Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

178697 November 17, 2010

#EFICIENC! ALUE 3A##E# TA= > AT? >A//e//me(& No. ST3 AT3973012@32000? *asic a5 Due +dd6 Penalties Interest up to 373#7%&&& Co0pro0ise Deficienc" V+ Due P 3,#($,3#... # %(,&&&.&&

P $,,(1,$&&.&

COMMISSIONER OF INTERNAL RE ENUE, Petitioner, vs. SON! P"ILIPPINES, INC., Respondent. DECISION MEN#O$A, J.: his %e&'&'o( )or rev'e* o( certiorari see!s to set aside the Ma" #$, %&&$ Decision and the 'ul" (, %&&$ Resolution of the Co+r& o) T,- A%%e,./ ) En *anc# (CTAEB), in C. .+. E* No. ,&, ,))'rm'(0 the October %-, %&&. #e1'/'o( o) &2e CTA3 F'r/& #'v'/'o(2 /hich, in turn, %,r&',..4 0r,(&e5 &2e %e&'&'o( )or rev'e* o) re/%o(5e(& So(4 P2'.'%%'(e/, I(1.(Sony). he CTA3F'r/& #'v'/'o( 5e1'/'o( 1,(1e..e5 &2e 5e)'1'e(14 ,//e//me(& '//+e5 b4 %e&'&'o(er Comm'//'o(er o) I(&er(,. Reve(+e (CIR) ,0,'(/& So(4 )or ,.+e A55e5 T,- (VAT) but +%2e.5 &2e 5e)'1'e(14 ,//e//me(& )or e-%,(5e5 *'&22o.5'(0 &,- (EWT) in the ,mo+(& o) P1,067,879.70 and the %e(,.&'e/ )or .,&e rem'&&,(1e o) '(&er(,. reve(+e &,-e/ in the a0ount of P1,269, 796.90.6 T"E FACTS8 On Nove0ber %., #,,1, the CIR 'ssued 2etter of +uthorit" No. &&&&#,$3. (LOA 19734) ,+&2or'9'(0 1er&,'( reve(+e o))'1er/ &o e-,m'(e So(4:/ boo;/ o) ,11o+(&/ ,(5 o&2er ,11o+(&'(0 re1or5/ re0,r5'(0 reve(+e &,-e/ for <&2e %er'o5 1997 ,(5 +(ver')'e5 %r'or 4e,r/.< On Dece0ber -, #,,,, a %re.'m'(,r4 ,//e//me(& )or 1997 5e)'1'e(14 &,-e/ ,(5 %e(,.&'e/ *,/ '//+e5 b4 &2e CIR *2'12 So(4 %ro&e/&e5. hereafter, actin4 on the protest, the CIR '//+e5 )'(,. ,//e//me(& (o&'1e/, the for0al letter of de0and and the details of discrepancies.. Said details of the deficienc" ta5es and penalties for late re0ittance of internal revenue ta5es are as follo/s6

3,#1%,3#...

P ##,#.#,&#..

#EFICIENC! E=PAN#E# AIT""OL#ING TA= >EAT? >A//e//me(& No. ST3EAT3973012732000? *asic a5 Due +dd6 Penalties Interest up to 373#7%&&& Co0pro0ise Deficienc" E8 Due P ((&,.1(.1% %(,&&&.&&

P #,.#-,,$-.,

($(,.1(.1%

P #,,,%,.-%.$

#EFICIENC! OF AT ON RO!ALT! PA!MENTS >A//e//me(& No. ST3LR13973012632000? *asic a5 Due +dd6 Penalties Surchar4e Interest up to 373#7%&&& Co0pro0ise Penalties Due P 3(,,#$$.1& 1$,(1&.3. #-,&&&.&& P

.-%,$(1.#.

P .-%,$(1.#.

