Nichimen Corp. v. Commissioner of Internal Revenue

NINTH DIVISION [CA-G.R. SP No. 42100. August 13, 1999.] NICHIMEN CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N VALDEZ , JR. , J p : The present petition seeks a review of the decision 1 of the Cost of Tax Appeals in CTA Case No. 4667, the dispositive portion of which reads: "WHEREFORE, in view of the foregoing, the petition for review is hereby DENIED and petitioner is ORDERED To PAY THE AMOUNT OF P767,531.10 as deficiency percentage tax for the fiscal year ended March 31, 1987, inclusive of increments, plus 20% interest per annum from February 1, 1990 until fully paid pursuant to Section 283 (c) of the Tax Code. "SO ORDERED." 2 Petitioner Nichimen Corporation (Manila Branch) is a branch office in the Philippines of Nichimen Corporation, a corporation organized and existing under Japanese law. On January 19, 1990, the petitioner received from the office of the respondent Commissioner of Internal Revenue a demand letter with an accompanying notice assessing it for deficiency income tax, fixed tax, expanded withholding tax and percentage tax in the aggregate amount of P1,092,459.94, inclusive of increments for the fiscal year ending 1987. 3 In a letter dated February 6, 1990, the petitioner, through SGV & Co., its external auditors, protested the assessments. 4 On October 7, 1991, the respondent withdrew and canceled the assessment for fixed tax but stood firm on his assessment for deficiency income, withholding and percentage taxes. 5 The petitioner agreed to settle and in fact settled its liability for income and withholding taxes. But as to the alleged deficiency percentage tax, it interposed, on November 6, 1991, a petition for review 6 in the Court of Tax Appeals, materially alleging that: "7. Petitioner, however, is constrained to disagree with the assessment for deficiency percentage (broker's) tax on the ground that under the attending circumstances, the subject assessment is devoid of legal basis for the following reasons: "The assessment for deficiency percentage tax (broker's) tax is based on respondents allegations that the compensation received by petitioner from its Head Office for soliciting orders from Philippine customers should be subject to broker's tax. We most respectfully disagree with this position. "It should be noted that petitioner's (Nichimen - Manila Branch) act in looking for local buyers is merely liaising for its Head Office. The Head Office then allocates certain amounts to the petitioner (Branch) to cover its operating requirements for the liaising activities it does. The amount allocated to the Branch is considered income attributable to the Branch; this is reported to the Central Bank and converted into Philippine pesos and reported as the Branch's income in its income tax return. "Under the circumstances, the petitioner (Branch Office) cannot be considered receiving income subject to broker's tax from its own Head Office, in the same manner that a person cannot be considered receiving taxable income from itself. LibLex " The liaising activities of the Branch is performed for its own Head Office . Hence, it is not an activity that is rendered for another person, but for itself because NICHIMEN (Head Office) and NICHIMEN (Manila Branch) are but one , single entity . "A broker is one who acts as a negotiator or middleman to close a deal between one person and another. A broker is necessarily distinct from the party for which he renders service. In a transaction involving a broker there are three (3) separate and distinct entities; the principal, the broker, and the buyer. "In the case at bar only two parties are involved NICHIMEN ( Head Office and the Philippine customers , the Manila branch being an integral part of the Head Office ). Therefore, there could be no broker/agency transaction in instant case. Accordingly, the amounts received by the Branch from its Head Office cannot be considered commission or brokerage fees subject to broker's tax. "xxx xxx xxx" 7 In his answer, 8 the respondent put up the following special and affirmative defenses: "(3) The assessment for deficiency percentage tax is based on the findings that there were receipts for the fiscal year ending March 31, 1987, which were derived as a result of the solicitations made of purchase orders from local customers relayed to the taxpayer's Home Office, which in turn solicited from manufacturer's abroad. Such receipts were not declared by petitioner as part of its gross receipt for commercial broker's tax purposes. "(4) The aforesaid undeclared receipts subjected to deficiency broker's tax were derived from sales consummated (sic) between Philippine customers and manufacturers abroad, other than Nichimen Corporation (Japan), although the said sales resulted due to the liaising services rendered by Nichimen Corporation (Philippine Branch). LLjur "(5) It is provided under Revenue Audit Memorandum Order No. 1-86, par. 3 subpar. 