Nestle Philippines, Inc. v. Court of Tax Appeals

SPECIAL NINTH DIVISION [CA-G.R. SP Nos. 59491 & 61674. June 22, 2006.] NESTLE PHILIPPINES, INC. , petitioner , vs . COURT OF TAX APPEALS, COMMISSIONER OF CUSTOMS, and COMMISSIONER OF INTERNAL REVENUE , respondents . D E C I S I O N AREVALO-ZENAROSA, M ., J p : Any claim for refund of taxes and customs duties take the nature of tax exemptions that must be construed strictly against the taxpayer and liberally in favor of the taxing authority. This is because taxes are the lifeblood of the government, such that, their relinquishment should never be presumed. THE CASE Before Us is a consolidated petition for review under Rule 43 of the Rules of Court seeking to reverse the Decisions dated January 3, 2000 1 and July 10, 2000 2 of the Court of Tax Appeals and the Resolutions dated May 15, 2000 3 and October 11, 2000, 4 in cases entitled Nestle Philippines, Inc. vs Commissioner of Customs and Commissioner of Internal Revenue , docketed as CTA Case Nos. 5224, 5225 and 5265. THE ANTECEDENTS CA G.R. No. 59491 Petitioner Nestle Philippines, Inc . is a domestic corporation and is a regular importer of milk and dairy products. It is likewise engaged in the manufacture, processing, distribution and sale of processed, manufactured and formulated milk and milk products. During the period covering June 1992 to January 1993 , petitioner made several importations of certain milk and milk products at the fair market prices from the different European countries. On these importations, petitioner paid the corresponding duties and taxes based on actual cost or export price as indicated in the commercial invoices of exporting countries. Each of these importations is covered by its corresponding Consumption Entries. cSICHD During those period, the Philippine Government engaged the services of Societe Generale de Surveillance (SGS) Far East Ltd ., an international firm of good reputation. SGS has been chosen and awarded by the Government of contract services to specifically inspect and provide real values/prices of products imported into the country for tariff and customs purposes. Hence, it is engaged by the Philippine Government to conduct pre-shipment inspection and submit valuation report thru the Clean Report of Findings (CRF) On the basis of SGS valuation, the Customs Collector tentatively assessed additional duties and taxes on the aforesaid. importations. Because the valuation of the SGS was higher than what was reflected in petitioner's invoices, this led petitioner to appeal before the Bureau of Customs-SGS Import Valuation and Classification Committee (BOC-SGS-IVCC) regarding the high assessment. In the meantime, petitioner paid the balance of the corresponding duties and Value-Added Taxes (VAT) due thereon and sought for the tentative liquidation and release of said shipments from customs custody. Later, SGS reduced its own valuation through an amendment of its originally issued CRFs. This modified valuation in the amended CRFs was later adopted by the BOC-SGS-IVCC and the corresponding recomputation based thereon was then made by Collector of Customs. As a result of this recomputation, additional duties and taxes were imposed on petitioner representing the difference between those earlier paid based on invoice values and those based on higher SGS valuations on amended CRP's as per final assessments. Petitioner tendered payments thereon under protests, duly acknowledged by the Bureau of Custom's official receipts, the details of which are as follows: Commodity Imported: Sweet Buttermilk Powder Consumption Bureau of Date Payments Made Entry Customs Official Under Protest Receipt Number (1) 73303-92 41687545 4/4/93 P470,899.00 (2) 87364-92 41687536 4/14/93 101,949.00 (3) 7705-92 41687511 4/14/93 205,435.00 (4) 83712-92 41687527 4/14/93 126,951.00 (5) 76119-92 41657554 4/14/93 246,992.00 (6) 83605-92 41687563 4/14/93 84,763.00 (7) 79968-93 41564993 4/14/93 87,533.00 (8) 76150-92 41565002 4/14/93 174,131.00 (9) 90743-92 41687667 4/14/93 462,446.00 (10) 02452-92 41687676 4/14/93 179,366.00 (11) 87363-92 41687685 4/14/93 407,279.00 Total amount of payments made under protest P2,547,744.00 Commodity Imported: Skimmed Milk Powder LH Consumption Bureau of Date Payments Made Entry Customs Official Under Protest Receipt Number (1) 67687-92 41564984 4/4/93 P731,905.00 (2) 65937-92 41564862 4/14/93 404,832.00 (3) 65938-92 41564914 4/14/93 162,813.00 (4) 56788-92 41564835 4/14/93 246,296.00 (5) 50282-92 41564957 4/14/93 422,265.00 (6) 68280-92 41564966 4/14/93 617,902.00 Total amount of payments made under protest P2,586,013.00 On April 20, 1993, or within the 2-year reglementary period prescribed by law, petitioner filed the eleven (11) and six (6) formal letter protest with the Bureau of Customs, to wit: Commodity Imported: Sweet Buttermilk Powder MICP 5 Protest Consumption Bureau of Date Payments Made Case No. Entry Customs Official Under Protest Receipt Number 190-93 bb 73303-92 41687545 4/4/93 P470,899.00 190-93 w 87364-92 41687536 4/14/93 101,949.00 190-93 aa 7705-92 41687511 4/14/93 205,435.00 190-93 y 83712-92 41687527 4/14/93 126,951.00 190-92 v 76119-92 41657554 4/14/93 246,992.00 190-93 z 83605-92 41687563 4/14/93 84,763.00 190-93 e 79968-93 41564993 4/14/93 87,533.00 190-93 f 76150-92 41565002 4/14/93 174,131.00 190-93 g 90743-92 41687667 4/14/93 462,446.00 190-93 h 02452-92 41687676 4/14/93 179,366.00 190-93 x 87363-92 41687685 4/14/93 407,279.00 Total amount of payments made under protest P2,547,744.00 Commodity Imported: Skimmed Milk Powder LH MICP Protest Consumption Bureau of Date Payments Made Case No. Entry Customs Official Under Protest Receipt Number 190-931 67687-92 41564984 4/4/93 P731,905.00 190-93 65937-92 41564862 4/14/93 404,832.00 190-93 a 65938-92 41564914 4/14/93 162,813.00 190-93 j 56788-92 41564835 4/14/93 246,296.00 190-93 m 50282-92 41564957 4/14/93 422,265.00 190-93 ee 68280-92 41564966 4/14/93 617,902.00 Total amount of payments made under protest P2,586,013.00 and paid the required protest fees, claiming refund of excess duties and taxes amounting to Two Million five Hundred Forty-Seven Thousand Seven Hundred Forty-Four (P2,547,744.00) and Two Million five Hundred Eighty-Six Thousand Thirteen Pesos (P2,586,013.00) , respectively, or a grand total of Five Million One Hundred Thirty-Three Thousand Seven Hundred Fifty-Seven. Pesos (P5,133,757.00) for having been erroneously and unlawfully assessed and collected by the Bureau of Customs. On March 23, 1995, petitioner through counsel filed its formal claims for refund of the VAT portion thereof with the respondent Commissioner of Internal Revenue. Since no action were taken by respondents Commissioner of Customs and Commissioner of Internal Revenue, petitioner lodged an appeal before the Court of Tax Appeals (CTA) by way of Petition for Review for the eleven (11) and six (6) protest on April 10, 1995, which became CTA Case Nos. 5224 and 5227 , respectively, to wit: CTA CASE NO. 5224 Commodity Imported: Sweet Buttermilk Powder MICP Protest Consumption Bureau of Date Payments Made Case No. Entry Customs Official Under Protest Receipt Number 190-93 bb 73303-92 41687545 4/4/93 P470,899.00 190-93 w 87364-92 41687536 4/14/93 101,949.00 190-93 aa 7705-92 41687511 4/14/93 205,435.00 190-93 y 83712-92 41687527 4/14/93 126,951.00 190-92 v 76119-92 41657554 4/14/93 246,992.00 190-93 z 83605-92 41687563 4/14/93 84,763.00 190-93 e 79968-93 41564993 4/14/93 87,533.00 190-93 f 76150-92 41565002 4/14/93 174,131.00 190-93 g 90743-92 41687667 4/14/93 462,446.00 190-93 h 02452-92 41687676 4/14/93 179,366.00 190-93 x 87363-92 41687685 4/14/93 407,279.00 Total amount of payments made under protest P2,547,744.00 CTA CASE NO. 5225 Commodity Imported: Skimmed Milk Powder LH MICP Protest Consumption Bureau of Date Payments Made Case No. Entry Customs Official Under Protest Receipt Number 190-93 l 67687-92 41564984 4/4/93 P731,905.00 190-93 65937-92 41564862 4/14/93 404,832.00 190-93 a 65938-92 41564914 4/14/93 162,813.00 190-93 j 56788-92 41564835 4/14/93 246,296.00 190-93 m 50282-92 41564957 4/14/93 422,265.00 190-93 ee 68280-92 41564966 4/14/93 617,902.00 Total amount of payments made under protest P2,586,013.00 These cases were later consolidated by CTA since they involved same question of facts and law. EICScD On July 18, 1995, respondent Commissioner of Customs moved for the dismissal of the Petition for Review on the ground that CTA has no jurisdiction over the said petition since the respondent Commissioner of Customs has yet to render a decision on the protest cases that could be reviewable by CTA pursuant to Section 7 (2) of RA 1125 . 