LATE REMITTANCE OF FINAL AIT""OL#ING TA= >A//e//me(& No. ST3LR23973012732000? *asic a5 Due +dd6 Penalties Surchar4e Interest up to 373#7%&&& Co0pro0ise Penalties Due P #,$%,,-,&.$ # (&1,$13.&$ (&,&&&.&& P

sou4ht re7evaluation of the afore0entioned assess0ent b" filin4 a protest on :ebruar" %, %&&&. Son" sub0itted relevant docu0ents in support of its protest on the #-th of that sa0e 0onth.On October %., %&&&, /ithin 3& da"s after the lapse of #1& da"s fro0 sub0ission of the said supportin4 docu0ents to the CIR, Son" filed a petition for revie/ before the C +.$

LATE REMITTANCE OF INCOME PA!MENTS >A//e//me(& No. ST3LR63973012832000? *asic a5 Due +dd6 Penalties %( 9 Surchar4e Interest up to 373#7%&&& Co0pro0ise Penalties Due P 1,1-(.3. (1.%, %,&&&.&&

+fter trial, the CTA3F'r/& #'v'/'o( 5'/,..o*e5 the 5e)'1'e(14 AT ,//e//me(& because the /+b/'5'9e5 ,5ver&'/'(0 e-%e(/e %,'5 b4 So(4 /hich /as 5+.4 1overe5 b4 , AT invoice resulted in an '(%+& AT 1re5'&. +s re4ards the E8 , the C +7:irst Division 0aintained the 5e)'1'e(14 EAT assess0ent on So(4:/ mo&or ve2'1.e/ ,(5 o( %ro)e//'o(,. )ee/ %,'5 &o 0e(er,. %ro)e//'o(,. %,r&(er/2'%/. It %,%11,.$3.$1 also assessed the a0ounts paid to /,.e/ ,0e(&/ ,/ 1omm'//'o(/ /ith )'ve P %,%11,.$3.$1 %er1e(& >7B? E8 pursuant to Section #;4< of Revenue Re4ulations No. -71(. he C +7:irst Division, ho/ever, 5'/,..o*e5 &2e EAT ,//e//me(& o( re(&,. e-%e(/e since it found that the total rental deposit of P#&,(%3,1%#.,, /as incurred fro0 'anuar" to March #,,1 /hich /as a4ain be"ond the covera4e of 2O+ #,$3.. E5cept for the co0pro0ise penalties, the C +7:irst Division also upheld the penalties for the late pa"0ent of V+ on ro"alties, for late re0ittance of final /ithholdin4 ta5 on ro"alt" as of Dece0ber #,,$ and for the late re0ittance of E8 P b" so0e of Son"=s branches.1 In su0, the C +7:irst Division %,r&.4 0r,(&e5 So(4:/ %e&'&'o( b4 1,(1e..'(0 &2e 5e)'1'e(14 AT assess0ent but upheld a 0odified deficienc" E8 assess0ent as /ell as the penalties. hus, the dispositive portion reads6 8>ERE:ORE, the petition for revie/ is hereb" P+R I+22? @R+N ED. #&,,%3.-& Respondent is ORDERED to C+NCE2 and 8I >DR+8 the deficienc" assess0ent for value7added ta5 for #,,$ for lac! of 0erit. >o/ever, the deficienc" assess0ents P #&,,%3.-& for e5panded /ithholdin4 ta5 and penalties for late re0ittance of internal revenue ta5es are AP>E2D. +ccordin4l", petitioner is DIREC ED to P+? the respondent the deficienc" e5panded /ithholdin4 ta5 in the a0ount of P#,&3(,1$,.$& and the follo/in4 P 17,897,662.67 penalties for late re0ittance of internal revenue ta5es in the su0 ofP#,%-,,(,3.,&6 1. AT o( Ro4,.&4 %. 8ithholdin4 a5 on Ro"alt" P @29,2@2.07 13#,.%1.%&