3.2 to wit "3. Branch Operation and Consequences . "3.2. The branch solicits purchase orders from local buyers, relays the information to its home office, the home office solicits prospective sellers abroad and eventually received compensation for services rendered. "In the second type of operation: (I) the branch shall be considered 'a commercial broker' or indentor; (ii) its share from compensation as allocated by its home office shall be subject to commercial broker gross receipts tax; (iii) the branch shall provide itself with corresponding fixed tax as a commercial broker; and (iv) pay income on its share of compensation." (6) Under the foregoing paragraph, the branch office shall be considered a commercial broker since its activities is well within the ambit of the tern (sic) "broker"; (7) Brokers are ". . . those who are engaged for others in the negotiations of contracts relative to property with the custody of which they have no concern. They act as negotiators in bringing other persons together to bargain; generally, they ought not to sell in their own names, have no implied authority to receive payment, are not entrusted with the physical possession of the principal's goods when engaged to buy or sell and have no special property therein or lien thereon" (8 Am. Jur. 889-890, cited in Philipp Brothers Oceanic, Inc. vs The Com. Of Int. Revenue, CTA, Case No. 31400 March 8, 1984); "(8) The assessment for deficiency percentage tax (broker's tax) was issued in accordance with law and BIR rules and regulations." 9 Aggrieved by the decision of the CTA upholding the legality of the CIR's assessment for deficiency percentage tax against the petitioner, the latter is now before us for relief. The petitioner defined the sole issue, viz: "Whether or not petitioner is a commercial broker subject to the disputed percentage tax assessment." 10 In this regard Section 187(t) of the National Internal Revenue Code of 1977 provides: llcd "(t) "Commercial broker" includes all persons, other than Importers, manufacturers, producers, or bona fide employees, who, for compensation or profit, sells or brings about sales or purchases of merchandise for other persons, or brings proposed buyers and sellers together, or negotiate freights or other business for owners of vessels, or other means of transportation, or for the shippers, or consignors or consignees of freight carried by vessels or other means of transportation. The term includes commission merchants." The CTA found the petitioner a commercial broker on this rationalization, to wit: Petitioner claims it is not a commercial broker. It alleges that in all the sales consummated between its Home Office in Japan and the Philippine customers, it merely performed listing activities for and in behalf of the former. It did not act as a broker or middleman, but only as an agent of the principal, Nichimen-Japan There being only two parties, Nichimen-Japan as seller, and the Philippine customers as buyers, Nichimen Philippine Branch is not liable as a commercial broker. To be liable as a commercial broker, petitioner cited the provision of Section 157(t) of the Tax Code which requires the presence of three (3) parties in a sale transaction, namely: the seller, the buyer and the broker. Thus: "(t) Commercial broker includes all persons, other than importers, manufacturers, producers, or bona fide employees, who, for compensation or profit, sell or bring about sales or purchases of merchandise for other persons, or bring proposed buyers and sellers together, or negotiate freights or other business for owners of vessels, or other means of transportation, or for the shippers, or consignors or consignees of freight carried by vessels or other means of transportation. The term includes commission merchants." "On the contrary, respondent insists that "the receipts subjected to the assessed deficiency broker's tax were derived from sales consummated between Philippine customers and manufacturers abroad , other than Nichimen Corporation (Japan) , although the said sales resulted due to the liaising services rendered by Nichimen Corporation (Philippine Branch)." (p. 2, Exh. "10", Resp., p. 289, BIR rec.) "After careful consideration of all the evidence presented by both parties, as well as the records of the case, the Court is convinced to rule in favor of the respondent. The Court gives more weight to respondent's testimonial and documentary evidence showing the factual and legal bases for the deficiency broker's tax assessment issued against petitioner. The lone witness presented by respondent, Ms. Myrna Lou Tabije, one of the examiners who investigated the instant tax case, explained the bases for issuing the subject assessment. Her testimony during the direct examination ran as follows: dctai "Q. Now, according to this report, one of your findings is for deficiency broker's tax in the amount of P718,851.68. Could you explain briefly the basis of this assessment? "A. As stated here in the report, the broker's tax assessment here in this report is based on the compensation, these are share of commission of the branch from the head office or transactions wherein the branch solicits orders from local customers, Philippine customers and notify the head office who in turn look for the commodities that the