Philippine Airlines, Inc. v. Commissioner of Internal Revenue

SPECIAL THIRD DIVISION [C.T.A. CASE NOS. 7677, 7685 & 7746. July 2, 2013.] PHILIPPINE AIRLINES, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE AND COMMISSIONER OF CUSTOMS , respondent . RESOLUTION COTANGCO-MANALASTAS , J p : For resolution is petitioner's Motion for Reconsideration [of Amended Decision dated April 25, 2013] 1 filed on May 14, 2013. Petitioner seeks reconsideration of this Court's Amended Decision, 2 the dispositive portion of which reads: IcDESA " WHEREFORE , premises considered, respondent Commissioner of Internal Revenue's Motion for Reconsideration is hereby PARTIALLY GRANTED . The August 24, 2012 Decision of this Court is hereby MODIFIED . Accordingly, respondents Commissioner of Internal Revenue and Commissioner of Customs are hereby ORDERED TO REFUND to petitioner the total reduced amount of FIFTY SEVEN THOUSAND SEVEN HUNDRED FIFTY FIVE PESOS (P57,755.00) , representing petitioner's erroneously collected excise taxes on its importation of commissary supplies for the period April 2005 to April 2006." Petitioner argues that it is entitled to the refund of excise tax in the amount of P3,258,213.04 3 on certain brands of imported wine and liquors despite the non-presentation of sales invoices on their purchase or importation. The Court should have considered the unit costs of the articles as computed from the dutiable value indicated in the Informal Import Declaration Entry (IIDE) since such valuation was made by the Bureau of Customs (BOC) in assessing the product for duties and taxes as mandated by Republic Act No. 9135, 4 implemented by Customs Administrative Order (CAO) No. 004-04, as amended by Customs Memorandum Order No. 016-10. Hence, there could not be a more objective, independent and credible cost of the imported goods than the valuation made by the BOC pursuant to CAO No. 04-04. In fact, the valuation made by BOC which primarily should be based on the "Transaction Value," would naturally be higher than that indicated in the sales invoice since it includes the "price actually paid or payable for the goods when sold for export to the Philippines" plus adjustments. Petitioner likewise argues that it is entitled to the refund of excise tax in the amount of P13,275,000.00 on its imported cigarettes despite the non-presentation of pricelist for locally available products. The comparative local price is not the only determining factor to justify the exemption of the imported product. Petitioner duly complied with the condition for the exemption since it has shown that the imported cigarettes brands could not be secured locally with regular supply and petitioner could not purchase them locally at lower prices, the truth being that no supplier of cigarettes could regularly supply petitioner the quantity of cigarettes it needs for its commissary supplies. Moreover, Duty Free Philippines itself, the only other importer of similar cigarette products known to petitioner, failed to make available their price list for imported cigarettes. This was established in the testimony of petitioner's witness, Mr. Victor Santos in his Judicial Affidavit. The value and weight of petitioner's evidence should not be discounted merely because it was rendered by petitioner's own witness. In its Comment/Opposition (Re: Motion for Reconsideration) 5 filed on May 30, 2013, respondent Commissioner of Internal Revenue counter-argues that petitioner failed to prove that the alleged commissary supplies are not locally available in reasonable quantity, quality and price. No independent and credible evidence was presented to prove this matter. cIHDaE Respondent Commissioner of Customs (COC) filed its Manifestation (Re: Petitioner's Motion for Reconsideration of the Amended Decision dated April 25, 2013) on June 7, 2013 through registered mail which was received by this Court on June 25, 2013. Respondent COC maintains that Republic Act No. 9334 had repealed and had withdrawn petitioner's tax privilege under its charter Presidential Decree No. 1590. However, since respondent COC's motion for reconsideration was denied in a Resolution dated October 15, 2012, he has already appealed the original August 24, 2012 ruling to the CTA En Banc via petition for review docketed as CTA EB No. 954, hence, he will just await the resolution of the case. We find the instant motion bereft of merit. Anent petitioner's argument that it is entitled to the refund of excise tax on certain brand of imported wine and liquors, We reiterate that the Court may not consider the comparison made by petitioner between the unit cost of the articles as per IIDE and the local prices of the same articles considering that, as per testimony of Mr. Santos, 6 the said unit costs are based on the valuations given by the BOC from which they assessed and collected the excise tax due and thus, are not the actual cost or price of the subject imported articles. The Court is not convinced with petitioner's argument that the valuation indicated in the IIDE should be sufficient evidence to prove the cost of importation of the product. As stated by petitioner, the valuation, which primarily should be based on the "Transaction