GRAN# TOTAL

3. E8 *ranches otal

of

PetitionerBs 1,,%3.-3 P #,%-,,(,3.,&

3. 8hether or not the /ithholdin4 assess0ent /ith respect to the (9 /ithholdin4 ta5 on rental deposit in the a0ount of P#&,(%3,1%#.,, is properE and .. 8hether or not the re0ittance of final /ithholdin4 ta5 on ro"alties coverin4 the period 'anuar" to March #,,1 /as filed outside of ti0e.## :indin4 no co4ent reason to reverse the decision of the C +7:irst Division, the C +7 E* dis0issed CIR=s petition on Ma" #$, %&&$. CIR=s 0otion for reconsideration /as denied b" the C +7E* on 'ul" (, %&&$. he CIR is no/ before this Court via this petition for revie/ rel"in4 on the ver" sa0e 4rounds it raised before the C +7:irst Division and the C +7E*. he said 4rounds are reproduced belo/6 @ROANDS :OR >E +22O8+NCE O: >E PE I ION I T"E CTA EN DANC ERRE# IN RULING T"AT RESPON#ENT IS NOT LIADLE FOR #EFICIENC! AT IN T"E AMOUNT OF P"P11,1@1,01@.@1. II AS TO RESPON#ENT:S #EFICIENC! E=PAN#E# AIT""OL#ING TA= IN T"E AMOUNT OF P"P1,992,@62.728 A. T"E CTA EN DANC ERRE# IN RULING T"AT T"E COMMISSION E=PENSE IN T"E AMOUNT OF P"P2,89@,797.00 S"OUL# DE SUDEECTE# TO A AIT""OL#ING TA= OF 7B INSTEA# OF T"E 10B TA= RATE. D. T"E CTA EN DANC ERRE# IN RULING T"AT T"E ASSESSMENT AIT" RESPECT TO T"E 7B AIT""OL#ING TA= ON RENTAL #EPOSIT IN T"E AMOUNT OF P"P10,726,821.99 IS NOT PROPER. III

Plus %&9 delinCuenc" interest fro0 'anuar" #$, %&&& until full" paid pursuant to Section %.,;C<;3< of the #,,$ a5 Code. SO ORDERED., he CIR sou4ht a reconsideration of the above decision and sub0itted the follo/in4 4rounds in support thereof6 +. T2e "o(or,b.e Co+r& 1omm'&&e5 rever/'b.e error '( 2o.5'(0 &2,& %e&'&'o(er '/ (o& .',b.e )or &2e 5e)'1'e(14 AT '( &2e ,mo+(& o) P11,1@1,01@.@1C *. he >onorable court co00itted reversible error in holdin4 that the co00ission e5pense in the a0ount of P%,1,.,$,$.&& should be subDected to (9 /ithholdin4 ta5 instead of the #&9 ta5 rateE C. he >onorable Court co00itted a reversible error in holdin4 that the /ithholdin4 ta5 assess0ent /ith respect to the (9 /ithholdin4 ta5 on rental deposit in the a0ount of P#&,(%3,1%#.,, should be cancelledE and D. he >onorable Court co00itted reversible error in holdin4 that the re0ittance of final /ithholdin4 ta5 on ro"alties coverin4 the period 'anuar" to March #,,1 /as filed on ti0e.#& On +pril %1, %&&(, the C +7:irst Division denied the 0otion for reconsideration.1avvphi1 AnfaFed, the CIR filed a petition for revie/ /ith the C +7 E* raisin4 identical issues6 #. A2e&2er or (o& re/%o(5e(& >So(4? '/ .',b.e )or &2e 5e)'1'e(14 AT '( &2e ,mo+(& o) P11,1@1,01@.@1C %. 8hether or not the co00ission e5pense in the a0ount of P%,1,.,$,$.&& should be subDected to #&9 /ithholdin4 ta5 instead of the (9 ta5 rateE

