PHILIPPINE AIRLINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY En Bane PHILIPPINE AIRLINES, INC., CTAEB NO. 2657 Petitioner, {CTA Case No. 10133) -versus- Present: DEL ROSARIO, P.J., RINGPIS-LIBAN, MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, MAR 26 2025 x---------------------------R--e-s-p--o-n--d-e--n-t-.-----------------~--~ --:,~-~-~~!~! x DECISION MODESTO-SAN PEDRO, J.: The Case Before the Court En Bane is a Petition for Review ("Petition"), filed on July 29, 2022.1 The Petition assails the September 28, 2021, Decision2 of the Court' s Second Division which denied its Petition for Review which sought the refund of, or issuance of a tax credit certificate for, the amount of P2,904,585 .91 , representing excise taxes it paid under protest on July 27, 201 7, and October 19,2017, for importations of alcohol products, as well as the June 22, 2022, Resolution3 denying its Motion for Reconsideration~ Rollo, pp. I 1-82. Division Docket, Vol. II , pp. 794-822. !d. at 855-864.

DECISIO:\ CTA lcB CASE NO. 2657 (CTA CASE NO. 10133) The Parties Petitioner, Philippine Airlines, Inc., is a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines with registered address at PNB Financial Center, President Diosdado P. Macapagal Avenue, CCP Complex, Pasay City.4 On the other hand, respondent is the Commissioner of the Bureau of Internal Revenue ("BIR"), vested with the authority to decide, approve, and grant tax refunds pursuant to Section 112 (C) of the National Internal Revenue Code of 1997, as amended ("Tax Code"). He may be served with summons and other Court processes at the BIR National Office Building, Agham Road, Diliman, Quezon City.5 The Facts The case began on July 22, 2019 when petitioner submitted a letter to respondent requesting for refund of or issuance of tax credit certificate for the amount of P2,904,585.91 representing excise taxes it paid on July 27, 2017, and October 19, 2017, for its importation of alcohol products which, under Presidential Decree ("PD") No. 1590, are exempt from excise tax.6 Considering that it only had two years from the payment of taxes within which to file an action with this Court, petitioner filed its Petition for Review a mere three days after its refund letter, or on July 25, 2019.7 Respondent filed his Answer8 on October 2, 2019, after being granted extended periods twice. Following trial, the Court, acting through its Second Division, issued the assailed Decision denying the case for lack of merit. Petitioner's Motion for Reconsideration, filed on November 3, 2021 9, was denied per the June 22, 7_07--7, R eso1utw. n. Having received said Resolution on June 29, 2022, petitioner filed the instant Petition for Review on July 29, 2022, .hefure the Court En Bane, following an extension of time granted to it~ Petition for Review, id., p. 2. ld 6 See Exhibit "P-2"; Division Docket Vol. II, pp. 529-539. Division Docket Vol. I. p. 10-95 !d. at 108-114. 9 !d. at 823-843.

DECISIO:\ CTA EB CASE NO. 2657 (CTA CASE NO. 10133) The Petition was dismissed on October 12, 2022, for lack of jurisdiction10 but upon Motion 11 , the same was reversed, and respondent was ordered to file his Comment to the Petition12� Following the Records Verification report that respondent failed to file any Comment, the case was submitted for Decision on January 25, 2024 13 . Hence, this Decision. The Issue The sole issue for this Court's resolution is whether denial of the Petition for Review before the Court in Division was proper as petitioner's evidence did not sufficiently establish that the subject imported alcohol products were not locally available in reasonable quantity, quality or price at the time of importation. Petitioner's Arguments Petitioner insists that the evidence it presented sufficiently established that the subject imported alcohol products are not locally available in reasonable quantity, quality or price. It also holds out that the Decision's imposition of stringent requirements defeats the purpose of PD No. 1590. The Ruling ofthe Court Petitioner's claim for refund is anchored upon PD No. 1590 which exempts it from the payment of excise taxes for its imported commissary and catering supplies, subject to its compliance with set requirements. The pertinent section of PD No. 1590 provides, as follows- Section 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine Government during the life of this franchise whichever of subsections (a) and (b) hereunder will result in a lower tax: (a) The basic corporate income tax based on the grantee's annual net taxable income computed in accordance with the provisions of the National Internal Revenue Code; or~ 10 See Resolution, Rollo, pp. 84-87. " !d., at 98-107. 12 See July 6, 2023 Resolution, !d., at 123-126. 13 !d., at 128. The time to promulgate the Decision was extended afterthe case was re-raffled to this Ponente for study and report.