6 CTA granted the motion to dismiss in a Resolution dated January 3, 1996 and ordered the dismissal of the claim for refund in so far as custom duties is concerned. On January 29, 1996, petitioner filed a motion for reconsideration which was denied by CTA in a Resolution dated March 29, 1996 . However, on July 6, 1998 , CTA reversed its two previous resolutions (Resolutions dated January 3, 1996 and March 29, 1996), and reinstated respondent Commissioner of Customs as an indispensable party to the case because of the difficulty in disposing the internal revenue aspect without the issue of customs valuation being resolved. On January 3, 2000 , CTA rendered a decision in the consolidated cases of CTA Nos. 5224 and 5225, denying the claim for refund, the pertinent portion of which reads: "The Supreme Court, in upholding the factual findings and determination of the Bureau of Customs as far as the valuation of imported goods is concerned, held, 'The court has long held consistently that "the rule is well established that the value of merchandise fixed by the appraiser and affirmed by the Collector of Customs is conclusive in the absence of an affirmative showing that the appraiser, in assessing the value, proceeded upon wrong principle and contrary to law" and that . . . the burden thus rests upon the importer disputing the customs valuation not only to prove the contrary and overcome the presumption of correctness of the valuation but also to show that the figures declared by him are in fact true and correct. As restated by the Court in a 1960 case , "The determination of the tax deficiency by the Government has prima facie validity and the burden rests upon the taxpayer to overcome this presumption and to show to the satisfaction of the Tax Court that the determination was not correct." (The Coca-Cola Export Corporation vs. The Commissioner of Internal Revenue, 56 SCRA 5, March 15, 1974) Since the petitioner has not successfully discharged its burden to overcome this presumption, We are inclined to deny the instant petition for review . WHEREFORE, in view of the foregoing, the instant petition for review is hereby DISMISSED for lack of merit. Petitioner's claim for refund of the additional taxes and duties imposed on the imported articles is DENIED. No pronouncement as to costs. SO ORDERED. "(Emphasis Supplied) On January 24, 2000, petitioner filed a motion for reconsideration seeking for the reversal of the January 3, 2000 decision, but was denied by the CTA in a Resolution dated May 15, 2000 . Hence, this petition docketed as CA G.R. SP No. 59491 . CA G.R. SP No. 61674 Petitioner is a domestic corporation. It is a regular importer of milk and milk products and is engaged in the manufactured and formulated milk and milk products. On several occasions, petitioner filed five (5) protest cases before the District Collector of Customs of Manila International Container Port (MICP) on the much higher valuation arrived at by the SGS in its CRF, which were duly issued on each importation, but the same was denied. Petitioner appealed to the BOC-SGS-IVCC under the Office of respondent Commissioner of Customs. Before said office, petitioner argued that pursuant to Section 201 of the Tariff and Customs Code of the Philippines , the invoice value should be the basis of the dutiable value of its shipment of goods and not on much higher SGSCRFs'. In the meantime, petitioner paid the balance of the corresponding duties and VAT due thereon and sought for the tentative liquidation and release of said shipments from customs custody. The BOC-SGS-IVCC later on issued various resolutions modifying the valuations provided in the original CRFs' based on European Economic Community (EEC) domestic price as published in Europe less normal cash discount. However, these modified valuations were still much higher than the invoice value of petitioner. Nevertheless, the District Collector of Customs relied eventually on such revised valuations in making a recomputation of additional duties and taxes on the above-mentioned. importations. This led petitioner to pay its taxes and duties under protest. A comparison of the invoice value with that of the amended valuations of the SGS as well as the corresponding time of filing of protest and date, and amount of payments of the five (5) importations are hereunder enumerated, to wit: I. MICP PROTEST CASE No. 394-93 filed on Dec. 22, 1993 Skimmed Milk Powder- Medium High Heat from Ireland CONSUMPTION ENTRY NO. 72626-93 HIAcCD Paid under BOC O.R. # 44815951, dated December 22, 1993 INVOICE SGS 1,783.58/mt 2,210.76/mt Invoice Value 428,059.20 530,582.40 Insurance 612.00 0.00 Freight 20,400.00 16,221.49 Other Charges 20,160.00 12,214.94 Total US$ Invoice 469,231.20 559,018.83 Total in Peso 11,731,718.46 13,976,588.79 Customs Duty 1,173,171.85 1,397,658.88 Taxable Value 11,731,718.46 13,976,588.79 Bank Charges 14,644.65 17,470.74 Customs Duty 1,173,171.85 1,397,658.42 Brokerage 14,837.42 14,837.42 Customs Stamps 31.50 31.50 IPF 250.00 250.00 Wharfage 5,992.00 5,992.00 Arrastre 16,200.00 16,200.00 Amount Subject to 10% Value Added Tax: 12,956,866.38 15,429,029.83 1,295,686.64 1,542,902.98 Difference P247,216.34 Plus difference of Customs Duty 224,487.03 Total Amount Paid: P471,703.00 II MICP PROTEST CASE No. 393-93 filed on Dec. 29, 1993 Skimmed Milk Powder- Medium High Heat from Ireland CONSUMPTION ENTRY NO. 70058-93 Paid under BOC O.R. #44815967, dated December 22, 1993 INVOICE SGS 1,783.58/mt 2,210.76/mt Invoice Value 142,062.15 176,087.03 Insurance 203.11 0.00 Freight 6,770.25 5,405.38 Other Charges 6,690.60 6,720.00 Total US$ Invoice 155,726.11 188,212.41 Total in Peso 3,903,274.95 4,717,544.06 Customs Duty 390,327.49 471,754.41 Taxable Value 3,903,274.95 4,717,544.06 Bank Charges 4,879.09 5,896.93 Customs Duty 390,327.49 471,754.41 Brokerage 6,346.22 6,346.22 Customs Stamps 31.50 31.50 IPF 250.00 250.00 Wharfage 1,997.50 1,997.50 Arrastre 5,400.00 5,400.00 Amount Subject to 10% Value Added Tax: 4,312,506.75 5,209,220.62 431,250.68 520,922.06 Difference P89,671.38 Plus difference of. Customs Duty 81,426.92 Total Amount Paid: P171,098.30 III. MICP PROTEST CASE No. 329-93a filed on July 16, 1993 Skimmed Milk Powder 28% from Denmark CONSUMPTION ENTRY NO. 22713-93 Paid under BOC O.R. # 42629237, dated July 14, 1993 INVOICE SGS 1,588.54/bag 2,661.75/bag Invoice Value 160,454.40 257,448.00 Insurance 249.60 0.00 Freight 5,777.20 6,026.89 Other Charges 20,160.00 7,723.20 Total US$ Invoice 166,481.20 271,198.09 Total in Peso 4,236,946.54 6,901,991.31 Customs Duty 847,389.31 1,380,398.26 Taxable Value 4,236,946.54 6,901,991.31 Bank Charges 5,296.18 8,627.49 Customs Duty 847,389.31 1,380,398.26 Brokerage 7,408.68 7,408.68 Customs Stamps 53.00 53.00 IPF 250.00 250.00 Wharfage 2,397.00 2,397.00 Arrastre 9,912.00 9,912.00 Amount Subject to 10% Value Added Tax: 5,109,652.71 8,311,037.74 510,965.27 831,103.77 Difference P320,139.00 Plus difference of. Customs Duty 533,008.95 Total Amount Paid: P853,147.95 IV. MICP PROTEST CASE No. 334-93 filed on July 16, 1993 Skimmed Milk Powder 28% from Denmark CONSUMPTION ENTRY NO. 22713-93 Paid under BOC O.R. # 42629212, dated July 14, 1993 INVOICE SGS 1,588.54/bag 2,661.75/bag Invoice Value 160,454.40 257,448.00 Insurance 249.60 0.00 Freight 5,777.20 6,026.89 Other Charges 0.00 7,723.20 Total US$ Invoice 166,481.20 271,198.09 Total in Peso 4,236,946.54 6,901,991.31 Customs Duty 847,389.31 1,380,398.26 Taxable Value 4,236,946.54 6,901,991.31 Bank Charges 5,296.18 8,627.49 Customs Duty 847,389.31 1,380,398.26 Brokerage 7,408.68 7,408.68 Customs Stamps 53.00 53.00 IPF 250.00 250.00 Wharfage 2,397.00 2,397.00 Arrastre 9,912.00 9,912.00 Amount Subject to 10% Value Added Tax: 5,109,652.71 8,311,037.74 510,965.27 831,103.77 Difference P320,138.00 Plus difference of. Customs Duty 533,008.95 Total Amount Paid: P853,146.97 V. MICP PROTEST CASE No. 334-93a filed on July 14, 1993 Skimmed Milk Powder 28% from Denmark CONSUMPTION ENTRY NO. 22715-93 Paid under BOC O.R. # 42629221, dated July 14, 1993 INVOICE SGS 1,588.54/bag 2,661.75/bag Invoice Value 200,568.40 321,810.58 Insurance 312.00 7,533.00 Freight 7,221.60 9,654.12 Other Charges 0.00 0.00 Total US$ Invoice 208,101.60 338,997.70 Total in Peso 5,296,185.72 8,627,491.47 Customs Duty 1,059,237.14 1,725,498.29 Taxable Value 5,296,185.72 8,627,491.47 Bank Charges 6,620.23 10,784.36 Customs Duty 1,059,237.14 1,725,498.29 Brokerage 8,732.73 8,732.73 Customs Stamps 53.00 53.00 IPF 250.00 250.00 Wharfage 2,996.25 2,996.25 Arrastre 12,390.00 12,390.00 Amount Subject to 10% Value Added Tax: 5,386,465.07 8,311,037.74 638,646.51 1,038,819.61 Difference P400,173.00 Plus difference of. Customs Duty 666,261.15 Total Amount Paid: P1,066,434.15 GRAND TOTAL OF AMOUNT PAID/(FOR REFUND) P3,415,530.74 On July 3, 1995, petitioner filed with BIR a written claim for refund of value-added tax paid corresponding to each of the five importations involved which were separately paid either on July 14, 1993 or December 22, 1993. On July 11, 1995, and without awaiting the decision of the District Collector of Customs on the protests, petitioner filed the instant petition for Review before the CTA allegedly based on respondents' inaction or silence for almost two (2) years of its claims for refund of excess duties and value-added taxes. Before the CTA, petitioner asserted that the invoice value reflects the correct fair market value of the imported article and should therefore be the principal basis of determining its dutiable value of the imported goods. It argued that before the invoice value is disregarded, it must be established first that reasonable doubt exists as to the value or price of the imported article declared in the entry and that after reasonable doubt has been ascertained, recourse to reports from commercial attaches' or other information must be shown to have been observed in coming out with the latest dutiable value. Finally, petitioner argued that such new dutiable value should have been published before it applied by the Collector of Customs. Petitioner further argued that respondents failed to comply with any of the three requisites mentioned in the preceding paragraph. It argued that reasonable doubt as to the correctness of the declaration has not been established there being no "alert notice" 7 issued against the