dated August 3, 2020:

"ADl\.IINISTRXHVE CIRCUL\R NO. 43A-2020

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1. The reglementary periods for filing of petitions, appeals, complaints, motions, pleadings and other court submissions before the courts shall be suspended from 4 to 18 :\ugust 2020, and shall resume on 19 August 2020, without prejudice to those who have already ftled such pleadings and documents within their reglementary periods. In the same manner, the periods for court actions with prescribed periods are likewise suspended, and shall resume on 19 August 2020.

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In this Court's Resolution dated i\Iarch 12, 2021,"6 We interpreted the foregoing AC in this wise:

"c\t the outset, it is worth mentioning that this Court issued l\Iemorandum dated August 4, 2020 echoing the order of the Supreme Court suspending the reglementary periods from August 4, 2020 to A.ugust 18, 2020 and shall resume on "\ugust 19, 2020. This is because the categorical language of _\dministrative Circular No. 43.-\-2020 leaves no room for doubt. The suspension of reglementary period extends to the filing of all petitions, appeals, complaints, motions, pleadings, and other court submissions without anr qualification or reservation. ~\s such, the Court finds itself unable to subscribe to respondent's interpretatio~ -1r, Resolution, \"ol. 2, pp. 665-67-1-.

CTA CASE NO. 10353 that the same is only applicable to those filings and submissions that fall due during the period of suspension." (Emphm'is added) This Court further ruled as follows:

Prescinding from the foregoing disquisition, petmoner should be given the fullest opportunity to establish the merits of his appeal considering that what is at stake is a possible deprivation of its property which is one of the fundamental rights protected by our Constitution.

~\s such, the Petition for Review filed on September 17, 2020 is well within the 30-day period fixed by law, reckoned from c\ugust 19, 2020, which is the resumption of the reglementary period to file pleadings and other court submissions as provided in the SC .-\dministrative Circular ~o. 43.~\-2020. Perforce, the FDD"\ has not attained finality and the instant case is within the jurisdiction of this Court."

Petitioner received the FDD.\ on ~\ugust 5, 2020. ~\t this date, ordinarily, the last day to appeal before the CT"\ should have been on September 5, 2020. With the promulgation of SC No. 43~\-2020, suspending the reglementan· period, the 30-day reglcmentan· period to file petition before this Court did not run until ~\ugust 19, 2020. Thus, counting thirtv (30) davs from ~\ugust 19,2020, petitioner had until September 18, 2020 to file its petition before this Court. Petitioner filed the present Petition for Revieu.' on September 1 7, 2020, which is well-within the adjusted reglementary period pursuant to SC's AC No. 43/\.- 2020. Thus, this Court has jut~sdiction over the said Petition for Re~Jiew. Whether or not petitioner should be held liable for donor's tax Petitioner alleged that in the assessment of its donor's tax liability, respondent, instead of apph·ing the applicable provision of RR 6-2008 as amended by RR 6-2013, erroneously relied on a repealed provision of RR 6-2008 in its computation of the fair market value of Kepwealth Property Phils. Inc. (KPPI)'s common shares.

On the other hand, respondent claims that the donor's tax assessed against petitioner was based on the Endings that petitioner sold shares of stock for less than the adequate consideration, hence, the same shall be considered gift that is subject to donor's tax pursuant to Section 100 of the NIRC of 1997, as amended, in relation toRR No. 6-2008 and RR No. 6-2013; and that since RR No. 6-2013 did not mention the situation wherein the outstanding shares of the compam consist of common shares and preferred shares, respondent applied Section 2 (v) of RR No. 6-2008 in the determination of the value per share sold. ~

CTA CASE NO. 10353 In determining whether petitioner is liable for the assessed donor tax, We shall first determine what is the applicable rule in the computation of the subject sale of shares of petitioner.

The amended provisions of RR No. 6-2013 should have been apph'ed by respondent in this case.