T"E CTA EN DANC ERRE# IN RULING T"AT T"E FINAL AIT""OL#ING TA= ON RO!ALTIES CO ERING T"E PERIO# EANUAR! TO MARC" 1998 AAS FILE# ON TIME.#% Apon filin4 of Son"=s co00ent, the Court ordered the CIR to file its repl" thereto. he CIR subseCuentl" filed a 0anifestation infor0in4 the Court that it /ould no lon4er file a repl". hus, on Dece0ber 3, %&&1, the Court resolved to 4ive due course to the petition and to decide the case on the basis of the pleadin4s filed. #3 T2e Co+r& )'(5/ (o mer'& '( &2e %e&'&'o(. he CIR insists that 2O+ #,$3., althou4h it states Gthe period #,,$ and unverified prior "ears,G should be understood to 0ean the fiscal "ear endin4 in March 3#, #,,1.#. he Court cannot a4ree. *ased on Section #3 of the a5 Code, a 2etter of +uthorit" or 2O+ is the authorit" 4iven to the appropriate revenue officer assi4ned to perfor0 assess0ent functions. It e0po/ers or enables said revenue officer to e5a0ine the boo!s of account and other accountin4 records of a ta5pa"er for the purpose of collectin4 the correct a0ount of ta5.#( he ver" provision of the a5 Code that the CIR relies on is uneCuivocal /ith re4ard to its po/er to 4rant authorit" to e5a0ine and assess a ta5pa"er. SEC. -. Po/er of the Co00issioner to Ma!e +ssess0ents and Prescribe +dditional ReCuire0ents for a5 +d0inistration and Enforce0ent. ) ;+<E5a0ination of Returns and Deter0ination of ta5 Due. ) +fter a return has been filed as reCuired under the provisions of this Code, the Co00issioner or his dul" authoriFed representative 0a" authoriFe the e5a0ination of an" ta5pa"er and the assess0ent of the correct a0ount of ta56 Provided, ho/ever, hat failure to file a return shall not prevent the Co00issioner fro0 authoriFin4 the e5a0ination of an" ta5pa"er. 5 5 5 HE0phases suppliedI Clearl", there 0ust be a 4rant of authorit" before an" revenue officer can conduct an e5a0ination or assess0ent. ECuall" i0portant is that the revenue officer so authoriFed 0ust not 4o be"ond the authorit" 4iven. In the absence of such an authorit", the assess0ent or e5a0ination is a nullit".

+s earlier stated, 2O+ #,$3. covered Gthe period #,,$ and unverified prior "ears.G :or said reason, the CIR actin4 throu4h its revenue officers /ent be"ond the scope of their authorit" because the deficienc" V+ assess0ent the" arrived at /as based on records fro0 'anuar" to March #,,1 or usin4 the fiscal "ear /hich ended in March 3#, #,,1. +s pointed out b" the C +7:irst Division in its +pril %1, %&&( Resolution, the CIR !ne/ /hich period should be covered b" the investi4ation. hus, if CIR /anted or intended the investi4ation to include the "ear #,,1, it should have done so b" includin4 it in the 2O+ or issuin4 another 2O+. Apon revie/, the C +7E* even added that the covera4e of 2O+ #,$3., particularl" the phrase Gand unverified prior "ears,G violated Section C of Revenue Me0orandu0 Order No. .37,& dated Septe0ber %&, #,,&, the pertinent portion of /hich reads6 3. + 2etter of +uthorit" should cover , &,-,b.e %er'o5 (o& e-1ee5'(0 o(e &,-,b.e 4e,r. he practice of issuin4 2J+s coverin4 audit of Gunverified prior "ears is hereb" prohibited. If the audit of a ta5pa"er shall include 0ore than one ta5able period, the other periods or "ears shall be specificall" indicated in the 2J+. #- HE0phasis suppliedI On this point alone, the deficienc" V+ assess0ent should have been disallo/ed. *e that as it 0a", &2e CIR:/ ,r0+me(&, that So(4:/ ,5ver&'/'(0 e-%e(/e 1o+.5 (o& be 1o(/'5ere5 ,/ ,( '(%+& AT 1re5'& because &2e /,me *,/ eve(&+,..4 re'mb+r/e5 b4 So(4 I(&er(,&'o(,. S'(0,%ore (SIS), is also erroneous. T2e CIR 1o(&e(5/ &2,& /'(1e So(4:/ ,5ver&'/'(0 e-%e(/e *,/ re'mb+r/e5 b4 SIS, the )ormer (ever '(1+rre5 ,(4 ,5ver&'/'(0 e-%e(/e. +s a result, Son" is not entitled to a ta5 credit. +t 0ost, the CIR continues, the said advertisin4 e5pense should be for the account of SIS, and not Son".#$ he Court is not persuaded. +s aptl" found b" the C +7:irst Division and later affir0ed b" the C +7E*, Son"=s deficienc" V+ assess0ent ste00ed fro0 the CIR=s disallo/ance of the input V+ credits that should have been realiFed fro0 the advertisin4 e5pense of the latter. #1 It is evident under Section ##&#, of the #,,$ a5 Code that an ,5ver&'/'(0 e-%e(/e 5+.4 1overe5 b4 , AT '(vo'1e '/ , .e0'&'m,&e b+/'(e// e-%e(/e. his is confir0ed b" no less than CIR=s o/n /itness, Revenue Officer +ntonio +luCuin.%& here is also no den"in4 that Son" incurred advertisin4 e5pense. +luCuin testified that advertisin4 co0panies issued invoices in the na0e of Son" and the latter paid for the sa0e. %# Indubitabl", Son" incurred and paid for