imported articles or any showing as to how the SGS ascertained and established its CRF value of the imported articles, or where and when such SGS' values were published. Respondent Commissioner of Customs explains that SGS is an international organization of good reputation which services the Philippine Government; that it is hired to provide it with the real home consumption value or price of goods imported into the country for Tariff and Customs purposes. He emphasized that under Joint Order No. 1-91 , which is an order jointly issued by the Secretary of Finance, Secretary of Trade and Industry and the Governor of the Bangko Sentral Ng Pilipinas providing for the implementation of the Comprehensive Import Supervision Service , SGS valuation is merely recommendatory in nature and is not conclusive upon the Bureau of Customs. However, once the Collector of Customs adopts the SGS-CRF value as endorsed by the Customs Examiner/Appraiser, he believes that it is no longer considered a mere SGS-CRF value, but for tariff and customs purposes, such value is deemed the official customs value of the imported articles, in such that any party, including the importer and petitioner herein, who questions said valuation has the burden of proving that the same is wrong or arbitrary. Respondent Commissioner of Customs argued that there is presumption of regularity in the act of Collector of Customs, citing the case of Coca-Cola Export Corporation vs The Commissioner of Internal Revenue, G.R. No. L-23604, March 15, 1974, 56 SCRA 5, as cited in the case of Commissioner of Customs vs Court of Tax Appeals, 195 SCRA 12 . aSTcCE Respondent Commissioner of Customs recalled that during the proceedings at the BOC-SGS-IVCC, it was established that the basis of SGS value was the actual price, per seller's (exporter's) invoice, plus the restitution paid to the exporters according to the EEC agreements based on EEC Regulation No. 804/68, dated June 27, 1968 . Based on this information, respondent Commissioner of Customs contended that the Bureau of Customs is correct in adopting SGS recommended value as the true and correct price of the goods in issue, most especially that Section 201 of the Tariff and Customs Code speaks of home consumption value or price of an imported article based on some, like or similar articles, as bought and sold or offered for sale freely in the usual wholesale quantities in the ordinary course of trade, in the principal markets on the date of exportation to the Philippines. Respondent Commissioner of Customs further elaborated that the intervention by the European Governments in the ordinary course of trade between the seller/exporter and the buyer/importer has in effect removed the element of freedom being ordained by Section 201 of the Tariff and Customs Code. He quips that the policy by the EEC of restituting/refunding the supplier in Europe with export subsidy has created two regimes of pricing in their community, one for the domestic market in the country of supply, and the other, a much lower price for those intended for export . On January 10, 2000 , CTA rendered a decision denying petitioner's claim for refund, the dispositive portion of which reads: "Without any qualm or quibble, we are certain that Section 201 of the Code does not require prior publication of new dutiable value before it can serve as the basis of assessment of customs duty and taxes. As aptly explained by the Honorable Supreme Court in the case of Commissioner of Customs vs Procter and Gamble Philippines Manufacturing Corp., 169 SCRA 693, we quote: "The posture taken by private respondent is untenable. A reading of Section 201 of the Tariff and Customs Code aforecited shows that where there exists reasonable doubt as to the value or price of the imported article declared in the entry, the correct dutiable value of the article shall be ascertained from the reports of the Revenue Attache or Commercial Attache (Foreign Trade Promotion Attache) . . . or other Philippine diplomatic officers and from such other information that may be available to the Bureau of Customs. This is what is called the "established" or "information" value. Such value shall be the home consumption value of the imported article which shall be the subject of customs duty and taxes. The same article then provides: From the data thus gathered, the Commissioner of Customs shall ascertained and established the home consumption values of articles exported to the Philippines and shall publish such lists of values from time to time (Section 201 of the TCCP) The law does not provide that it is only after 'the "established" or "information" value is "published" that such home consumption value may be the basis of assessment of the customs duty and taxes . On the contrary, it is explicitly provided that upon reasonable doubt as to the accuracy of the declared value of the article in the consular or commercial invoice, the Commissioner of Customs may, determine its home consumption value from other available and more reliable sources which "established" or "information" value shall then be the basis of the imposition of the customs duty and taxes. The publication of said "established" or "information" value is not a prerequisite before it may be the basis of the imposition of customs duty and taxes. Conversely, it's non publication is no obstacle to the assessment of customs duty and taxes based on such "established" or "information" value. The publication is intended as guide in the assessment of future shipment of similar articles . While such published value of an imported article is reliable, nevertheless, in the absence of the same, the Commissioner of Customs may establish said value from other sources as above provided by law." Altogether, we find the actions taken by the Committee and the District Collector of Customs to be just, proper and in accordance with law . Accordingly, herein claim for refund is found to be without basis in fact and in law. WHEREFORE, in view of the foregoing, the instant petition for review is hereby DENIED for lack of merit. No pronouncement as to costs. SO ORDERED." (Emphasis Supplied) On July 10, 2000, petitioner filed a motion for reconsideration but the same was denied by CTA in a Resolution dated October 11, 2000 . Hence, this petition, docketed as CA G.R. SP No. 61674 . On September 21, 2001 , this Court issued a Resolution ordering the consolidation of CA G.R. SP No. 61674 with CA G.R. SP No. 59491, since both cases involved the same issues. THE ARGUMENTS CA G.R. SP No. 59491 Petitioner argues that the SGS' valuation on the imported articles is arbitrary, unjust, illegal and without proper basis. Petitioner further added that the scheme of mathematically adding to the invoice cost any amount which purportedly corresponds to subsidy being extended. to European exporters by their own government is highly anomalous since it is not in accordance with Section 201 of the Tariff and Customs Code. Second, it fails to comply with publication requirements. And lastly, the fact of export-subsidy enjoyed by European exporters is not well-established and proven by respondents Commissioner of Customs and Commissioner of Internal Revenue. cEHSTC Considering these reasons, petitioner reiterates that it is erroneous on the part of the Bureau of Customs to adopt the SGS's valuations and findings, thus, the amount it unlawfully collected from the petitioner should be refunded. Further, petitioner asserts that "the respondent Court of Tax Appeals gravely erred in not applying the well-settled rule that dutiable value of an imported article is based on cost or Fair Market Value (FMV) which is the value or price declared in the consular commercial, trade or sales invoice; that respondent court gravely erred in holding that the said rule does not apply since there exists a reasonable doubt as to the values declared in the invoices, despite stipulations by the parties that the importations were 'at reasonably fair market prices' and that the advanced duties and taxes were paid 'based on actual cost or export price as indicated in the commercial invoices;' respondent court gravely erred in sustaining instead the SGS higher valuations which were based on the 'European Economic Community (EEC) Domestic prices' and which were arrived at by adding-up to the invoice values the supposed EEC restitution or subsidy; respondent court gravely erred in not holding that such SGS higher valuations are arbitrary, unjust, illegal, and violative of Section 201 of the Tariff and Customs Code; respondent court gravely erred in not holding that petitioner is entitled to the refund of excess duties and taxes which were all paid under protest on April 14, 1993, in the aggregate amount of P5,133,757.00." 8 Petitioner submits that CTA erred in adding up the restitution or subsidy as basis of the valuation of the subject goods. It puts forth the view that in the valuation of imported products, what should be used as the basis is the FMV of the goods as provided in Section 201 of the Tariff and Customs Code. Petitioner asserts that the CTA erroneously valued the imported articles based on the domestic wholesale price and not on the export price prevailing in the international market as the FMV. It thus insists on the invoice valuation as per import entry as the true and correct fair market value of the subject articles. Respondents counter that petition should be denied on the following grounds: "1. When reasonable doubt exists as to the correctness of the fair market value/home consumption value, the same shall be ascertained from other information available to the Bureau of Customs such as the SGS-CRF value. 