DECISIO'i CTA EB CASE NO. 2657 (CTA CASE NO. 10133) Page-l of 15 (b) A franchise tax of two per cent (2%) of the gross revenues derived by the grantee from all sources, without distinction as to transport or nontransport operations; provided, that with respect to international air-transport service, only the gross passenger, mail, and freight revenues from its outgoing t1ights shall be subject to this tax. The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed, or collected by any municipal, city, provincial, or national authority or government agency, now or in the future, including but not limited to the following: I. All taxes, duties, charges, royalties, or fees due on local purchases by the grantee of aviation gas, fuel, and oil, whether refined or in crude form, and whether such taxes, duties, charges, royalties, or fees are directly due from or imposable upon the purchaser or the seller, producer, manufacturer, or importer of said petroleum products but are billed or passed on the grantee either as part of the price or cost thereof or by mutual agreement or other arrangement; provided, that all such purchases by, sales or deliveries of aviation gas, fuel, and oil to the grantee shall be for exclusive use in its transport and nontransport operations and other activities incidental thereto; 2. All taxes, including compensating taxes, duties, charges, royalties, or fees due on all importations by the grantee of aircraft, engines, equipment, machinery, spare parts, accessories, commissary and catering supplies, aviation gas, fuel, and oil, whether refined or in crude form and other articles, supplies, or materials; provided, that such articles or supplies or materials are imported for the use of the grantee in its transport and transport operations and other activities incidental thereto and are not locally available in reasonable quantity, quality, or price; ..." (Emphasis, supplied) Hence, the issue in the case is whether the imported products for which petitioner claims a tax refund are not locally available in reasonable quantity, quality or price. In denying the claim for refund, the Court, acting m Division, elucidated as follows- However, with regard to the third condition, i.e., the non- availability of the subject imported alcohol products at reasonable quantity, quality or price in the local market, We find that petitioner failed to prove compliance therewith. To prove that the imported alcohol products were not locally available in reasonable quantity, quality or price, petitioner submitted -------- the following: (I) Judicial Affidavit of Capinpin, its Manager for In-__...--

DECISIO:\ CTA �8 CASE NO. 2657 (CTA CASE NO. 10133) flight Materials Purchasing Division; (2) Absolute Sales Corporation's Product Price Lists for 2013 and 2014; (3) Future Trade International's Product Price Lists for 2013 and 2014; (4) BIR's RMC No. 90-2012; (5) Minivan Enterprise's Product Price Lists for 2013 and 2014; and (6) Table of Comparison prepared by petitioner. The Court, however. finds petitioner's proffered p1eces of evidence to be insufficient. It is noted that during the cross-examination of Capinpin, she testified that her observation that the imported wine and liquors are not available locally in reasonable quantity, quality or price, is merely based on the price lists obtained from Absolute Sales Corporation, Future Trade International and Minivan Enterprise, viz: JUSTICE CASTANEDA: Cross? ATTY. MANZANARES: Yes. your Honors. Q: Ms. Witness, in Question No. 8, you mentioned that you compared local prices in the importation cost for alcohol products, is that correct? A: Yes, Sir. Q: How did you get the local prices for comparison for the importation prices? A: I asked local prices from the local merchant of wines and liquors. Q: May I know how many local merchants did you approach to get these prices? A: We approached several at least more than five but only three (3) have responded. Q: So, your local prices is (sic) based on three (3) merchants? A: Yes. Unfortunately, the Court cannot simply rely on the product price lists from the three (3) dealers or on the testimonies merely based thereon. It is hard to be convinced that the product price lists from the said dealers represent the market price in the local market or for the entire country. Without corroborating evidence to prove that the price lists of Absolute Sales Corporation, Future Trade International and Minivan Enterprise represent the local market prices for the subject alcohol products in 2013 and 2014 vis-it-vis totality of local suppliers who are engaged in selling similar products in the same year, We cannot conclude that petitioner's comparison of the prices of its imported wines and liquors with that of the said dealers is deemed sufficient. In ~ the same vein, considering that RMC No. 90-2012 was based on the~

DECISIO'< CTA EB CASE 1'-:0. 2657 (CTA CASE NO. 10133) 2010 BIR price survey of alcohol products, no valid comparison can be made to the prices of petitioner's wines and liquors that were imported in 2013 and 2014 with that of the said price survey that was made in 2010. Simply put with the evidence presented by petitioner, We cannot determine, with certainty, whether the cost of importing the said wines and liquors is lower than purchasing them locally. 14 At this point, it would be instructive to review jurisprudence on this issue. It would appear that there are seven Supreme Court decisions touching on the issue of whether petitioner has presented evidence sufficient to entitle it to its claim for refund of excise taxes it paid under protest for importations of cigarettes, liquor and wine. Of these seven, four are Notices of unsigned Resolutions and three are full Decisions. A summary of the conclusions in these cases and those in the corresponding En Bane and Division cases appealed from is contained in the table below- CASE NO. TESTIMONY EVIDENCE WHY CONCLUSION REJECTED I G.R. No. 236343-45. Capinpin- Tables of Disagreed with 236372-74: Notice Carlsberg. Comparison; CTA finding that (2023-0 1-17) - Absolut, Supporting price PAL has granted; sufficient Gordons list- inadequately Unsigned Resolution corroborated shown its but discussed facts Capinpin's compliance with and law on which it testimony Section 13 (b) was based (2) of PD 1590 as regards the amount of P240.283. 71. EB No. 1308, 1309, Capinpin -No Table of Testimony that Due to testimony 1311 (20 17-02-27) J local suppliers; Comparison; PAL imported on no local Liban- partially no reasonable because suppliers, as to granted quantity cheaper than one product. available locally buying locally additional -as to Volupta insufficient - P550,81 0.26 Blanco and Local prices refunded; Rosso not available alternative, not Lee; Galedo for comparison cumulative qualification for exemption; partial refund of P3,983,223.10 No. 8514 (2015-01- Capinpin; Lee; Table of Local prices of Costs of 06) J Casanova - Galedo Comparison; some alcohol importing partially granted Philippine Wine products not identified liquors Merchants Price available for and wines are List: Future comparison; lower than the Trade costs of International purchasing them Price List; Duty locally - Partial Free Price List refund_granted 2 G.R. No. 231638 Capinpin - PAL Philippine Wine CTA committed a severe Notice (2021-02-17) imported Merchants Price -granted; sufficient because cheaper list; Table of departure from Unsigned Resolution than buying Comparison settled but discussed facts locally jurisprudence and law on which it amounting to was based abuse or improvident exercise of ~� Decision. pp. 25-27. citations omitted: Division Docket, Vol. II, pp. 818-820.