Philippine branch needs. And another instance wherein the head office orders the branch to look for local products wherein the branch merely monitors the shipping to the importer of these local products. And the documents presented there show that the[y] are merely the agent of the buyer and the seller. The head office does not have records of sale and purchases of these imports and exports. "Q. Now, you recommended a deficiency of P718,000.00 (sic) as broker's tax. How did you arrive at this amount? "A. In this docket, on page 181, this is the computation how we arrived at the deficiency tax. "Q. Where did you base the amount appearing in this computation of yours? "A. These are taken from the documents presented to us by the taxpayer. This amount was also computed here as shown in pages 155 to 158." (pp. 6-8, TSN, Hearing on March 23, 1995) "A glance at pages 155 to 158 of the BIR records of the case revealed that petitioner indeed earned commissions from companies other than Nichimen Company in Japan. And if ever petitioner received compensations from its head office, such amounts were also in the nature of commissions representing its share the commissions received by the head office due to their brokerage activities here and abroad. In both instances, the commissions received by petitioner depended on the invoice amounts of import-export transactions. Thus, in petitioner's Notes to Financial Statements , No. 2 thereof, the following were clearly stated: "2. COMPENSATIONS RECEIVED FROM HOME OFFICE AND COMMISSIONS. "Compensations received from Home Office represent income computed at certain percentages of invoice amounts of import and export transactions in the Philippines of the Home Office and others . "Commissions represent income computed at certain percentage of invoice amounts of import and export transactions in the Philippines of certain affiliates of Nichimen Corporation and of other parties . (Underscoring supplied, p. 159, BIR rec.) "Moreover, during the cross-examination of respondent's witness, it was established that petitioner receives more than the fixed subsidy given by its Head Office as evidenced by the notice of remittances. The following testimony has been extracted from the witness, to wit: prLL "ATTY. VILLANUEVA "Q. Then, Ms. Witness, on what documents or records did you base your conclusion that there was in fact a sharing of commission? "ATTY. PANGILINAN "If Your Honors please, I think it has already been answered by the witness based on the documents submitted to them. That's wa[s] the answer of the witness. "JUDGE ACOSTA "That is why petitioner is asking what are those documents which made you conclude about the sharing. "A. Per notice of remittances from the head office. "JUDGE ACOSTA "Q. And remittances of what, Ms. Witness? "A. Of compensation. I would like to add also here, Your Honors, that they claimed a fixed subsidy for their expenses. xxx xxx xxx "JUDGE ACOSTA "So they get more? "A. Yes, Your Honors, over and above that fixed subsidy, they get more, that is taken from these transactions based on their soliciting." (pp. 12-14, TSN, Hearing of March 23, 1995) "The case at bar is not different from the case of Marubeni Corporation Manila Branch vs . The Commissioner of Internal Revenue , CTA Case No . 4589 . In the latter case, this Court ruled on April 10, 1995, that petitioner is a commercial broker subject to seven (7%) percent commercial broker's tax. The decision was patterned after another Marubeni decision in CTA Case No. 4110, promulgated on March 3, 1993, where We stated that: "As It is, from the aforecited provision of the Tax Code, it can very well be concluded that indeed petitioner is a commercial broker. For all the brokerage services rendered by Marubeni Corporation branch in Manila it received commissions from Marubeni Corporation, Head Office, a definite percentage from the commissions from Marubeni Corporation, Head Office, a definite percentage from the commissions income received by the latter in a completed operation of brokerage services. This commission income was declared by Marubeni Corporation, Manila Branch, as subsidy from home office. It is however reported by the latter as income in its Statement of Income and Expenses for the period ended March 31, 1985 and 1984 attached to its Corporation Annual Income Tax Return. "For the Commissions that they earned from the brokerage transactions, Marubeni Corporation Japan allocates a certain portion of that income out of the transaction for the services rendered by Marubeni Branch It can be readily seen, in the course of the transaction that the source of the subsidy is tied with the import and export transaction. "Now, with regard to the pattern of percentage being sent as subsidy, the same is computed as based on percentage on sales price or in fixed amount based on quantity. The Court considers said amount as commissions contrary to the petitioner's claim. It is likewise noted that it is the Head Office (Marubeni Japan) that allocates the commissions as compensation for the services rendered by its Philippine branch. "We cannot give due assent to petitioner's