2. SGS higher valuation is not baseless, arbitrary, unjust and illegal nor violates Section 201 of the Tariff and Customs. 3. Publication of "established" or "information" value is not a prerequisite before it may be made the basis of the imposition of custom duty. 4. Petitioner is not entitled to a refund of additionally imposed duties and taxes, which were paid under protest. 5. Findings of fact of the Court of Tax Appeals are entitled to respect by higher courts." 9 The reason why the SGS recommended value is higher than the invoice value of the petitioner is due to the fact that it is more accurate and reflective of the correct home consumption value or price. It is precisely for this reason why the Philippine Government contracted the services of a private international firm like the SGS in order to be able to arrive at the correct price or value of imported goods. Otherwise, as history will show, the government is always at the mercy of foreign merchants and importers on matters involving customs valuations. 10 SGS' classification or valuation products are recommendatory in nature and it was never designed to replace the discretion being exercised by the Collectors of Customs in areas of valuation and classification. This is evident in the fact that the Collectors of Customs may, in proper cases, disregard the valuation recommended by SGS. Such actions of the Collector of Customs find legal support under Joint Order 1-91, which is jointly issued by the Secretary of Finance, Secretary of Trade and Industry and the Governor of the Bangko Sentral Ng Pilipinas providing for the implementation of the Comprehensive Import Supervision Service. Under paragraph 4 of said Joint Order, it provides that: 11 " Importation into the Philippines which are subject to SGS pre-shipment inspection under the provisions of this Joint Order, may be subject to further examination and appraisal by the Bureau of Customs at the discretion of the collector. The CRF shall be considered recommendatory in nature with regard to the Tariff and Customs Code." (Emphasis Supplied) Respondents contended that there is a strict compliance with Section 201 of the Tariff and Customs Code but emphasize that the invoice value cannot be the proper basis of valuation since there exists a reasonable doubt on its veracity, in such that, recourse to other information available is necessary. CA G.R. SP No. 61674 Petitioner argues that "the respondent Court of Tax Appeals gravely erred in not applying the well-settled rule that dutiable value of an imported article is based on cost or fair market value (FMV, for brevity) which is the value or price declared in the consular commercial, trade or sales invoice; respondent court gravely erred in holding that the said rule does not apply since there exists a reasonable doubt as to the values declared in the invoices, despite stipulations by the parties that the importations were 'at reasonably fair market prices' and that the advanced duties and taxes were paid. 'based on actual cost or export price as indicated in the commercial invoices;' respondent court gravely erred in sustaining instead the SGS higher valuations which were based on the 'European Economic Community (EEC) Domestic prices' and which were arrived at by adding-up to the invoice values the supposed EEC restitution or subsidy; respondent court gravely erred in not holding that such SGS higher valuations are arbitrary, unjust, illegal, and violative of Section 201 of the Tariff and Customs Code; respondent court gravely erred in not holding that petitioner is entitled to the refund of excess duties and taxes which were all paid. under protest on April 14, 1993, in the aggregate amount of P3,415,531.00." 12 Petitioner argues that such reasonable doubt, claimed by respondents to have existed, is bereft of factual basis. As stated above, it asserts that there was no "alert notice" ever issued on its shipments; and that there was neither any showing as to how SGS ascertained and established the CRF values of the questioned goods nor where and when such values were published in accordance with Section 201 of the Code. aITDAE Altogether, petitioner accuses respondents' Commissioner of Customs and Commissioner of Internal Revenue of grave abuse of discretion, without or in excess of jurisdiction and in gross violation of the law. Moreover, petitioner argues that the dutiable value of subject importation made in 1992 and 1993 should be based on "cost" or "fair market value" (FMV), and not on home consumption value (HCV). This is so because P.D. 32 had been amended by P.D. 1464, which in 1987 was further amended by E.O. 156, where the term "cost" or "fair market value" was substituted in lieu of the "home consumption value" or "price". With such amendment the term "export price" is construed within the phrase "fair market value". Petitioner then raises this issue before this Court: WHETHER OR NOT IN DETERMINING THE DUTIABLE VALUE OF IMPORTED MILK PRODUCTS, IT IS LEGAL AND PROPER TO ADD OR INCLUDE INTO THE INVOICE VALUE OR EXPORT PRICE THE AMOUNT OF FOREIGN SUBSIDY GIVEN BY EEC TO ITS DAIRY INDUSTRY. Respondents counter that "this kind of procedure being adopted by the respondent Bureau of Customs, petitioner's claim that SGS Valuation is arbitrary and unjust, can easily be controverted. As discussed earlier, SGS valuation is merely recommendatory in nature and is not conclusive upon the Bureau of Customs. Therefore, once the Collector of Customs adopts the CRF value as endorsed by the Customs Examiner/Appraiser, it is no longer considered as a mere SGS-CRF value, but for tariff and customs purposes, such value is deemed the official customs value of the articles involved." 13 THE ISSUE The sole issue to be resolved in this petition is whether or not petitioner is entitled to refund of the additionally imposed duties and taxes which were paid under protest . THE RULING "Customs duties" is 'the name given to taxes on the importation and exportation of commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a foreign country.' 14 The issue in this petition is: What is the basis of determining the dutiable value of imported milk products to arrive at customs duties. We rule to affirm the decision of the CTA . For a better understanding of the issue, we find it necessary to include the brief historical background of the Philippine Customs Valuation. It is noteworthy that from 1902 to 1972, the Philippine Customs Valuation follows the Export Value System . The first tariff and customs law that we have in the Philippines is the Tariff Act of 1909 . Alert Value " is an HCV ascertained from alert notices coming from foreign sources such as reports of Philippine Government Attaches, Philippine Diplomatic Offices and other authorized government offices. " Published Value " refers to the HCVs published in Customs Information on Value and Classification Circular (CIVCC) 270-76 and in all its Revision Orders. " Established Value " is an HCV ascertained and duly approved by the Collector of Customs and/or the Commissioner of Customs; or an HCV applied in a Discrepancy Report Approved for establishment by the Collector of Customs and/or Commissioner of Customs. P.D. No. 34 was amended by P.D. No. 1464 , 20 which took effect on June 11, 1978. The problem of using the Home Consumption Value System was the difficulty in verifying the HCV. As a remedy, the Bureau of Customs entered into a Pre-Shipment Inspection contract with SGS, known as the Comprehensive Import Supervision Scheme (CAISS) . Under this agreement with SGS, the basis for dutiable value used by SGS is the Clean Report of Findings (CRF) or the Published Value, whichever is higher. P.D. 1464 was further amended by Executive Order No. 156 , 21 which took effect on March 30, 1987, applying the cost ( FMV ) 22 as basis for duty, instead of HCV. This basis for dutiable value lasted until June 30, 1996. HIETAc During the period of March 30, 1987 to June 30, 1996, the dutiable value of imported goods is computed as follows: FMV + Freight + Insurance + other charges 23 = Dutiable Value From July 1, 1996 to December 31, 1999, pursuant to Customs Administrative Order (CAO) 2-96 , the basis of dutiable value shall be the export value , computed as follows: Export Value + Freight + Insurance + other charges. = Dutiable Value On March 28, 1996, P.D. 1464 was amended by R.A. No. 8181 . 24 In the said republic act, the basis for determining dutiable value is transaction value , 25 which shall take effect on January 1, 2000, pursuant to Section 2 26 and 3 27 of the law. On June 2, 2001, R.A. No. 9135 28 took effect, amending R.A. No. 8181. Under this republic act, the Philippine Valuation System follows the World Trade Organization (WTO) Valuation System . This new system is applicable only on those items exported to the Philippines on or after January 1, 2000 . 