Section 100 of the NIRC of 1997, as amended, provides: SEC. 100. Transfer for Less Than Adequate and Full Consideration. - \Vhere propertY, other than real property referred to in Section 24(D), is tram;fcrred for less than an adequate and full consideration in mone\' or money's worth, then the amount by which the fair market value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this Chapter, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year. The pertinent provrsions of Revenue Regulations No. 6-2008, Consolidated Regulations Prescribing the Rules on the Taxation of Sale, Barter, Exchange or other Disposition of Shares of Stock Held as Capital Assets, dated ,'\pril 22, 2008, provides:

SEC. 2. DEFINITION OF TERMS. - For purposes of these Regulations, the following definition of words and phrases are hereby adopted:

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(c) "Shares of Stock" shall include shares of stock of a corporation, warrants and/ or options to purchase shares of stock; as well as units of participation in a partnership (except general professional partnerships), joint stock companies, joint accounts, joint ventures taxable as corporations, associations, and recreation or amusement clubs (such ad golf, polo or similar clubs); and mutual fund certificates.

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(v) "Book Value per Share" refers to the value per share computed by di\·iding the total Stockholder's Equitv of a corporation or net assets of the company b\' the number of outstanding shares or units if participation in a company. In case there are preferred shares as well as common shares, the book value per common share is computed by deducting the liquidation val/

CTA CASE NO. 10353 of the preferred shares form the total equity of the corporation and dividing the result of the number of common shares outstanding as of balance sheet date. The lic1uidation value of the preferred shares is equal to the redemption price as of balance sheet date, including any premium and cumulative preferred dividends in arrears.

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SEC. 7. SALE, BARTER OR EXCHANGE OF SHARES OF

STOCK NOT TRADED THROUGH A LOCAL STOCK

EXCHANGE PURSUANT TO SECS. (C), 25 (A)(3), 25 (B). 27 (D) (2), 28 (A) (7) (C), 28 (B) (5) (C) OF THE TAX CODE, AS AMENDED. - XXX,

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( c.2) Definition of" fair market value" of the Shares of Stock. - For purposes of this Section, "fair market value" of the shares of stock sold shall be:

(c.2.1) ~'\...,'\.

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(c.2.2) In the case of shares of stock not listed and traded in the local stock exchanges, the book value of the shares of stock as shown in the financial statements duly certified by an independent certified public accountant nearest to the date of sale shall be the fair market value.

On ,-\pril 11, 2014, the BIR issued Revenue Regulation No. 6-2013, Amending Certain Provision of Revenue Regulations No. 06-2008 Entitled Consolidated Regulations Prescribing the Rules on the Taxation of Sale, Barter, Exchange or other Disposition of Shares of Stock Held as Capital .\ssets. Section 2 thereof states:

SECTIOI\: 2. Sale, Barter or Exchange of Shares of Stock ~ot Traded Through a Local Stock Exchange Pursuant to Sees. 24 (C), 25 (:\)(3), 25 (B), 27 (D) (2), 28 (,\) (7) (C), 28 (B) (5) (C) of The Tax Code, as Amended. - Sec. 7 of RR No. 06-2008 is herebv amended to read as follows:

"SEC 7. Sale, Barter or Exchange of Shares of Stock Not Traded Through a Local Stock Exchange Pursuant to Sees. 24 (C), 25 (,-\)(3), 25 (B), 27 (D) (2), 28 (.-\) (7) (C), 28 (B) (5) (C) of The Tax Code, as ,-\mended.- ,/V"

CTA CASE NO. 10353

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( c.2) Definition of" fair market value of the Share,; of Stock. For purpose,; of this Section, "fair market value" of the shares of stock sold shall be:

(c.2.1) X X X (c.2.2) In the ca,;e of share,; of stock not listed and traded in the local stock exchanges, the value of the shares of stock at the time of sale shall be the fair market value. In determining the value of the shares, the Adjusted Net ,\sset Method shall be used whereby all a,;sets and liabilities arc adjusted to fair market values. The net of adjusted asset minus the liability values is the. indicated value of the equity. For purposes of this section, the appraised value of real property at the time of sale shall be the higher of- (1) The fair market value as determined by the Commissioner, or (2) The fair market value as shown in the schedule of value[s] fixed by the Provincial and City ;\ssessors, or (3) The fair market value as determined by Independent _\ppraiser.

The BIR made the following assessments in the Details of Discrepancies attached to the E\N:

Computation of Fair Market Value of Shares of Stock:;

Name of Corporation

Buyer

No. of Shares

Fair Market Value

Sold per Share

Amount

Kepwea.ft!l Property Ph1!s., Inc.