advertisin4 e5penseJ services. 8here the 0one" ca0e fro0 is another 0atter all to4ether but /ill definitel" not chan4e said fact. he CIR further ar4ues that Son" itself ad0itted that the rei0burse0ent fro0 SIS /as inco0e and, thus, ta5able. In support of this, the CIR cited a portion of Son"=s protest filed before it6 T2e ),1& &2,& 5+e &o ,5ver/e e1o(om'1 1o(5'&'o(/, So(43S'(0,%ore 2,/ 0r,(&e5 &o o+r 1.'e(& , /+b/'54 eF+'v,.e(& &o &2e .,&&er:/ ,5ver&'/'(0 e-%e(/e/ *'.. (o& ,))e1& &2e v,.'5'&4 o) &2e '(%+& &,-e/ )rom /+12 e-%e(/e/. hus, at the 0ost, this is an additional inco0e of our client subDect to inco0e ta5. Ae /+bm'& )+r&2er &2,& o+r 1.'e(& '/ (o& /+bGe1& &o AT o( &2e /+b/'54 '(1ome ,/ &2'/ *,/ (o& 5er've5 )rom &2e /,.e o) 0oo5/ or /erv'1e/.22 Insofar as the above70entioned subsid" 0a" be considered as inco0e and, therefore, subDect to inco0e ta5, the Court a4rees. >o/ever, the Court does not a4ree that the sa0e subsid" should be subDect to the #&9 V+ . o be4in /ith, the said subsid" ter0ed b" the CIR as rei0burse0ent /as not even e5clusivel" ear0ar!ed for Son"=s advertisin4 e5pense for it /as but an assistance or aid in vie/ of Son"=s dire or adverse econo0ic conditions, and /as onl" GeCuivalent to the latter=s ;Son"=s< advertisin4 e5penses.G Section #&- of the a5 Code e5plains /hen V+ 0a" be i0posed or e5acted. hus6 SEC. #&-. Value7added a5 on Sale of @oods or Properties. ) ;+< Rate and *ase of a5. ) here shall be levied, assessed and collected on ever" sale, barter or e5chan4e of 4oods or properties, value7added ta5 eCuivalent to ten percent ;#&9< of the 4ross sellin4 price or 4ross value in 0one" of the 4oods or properties sold, bartered or e5chan4ed, such ta5 to be paid b" the seller or transferor. hus, there 0ust be a sale, barter or e5chan4e of 4oods or properties before an" V+ 0a" be levied. Certainl", there /as no such sale, barter or e5chan4e in the subsid" 4iven b" SIS to Son". It /as but a dole out b" SIS and not in pa"0ent for 4oods or properties sold, bartered or e5chan4ed b" Son". In the case of CIR v. Court of App a!" (CA),%3 the Court had the occasion to rule that services rendered for a fee even on rei0burse0ent7on7cost basis onl" and /ithout