claim that what it allocates to the Marubeni Branch are mere subsidies in the truest sense of the word. To our mind, it is more of a commission considering the fact that the amount of subsidies remitted varies, dependent upon the sales price or based on quantities. Furthermore, if these subsidies are only given to finance the transaction being undertaken by the branch office in favor of the mother company, then be no need to determine the percentage of the subsidies on the basis of sales price and quantity. "The bigger the amount involved in the transaction, the bigger the commissions, the amount given by the import-export transaction" (Marubeni Corporation, Manila Branch vs. The Commissioner of Internal Revenue, CTA Case No. 4589, April 10, 1995, pp. 7-8). ". . . In affirming our decision, the Court of Appeals stated that: "As found by the Court of Tax Appeals, the import-export trade business of petitioner's head office is conducted through brokerage services and since the import-export trade business transcends beyond the national boundary the brokerage services were rendered by its branch offices worldwide and here in the Philippines, the brokerage services is rendered by petitioner Marubeni Manila. For the said brokerage services, a certain portion of the commission income received by the latter is allocated and sent to the petitioner which it considered and declared as "subsidy" from home office. The "subsidy" coming from its head office is so tied up with the petitioner's import-export transactions such that the amount of the subsidies remitted to petitioner varies, depending upon the sales price and quantities of import and export" (Marubeni Corp. v. Court of Tax Appeals and Commissioner of Internal Revenue, CA-G.R. SP. No. 314047 and CA-G.R. SP. No. 37508, May 22, 1996, p. 6). "The Instant case is identical in facts and issue with the Marubeni case (CTA Case No. 4589, CA-G.R. SP No. 37508) just cited. The herein petitioner is a commercial broker. This was even admitted by Mr. C.C. Gison of the Tax Division of SGV and Co. in his letter of August 3, 1989, page 7 thereof (p. 194, BIR rec.), stating among others that: "As to the proposed deficiencies fixed tax as alleged importer, exporter, we submit that our client is likewise not liable thereto as it is only engaging in business as a broker and is not engaged in the business of import and/or export." (Underscoring supplied)" 11 On the other hand, the petitioner contends that it is not a commercial broker and submits that: dctai "The principal error committed by the Tax Court lies on its conclusion that the amounts received by petitioner from its Head Office (Nichimen Japan) actually represent its share in the latter's commission receipts from brokerage activities abroad In other words, the Tax Court has observed that the trading business of Nichimen Corporation in the Philippines is conducted through brokerage activities of Nichimen Japan which, for a fee (commission), brings together foreign suppliers and local buyers to a consummated sale of goods or merchandise. Said fee, in turn, is allegedly shared by Nichimen Japan to its Manila branch (petitioner) for facilitating said sales transactions The Tax Court's findings truly betrays the facts and the evidence on record The testimony of petitioner's witnesses as well as the documentary evidence which it has presented during the trial so clearly and undisputably proved that in the disputed sales transactions, Nichimen Japan was the direct seller of the goods or merchandise. It acts not as mere broker between foreign suppliers and local customers but is itself the seller of the same goods or merchandise because, as a general trading company engaged in the import and export business, it necessarily purchases a variety of products from specified manufacturers and then re-sells the same elsewhere. Trading is buying and selling. Nichimen Japan earns its income not from brokerage commissions but precisely from mark-up accumulated from the succession and continuous prosecution of trading activities worldwide. Indeed, what Nichimen Corporation markets in the Philippines are merchandise which it previously purchased or acquired from manufacturers or suppliers and which it, therefore, owns. This is evidently (sic) by the various documents presented by petitioner such as sales invoices [Exhibits "B" to "BO-19], bills of lading [Exhibits "C" to "C-23"] as well as various sales contracts [Exhibits "D" to "D-7"] which are conclusive proof of ownership by Nichimen Japan of the merchandise which are sold to Philippine customers. Verily, it is basic in law that one can only sell and therefore transfer in ownership something to which he has title or has acquired title. The testimony of petitioner's witness, Mr. Kenji Chijinatsu, bears reiteration: llcd "Q: Assuming that the Philippine buyer signifies its interest to buy the products for export to the Philippines, what does the Philippine buyer normally do? "A: The Philippine buyer normally negotiate with Nichimen Manila Branch if they are interested to buy the product. "Q: To whom does the Philippine buyer address