Las Tuazon and

Sons Realty. Inc

Crown Castle

Holdrngs.com. Inc 356,090 p 63.08 p 22.462. ·, 5' ::

Kepwea!tJ Property Phds .. Inc 4,795.410 63.08 302,49~.462 cc

Total

p 324,955,620.00

Total

p --;,oc"".s"'ss".'"'2"o;;;ooc- Computation of Fair Market Value per Share based on AFS as of 12131!2016 or Independent Appraisal. which ever is higher

Per BookJAFS

Per Appraisal

Higher Amount

Current Asse5

P

45,533,582.00 P 45,533,582.00 ~d: Non-ame:n!Assels 3~5.629.591.00 78Q.OOO.OOO 00

To~IAsset

P

391,163,173.00 P 834,533,582.00

P

834,533,582.00

P

834.533,5822C

Less:To'alliabilifes

43,222.~31 CD Ne!V'Iorth

P

791.31H5~.:c

Add· Subsaipkm ReceiYab~

T o'al Net Vwbrfl Less: Par Value ofPre~rred Sbck Total NeiWorfl A!!r1butable b Corrroon Sbck Divded by: t~urrter of shares ouls\anding

Fair Market Value per Share

15,'XO ((' p 781,326.451.20 255.0CO,Ol:O 2C p 536,326,451 (.(' 8.502.500 cc

P

63.0S

CTA CASE NO. 10353 In the FDD_"· the BIR ruled as follows:

"\'\'e maintained our position that P63.08 is the Fair Market Value per share of stock. The par ,-aluc of KPPI's preferred shares must be deducted from the adjusted stockholders' equit\', and the remaining balance is to be divided by the total outstanding common shares.

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Nowhere in RR No. 6-2013had it deleted any reference to book value of shares as defined under RR No. 6-2008. RR ;\!o.

6-2013 primarih· prescribes a new method 111 determining the fair market value of shares sold, which is the "Ad;itJied Net Anet 1\ietbod". The book value per share as defined in RR No.6- 2008 is still valid and subsisting. RR No. 6-2013 does not delete any reference to book value of shares of stock. In fact, it was cxplicitlv mentioned in the illustration problem in the said Revenue Regulation.

Be it noted that RR No. 6-2013 amends only certain provision of RR No. 6-2008, this does not mean that it superseded the entire provisions of RR ,\'o. 6-2008.

\'Ve cannot assume that RR 1\'o. 6-2013 deleted the bmic definition of book value per share by not expressly mentioning its definition in the subsequent Revenue Regulation. This onlv holds true that, the ddinition of book value per share, is valid and subsisting as defined b1 RR l\o. 6-2008 to wit;

(v) "Book Va!m per Sbare" refers to the value per share computed by dividing the total Stockholders' Equity of a corporation or net assets of the company bv the number of outstanding shares or units of participation in a company. In case there are preferred shares as well as common shares, the book value per common share is computed by deducting the liquidation value of the preferred shares from the total equity of the corporation and dividing the result by the number of common shares outstanding as of balance sheet date. The liquidation ,-alue of the preferred shares is equal to the redemption price as of balance sheet date, including any premium and cumulative preferred dividends in arrears. Under the rule on statutor\' construction, where a Statute, by its terms, is expressly limited to certain matter, it may not, by interpretation or construction, be extended to other matter (expreJstmz fadt ressare tadt11m ~

CTA CASE NO. 10353 Hence, we hereby disagree to your contention that pursuant to RR No. 6-2013, the method of computing the Fi\IV of KPPI's common shares should be based using the Adjusted Net Asset i\Iethod, without any distinction as to whether there are preferred or common shares. Your position that preferred shares were not given preference in the distribution of the assets of the corporation in case of liquidation has no leg to stand on.

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\Ve cannot give credence to your stand that preferred and common shareholders of KPPI enjoy the same rights and privileges. Your contention lacks adequate proof to substantiate its claim. \vel!- settled in Jurisprudence that mere submission of annexes without any documentary support will not be given any ment.