29 The critical determinant for the effective date of the new valuation system, is the date on which the merchandise being appraised is exported, not the date of arrival. In WTO Valuation System "the dutiable value for imported goods shall be determined using one of the six (6) methods of valuation listed below, to be applied sequentially in the order provided by law, 30 to wit: 1. Transaction Value 2. Identical Goods Value 3. Similar Goods Value 4. Deductive Value 5. Computed Value 6. Fallback Value The question now is: how will this new valuation system affect the SGS pre-shipment inspection process? The Philippine Government has extended the services of SGS to conduct pre-shipment inspection as well as price verification of certain types of goods until March 31, 2000 . In other words, for shipments exported prior to January 1, 2000, the old export value system shall still apply along with existing rules on those required to be covered by SGS-CRF. And for shipments exported on or after January 1, 2000, the transaction value system shall govern . In the instant case, the importation took place during the period of 1992 to 1993. Hence, this decision should be governed by the law that took effect during those periods of the questioned importations. At the outset, this Court has observed, on the basis of the pleadings submitted by respondents, through the Office of the Solicitor General, before this Court, that respondents keep on using the "Home Consumption Value" and sometimes interchangeably used "Fair Market Value" as the basis of dutiable value of the imported goods in question. As a matter of fact, in their consolidated memorandum 31 filed before this Court, respondents argue that the reason why the SGS recommended value is higher than the invoice value of the petitioner is due to the fact that it is more accurate and reflective of the correct home consumption value or price. Let it be emphasized that on the basis of the afore-stated historical background of Philippine Valuation System, the use of correct term or the proper basis of dutiable value is important in the resolution of this petition. Recall that during the period of 1992 and 1993, the basis of dutiable value is the "cost" or "fair market value" (FMV), and not the home consumption value. This is so because P.D. 34 had been amended by P.D. 1464, which in 1987 was further amended by E.O. 156, where the term "cost" or "fair market value" was substituted in lieu of the "home consumption value" or "price". With such amendment the term "home consumption value" should not be used during the period when the Fair Market Value is used as basis in determining the dutiable value. We now go to the issue in this petition which is the interpretation of the basis of dutiable value as found in Section 201 of Tariff and Customs Code , as amended, which states: "SECTION 201. Basis of Dutiable Value. The dutiable value of an imported article subject to an ad valorem rate of duty shall be based on the cost (fair market value) of same, like or similar articles , as bought and sold or offered for sale freely in the usual wholesale quantities in the ordinary course of trade in the principal markets of the exporting country on the date of exportation to the Philippines (excluding internal excise taxes to be remitted or rebated) or where there is none on such date, then on the cost (fair market value) nearest to the date of exportation, including the value of all container, covering and/or packings of any kind and all other expenses, costs and charges incident to placing the article in a condition ready for shipment to the Philippines, and freight as well as insurance premium covering the transportation of such articles to the port of entry in the Philippines. Where the fair market value or price of the article cannot be ascertained thereat or where there exists a reasonable doubt as to the fairness of such value or price, then the fair market value or price in the principal market in the country of manufacture or origin , if it is not the country of exportation, or in a third country with the same stage of economic development as the country of exportation shall be used. cSEaDA When the dutiable value of the article cannot be ascertained in accordance with the preceding paragraphs or where there exists a reasonable doubt as to the cost (fair market value) of the imported article declared in the entry, the correct dutiable value of the article shall be ascertained by the Commissioner of Customs from the reports of the Revenue or Commercial Attache (Foreign Trade Promotion Attache), pursuant to Republic Act Numbered Fifty-four Hundred and Sixty-six or other Philippine diplomatic officers or Customs Attaches and from such other information that may be available to the Bureau of Customs . Such values shall be published by the Commissioner of Customs from time to time. When the dutiable value cannot be ascertained as provided in the preceding paragraphs, or where there exists a reasonable doubt as to the dutiable value of the imported article declared in the entry, it shall be domestic wholesale selling price of such or similar article in Manila or other principal markets in the Philippines or on the date the duty become payable on the article under appraisement, on the usual wholesale quantities and in the ordinary course of trade, minus: (a) not more than twenty-five (25) per cent thereof for expenses and profits; and (b) duties and taxes paid thereon. 32 (Emphasis Supplied) The law is clear that where "the dutiable value of an imported article subject to an ad valorem rate of duty is based on its Fair Market Value (then worded as home consumption value) or price as freely offered for sale in wholesale quantities in the ordinary course of trade in the principal markets of the country from where exported on the date of exportation to the Philippines. That Fair Market Value (home consumption value) or price is the value or price declared in the consular, commercial, trade or sales invoice. 33 But the law provides for qualification. "If there is a reasonable doubt as to the value of the imported article declared in the entry, the correct dutiable value is to be ascertained from the reports of the Revenue Attache or Commercial Attache and from such other information that may be available to the Bureau of Customs." 34 In the instant petition, the petitioner argues the value declared in its sales invoice is the true price offered by the exporter, in such that no reasonable doubt existed as to its veracity, thereby precluding the determination of the dutiable value by any other means. This argument does not hold water. Noteworthy is the fact that the additional duties and taxes imposed by the Bureau of Customs has for its bases the findings of the SGS which considers both the actual price as per seller's/exporters invoice and the restitution paid to the Exporters according to the EEC agreement. In other words, there can be no question that as a general rule the FMV or price of an imported article subject to an ad valorem rate of duty shall be the value or price declared in the consular, commercial, trade or sales invoice. However, where there exists a reasonable doubt as to the value or price of the imported article declared in the entry, the correct dutiable value of the article shall be ascertained from the reports of the Revenue Attache or Commercial Attache (Foreign Trade Promotion Attache), pursuant to Republic Act Numbered Fifty-four hundred and. sixty-six or other diplomatic officers and from such other information that may be available to the Bureau of Customs. 35 Thus, the consular and commercial invoice can in no way be conclusive on the government. Otherwise, the government would be rendered helpless to a considerable extent in the collection of the correct amount of customs revenues. Customs officials would be left at the mercy of foreign merchants and importers who may avail of various devices, schemes and other arrangements, short of outright fraud, to lower and reduce the face value of the articles covered by such invoices and certifications issued by consular officials who may not have the facilities to verify the correctness of the stated invoice prices as against the true and actual value of the importation. 36 In the instant petition, let it be emphasized that the law does not provide that the reasonable doubt be construed strictly. Any condition that creates a probable cause to make the respondent Commissioner of Customs believe in the inaccuracy of the invoice value of imported goods, declared by petitioner, as reflected by the importer in his customs declaration is enough to cast a doubt as to the price declared in the invoice. Knowledge of the existing difference between the price offered by the exporter to its local market (domestic price) vis--vis the price it offered to the international market (export price) to our mind, is sufficient to engender in a reasonable and prudent man a doubt as to the veracity of the contract price indicated in the exporter-sellers' invoice. This circumstance alone could well justify the Bureau of Customs to secure the services of the SGS to arrive at and determine the true value of the goods as basis for determining duties and taxes payable to the government. This Court finds that the discrepancy in the value of the imported goods as declared by petitioner and determined by the Collector of Customs is sufficient to create doubt as to the veracity of the invoice value of petitioner, to wit: In CA G.R. SP No. 61674 I. MICP PROTEST CASE No. 394-93 filed on December 22, 1993 Skimmed Milk Powder- Medium High Heat from Ireland CONSUMPTION ENTRY NO. 72626-93 aCcADT Paid under BOC O.R. # 44815951, dated December 22, 1993 INVOICE SGS 1,783.58/mt 2,210.76/mt Invoice Value 428,059.20 530,582.40 II. ICP PROTEST CASE No. 393-93 filed on December 29, 1993 Skimmed Milk Powder- Medium High Heat from