DECISIO:\ CTA EB CASE NO. 2657 (CTA CASE NO. 10133) authority when it ruled that the pieces of evidence PAL presented are "inadequate" to show compliance with Section 13 (b) (2) EB No. 1299 (2016- Alcohol- PAL Capinpin Cross Affirmed 10-03)JUy- imported Examination- Division dismissed; because cheaper only Phil Wine dismissing insufficient than buying Merchants Petition; PJ Del locally submitted Rosario Cigarettes - no quotation; Duty dissented local suppliers Free- only visited to see prices; did not try to obtain price from other suppliers; none of the comparative price list contain price on cio-arettes No. 8130 (2014-12- Capinpin- only The information 0 I) J Victorino- I supplier gathered from dismissed: granted request the t\vo sources insufficient for price list; but insofar as request was only imp01ied \\�'ine to Duty Free and liquors are concerned are seriously deficient to justify conclusion that the said impo11ed items are not available in reasonable quantity, quality or price in the local market : Denied Petition 3 G.R. No. 240532 Respect CTA' s Notice factual findings (20 19-03-27)- sufficient EB No. 1363- Cap in pin Philippine Wine Followed 2 other Amended Decision Merchants Price CTA cases (2018-02-13)-PJ List where Table of Del Rosario- Comparison and sufficient local prices reflected in I price list found sufficient; remanded to Division to determine refund amount 2 other cases - CTA Case Nos. 7677, 7685,and 7746 (Decision and Amended Decision) affirmed with l.o-

llECISIO'< CTA EB CASE NO. 2637 (CTA CASE NO. 10133) modifications in CTA EB 954 & I046, October 14,2014;and CTA Case No. 8153, January 17,2013 (affirmed in CTA EB Nos. 1029, 1031 and April30, 2014) Original Decision Capinpin- only Philippine Wine Affirmed EB No. 1363 (2017- I price list Merchant Division- only 04-05) J Grulla; because other I supplier insufficient local merchants insufficient refused to give Capinin their price list testimony is uncorroborated No. 8198 (20 15-06- Capinpin -only Table of PAL could not Denied Petition 02) J Bautista- I price list Comparison; have Presenting only insufficient because other Philippine Wine determined the I supplier is local merchants Merchants Price availability of insufficient refused to give List the imported their price list wines or liquors in reasonable quantity, quality or price in the local market based solely on the price list provided by only one supplier. 4 G.R. No. 238672 Respect CTA Notice (20 18-07-09) findings of fact sufficient EB No. 1433 (20 17- Cap in pin Table of Cited several IO-l8) J Casanova - Comparison; CTA EB cases sufficient Philippine Wine (CTA EB Case Merchants price Nos. 1216, 1217 list; Future and 1221 {CTA Trade Case No. International 8184}), May 27, Price List; Duty 2016, CTA EB Free Retail Case Nos. 954 & Prices 1046 (CTA Case Nos. 7677, 7685 and 7746), October 14, 2014; CTA EB Case Nos. 920 & 922 (CTA Case Nos. 7665 and 7713), September 9, 2013 (G.R. Nos. 209353-54, 211733-34, July 6, 2015); CTA EB Case Nos. ' 1029, 1031 & I 032 (CTA Case No. 8153), April 30, 2014; CTA Case No. 8236, December 18, ~ 2013.) which

DECISIO:\ CIA EB CASE NO. 2657 (CIA CASE 1\:0. 10133) consistently ruled that the Table of Comparison Between Cost of Importing and Cost of Locally Purchasing Commissary and Catering Supplies with local prices reflected in the Philippine Wine Merchants' Price List and/or Duty Free Philippines Retail Prices, together with the testimony of petitioner's witness, were deemed sufficient Also cited SC ruling in G.R. Nos. 215705-07 where there was only one price list presented and evidence still found sufficient Noted that PAL's evidence remained unrebutted as the BIR did not present any evidence to refute PAL's claim Nos. 8529 and 8590 Capinpin Table of Imported Remand to (2015-10-27) J Comparison; brands not Division to Victorino- Philippine Wine mentioned in determine refund insufficient Merchants Price price list of amount List; Duty Free Philippine Denied Petition Retail Prices Wine Merchants nor Duty Free When the ~� subject importations were made in 2009, petitioner did not have any data, reliable or otherwise, on the price and