On your contention that KPPI's method of computing the F:'viV of shares was consistent with accounting rules in calculating the book value of shares where the issuing company has fully participating preferred shares and common shares, RR No. 6-2008 explicitly provides the formula of computing the book value per share which we reiterate as follows;

(v) "Book T 'o/m per S IJare" refers to the value per share computed by dividing the total Stockholders' Ec1uity of a corporation or net assets of the company by the number of outstanding shares or units of participation in a company. In case there are preferred shares as well as common shares, the book value per common share is computed by deducting the liquidation value of the preferred shares from the total equity of the corporation and dividing the result by the number of common shares outstanding as of balance sheet date. The liquidation value of the preferred shares is ec1ual to the redemption price as of balance sheet date, including any premium and cumulative preferred dividends in arrears \ve cannot deviate from the yardstick given by law. "Where the law does not distinguish, neither should we distinguish"- Thus, where the law does not distinguish preferred shares from fully participating and non-participating preferred shares, neither should we distinguish. In this regard, our method used for the computation of F\IV per share was consistent with applicable rules and regulation as provided by RR No. 6-2008, as amended by RR No. 6-2013. Hence, the herein assessment is hereby reiterated."

.

/

CTA CASE NO. 10353 After consideration, the Court finds that respondent erroneously applied the provisions of RR No. 6-2008. Respondent should not use Section 2(v) of RR No. 6-2008 in the determination of the value per share sold, since the sale transaction took place in October 27,2017, wherein the applicable rule is Section 7 (c.2.2) of RR No. 6-2008, as amended by RR No. 6-2013. Under the amendment by RR No. 6-2013, the fair market value of shares not listed and traded in the local stock exchange shall be the higher of the following:

1) The fair market value as determined by the Commissioner, or 2) The fair market value as shown in the schedule of values fixed by the Provincial and City c\ssessors, or 3) The fair market value as determined by Independent :\ppraiser. Note that in the amended provision, reference to the "book value" was deleted, to determine the fair market value of shares not listed and traded in the local stock exchange. The definition of "book \·aluc" in Section 2(v) of RR No. 6-2008 is interrelated in the context of Section 7(c.2.2) of RR No. 6-2008. Consequently, Section 2(v) was modified when RR No. 6-2013 amended the fair market value definition of shares not listed and traded in the local stock exchange in Section 7 ( c.2.2) and required instead that assets and liabilities be adjusted to their fair market value (by using the adjusted net asset method) for purposes of determining the value of shares.

Moreover, Section 3 of RR No. 6-2013 states that "[ajll revenue issuances or parts thereof inconsistent with the provisions of these Regulations arc hereby considered repealed, amended or modified accordingly." This implies that there is no need to refer to Section 2(v) anymore (i.e., definition of book value per share), so as to ascertain the fair market value of shares not listed and traded in the local stock exchange. Instead, the amended Section 7 (c.2.2) of RR J\'o. 6- 2013 provides the method of determination.

From all the foregoing, respondent erred in applying the provisions of Section 2(v) of RR No. 6-2008 in computing the fair market value of petitioner's sale of shares of stock in 2017.

There was no transfer for insufficient consideration The Court shall now determine whether there was transfer for insufficient consideration in the subject sale of shares in KPPI to Las Tuazon & Sons Realty, Inc. and Crown Castle 1-Ioldings.Com, Inc., to which petitioner should be held liable for donor's tax/V'

CTA CASE NO. 10353 In the Final Decision on Disputed Assessment ("FDD.-\"), respondent reiterated its findings in the Formal .-\ssessment 0-'otice ("Fc\N") and assessed petitioner of deficiency donor's tax and compromise penalty, in the amounts of P98,218,731.68 and 'P1 00,000.00, as shO\vn below: 47 I. DONOR'S TAX (DN-ELA84505-17-18-0552)

Taxable Donation

Add: _-\djustments/ disallowances Transfer for Insuft1Clent Consideration (Sale to La Tuazon and Sons RealtY, Inc.)

Transfer for Insufficient Consideration (Sale ro Cro\\'n C11stle J-lolclings.com, Inc.)

Subtotal

.:-\dd: Prior Net Donations during the_ Calendar Year

Total Taxable Donation

Donor's Tax Due (3on_.o)

Less: Tax Credits/Payments

Basic Tax Due

,\dd: Surcharge 25% Interest 20% (11.27.2017 to 12.3l.l7) Interest 12°c (OU1!.20!8 to 09.30.20)

TOTAL AMOUNT DUE

II. COMPROMISE PENALTY (MC-ELA84505-17-18-0552) !' 14,150,767.36 190,566,236.86 !' 15,353,775.32 1,177,823.86 20,27:2,031.23 !' 204,717,00-1.22 !' 204,717,00-f.22 r 2o--l-,7l7,0(J--I-.2.::::

f' 61,415.111 l.2C f' 61,415,](1].2C 36,803,630.-11 1'98,218, 731.68

I'