Ireland CONSUMPTION ENTRY NO. 70058-93 Paid under BOC O.R. # 44815967, dated December 22, 1993 INVOICE SGS 1,783.58/mt 2,210.76/mt Invoice Value 142,062.15 176,087.03 III. MICP PROTEST CASE No. 329-93a filed on July 16, 1993 Skimmed Milk Powder 28% from Denmark CONSUMPTION ENTRY NO. 22713-93 Paid under BOC O.R. # 42629237, dated July 14, 1993 INVOICE SGS 1,588.54/bag 2,661.75/bag Invoice Value 160,454.40 257,448.00 IV. MICP PROTEST CASE No. 334-93 filed on July 16, 1993 Skimmed Milk Powder 28% from Denmark CONSUMPTION ENTRY NO. 22713-93 Paid under BOC O.R. # 42629212, dated July 14, 1993 INVOICE SGS 1,588.54/bag 2,661.75/bag Invoice Value 160,454.40 257,448.00 V. MICP PROTEST CASE No. 334-93a filed on July 14, 1993 Skimmed Milk Powder 28% from Denmark CONSUMPTION ENTRY NO. 22715-93 Paid under BOC O.R. # 42629221, dated July 14, 1993 INVOICE SGS 1,588.54/bag 2,661.75/bag Invoice Value 200,568.40 321,810.58 CA G.R. SP No. 59491 Commodity Imported: Sweet Buttermilk Powder MICP Protest Consumption Bureau of Date Payments Made Case No. Entry Customs Official Under Protest Receipt Number 190-93 bb 73303-92 41687545 4/4/93 P470,899.00 190-93 w 87364-92 41687536 4/14/93 101,949.00 190-93 aa 7705-92 41687511 4/14/93 205,435.00 190-93 y 83712-92 41687527 4/14/93 126,951.00 190-92 v 76119-92 41657554 4/14/93 246,992.00 190-93 z 83605-92 41687563 4/14/93 84,763.00 190-93 e 79968-93 41564993 4/14/93 87,533.00 190-93 f 76150-92 41565002 4/14/93 174,131.00 190-93 g 90743-92 41687667 4/14/93 462,446.00 190-93 h 02452-92 41687676 4/14/93 179,366.00 190-93 x 87363-92 41687685 4/14/93 407,279.00 Total amount of payments made under protest P2,547,744.00 Commodity Imported: Skimmed Milk Powder LH MICP Protest Consumption Bureau of Date Payments Made Case No. Entry Customs Official Under Protest Receipt Number 190-93 l 67687-92 41564984 4/4/93 P731,905.00 190-93 65937-92 41564862 4/14/93 404,832.00 190-93 a 65938-92 41564914 4/14/93 162,813.00 190-93 j 56788-92 41564835 4/14/93 246,296.00 190-93 m 50282-92 41564957 4/14/93 422,265.00 190-93 ee 68280-92 41564966 4/14/93 617,902.00 Total amount of payments made under protest P2,586,013.00 Certainly, the above-quoted differences buttress the finding of respondents that there is reasonable doubt as to the accuracy of the price stated by petitioner in its invoice that warrants the use of other available and more reliable sources of information to determine the FMV of said shipment to insure a correct assessment. What the law requires is the declaration of the appropriate value of imported goods not only as the basis for imposing the correct amount of taxes but also as a means to regulate, among others, the price of commodities and to promote fair trade competition. 37 In other words, the marked difference between the Invoice and the SGS value is, in our consideration, sufficient to engender in the mind of a reasonable and prudent man a doubt as to the veracity of the former price. More so, if we take into account the volume involved in this case. Hence, as respondents continued, the "unreliability and ill-effect" of basing the dutiable value of imported articles on the commercial and consular invoices, are apparent, especially at that time when prices of commodities throughout the world were continuously rising. 38 On the assumption that respondents has the discretion in this case to disregard the value indicated in the invoice and to ascertain the correct dutiable value thereof from other sources, petitioner's thesis is that private respondents' valuation of petitioner's shipment was erroneous as it was based upon a wrong principle and was contrary to law. The attention of this Court is invited to the fact that the value made by respondents is based on the appraisal made by SGS. We agree with the CTA that SGS is an international firm of good reputation. The singular fact that it has been chosen and awarded by the Government of contract services to specifically inspect and provide real values/prices of products imported into the country for tariff and customs purposes is proof enough of its competence and expertise in that particular field. Petitioner is aware that during the period of the questioned importations the Philippine Government engaged the services of SGS, to conduct shipment inspection and submit valuation report thru the CRF. The appraisal of said imported goods made by the SGS and adopted by the Bureau of Customs is based on the value of the goods declared in the sales invoice including the amount of subsidy/discount offered by the European markets as part of their export policy . In other words, in determining the propriety of the appraisal made by SGS based on the value declared in the sales invoice including the amount of subsidy/discount offered by European markets, it is imperative to look once again to the applicable provision in the valuation of the imported goods during the dates of importation in 1992. A cursory reading of Section 201 of the Tariff and Customs Code reveals that what is controlling is the FMV or cost of the article as bought and sold. Said FMV should not be limited to the value or price declared in the consular, commercial, trade or sales invoice. There is another criteria which is too important to be left unnoticed that is, the price of the goods as freely offered for sale in wholesale quantities in the ordinary course of trade in the principal markets on the date of exportation to the Philippines. TADIHE The petitioner is fully aware that the price as indicated in the invoice is a discounted price brought about by the export policy of EEC in which European Governments extend to their own exporters a certain subsidy/refund on the prices of goods they exported to foreign countries. On the basis of the foregoing, it could be inferred that if there is a discounted price being offered to their exporters, then there exists a higher price, which is customarily offered by these foreign merchants in the ordinary course of trade in their principal markets. It is then, unfair as it is illogical that the price contained in the invoice is the same price which is customarily offered for sale in the exporter's principal market, considering that fact that it is well-established that a subsidy is granted to exporters of milk and milk products as an added incentive. Clearly, this discounted price cannot be considered the FMV as defined by Section 201 of the Tariff and Customs Code. The subsidy/refund granted to European exporters as part of their government's foreign economic policy should not be used as the controlling price in the valuation of the goods imported in the Philippines. The benefit being provided by this export-subsidy policy to foreign merchants or to foreign governments, should not prejudice our country by depriving our Government of taxes and duties due them. It was therefore no error on the part of the Bureau of Customs to disregard the value declared in the petitioner's invoice and to adopt instead the price indicated in the SGS's Cleans Report of Findings. The SGS in valuating the subject importation recommended a higher value than that of the invoice value by including in its valuation the subsidy and export refund granted to seller-exporter. Obviously, we could not entirely rely on what is indicated in the invoice as the FMV of the goods especially if it was established that the price therein is a discounted price of what was normally offered in the ordinary course of trade. Respondents have convincingly shown that EEC has been subsidizing its export products by way of refunds which effectively created two regimes of pricing in their community, one for the domestic market in the country of supply, and the other, a much lower price for those intended for export . As it works, the price difference between the two regimes is covered by an export refund. In this way, EEC exporters are able to quote lower competitive prices for exports while their domestic prices are variedly much higher. Hence, respondents are correct in saying that petitioner's invoice value, which has been the beneficiary of EEC government subsidy, is not the true and correct FMV contemplated under Section 201 of the Tariff and Customs Code. This Court agrees with respondents that the invoice value does not represent goods or articles that have been bought "freely" in the ordinary course of trade in the principal markets of the exporting country. Thus, respondents committed no reversible error in adjusting the invoice value to EEC domestic prices. Hence, since the FMV cannot be ascertained in a manner as enumerated in Section 201 of the Tariff and Customs Code or there exists a reasonable doubt as to the fairness of such value or price, respondent Bureau is mandated by the third paragraph of the said Section to ascertain the correct dutiable value from among others, "such other information" that may be available to him. The existence of reasonable doubt prompted the Collector of Customs to resort to other information such as that of the SGS's recommendation and valuation. Verily, the authority of the Collector of Customs to resort to other means of ascertaining FMV in the event that reasonable doubt exists on the invoice value is manifest from the provisions of Section 201 of the Tariff and Customs Code and in our jurisprudence. Moreover, Section 1405 of the Tariff and Customs Code , 39 as amended, also provides: "Section 1405. Proceedings and Report of Appraisers. Appraisers shall, by all reasonable ways and