DECISIO"i CTA EB CASE NO. 2657 (CTA CASE NO. 10133) availability of the subject imported items; Witness also admitted in open court that petitioner had nothing to show that it conducted internal canvassing pertaining to the local availability of the subject imported products 5 G.R. No. 215705-07 Respect CTA (2017-02-22)- findings of fact sufficient EB No. 1029, 1031, Santos Philippine Wine Affirmed 1032 (2014-04-30) J Merchants Price Division in toto Uy - sufficient List; Table of Comparison; Prima facie case established, burden of evidence shifts to respondent which presented no controverting evidence No. 8153 (20 13-01- Santos- Philippine Wine Partially granted Merchants Price as to wine I7) J Castaneda - importing sufficient supplies cheaper List; Table of products; I than purchasing Comparison supplier locallv sufficient 6 G.R. No. 209353-54, Respect CTA 211733-34 (20 15- findings of fact 07-06)- sufficient EB No. 920, 922 Affirmed (20 13-09-09) J Division; issue Grulla -sufficient not discussed No. 7665, 7713 Li- importation Duty Free Price One supplier (20 12-04-17) J sufficient; cheaper than list: Table of Castaneda- purchasing Comparison Refund granted sufficient locallv 7 G.R. No. 2!2536-37 Respect CTA (2014-08-27)- findings of fact sufficient EB No. 942, 944 Affirmed (20 13-12-09) J Division Castaneda- sufficient No. 7868 (20 12-06- Santos- Various price Refund granted 22) J Casanova- importing is lists (3) sufficient cheaper than purchasing locally As it stands, then, it would appear that the presentation of just one supplier cannot be the basis for finding the evidence of petitioner insufficient. _ Indeed, in six of the seven cases, above, the ultimate holding is that the~

DECISIO:\ CTA EB CASE NO. 2657 (CTA CASE NO. 10133) Pagell of15 presentation of one supplier's price list, together with a Table of Comparison and testimonial evidence that importing the subject alcohol products is cheaper than purchasing them locally, is sufficient to prove that the subject imported products were not locally available in reasonable quantity, quality or price at the time of importation. At first blush, then, it would appear that the Court in Division erred in finding the evidence of petitioner insufficient, given that not only did petitioner present the testimony of its usual witness, Cheryl V. Capinpin, but also a Table of Comparison and price lists from three sources. Yet, the Court still agrees with the Division's finding. Indeed, a closer look at the assailed Resolution of the Division would show that it upheld its dismissal of petitioner's claim for the following combined reasons - 1. The Table of Comparison submitted by petitioner reveals that there is only one merchant or supplier that supposedly established local prices for some (and in fact, none for the rest) of the imported local products listed therein. 2. The Court cannot rely on the price of only one merchant or supplier absent any corroborating evidence that such merchant or supplier adequately represents the local market prices or that said merchant or supplier is the exclusive distributor oflisted alcohol products. 3. The Court cannot determine from the pieces of evidence presented whether the subject imported alcohol products are not available locally in reasonable quantity. 4. Revenue Memorandum Circular ("RMC") No. 90-2012 was based on a 2010 price survey of alcohol products, such that no valid comparison can be made with importations in 2013 and 2014. Clearly, the denial of the claim for refund is not simply because there were only three price lists presented (as the presentation of one price list will suffice) but because the evidence presented was not reliable. All told, in finding that petitioner's evidence was insufficient to prove that the imported products were not locally available in reasonable quantity, quality, or price at the time of importation, the questioned Decision looked into the quality of the evidence presented by petitioner and not just the quantity thereofY

DECISIO~ CTA I'B CASE NO. 2657 (CTA CASE NO. 10133) Moreover, a review of the evidence presented by petitioner would additionally show the following as additional basis for the denial ofthe refund claim- l. The first Pricelist prepared by Future Trade International was effective February l, 2013, 15 and there was no indication that prices were the same in 2014. 2. The second Pricelist prepared by Future Trade International was effective December 15, 2014, 16 and there was no indication that prices were the same for January to December 14, 2014. 3. Table of Comparison- the relevant comparative prices were ostensibly only for eight of the 24 imported alcohol products- three for 2013 and five for 2014. 4. Table of Comparison- not all imported products were compared with the products' pricing offered by the local supplier; shows that petitioner miserably failed to exert diligent effort to study the availability oflocal products and the reasonableness of their prices from other local suppliers. Indeed, a closer look at the Table of Comparison 17 reveals that of the 24 types of alcohol listed, there were no comparative prices for the covered period of 2013 from Absolute Sales nor from Minivan Enterprise. For that period, it would appear that there were three comparative prices obtained from Future Trade International. However, two of these entries were for the same alcohol brand - Charles Heidsieck Brut Reserve 12%. In sum, for the year 2013, only two comparative prices were presented in evidence- for Charles Heidsieck Brut Reserve 12% and for Remy Martin VSOP. This would equate to a measly 8% of the products. For the covered period of 2014, while it would appear that there were three entries from the pricelist of Absolute Sales, these were only for one product - Asahi Super Dry Beer. Minivan Enterprises had two entries but these were similarly for the same product - Rawson Private Release Shiraz Cabernet. There were no listings from Future Trade International for 2014. In sum, for the year 2014, only two comparative prices were presented in evidence- for Asahi Super Dry Beer and for Rawson Private Release Shiraz Cabernet. Again, this would equate to a measly 8% of the products~ 15 Exh. "P-23", Docket Vol. II, p. 703-708. 16 Exh. "P-23a", id. at 709-7I3. 17 Exh. "P-28", id. at 753.