its order for the goods? "A: The Philippine buyer will place its order to Nichimen Head Office through Nichimen Manila branch. "Q: After signifying his order for the goods, does the buyer if any perform any activity? A : Yes, the Philippine buyer will open an LC. Q : What again LC means? "A: That stand for letter of credit for the purpose of payment. Then Philippine buyer will establish a letter of credit to the issuing bank and drawing bank. The original letter of credit will be delivered to the Nichimen Corporation head office. "Q: This letter of credit is generally understood issued to be in favor of somebody, can you please tell the court to whom the letter of credit is issued? "A: This letter of credit is established to the head office from Philippine buyer. "Q: After receiving the letter of credit Mr. Witness, what does Nichimen-Japan or the head office do? "A: Immediately the letter of credit if received by the head office they will inform the supplier that they received the original letter of credit. "Q: After that information, what will happen next? "A: They will place order for this transaction based on that letter of credit. "Q: Can you repeat that please. "A: They will place order to the goods to be exported to the Philippines. "Q: What do you mean when you said Nichimen Japan will order? "A: Nichimen Head Office will buy the product from the supplier . "Q: And then after buying the product from the supplier, what does Nichimen Japan do? "A: They will arrange shipment for the Philippine buyer. . . . [pp. 16-18, TSN, March 26, 1993] "Respondent gave an entirely different account of how the trading activities of Nichimen Corporation in the Philippines proceed. Essentially, she claims that when a Philippine customer or proposed buyer wishes to purchase some merchandise abroad, petitioner, as branch of Nichimen Corporation, relays that information to its Head Office (Nichimen Japan) which in turn will look for the required commodities. Allegedly, Nichimen Japan merely brokers for the foreign supplier and the local buyer who are the real and direct parties to the sales transaction. For these brokerage services, respondent's examiner claims that Nichimen Japan earns commission which it shares to petitioner, something which petitioner receives over and above its regular subsidy. The Tax Court gave more weight to respondent's claim. Herein petitioner, however, strongly disagrees because the bare testimony of respondent's witness could not possibly outweigh the positive and preponderant evidence adduced by petitioner which in their totality overwhelmingly established that Nichimen Japan is itself the direct seller of the goods procured from third party manufacturers or suppliers. More, the claim of respondent's examiner that the alleged commissions are over and above petitioner's subsidy is utterly devoid of probative value because not a single document was presented in evidence which at best would imply the same. Suffice it to state, the conclusion reached by the Tax Court to the effect that the disputed receipts by petitioner represent its share in the commission income of Nichimen Japan is utterly unsupported by substantial evidence. LibLex "In finding that what petitioner receives are actually commission for brokerage services rendered, the Tax Court noted that the amounts received vary depending on the invoice amount of the goods sold. Petitioner, however, respectfully submits that the variable nature of the amounts received by petitioner from Nichimen Japan does not necessarily indicate that the same are commissions much less, qualify petitioner as a broker subject to the broker's tax. In the case of Kuensle & Streiff vs . Commissioner of Internal Revenue , G.R. No. 17648, the Supreme Court categorically held that "the essential feature of a broker is the fact that he acts not for himself, but for a third person, regardless of whether the fee paid to him is fixed , regular amount or not , or whether the act performed by him can be performed by the principal or not". In support of its finding, the Tax Court did cite the Notes to petitioner's Financial Statements which described the nature of the now disputed "compensation from home office". The Tax Court, however, failed to note that petitioner's income, as stated in said Notes to F/S, are actually of two types: one is the so-called "compensation from home office", and the other are the "commissions" per se. They are distinguished by the fact that the former refers to the amount received by petitioner for the liaising activities it perform in the Philippines in relation to the sales of goods or merchandise directly made by Nichimen Japan to Philippine customers. This is the same type of petitioner's income which is in issue in the instant case. The latter pertains strictly to the commissions which petitioner earns from third parties , including affiliates of Nichimen Corporation. Petitioner does not deny that it occasionally acts as broker for the said third parties for which it earns commissions. The records attest to the fact, though, that said commissions are properly subjected to the percentage