means, ascertain, estimate and determine the value or price of the articles as required by law, any invoice or affidavit thereto or statement of cost, or of cost of production to the contrary notwithstanding, and after revising and correcting the report of the examiners as they may judge proper, shall report in writing on the face of the entry the value so determined, irrespective of whether such value is equal, higher or lower than the invoice and/or entered value of the articles. Proceedings and Reports of Appraisers. "(Emphasis Supplied) In other words, when "the imported good are (then) subjected to examination, appraisal by examiners and appraisers," 40 the appraisers shall "by all reasonable ways and means, ascertain, estimate and determine the value or price of the articles as required by law." In the instant petition, the Collector of Customs relied on the valuation made by SGS. On the contention of the petitioner that SGS' valuation does not comply with the due process clause as it dispensed with the publication requirements, we do not agree. The posture taken by petitioner is untenable. A reading of Section 201 of the Tariff and Customs Code shows that "where there exists a reasonable doubt as to the cost (fair market value) of the imported article declared in the entry, the correct dutiable value of the article shall be ascertained by the Commissioner Of Customs from the reports of the Revenue or Commercial Attache (Foreign Trade Promotion Attache), pursuant to Republic Act Numbered Fifty-four Hundred and Sixty-six or other Philippine diplomatic officers or Customs Attaches and from such other information that may be available to the Bureau of Customs." This is what is called the "established" or "information" value. Such value shall be the Fair Market Value of the imported article which shall be the subject of customs duty and taxes. aACHDS The same article then provides: "Such values shall be published by the Commissioner of Customs from time to time." The law does not provide that it is only after the "established" or "information" value is "published" that such FMV may be the basis of assessment of the customs duties and taxes. On the contrary, it is explicitly provided that upon reasonable doubt as to the accuracy of the declared value of the article in the consular or commercial invoice, the Commissioner of Customs may determine its FMV from other available and more reliable sources, which "established" or "information" value shall then be the basis of the imposition of the customs duties and taxes. In other words, the publication of said "established" or "information" value is not a prerequisite before it may be the basis of the imposition of customs duty and taxes. Conversely, its non publication is no obstacle to the assessment of customs duty and taxes based on such "established" or "information" value. The publication is intended as a guide in the assessment of future shipment of similar articles. While such published value of an imported article is reliable, nevertheless, in the absence of the same, the Commissioner of Customs may establish said value from other sources as above provided by law. 41 Moreover, the SGS recommendation is never conclusive on the part of the Collector of Customs and respondents Commissioner of Customs and Commissioner of Internal Revenue. It may be disregarded. But once the SGS findings is adopted by the Collector of Customs, it is deemed the official customs value of the articles involved, which then enjoys the presumption of correctness. Hence, the value of merchandise fixed by the appraiser (SGS) and affirmed by the Collector of Customs is conclusive in the absence of an affirmative showing that the appraiser, in assessing the value, proceeded upon a wrong principle and contrary to law. 42 It was therefore no error for the respondents to disregard invoice value and to use instead the SGS value as the true and correct price of the imported articles. In the same case of Coca-Cola Export Corporation vs. The Commissioner of Internal Revenue , 43 the Supreme Court reaffirmed the well-established rule: " The value of merchandise fixed by the appraiser and affirmed by the Collector of Customs is conclusive in the absence of an affirmative showing that the appraiser, in assessing the value, proceeded upon a wrong principle and contrary to law , and that if the customs authorities were bound by the invoice value, it is evident that they would be, to a considerable extent, at the mercy of foreign merchants and importers. The purpose of Congress in providing for appraisers was to prevent fraud upon the customs, and thus protect the revenues of the Government." The Court has likewise consistently held as a necessary corollary that the value of imported articles as fixed by the customs authorities in the discharge of their function of assessing and collecting the lawful revenues justly on imported articles and confirmed by the customs commissioner and/or respondent revenue commissioner . . . that such valuation is presumed to be correct and therefore conclusive in the absence of fraud or illegality or of an affirmative showing by the protesting importer that the customs authorities in fixing or assessing the value of the importation proceeded upon a wrong principle and contrary to law. The burden thus rests upon the importer disputing the customs valuation not only to prove the contrary and overcome the presumption of correctness of the valuation but also to show that the figures declared by him are in fact true and correct . As restated by the Court in a 1960 case, ' the determination of the tax deficiency by the Government has prima facie validity and the burden rests upon the taxpayer to overcome this presumption and to show to the satisfaction of the Tax Court that the determination was not correct .'" (Emphasis Supplied) Where a higher assessment on its imported goods have been made, it becomes incumbent upon petitioner to show that the value declared in its consular invoice was the true and correct FMV thereof. Petitioner cannot simply rely on its invoice, precisely because a question on the veracity of the figure contained therein had been raised by the re-assessment made by SGS, which re-assessment was affirmed by the Collector of Customs, Commissioner of Customs, Commissioner of Internal Revenue and the CTA. In other words, the burden of proving that the valuation is not correct is shifted to the petitioner-claimant. It is incumbent upon the petitioner to overcome the presumption of correctness of the valuation and to show to the satisfaction of this Court that the figures that is declared in the invoice are in fact the true and accurate fair market value of the subject goods. In the 1991 case of COMMISSIONER OF CUSTOMS vs. HON. COURT OF TAX APPEALS, 44 the Supreme Court upheld this ruling when it said: "The burden thus rests upon the importer disputing the customs valuation not only to prove the contrary and overcome the presumption of correctness of the valuation but also to show that the figures declared by him are in fact true and correct." At the very least, petitioner should have convinced this Court that no reasonable doubt ever existed such that recourse to the SGS findings is not necessary. This, the petitioner failed to do. No evidence was likewise introduced that the customs valuation had been made arbitrarily, whimsically and capriciously. "Customs duties" is 'the name given to taxes on the importation and exportation of commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a foreign country.' 45 Any claim for refund of customs duties, therefore, take the nature of tax exemptions that must be construed strictissimi juris against the claimants and liberally in favor of the taxing authority. 46 This power of taxation being a high prerogative of sovereignty, its relinquishment is never presumed. Any reduction or diminution thereof with respect to its mode or its rate must be strictly construed, and the same must be couched in clear and unmistakable terms in order that it may be applied. 47 Thus, any award for the refund of allegedly overpaid customs duties and taxes in favor of petitioner on its importations is not favored in this jurisdiction unless there is a direct and clear finding thereon. ECDAcS Moreover, it has been a settled rule that this Court is not a trier of facts. 48 Findings of the CTA are generally binding and cannot be disturbed by this Court unless it is sufficiently shown that there has been no evidence on record to support such findings. 49 The assessment made by the CTA carry even more weight when it is consistent with that of the Bureau of Customs and Bureau of Internal Revenue, agencies of the government tasked with the duty on matters relating to tax and customs duties. Consonantly, the factual determination of the CTA, when supported by substantial evidence, will not be reversed on appeal unless Ads clear that the said court has committed gross error in the process. 50 The Commissioner of Customs, Commissioner of Internal Revenue and the Court of Tax Appeals are unanimous in concluding that no error has been committed by Collector of Customs in adopting the SGS valuation. The records do appear to sustain this conclusion. WHEREFORE, the instant petition is hereby DISMISSED. ACCORDINGLY, Decisions dated January 3, 2000 51 and July 10, 2000 52 of the Court of Tax Appeals and the Resolutions dated May 15, 2000 53 and October 11, 2000 54 , are hereby AFFIRMED. SO ORDERED. Dacudao and Abdulwahid * , JJ., concur. Footnotes Rollo received on January 11, 2006. * Vice J. Carandang who is on leave. 