DECISIO~ CTA EB CASE NO. 2657 (CTA CASE NO. 10133) Neither were there entries in the Table of Comparison from RMC 90- 2012, a clear concession that it had no bearing to the years 2013 and 2014. All in all, only four ofthe 24, or only 16%, of the alcohol products were actually compared in prices for the two-year period involved. We thus agree with the Court in Division that petitioner "miserably failed to exert diligent effort to study the availability oflocal products and the reasonableness oftheir prices from other local suppliers". With the meager evidence presented by petitioner, the Court cannot make the conclusion that, indeed, the imported products were not locally available in reasonable quantity, quality, or price at the time of importation. It is well-settled that the party who alleges the affirmative of the issue has the burden of proof, and that with the plaintiff in a civil case, the burden of proof never parts. Once the plaintiff makes out a prima facie case in his or her favor in the course of the trial, however, the duty or the burden of evidence shifts to the defendant to controvert the plaintiffs prima facie case, otherwise, a verdict must be returned in favor of the plaintiff. 18 In turn, "prima facie" is defined as evidence good and Hifjicient on its face. Such evidence as, in the judgment of law, is sufficient to establish, a given fact, or the group ofchain of facts constituting the party's claim or defense and which if not rebutted or contradicted will remain sufficient. 19 Here, as explained above, the evidence presented by petitioner can hardly qualify as good and sufficient on its face such that it does not even require controverting evidence. Indeed, it is only when "the plaintiff makes out a prima facie case in his or her favor in the course of trial that the duty or the burden of evidence shifts to the defendant to controvert the plaintiffs prima facie case". Finally, the Court must emphasize that being a derogation of the State's power of taxation, tax refunds or credits, just like tax exemptions, are strictly construed against taxpayers and liberally in favor of the State. Strict compliance with the mandatory and jurisdictional conditions prescribed by law to claim such tax refund or credit is essential and necessary for such claim to prosper~ " Singson v. Spouses Carpio, G.R. No. 238714. August 30.2023. 19 Ugani=a y Quinday v. People, G.R. No. 236379 (Notice), October 9, 2023. 20 Philippine National Bank v. Commissioner ofInternal Revenue, G.R. Nos. 242647 & 243814 & 242842- 43 (Notice), March 15,2022.

DECISIO:\ CTA EB CASE NO. 2657 (CTA CASE NO. 10133) Perhaps with this ruling, petitioner can see fit in the future to present evidence sufficient not just in quantity but more importantly, in quality. FOR THESE REASONS, the Petition for Review, filed on July 29, 2022 is hereby DENIED for lack of merit. The Assailed Decision, dated September 28, 2021, and the Assailed Resolution, dated June 22, 2022, of the Court in Division are hereby AFFIRMED. SO ORDERED. WE CONCUR: Presiding Justice ~. ~ ...., '-- !join the Dissenting Opinion ofJustice Ferrer-Flares MA. BELEN M. RINGPIS-LIBAN Associate Justice c~�,-~ CATHERINEf. MANAHAN --Associate Justice JEAN ~~r.~-r~ !join Justice Ferrer-Flares' Dissenting Opinion MARIAN IVY F. REYES-FAJARDO Associate Justice

DECISION CTA EB CASE NO. 2657 (CTA CASE NO. 10133) ~CfMA LANEE S. CUI-DAVID Associate Justice ~~ r/~~� . . rHrIz'th due respef(pleafs/e� see my zsse tmg 0pm, w, n CORAZON G. FERRER- ORES Associate Justice HENRY s!k-NGELES Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice

.. REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC PHILIPPINE AIRLINES, INC., CTA EB NO. 2657 Petitioner, (CTA Case No. 10133) -versus- Present: DEL ROSARIO, �1, RINGPIS-LIBAN, MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, Jl. COMMISSIONER OF INTERNAL REVENUE, Respondent. 15tr~ : ~~. ~. X -------- --------------------------------------------X CONCURRING OPINION BACORRO-VILLENA, L: I concur with the ponencia in denying petitioner Philippine Airlines, Inc.'s (petitioner's/PAL's) Petition for Review fo r lack of merit. Consequently, this affirms the Second Division's Decision dated 28 September 2021 (Assailed Decision) and Resolution dated 22 June 2022 (Assailed Resolution), which denied petitioner's claim for a refund amounting to P2,904,585.9L This amount represents excise taxes imposed on petitioner's importation of alcoh ol products (from December 2013 to September 2014), t which were allegedly collected illegally and paid under protest on 27 July 2017 and 19 October 2017. The denial is based on petitioner's failure to present . sufficient and convincing evidence demonstrating compliance with the third