realiFin4 profit are also subDect to V+ . he case, ho/ever, is not applicable to the present case. In that case, COM+SERCO rendered service to its affiliates and, in turn, the affiliates paid the for0er rei0burse0ent7on7cost /hich 0eans that it /as paid the cost or e5pense that it incurred althou4h /ithout profit. his is not true in the present case. Son" did not render an" service to SIS at all. he services rendered b" the advertisin4 co0panies, paid for b" Son" usin4 SIS dole7out, /ere for Son" and not SIS. SIS Dust 4ave assistance to Son" in the a0ount eCuivalent to the latter=s advertisin4 e5pense but never received an" 4oods, properties or service fro0 Son". Re4ardin4 the deficienc" E8 assess0ent, 0ore particularl" Son"=s co00ission e5pense, the CIR insists that said deficienc" E8 assess0ent is subDect to the ten percent ;#&9< rate instead of the five percent ;(9< citin4 Revenue Re4ulation No. %7 ,1 dated +pril #$, #,,1. %. he said revenue re4ulation provides that the #&9 rate is applied /hen the recipient of the co00ission inco0e is a natural person. +ccordin4 to the CIR, Son"=s schedule of Sellin4, @eneral and +d0inistrative e5penses sho/s the co00ission e5pense as Gco00issionJdealer sales0an incentive,G e0phasiFin4 the /ord sales0an. On the other hand, the application of the five percent ;(9< rate b" the C +7:irst Division is based on Section #;4< of Revenue Re4ulations No. -71( /hich provides6 ;4< +0ounts paid to certain *ro!ers and +4ents. ) On 4ross pa"0ents to custo0s, insurance, real estate and co00ercial bro!ers and a4ents of professional entertainers ) five per centu0 ;(9<.%( In den"in4 the ver" sa0e ar4u0ent of the CIR in its 0otion for reconsideration, the C +7:irst Division, held6 5 5 5, co00ission e5pense is indeed subDect to #&9 /ithholdin4 ta5 but pa"0ents 0ade to bro!er is subDect to (9 /ithholdin4 ta5 pursuant to Section #;4< of Revenue Re4ulations No. -71(. 8hile the co00ission e5pense in the schedule of Sellin4, @eneral and +d0inistrative e5penses sub0itted b" petitioner ;SPI< to the *IR is captioned as Gco00issionJdealer sales0an incentiveG the sa0e does not Dustif" the auto0atic i0position of flat #&9 rate. +s ite0iFed b" petitioner, such e5pense is co0posed of GCo00ission E5penseG in the a0ount of P#&,%&&.&& and K*ro!er Dealer= of P%,1,.,$,$.&&.%-