1. CA-G.R. SP No. 59491, Annex "A", Rollo , pp. 38-52. 2. CA-G.R. SP No. 61674, Annex "A", Rollo , pp. 40-65. 3. CA-G.R. SP No. 59491, Annex "C", Rollo , pp. 65-70. 4. CA-G.R. SP No. 61674, Annex "C", Rollo , pp. 78-83. 5. Manila International Container Port. 6. Section 7. Jurisdiction. The Court of Tax Appeals shall have exclusive appellate jurisdiction to review by appeal, as herein provided (2) Decision of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected; fines, forfeitures or other penalties imposed in relation thereto; or other matters arising under the Custom Law or other law or part of law administered by the Bureau of Customs. 7. The " Alert Value " is a Home Consumption Value ascertained from alert notices coming from foreign sources such as reports of Philippine Government Attaches, Philippine Diplomatic Offices and other authorized government offices. 8. Rollo , p. 16. 9. Consolidated Memorandum of Public Respondent, Rollo , p. 116. 10. Ibid , Rollo , pp. 122-123. 11. Ibid , Rollo , p. 117. 12. Rollo , p. 16. 13. Consolidated Memorandum of Public Respondent, Rollo , p. 118. 14. Garcia v. Executive Secretary , 211 SCRA 219, 227 (1992) citing U.S. v. Sischo , 262 Fed. 1001 (1919); Flint v. Stone Tracey Company , 220 US 107 (1910); Keller-Dorian Corp. v. Commissioner of Internal Revenue , 153 F2d 1006 (1946) and Pollock v. Farmers' Loan and Trust Company , 158 US 601; 39 Law Ed. 1108 (1895); NESTLE PHILIPPINES, INC., (FORMERLY FILIPRO, INC.) vs. HONORABLE COURT OF APPEALS, G.R. No. 13411, July 6, 2001. 15. Under REPUBLIC ACT NO. 3, "AN ACT TO CONTINUE IN FORCE AND EFFECT THE ACT OF THE CONGRESS OF THE UNITED STATES, APPROVED ON AUGUST 5, 1909, ENTITLED "AN ACT TO RAISE REVENUE FOR THE PHILIPPINE ISLANDS, AND FOR OTHER PURPOSES," OTHERWISE KNOWN AS "THE PHILIPPINE TARIFF LAW OF 1909," AS AMENDED, which took effect on July 19, 1946. Section 1 of the said republic act, provides: SECTION 1. The Act of the Congress of the United States, approved on August 5, 1909, entitled "An Act to Raise Revenue for the Philippine Islands, and for other purposes," otherwise known as "The Philippine Tariff Law of 1909," as amended, shall continue in force and effect on and after July 4, 1946, until the Congress of the Philippines shall provide otherwise. 16. AN ACT TO REVISE AND CODIFY THE TARIFF AND CUSTOMS LAWS OF THE PHILIPPINES. 17. SECTION 201. Basis of Dutiable Value. Whenever an imported article is subject to an ad valorem rate of duty, the duty shall be assessed upon the market value or price at which, at the time of exportation, the same, like or similar article is freely offered for sale in the principal markets of the exporting country for exportation to the Philippines, in the usual wholesale quantities and in the ordinary course of trade (excluding internal excise taxes to be remitted or rebated), plus ordinary expenses prior and incidental to the lading of such article on board the vessel or aircraft at the port of export (including taxes or duties, if any) and freight paid as well as assurance premium paid covering the transportation of such article to the port of entry in the Philippines. xxx xxx xxx 18. AMENDING THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES. 19. Customs Administrative Order 14-77, Customs Memorandum Order 42-78. 20. A DECREE TO CONSOLIDATE AND CODIFY ALL THE TARIFF AND CUSTOMS LAWS OF THE PHILIPPINES. 21. FURTHER AMENDING SECTION 201 OF THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, AS AMENDED, CHANGING THE BASE FOR CUSTOMS VALUATION FROM HOME CONSUMPTION VALUE TO COST, PLUS INSURANCE AND FREIGHT (C.I.F) AND FOR OTHER PURPOSES. 22. Sec. 201. Basis of Dutiable Value. The dutiable value of an imported article subject to an ad valorem rate of duty shall be based on the cost (fair market value) of same, like or similar articles, as bought and sold or offered for sale freely in the usual wholesale quantities in the ordinary course of trade in the principal markets of the exporting country on the date of exportation to the Philippines (excluding internal excise taxes to be remitted or rebated) or where there is none on. such date, then on the cost (fair market value) nearest to the date of exportation, including the value of all containers, coverings and/or packings of any kind and all other expenses, costs and charges incident to placing the article in a condition ready for shipment to the Philippines, and freight as well as insurance premiums covering the transportation of such articles to the port of entry in the Philippines. 23. which is 3% of the FMV, except, 1) If imported in bulk; 2) If imported to Philippines in its original packing as when sold for domestic consumption in the country of manufacturer. 24. AN ACT CHANGING THE BASIS OF DUTIABLE VALUE OF IMPORTED ARTICLES SUBJECT TO AN AD VALOREM RATE OF DUTY FROM THE HOME CONSUMPTION VALUE (HCV) TO TRANSACTION VALUE (TV) , AMENDING FOR THE PURPOSE SECTION 201 OF TITLE II, PART 1 OF PRESIDENTIAL DECREE NO. 1464, OTHERWISE KNOWN AS THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, AS AMENDED, AND FOR OTHER PURPOSES. 25. Sec. 201. Basis of Dutiable Value. The dutiable value of an imported article subject to an ad valorem rate of duty shall be the transaction value , which shall be the price actually paid or payable for the goods when sold for export for the Philippines, adjusted by adding the following to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods: . . . 26. "SECTION 2. Transitory Provisions. Upon the effectivity of this Act and until such time when the Congress authorizes the shift to transaction value before January 1, 2000 as provided under Section 3 of this Act, the dutiable value of an imported article subject to an ad valorem rate of duty shall be based on the export value at which at the time of exportation, . . ." 27. Section 3. In the interest of national economy, general welfare and/or national security, the Congress. shall, upon recommendation of the President, by joint resolution, order the shift to transaction value, as provided under Section 1 of this Act, as the basis of dutiable value of an imported article to an ad valorem rate of duty even before January 1, 2000. 28. 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. 29. CAO No. 4-2004 which is an order amending CAO No. 5-2001. 30. Ibid . 31. Rollo , pp. 109-128. 32. As amended by Executive Order No. 156. 33. COMMISSIONER OF CUSTOMS vs. COURT OF TAX APPEALS, G.R. No. 72069, May 21, 1988; COMMISSIONER OF CUSTOMS vs. COURT OF TAX APPEALS, G.R. No. 72070, May 21, 1988; COMMISSIONER OF CUSTOMS vs. HON. COURT OF TAX APPEALS, G.R. No. L-48027, March 11, 1991; ACTING COMMISSIONER OF CUSTOMS vs. WISE & COMPANY, INC., G.R. No. 47890. October 16, 1992. 34. COMMISSIONER OF CUSTOMS vs. COURT OF TAX APPEALS, G.R. No. 72069, May 21, 1988; COMMISSIONER OF CUSTOMS vs. COURT OF TAX APPEALS, G.R. No. 72070, May 21, 1988; THE COMMISSIONER OF CUSTOMS vs. COURT OF TAX APPEALS, G.R. Nos. L-48144-47, June 28, 1988; THE COMMISSIONER OF CUSTOMS vs. PROCTER AND GAMBLE PHILIPPINE MANUFACTURING CORPORATION, G.R. No. 56705, January 31, 1989. 35. THE COMMISSIONER OF CUSTOMS vs. PROCTER AND GAMBLE PHILIPPINE MANUFACTURING CORPORATION, G.R. No. 56705, January 31, 1989. 36. THE COMMISSIONER OF CUSTOMS vs. PROCTER AND GAMBLE PHILIPPINE MANUFACTURING CORPORATION, supra ; The Coca-cola Export Corporation vs. The Commissioner of Internal Revenue , 56 SCRA 5 (1974). 37. THE COMMISSIONER OF CUSTOMS vs. PROCTER AND GAMBLE PHILIPPINE MANUFACTURING CORPORATION, G.R. No. 56705, January 31, 1989. 38. THE COMMISSIONER OF CUSTOMS vs. COURT OF TAX APPEALS, G.R. Nos. L-48144-47, June 28, 1988. 39. THE COMMISSIONER OF CUSTOMS vs. PROCTER AND GAMBLE PHILIPPINE MANUFACTURING CORPORATION, G.R. No. 56705, January 31, 1989. 40. Tax Law and Jurisprudence, Second Edition, by Justice Jose C. Vitug and Judge Ernesto D. Acosta, pp. 358-359. 41. THE COMMISSIONER OF CUSTOMS vs. PROCTER AND GAMBLE PHILIPPINE MANUFACTURING CORPORATION, G.R. No. 56705, January 31, 1989. 42. COMMISSIONER OF CUSTOMS vs. HON. COURT OF TAX APPEALS, G.R. No. L-48027, March 11, 1991. 43. G.R. No. L-23604, March 15, 1974. 44. G.R. No. L-48027, March 11, 1991. 45. Garcia v. Executive Secretary , 211 SCRA 219, 227 (1992) citing U.S. v. Sischo , 262 Fed. 1001 (1919); Flint v. Stone Tracey Company , 220 US 107 (1910); Keller-Dorian Corp. v. Commissioner of Internal Revenue , 153 F2d 1006 (1946) and Pollock v. Farmers' Loan and Trust Company , 158 US 601; 39 Law Ed. 1108 (1895); NESTLE PHILIPPINES, INC., (FORMERLY FILIPRO, INC.) vs. HONORABLE COURT OF APPEALS, G.R. No. 13411, July 6, 2001. 46. Commissioner of Internal Revenue v. Tokyo Shipping Co., Ltd ., 244 SCRA 332, 336 (1995), Esso Standard Eastern, Inc. v. Acting Commissioner of Customs , 18 SCRA 488 (1966). 47. Philippine Telegraph and Telephone Corp. v. COA , 146 SCRA 190, 196-197 (1986); NESTLE PHILIPPINES, INC., (FORMERLY FILIPRO, INC.) vs. HONORABLE COURT OF APPEALS, G.R. No. 13411, July 6, 2001. 48. Hervas vs. Court of Appeals , 319 SCRA 776. 49. Ceremonia vs. Court of Appeals , 314 SCRA 731; Guerrero vs. Court of Appeals , 285 SCRA 670. 50. CIR vs. Court of Appeals , 298 SCRA 83; REPUBLIC OF THE PHILIPPINES vs. THE COURT OF TAX APPEALS, G.R. No. 139050, October 2, 2001. 51. CTA Case Nos. 5224 and 5225. 52. CTA Case No. 5265. 53. CTA Case Nos. 5224 and 5225. 54. CTA Case No. 5265.