CONCURRING OPINION CTA EB No. 21i.5..Z (CTA Case No. 10133) Philippine Airlines, Inc. v. Commissioner of Internal Revenue Page 2 of9 x------------------------------------------x condition required by Presidential Decree (PO) No. 1590, as amended,' i.e., that the imported alcohol products were not locally available in reasonable quantity, quality, or price at the time of importation. I wish to emphasize that the 20142 and 2017 PAL Decisions3, 20154 PAL Resolution and the PAL Minute Resolutions of 2018S, 20196, 2o217, and 20238 cannot be used as bases for deeming the pieces of evidence presented (i.e., the testimony of Cheryl V. Capinpin [Capinpin], petitioner's Manager for In- flight Materials Purchasing Division, the Table Comparison and the Price Lists) as sufficient compliance with the third condition. Unfortunately, the cited Decisions, Resolution and Minute Resolutions are clearly inapplicable to the instant case. Additionally, and more particularly, the Minute Resolutions are not binding precedents. To expound, Section 13(2) ofPD 1590 reads: SEC. 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine Government during the life of this franchise whichever of subsections (a) and (b) hereunder will result in a lower tax: The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed, or collected by any municipal, city, provincial, or national authority or government agency, now or in the future, including but not limited to the following: (2) All taxes, including compensating taxes, duties, charges, royalties, or fees due on all importations by the grantee of aircraft, engines, equipment, u machinery, spare parts, accessories, commissary and catering supplies,~ aviation gas, fuel, and oil, whether refined or in crude form and other AN ACT GRANTING A NEW FRANCHISE TO PHILIPPINE AIRLINES, INC. TO ESTABLISH, OPERATE, AND M,\11\:T,\IN AIR-TRANSPORT SERVICES I~ TI-lE PI!ILIPPINES AND BETWEEN THE PHILIPPINES AND OTHER COUNTRIES. CommissiOner of!nterna/ Rewnue and ( "ommissioner (d Customs r. fJfu1ippine :lirlines, Inc_. G.R. Nos. 212536- 37.27 August 2014. Commissioner ofInternal Revenue and Commissioner ofCustoms v_ Philippine Airlines. Inc.. G.R. Nos. 215705- 07. 22 February 2017. Republic o.fthe Philippines. rep. by the Commissioner ofCustoms v. Philippine Airlines. Inc. (PAL). G.R. Nos. 209353-54 & 211733-34 (Rt:solution). 06 July 2015. Commissioner c~(lnterna! Revenue and Commissioner a,( Customs v. Philippine rlirlines. Inc.. G.R. No. 238672 (Notice). 09 July 2018. Commissioner(~( Internal Re1�enue (CIR), eta/. v. PhilljJpine .-lirfines. Inc. (PAL)- G.R. No. 240532 (Notice), 27 \>larch 20\9. Philippine .-lirlines. Inc. v. Commissioner of Internal Revenue, eta/.. G.R. No. 231638 (Notice). 17 February 202 I. Commissioner ofInternal Revenue, eta!. r. Philippine Airlines, Inc, G.R. Nos. 236343-45 & 236372-74 (Notice), 17 January 2023.

CONCURRING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. v. Commissioner of Internal Revenue Page 3 of9 x------------------------------------------x articles, supplies, or materials; provided, that such articles or supplies or materials are imported for the use of the grantee in its transport and non- transport operations and other activities incidental thereto and are not locally available in reasonable quantity, quality, or price. The foregoing provision requires the concurrence of three (3) requisites before petitioner's importations may be considered tax-exempt, to wit: 1. Petitioner paid its corporate income tax covering the period when the subject importations were made; 2. The articles, supplies, or materials are imported for petitioner's use in its transport and non-transport operations and other activities incidental thereto; and 3� The imported articles, supplies, or materials are not locally available in reasonable quantity, quality, or price.9 As to the 3rd condition, the Supreme Court in Commissioner ofInternal Revenue and Commissioner of Customs v. Philippine Airlines, Inc. 10, ruled that such qualification for exemption is in the alternative, and not cumulative. Simply stated, petitioner only needs to prove that the locally available article is either insufficient in quantity, or is of subpar quality, or is severely overpriced compared to its imported variant. In this case, petitioner submitted the following pieces of documentary evidence to prove that the subject imported alcohol products were not locally available in reasonable quantity, quality or price: (1) the Judicial Affidavit of Capinpin", petitioner's Manager for In-flight Materials Purchasing Division; (2) Absolute Sales Corporation's (ASC's) Product Price Lists for 2013 and 2014'2 ; (3) Future Trade International's (FTI's) Product Price Lists for 2013 and 2014'3; (4) Minivan Enterprise's (ME's) Product Price Lists for 2013 and 201414; (5) Bureau of!nternal Revenue's (BIR's) Price List per Revenue Memorandum _ Circular (RMC) No. 90-2012'5; and (6) Table of Comparison showing t h e t Commissioner (~/)nlernal Revenue and Comnussirmer oj'Cusloms v. Philippine :lirlines. Inc .. G.R. Nos. 245330- 31. 0 I April 202-L Ill Jd. " Exhibit ��P-31''. Division Docket. Volume L pp. 339-458. with attached annexes. Exhibit ��P-22"". id .. Volume IL pp. 697-702. Exhibit ""P-23". id .. pp. 703-713. '" Exhibit "'P-29'". id .. pp. 754-755. " Exhibit "'P-24'". id.. pp. 714-736. Rc\�iscd Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351. "An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by Amending Sections 141. 142. 143. 144. 145. 8. 131 and 288 of Republic Act No. 8424. Otherwise Kno,vn as the National Internal Revenue Code of 1997. as Amended by Republic Act No. 9334. and for Other Purposes��.