100,000.00 Respondent's verification disclosed that 356,090 and 4,795,410 shares of the outstanding capital stock of Kepwea!th Property Phils., Inc. ("KPPI") with a total book value of'P22,462,157.20 and 'P302,494,462.80, respectively, were sold by petitioner separately to Las Tuazon and Sons Realty, Inc. and Crown Castle Holdings. com, Inc. through Deeds of _-\ssignment of Shares of Stock executed on October 27, 2017 for less than an adequate total consideration of P8,311,389.84 and 'P111,928,225.94, correspondingly. Hence, the difference in the amount of 'P14,150,767.36 and P190,566,236.86, as shown below, shall be deemed a gift subject to donor's tax pursuant to Section 100 of the NIRC, as amended:

8 in relation to Section 7 of Revenue Regulations ("RR") No. 06-2008, as amended by RR No. 06-2013:""

SCHEDULE 1

Sales to Las Tuazon and Sons Realty, Inc.

Total Fair l\Iarkct Yalue of ::~hare::; of :->rock sold Less: ~-\1nount of consideration recen·ed

Value of Shares of Stock Deemed Donated

r Exhibit "P-15", Docket- \"ol. \'1, p. 28~~- !" 22,462, I 57.20 8,311 ,389.H4 .P14,150,767.36 ~H Section 100. Tmn._•/erfor L..e.,._,. T'han Adrq11a!t' and.Jul/ CfJJuideration. -\\"here propcrr-y, other than real property referred ro in Section 2-1-(D), i:- transferred for less than an adeyuarc and full cons1derarion in mone~- or money's '-H>nh, rhcn rhc amount b:· \\·hich the fan marker \"<liue of the properry exceeded the \'aiue of the consideration shall, for the purpose of the tax imposed by th1s Chapter, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year. -l'J Exhibit "P-13'' (Details of Discrepancies attached to the F.-\:-J), Docker- \"ol. II, p. S1S.

CTA CASE NO. 10353

SCHEDULE2

Sales to Crown Castle Holdings.com, Inc.

Total Fair i'darket \'alue of shares of stock sold Less: An1ount of consideration recei\·ed

Value of Shares of Stock Deemed Donated

f' 302,494,462.80 111,928,225.94 1"190,566,236.86 The total fair market \·aluc ("F.\I\'") of shares of stocks sold in the amounts of 1'22,462,157.20 and 1'302,494,462.80 were derived by respondent using the FMV per share ofP63.08 computed based on the book value per share under Section 2(v) of RR "lo. 6-2008 in relation to Section 7(c.2.2) of the same regulations, as shown below: 511 Computation of Fair Market Value of Shares of Stock

Name of

Corporation

Buver

No. of

Shares

Sold

Fair

Market

Value per

Share

Amount

Kepwealth Property

Phib., Inc.

Kepwealth Property

Phils., Inc.

La::; Tuazon and Son:-;

Rcaln-. Inc.

356.090 1'63.08

I'

22_-162, 15 7 211

Total

Crown Ca~tl<:' Holding::;. Com, Inc.

63 08 ----=-31::_:)22, ~-"9-~"' ~.:.cGc::2cc. 8'-'' 1_1 1'324,956,620.00 Computation of Fair Market Value per Share based on AFS as of 12/31/2016 or Independent Appraisal. which ever is higher Current .-\ssets :\dd: :-.:on-current _-\ssets Total _-\ssets

Less: Total

Liabilirie::;

:\:er \'\"orth .-\dd: Subscription recei\'able Total ~et \~Corrh Less: Par \ · aluc of

Preferred Stock

Total.\,"et \\'orrh .-\trriburable to

Common Stock

Di\·ided by:

:-.:umber of Share

Outstanding

Fair Market Value per Share

Per Book/ AFS

Per Appraisal

p .f5,533,582.1)0 !' -15,533,582.00 345,629,591.00 7 89,000,000.00 !'391,163,173.00 !'834,533,582.00

Higher Amount

!'834,533,582.00 P~91 ,311 AJ 1.111 I 15,00().1.)1) P · 91 ,326,-.J.S l.fl(l 25.:),111.11.1,1)1111.1111 P536,326,..J.Ji.llll 8,51 1.2,51 ){ 1.1)1 I !' 63.08 Petitioner, on the other hand, contends, among others, that the assailed Decision erroneously fails to apply RR No. 6-2013, which amended the definition ofFMY of shares of stock not traded and listed through the local stock exchange and the manner of computing the 1-'.\I\' of shares under Section 7(c.2.2) in relation to Section 2(v) of RR No. 6-2008; that applving RR No. 6- ,

/Y'

'" Id., ar p. 816.