he Court a4rees /ith the C +7E* /hen it affir0ed the C +7:irst Division decision. Indeed, the applicable rule is Revenue Re4ulations No. -71(, as a0ended b" Revenue Re4ulations No. #%7,., /hich /as the applicable rule durin4 the subDect period of e5a0ination and assess0ent as specified in the 2O+. Revenue Re4ulations No. %7,1, cited b" the CIR, /as onl" adopted in +pril #,,1 and, therefore, cannot be applied in the present case. *esides, the /ithholdin4 ta5 on bro!ers and a4ents /as onl" increased to #&9 0uch later or b" the end of 'ul" %&&# under Revenue Re4ulations No. -7%&&#.%$ Antil then, the rate /as onl" (9. he Court also affir0s the findin4s of both the C +7:irst Division and the C +7E* on the deficienc" E8 assess0ent on the rental deposit. +ccordin4 to their findin4s, Son" incurred the subDect rental deposit in the a0ount of P#&,(%3,1%#.,, onl" fro0 'anuar" to March #,,1. +s stated earlier, in the absence of the appropriate 2O+ specif"in4 the covera4e, the CIR=s deficienc" E8 assess0ent fro0 'anuar" to March #,,1, is not valid and 0ust be disallo/ed. :inall", the Court no/ proceeds to the third 4round relied upon b" the CIR. he CIR initiall" assessed Son" to be liable for penalties for belated re0ittance of its :8 on ro"alties ;i< as of Dece0ber #,,$E and ;ii< for the period fro0 'anuar" to March #,,1. +4ain, the Court a4rees /ith the C +7:irst Division /hen it upheld the CIR /ith respect to the ro"alties for Dece0ber #,,$ but cancelled that fro0 'anuar" to March #,,1. he CIR insists that under Section 3 %1 of Revenue Re4ulations No. (71% and Sections %.($.. and %.(1;+<;%<;a<%,of Revenue Re4ulations No. %7,1, Son" should also be 0ade liable for the :8 on ro"alties fro0 'anuar" to March of #,,1. +t the sa0e ti0e, it do/npla"s the relevance of the Manufacturin4 2icense +4ree0ent ;M2+< bet/een Son" and Son"7'apan, particularl" in the pa"0ent of ro"alties. he above revenue re4ulations provide the 0anner of /ithholdin4 re0ittance as /ell as the pa"0ent of final ta5 on ro"alt". *ased on the sa0e, Son" is reCuired to deduct and /ithhold final ta5es on ro"alt" pa"0ents /hen the ro"alt" is paid or is pa"able. +fter /hich, the correspondin4 return and re0ittance 0ust be 0ade /ithin #& da"s after the end of each 0onth. he Cuestion no/ is /hen does the ro"alt" beco0e pa"ableL Ander +rticle M;(< of the M2+ bet/een Son" and Son"7'apan, the follo/in4 ter0s of ro"alt" pa"0ents /ere a4reed upon6

;(<8ithin t/o ;%< 0onths follo/in4 each se0i7annual period endin4 'une 3& and Dece0ber 3#, the 2ICENSEE shall furnish to the 2ICENSOR a state0ent, certified b" an officer of the 2ICENSEE, sho/in4 Cuantities of the MODE2S sold, leased or other/ise disposed of b" the 2ICENSEE durin4 such respective se0i7annual period and a0ount of ro"alt" due pursuant this +R IC2E M therefore, and the 2ICENSEE shall pa" the ro"alt" hereunder to the 2ICENSOR concurrentl" /ith the furnishin4 of the above state0ent.3& 8ithal, Son" /as to pa" Son"7'apan ro"alt" /ithin t/o ;%< 0onths after ever" se0i7 annual period /hich ends in 'une 3& and Dece0ber 3#. >o/ever, the C +7:irst Division found that there /as accrual of ro"alt" b" the end of Dece0ber #,,$ as /ell as b" the end of 'une #,,1. @iven this, the :8 s should have been paid or re0itted b" Son" to the CIR on 'anuar" #&, #,,1 and 'ul" #&, #,,1. hus, it /as correct for the C +7:irst Division and the C +7E* in rulin4 that the :8 for the ro"alt" fro0 'anuar" to March #,,1 /as seasonabl" filed. +lthou4h the ro"alt" fro0 'anuar" to March #,,1 /as /ell /ithin the se0i7annual period endin4 'une 3&, /hich 0eant that the ro"alt" 0a" be pa"able until +u4ust #,,1 pursuant to the M2+, the :8 for said ro"alt" had to be paid on or before 'ul" #&, #,,1 or #& da"s fro0 its accrual at the end of 'une #,,1. hus, /hen Son" re0itted the sa0e on 'ul" 1, #,,1, it /as not "et late. In vie/ of the fore4oin4, the Court finds no reason to disturb the findin4s of the C +7 E*. 8>ERE:ORE, &2e %e&'&'o( '/ #ENIE#. SO ORDERED.