CONCURRING OPINION CTA EB No. 2657 (CTA Case No. 10133] Philippine Airlines, Inc. v. Commissioner of Internal Revenue Page 4 of9 X------------------------------------------X complete comparison of prices for the alcohol products imported by petitioner for the period December 2013 to September 2014.'6 I find petitioner's pieces of evidence insufficient to prove that the locally available alcohol products are either overpriced or scarce or subpar compared to their imported variants. First, RMC No. 90-2012'7 was based on the 2010 BIR price survey of alcohol products. Given this, no valid comparison can be made between the prices of petitioner's wines and liquors imported from December 2013 to September 2014 and those reflected in the 2010 price survey. It is common knowledge that the quantity, quality, and price of locally available alcohol and tobacco products fluctuate over time. Consequently, the contents of RMC No. 90-2012, which relied on a price survey conducted in 201o-several years before the subject importations- should not be accorded significant weight or relied upon as a basis for comparison. Second, a meticulous examination of petitioner's Table of Comparison reveals that there is only one (1) merchant or supplier (i.e., either ASC, FTI or ME) that supposedly establishes local prices for some (and, in fact, none for the rest) of the imported alcohol products listed therein. Pertinent portions of the Table of Comparison are reproduced below: IIDE Product Imported Price Per Absolute Absolute Future RMCNo. Minivan Entry Bottle Sales 2013 Sales 2014 Trade 2013 Enterprise (PHP) 90-2012 (PHP) (PHP) (PHP) 2014 998.o8 Price list Charles Headstick Brut 550�94 . 3�595-00 (PHP) Reserve 12% 209�36 ... .(PHP) 10!76 Remy Martin VSOP 2,228.68 .� .2,430.00 .. 451.50 3,8!5.21 . Russian Vodka Standard - .. .. 451.50 Original 21').')0 . .' . � Ballantines Scotch Whisky 21').')0 4519 Camus Extra Elegance . 3�595�00 . 1,016.65 . 89:; Rawson Private Release Shiraz .. .' Cabcrnet 21').00 .50.00 . . I Pen folds Private Release ... I Chardonnay 215.00 . 1408 Charles Heidsick Brut Reserve 12Yiu 614.00 .' 2179 Pen folds Private Release 198�43 Chardonna � 26.93 ' Rawson Private Release Shiraz 2.P4.06 (a bernet johnnie Walker Black Label 59 {Genex) J & B Rare Scotch Whisky 836 Asahi Super Dry Beer 10450 Ballantines Scotch Whisky Exhibit --P-2s��. id .. p. 753. Exhibit ""P-24"". supra at note 15.

CONCURRING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. v. Commissioner of Internal Revenue Page 5 of9 X------------------------------------------X IIDE Product Imported Price Per Absolute Absolute Future RMCNo. Minivan Entry Bottle Sales 2013 Sales 2014 (PHP) Trade 2013 go-2012 Enterprise (PHP) (PHP) (PHP) 2,161.99 Price List 2014 . . (PHP) 410.17 .. (PHP) ....� ...� � Chivas Royal Salute 21 Years 1,043-07 .so.oo .. Old Scotch Whisky 344-07 . ..� .so.oo ....� Stolichnaya Gold 70 cl 1,409.25 . 1,061.77 Patron Silver Tequila 28.26 sB33 J & B Rare Scotch Whisky 108.62 26.84 894 Patron Silver Tequila 215.00 s832 Cl1ivas Royal Whisky 3532 2194 Asahi Super Dry Beer 2532 Queen Adelaide Chardonnay Asahi Super Dry Beer Rawson Private Release Chardonnay Clearly from the foregoing. although petitioner submitted price lists from three (3) merchants (ASC. FTI and ME) not all of these merchants or suppliers provided their respective retail prices for each alcohol product. As such, petitioner's alcohol products are supported either by pricing data derived solely from a single supplier, or exclusively from RMC No. 90-2012 or from a combination of both sources. Third, petitioner submitted no corroborating evidence to prove that the price lists from ASC, FTI and ME represent the local market prices (or that these merchants or suppliers serve as the exclusive distributors) of the above-listed alcohol products from December 2013 to September 2014 vis-a-vis the totality of local suppliers who are engaged in selling similar products in the same period. Consequently, with petitioner's singular piece of evidence, the Court is left unable to ascertain whether the subject imported alcohol products are unavailable locally at a reasonable price. Fourth, it cannot be determined from the pieces of evidence presented whether the subject imported alcohol products are not available locally in reasonable quantity and/or quality. There is no indication from Capinpin's testimony, nor from evidence on record, that the subject imported alcohol products are unavailable locally at a reasonable quantity and/or quality. Lastly, it is worth noting that, as regards petitioner's importation of alcohol products from December 2013 to September 2014, reliance cannot be made on the aforesaid 2014 and 2017 PAL Decisions, 2015 PAL Resolution and the PAL Minute Resolutions of2m8, 2019,2021, and 2023 t in terms of appreciating the price lists from two (2) local suppliers to establish compliance with the third condition since the subject matter . ofthese cases pertain to importations made prior to the issuance ofthe