tax on commercial broker's. However, these transactions are very minimal, as shown by petitioner's Comparative statements of Income and Expense for the fiscal year ending March 31, 1986 and 1987, which is the reason why one simply cannot ignore the distinction between the amounts received by petitioner from Nichimen Japan and those which it receives from third parties as commission per se . "Again, Nichimen Japan is a trader . The organization that is Nichimen Corporation is a trading enterprise. It does not hold itself out as an entity which, for a fee, renders brokerage services as its principal undertaking, for purposes of bringing together parties, a proposed seller and a proposed buyer, to a consummated sales transaction. And since it is not a broker, what is allegedly shares to herein petitioner as its Manila branch is not and never commission income. Much less, and even more obviously, petitioner as Manila Branch cannot be considered a broker in the disputed sales transactions, because the Head Office and Manila branch of Nichimen Corporation are one and the same entity. To claim that one can be a broker of its own self is simply an absurd proposition. . . ." "Petitioner was not employed by Nichimen Japan to act as broker relative to the goods or merchandise which it sells to the Philippine customers. Neither was it employed by some interested Philippine buyer who would want to purchase specified goods abroad. Petitioner does not promote the sales of its Head Office in the Philippines for an agreed commission or brokerage fee. For why would Nichimen Japan pay its own branch to do just that? Nichimen Corporation (Manila Branch) was not created or established in the Philippines to be the broker of its own Head Office. Instead, the Manila branch was set up in the Philippines to undertake the promotion of the sales of Nichimen Corporation in the Philippines as an international trading concern. Other than those very few occasions wherein petitioner itself acts as broker or middle man in sales transactions between local buyers and foreign third party suppliers, petitioner's role in the general business of Nichimen Corporation is to facilitate the marketing of products sold directly by Nichimen Japan. "Indeed, in the disputed transactions, there are only two parties involved, the buyer (Philippine customer) and the seller (Nichimen Japan). There is no broker involved, at least not petitioner which as branch merely acted to facilitate the direct sales transactions that occur and are eventually consummated between its Head Office and its Philippine customers. And it is on the occasion of these services that petitioner receives the so called "compensation from Home Office" in order to sustain its operational needs in the Philippines." 12 After assiduously evaluating the respective positions of the parties, we have come to the conclusion that the assailed decision of the CTA is free from any reversible error. It is essentially based on facts and information disclosed by petitioner's own documents as testified to by the examiner Myrna Lou Tabije. Of particular interest are the Notes to Financial Statements submitted by the petitioner no less which demonstrate that it had been receiving compensations and commissions from its home office, the Nichimen Corporation in Japan, over and above its fixed periodical subsidy. These compensations and commissions, by petitioner's own description, represented income computed at certain percentages of invoice amounts of import-export transactions in the Philippines of the petitioner and others , and import-export; transactions in the Philippines of certain affiliates of the Nichimen Corporation (Japan) and other parties . These are clearly indicative of facts of a commercial broker. Above all, Ma. C.C. Gison of the Tax Division of SGV and Co., external auditors of the petitioner, let the cat out of the bag, so to speak, when in his letter of August 3, 1989, cited in the challenged CTA decision he stated, inter alia , that the petitioner is not liable for the deficiency fixed tax " as it is only engaging in business as a broker ." The petitioner never bothered to disown or neutralize this highly damaging admission. Thus, the self-serving testimony of its witness, Kenjii Chijinatsu, easily pales upon juxtaposition with the respondent's evidence. What is more, the CTA correctly pointed out that upon an identical factual setting, this Court has already sustained the validity of the imposition of the commercial broker's tax. We cannot but pay obeisance to our earlier ruling. WHEREFORE, the instant petition is DISMISSED and the appealed decision of the Court of Tax Appeals is AFFIRMED, with costs against the petitioner. SO ORDERED. Austria-Martinez and Dacudao, JJ . , concur. Footnotes 1. Annex "A", Petition, Rollo, pp. 36-50. 2. Id . at p. 50. 3. Rollo, p. 74. 4. Ibid ., at pp. 77-83. 5. Ibid ., at pp. 84-87. 6. Ibid ., at pp. 88-92. 7. Id ., at pp. 89-90; Emphases are petitioner's. 8. Ibid ., at pp. 93-96. 9. Id ., at pp. 83-95. 10. Petition, Rollo, p. 26. 11. Appealed Decision, Rollo, pp. 41-47, 49. 12. Petition, Rollo, pp. 26-32.