CTA CASE NO. 10353 2013, the E\IV per sale share is !'23.26, as computed below; and that there is no deemed gift as contemplated under Section 100 of the Tax Code because the Fi\IV does not exceed the consideration of sale, hence, it should not be subject to donor's tax on its sale of shares:

FMV OF KPPI SHARES USING ADJUSTED NET ASSET METHOD Total ~-\s:>ets 1'391,163.173.00

LeJJ: Total Liabilities

~3,222,131.00 r~w/1· Sh~reholclers' EquitY 1'.3~7.9~ 1.0~2.00 P/1u: Net .-\djustment ~~2,901,409.00 Equal.,· Adjusted Net Assets 1'790,842,45 1.00 Dil1ided I?)' Total Number of Preferred Shares and

Common Shares Issued and Outstanding

3~,002,500

Fair Market Value per Preferred Share and

Common Share

I'

23.26 Petitioner's contentions have merit.

As previously discussed, respondent erred in applying the provisions of Section 2(v) of RR ~o. 6-2008 in computing the F\IV of petitioner's shares of stock sold, since the transaction took place in October 27, 2017, wherein the applicable rule is Section 7(c.2.2) of RR No. 6-2008, as amended by RR No. 6-2013.

To reiterate, Section 2 of RR No. 6-2013 states: "SECTION 2. Sale, Barter or Exchange of Shares of Stock Not Traded Through a Local Stock Exchange Pursuant to Sees. 24 (C), 25 ("\)(3), 25 (B), 27 (D) (2), 28 p) (7) (C), 28 (B) (5) (C) of The Tax Code, as .\mended. ~Sec. 7 of RR l\:o. 06-2008 is hereby amended to read as follows:

'SEC. 7. Sale, Barter or Exchange of Shares of Stock

Not Traded Through a Local Stock Exchange

Pursuant to Sees. 24 (C), 25 ("\)(3), 25 (B), 27 (D) (2), 28 (.-\) (7) (C), 28 (B) (5) (C) of The Tax Code, as Amended.~

XXX

XXX

XXX

(c.2) Definition of 'fair market value' of the Shares of Stock. ~ For purposes of this Section, 'fair market value' of the shares of stock sold shall be:

(c.2.1) X X X ( c.2.2) In the case of shares of stock not listed and traded in the local stock exchanges, the value of the shares of stock at the time of sale shall be the f/

CTA CASE NO. 10353 market value. In determining the value of the shares, the Adjusted Net "-\sset i\Iethod shall be used whereby all assets and liabilities are adJUSted to fair market values. The net of adJUSted asset minus the liabilitv values is the indicated value of the equity. For purposes of this section, the appraised value of real property at the time of sale shall be the higher of-

(1) The fair market value as determined by the Commissioner, or

(2) The fair market value as shown in the schedule of valued fixed by the Provincial and City .\ssessors, or (3) The fair market value as determined b1· Independent "\ppraiser.

Illustrations:

Assume that i\Ir. X sold on .\pril 30, 2013, 5000 shares of stock of 'A' Corporation. 'i\' Corporation has 10,000 outstanding shares The total assets and liabilities of 'A' Corporation in its latest audited financial statements (.\FS) are Php20,000,000 and Php5,000,000, respectively. "\ssuming further that the book value of all its assets and liabilities is also the market 1·alue with the exception of its real property. Supposing, the market value of the real properties of'.\' Corporation are as follows:

~ Book \' alue

I\[\' per Tax

Zonal

Independent

Highest of

.-\Jjusrnient per ;\FS

Declaration

\·aluation :\ppraiser the three Land.-\ 2, (1(1(1, 01)1) 2,500,000 5,011(1,000 6,111111,1JOO 6,01111.000 ~.OOU,OOO

LandB

2,000,000 2,200,000 HIOII,OOII ' 3_51 10,0011 ~.000,000 2,000,00[1 '