Value," includes the "price actually paid or payable for the goods when sold for export to the Philippines" plus adjustments . Based on the foregoing, the dutiable value indicated therein is not the actual cost of the imported articles. Moreover, CAO No. 4-2004 7 provides that the dutiable value of imported goods shall be determined using one of the six methods of valuation listed below, to be applied sequentially in the order provided by law. 8 Hence, customs valuation is not limited to the use of the Transaction Value method. A perusal of the IIDE will show that there was no computation or breakdown on how the dutiable value was arrived at. Nevertheless, petitioner presumed that the valuation was arrived at using the Transaction Value method, which is the primary method for customs valuation. However, the unit cost of the imported articles cannot be based on an assumption or inference; it must be based on facts. Anent petitioner's argument that it is entitled to the refund of excise tax on its imported cigarettes, We reiterate that other than the testimony of petitioner's witness, Mr. Santos, there is nothing in the documentary evidence presented by petitioner which would support a conclusion that the subject cigarettes are not locally available in reasonable quantity, quality or price. In addressing the same issue, the Second Division of this Court, in Philippine Airlines, Inc. (PAL) vs. Commissioner of Internal Revenue and Commissioner of Customs , 9 held as follows: "The Court is not convinced since the said testimony are [sic] unverifiable and self-serving, as no other supporting documents were presented before this Court to prove that said cigarettes were not locally available in the required quantity, quality or price. The Court cannot just rely on the foregoing testimony. It would have been useful for petitioner, if for example, it presented to the Court a certification from local dealers of cigarettes that they cannot supply petitioner enough cigarettes with said brands for its catering and inflight use. And if they had such products, a list of the corresponding selling prices should have been also presented. In the absence thereof, the Court cannot determine whether the cost of importing cigarettes is lower than purchasing them locally." EHTCAa Petitioner likewise argues that in a number of criminal cases, where the degree of evidence required is that of beyond reasonable doubt, the Supreme Court upheld that the lone testimony of the private complainant is sufficient and may be the sole basis for conviction even in the absence of corroborative testimony of other witnesses. However, We note that the two criminal cases 10 cited by petitioner as basis for its claim that the lone testimony of private complainant is sufficient involves the crime of rape. As explained by the Supreme Court in a number of cases, 11 the crime of rape is essentially committed in relative isolation or even secrecy, hence, it is usually only the victim who can testify with regard to the fact of the forced coitus. Based on the foregoing, the above doctrine cannot apply in this case where the testimony of petitioner's lone witness may be corroborated by local dealers of cigarettes or by other evidence. Well-settled is the rule that tax refunds are in the nature of tax exemptions and are to be construed strictissimi juris against the entity claiming the same. Thus, the burden of proof rests upon the taxpayer to establish, by sufficient and competent evidence, its entitlement to a claim for refund. 12 Otherwise stated, the claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund. 13 WHEREFORE , premises considered, the instant Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED . (SGD.) AMELIA R. COTANGCO-MANALASTAS Associate Justice Lovell R. Bautista, J., concurs. Footnotes 1. Rollo , pp. 1357-1370. 2. Rollo , pp. 1343-1350. 3. Amount refers to excise tax due; excise tax actually paid amounted to P3,258,214.48. See Exhibits "Y" and "Y-1", Exhibit "EE", Exhibits "PP" and "PP-1"; and Exhibit "UU". 4. An Act Amending Certain Provisions of Presidential Decree No. 1464, Otherwise Known as the Tariff and Customs Code of the Philippines, as Amended, and for Other Purposes. 5. Rollo , pp. 1375-1379. 6. Exhibit "GGGG ". 7. Amendment to Customs Administrative Order 5-2001 (Implementing Republic Act 9135: An Act Amending Certain Provisions of Presidential Decree No. 1464, Otherwise Known as the Tariff and Customs Code of the Philippines, as Amended (Customs Code), and for Other Purposes). 8. See Section 201 of the Tariff and Customs Code of 1978 (PD No. 1464), as amended by RA No. 9135. 9. CTA Case No. 8153, January 17, 2013, affirmed in a Resolution dated June 4, 2013. 10. People vs. Atadero , G.R. No. 183455, October 20, 2010 and People vs. Sinoro , G.R. Nos. 138650-58, April 22, 2003. 11. People vs. Cias , G.R. No. 194379, June 1, 2011, People vs. Macapanpan , G.R. No. 133003, April 9, 2003, and People vs. Burlat, G.R. No. 129238, February 22, 2001. 12. Philippine Geothermal, Inc. vs. The Commissioner of Internal Revenue , G.R. No. 154028, July 29, 2005. 13. Citibank, N.A. vs. Court of Appeals and the Commissioner of Internal Revenue , G.R. No. 107434, October 10, 1997.