Building

1,000,000 2,400,000 3.000,000 3,000,000 2,000,000 .-\

Building

500,000 2,000,000 1.950,000 2.1lllii.IJ0(1 1.5011.01111

B

TOT.-\L 5,500.000 I 5,111111,000 9,5UU,i11Jll In the above case, the net asset of'.\' Corporation is Php 15,000,000 while the adJusted net asset is Php24,500,000 [(20,000,000 + 9,500,000)- 5,000,000]. "\s such, with the adjusted value per shares of stock of Php2,450, the fair market value of the shares sold was Php12,250,000 (5000 shares at Php2,450 per share)." Pursuant to the above provision and following the accompanying illustration thereon, the adJusted net asset method shall be used in determining the value of the shares whereby all assets and liabilities shall be adjusted to Fi\f\' s, and the appraised value of real propertY shall be the highest among the Fi\f\'s determined by the Commissioner, or that shown in the schedule fixed bv the Provincial and City .\ssessors, or that determined by Independent .\ppraiser. i

I

I

,...../

CTA CASE NO. 10353 The net of adjusted asset minus the liability values will yield the indicated value of the equity, which shall then be divided by the number of shares outstanding to arrive at the FJ\IV per share.

Here, KPPI's Total Current .\ssets and Total Liabilities, in the respective amounts off'45,533,582.00 and !'43,222,131.00 are undisputed, as well as the use of the F1\IV of its Non-current. \ssets as determined by independent appraiser. It is to be noted, however, that the P789,000,000.00 appraised value of Non-current Assets used by respondent in the assessment is mere!\' the rounded off value of the actual Fi\IV of !'788,531 ,000.00 as determined b\' the ' independent appraiser per the Valuation Report dated May 17, 2017 prepared by

Santos Knight Frank-'

1 Verily, the exact E\1\' off'788,531,000.00 shall be used for purposes of computing the adjusted net assets of KPPI. 1\Ieanwhile, the Court finds respondent's inclusion of subscription receivable amounting to !'15,000.00 in determining KPPI's total net worth to arrive at the fair market \·aluc per share improper. Per "~\nnex 68-K" of the Securities Regulation Code ("SRC"J Rule No. 68, as amended, dated February 14, 2002, or the Rules and Regulations Covering Form and Content of Financial Statements, subscription receivable is shown as a deduction from capital stock under the equity section, to wit:

"ISSUED C\PIT.\L .\ND RESERVES The equity section should be presented in sufficient detail to provide a clear understanding of the capital structure of the corporation and the sources of capital current!\· in use.

XXX

XXX

XXX

(18) Capital Stock (SFAS I\'o. 18) (.\) For eacb da.r.r o/mpital .rtock. di>do.>e thejo!!OJving information:

XXX

XXX

XXX

(B) Show the amount, if any, of capital stock subscribed but unissued, and show the deduction of subscriptions receivable therefrom. Subscriptions receivable collectible within one year may be shown as current assets." (Empl!a.ri.r .r11pplied) Basically, subscription receivable is not an asset account but an equity account, particularly, a reduction to the stockholder's equity. While those collectible within one (1) \Tar may be presented as a current asset, such

/'V"

il Exhibit "17" and "P-1: -a", Docker- \"ol. II, pp 893 to 920.

CTA CASE NO. 10353 presentation is mere!\' optional and there is no showing, in this case, that the subject subscription receivable will be collected within a year. In fact, it is observed that KPPI directly deducted the subscription receivable from the value of its common share equity.

In KPPI's Audited Financial Statements (" .-\FS") for the year ended December 31, 2016, specifically, the Statement of Changes in Equity,52 the reflected value of common shares is 1'85,01 0,000.00. i\Ioreover, it is disclosed in Note 7 - Equity thereof that out of the 8,800,000 common shares authorized, 8,502,500 shares are issued and outstanding, and 8,501,000 shares are paid-up with par value of 1'1 0.00." Based thereon, the difference between the value of shares issued and outstanding amounting to 1'85,025,000.00 (8,502,500 shares x 1'10.00 par value) and the value of shares paid-up amounting to 1'85,010,000.00 (8,501 ,000 shares x 1'1 0.00 par value) is the subscription receivable amounting to 1'1 5,000.00, which apparently, was alt·ead1· deducted from KPPI's equity since it reflected in its Statement of Changes in Equm· the value of paid-up shares of 1'85,010,000.00, and not the value of the shares issued and outstanding. },nent the number of shares outstanding that shall be considered 1n computing the Fi\IV per share, since the manner of computing the F,\IV of shares under RR No. 6-2013 is not based on the book value of shares per Section 2(v) of RR No. 06-2008 and does not make a distinction as to whether the corporation has both common share and preferred share, the same could be said as referring to the total number of preferred shares and common shares outstanding of KPPI. As such, petitioner's usc of the 34,002,500'" total number of shares outstanding in computing the FMV per share is deemed proper. Considering the foregoing and in accordance with Section 7 ( c.2.2) of RR No. 6-2008, as amended by RR 6-2013, the adjusted net assets of KPPI and the FMV per share amounted to 1'790,842,45 1.00 and 1'23.26, respectivelY, computed as follows:

Total ~-\ssets Current .:\ssets Non-current _--\sscts Add: Adjustment in Non-current .\:::.sets FlviV per Independent Apprai:;er Less: Book Value per ,\FS "\diusred Total "\ssets

Less: Total Liabilities

Adjusted Net Assets

Dinded by: Torn! Number of Oursunding

Shares

52 Exhibit "P-16", Docket- \-ol. \·I, p. 2R38.

:;'!d. ,tt P· 28-t3.

p 4 5.53 3 .5R2.UO :l-15,629,591.00 p :191,163, 17:l.OCI 1'788,531 ,000.00 345,629,59100 H7,90U09.00 p 834,064,582.00 -13,222,131.00 1'790,842,451.00 3-1,002,500

CTA CASE NO. 103S3 I FMV per share

I'

23.26 1 Consequently, the F:\f\' of the shares of stocks sold to Las Tuazon and Sons Realty, Inc. and Crown Castle l-Ioldings.com, Inc. aggregated to P119,823,890.00, which is lower than the total consideration received therefor amounting to P120,236,615.78, as shown below:

Las Tuazon and

Crown Castle

Sons RealtY, Inc.

Holdings. Com, Inc.

Total

~o. of shares sold S, l.S LSOU I .

356,( l9(l ~.7~5,~1(1 --i F\1\" per share ' !' 23.26 !' 23 . .26 !' 23 . .2() .E\1\' of shares of stock sold !'8,2~2,6S3AO 1'1!1,S~L236.60 1'119.823,K~ll.ill1 Less: ~-\mount of consideration receiYed 8,311 ,3K9.8~ 1!1,928,225.94 120,239,61S 78

Difference

(I' 28,736.44) (I' 386,989.34) (I' 415,725. 78) Considering that the total amount of consideration for the sale of shares in KPPI to Las Tuazon and Sons Realty, Inc. and Crown Castle Holdings.com, Inc. is higher than the FJ\IV of the same shares sold, there was no transfer for insufficient consideration or deemed gift in such sales that mav be subject to donor's tax. Thus, the assessed deficiency donor's tax, in the amount of P98,218,731.68, inclusive of surcharge and interests, must be cancelled for lack of merit.

l\Ioreover, the compromise penalty of P1 00,000.00 imposed by respondent pursuant to Revenue .\Iemorandum Order ("Rl\10") No. 01-90, as amended by R;\IO No. 007-15, in relation to Section 7(C) and 204(B) of the NIRC of 1997, as amended, in lieu of instituting criminal action under Section 255 of the same Code for the alleged failure of petitioner to file and pay donor's tax under Section 98 thereof, must necessarilv be struck down having no leg to stand on. Since there is no deficiency donor's tax to speak of, as found bv the Court, there is no basis for the imposition of penal tv thereon.

WHEREFORE, premises considered, instant Petition for Review be GRANTED. Accordingly, the deficiency donor\ tax assessment issued against petitioner for taxable year 2017, inclusi\'e of surcharge, interest and compromise penalty, in the aggregate amount ofP98,318,731.68, is CANCELLED and SET ASIDE.

~-~ -4L-

MA. BELEN M. RINGPIS-LIBAN .'\.ssociate Justice

CTA CASE NO. 10353

WE CONCUR:

-SAN PEDRO

ORES

ATTESTATION

I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

~- ~ -v ...______ MA. BELEN M. RINGPIS-LIBAN .·\ssociate Justice

Chairperson

CERTIFICATION

Pursuant to .·\rricle VIII, Section 13 of the Constitution, and the Division Chairperson's .\ttestation, is it hcreb1 certified that the conclusions in the abo\'C decision were reached in comultation before the case was assigned to the writer of the opinion of the Court.

Presiding Justice