CONCURRING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. v. Commissioner of Internal Revenue Page 6 of9 X------------------------------------------X BIR's RMC No. 90-2012.18 Particularly, the 2014 and 2017 PAL Decisions and 2015 PAL Resolution involved importations of various liquors and wines from February to March 2007, from October to December 2007 and from March 2005 to January 2006, respectively, whereas the PAL Minute Resolutions of 2018, 2019, 2021, and 2023 involved those imported on various dates in 2007, 2009 and 2010, from January to April2oo8, from March to November 2007 and from June 2007 to October 2oo8 and July 2009 to October 2009, respectively.'9 Notably, RMC No. 90-2012 was based on the BIR's 2010 price survey of alcohol products. Therefore, it is understandable that for liquors and wines imported before and during 2010, a price list from a single local supplier would suffice to meet the third condition, as RMC No. 90-2012 already provides a benchmark for the prices of those available in the local market. Since the instant case involves petitioner's imported alcohol products for the period from December 2013 to September 2014, which is beyond the scope of the BIR's 2010 price survey of alcohol products as per RMC No. 90-2012, it is reasonable to conclude that this issuance can no longer serve as a benchmark for the prices of those available in the local market. Without such a benchmark, the 2013 and 20I4 price lists obtained from three (3) local merchants or suppliers in this case cannot be deemed sufficient, as it can hardly be said that the prices indicated therein are representative of the local prices corresponding to petitioner's imported alcohol products. I also wish to emphasize that, in determining compliance with the third condition, the focus should not be on the number of price lists obtained from local suppliers. Instead, it should be on whether t petitioner was able to ascertain, within a reasonable time prior to importation, that the alcohol products sought to be imported could . not be sourced from the local market in the necessary quantity, quality, 18 Revised Tax Rates of Alcohol and Tobacco Products lJnder Republic Act -:\a. 10351. ��An Act Restructuring the l~xci~c Ta:-.:: on /\ kohol and Tobacco Products by Amending Sections 141. 142. 143. 144. 145. 8. 131 and 288 of Republic Act No. 8424. Otherwise Kno\\-n as the National Internal Revenue Code of 1997. as Amended by Republic Act No. 9334. and for Other Purposes��. 19 Supreme Court Issuance Case No. Period of lmnortation 2014 PAL Decision G.R. Nos. 212536-37 From Februarv to March 2007 20 17 PAL Decision G.R. Nos. 215705-07 2015 PAL Resolution G.R. Nos. 209353-54 & 211733-34 From October to Dec-:mber 2007 2018 PAL Minute Resolution G.R. No. 238672 From March ?005 to Januarv 2006 Various dates in 2007. 2009 and 7019 PAL Minute Resolution G.R. No. 7c1.0532 2010 707 I PAL Minute Resolution G.R. 'lo. 1)1638 From .lanuarv to April 2008 2023 PAL Minute Resolution G.R. ;..los. 236343-45 from !\.'larch to November 2007 from June 2007 to October 2008 and July 2009 to October 2009

CONCURRING OPINION CTA EB No. 2657 [CTA Case No. 10133) Philippine Airlines, Inc. v. Commissioner of Internal Revenue Page 7 of9 x------------------------------------------x or price-thereby justifying the need for importation. There should be evidence that petitioner determined the prices and availability of each imported alcohol product through a survey conducted with a representative number of local dealers, in order to reasonably conclude that such products cannot be sourced locally and must be imported. Certainly, since a statute granting tax exemption is strictly construed against the person or entity claiming the exemption20, it is incumbent upon petitioner to demonstrate that the third condition for excise tax exemption on the importation of alcohol products under PO 1590 was met not after, but within a reasonable time before or at the very least by the date ofimportation. It must be remembered that every case is evaluated and decided based on the evidence presented. A divergence in the rulings of the priorly- promulgated cases is not violative of the doctrine of stare decisis. Additionally, the rulings in the PAL Minute Resolutions of 20182', 20192 ", 20212 3, and 202324 are not applicable since a minute resolution is not considered a binding precedent. Citing Philippine Health Care Providers, Inc. v. Commissioner of Internal Revenue2 s, in San Miguel Corporation v. Commissioner of Internal Revenue26 (San Miguel), the Supreme Court clarified that a previous case ruled with a different subject matter albeit with the same parties and same issues will not be considered res judicata to the other cases as well as stressed that there is a substantial distinction between a minute resolution and a decision, viz: It must be noted that APCwas decided through a Minute Resolution, and the petition's denial therein was due to a failure to abide by procedural requirements. Nevertheless, the Court held that even if the petitioner therein complied with the procedural requirements, the petition would still be denied for failure to show that a reversible error was committed by the appellate court. t In the case of Philippine Health Care Providers, Inc. v. Commissioner of Internal Revenue,. the Court clarified that a Minute Resolution is not binding precedent: Commissioner c~( Internal Revenue v. Eastern Telecommunications Philippines. Inc.. G.R. No. 163835, 07 July 2010. Supra at note 5 Supra at note 6. Supra at note 7. Supra at note 8. G.R. No. I 67330 !Resolution). 1S Scptcmh.:r 2009. G.R. No. 257697 and 259446. 12 i\pri\2023.

CONCURRING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, inc. v. Commissioner of internal Revenue Page 8 of9 X------------------------------------------X It is true that, although contained in a minute resolution, our dismissal of the petition was a disposition of the merits of the case. When we dismissed the petition, we effectively affirmed the CA ruling being questioned. As a result, our ruling in that case has already become final. When a minute resolution denies or dismisses a petition for failure to comply with formal and substantive requirements, the challenged decision, together with its findings of fact and legal conclusions, are deemed sustained. But what is its effect on other cases? With respect to the same subject matter and the same issues concerning the same parties, it constitutes res judicata. However if other parties or another subject matter (even with the same parties and issues) is involved. the minute resolution is not binding precedent. Thus in CIR v. Baier-Nickel the Court noted that a previous case C/R v. Baier-Nickel involving the same parties and the same issues was previously disposed of by the Court through a minute resolution dated February 17 2003 sustaining the ruling of the CA. Nonetheless. the Court ruled that the previous case "(h)ad no bearing" on the latter case because the two cases involved different subject matters as they were concerned with the taxable income of different taxable years. Besides, there are substantial, not simply formal, distinctions between a minute resolution and a decision. The constitutional requirement under the first paragraph of Section 14, Article VIII of the Constitution that the facts and the law on which the judgment is based must be expressed clearly and distinctly applies only to decisions, not to minute resolutions. A minute resolution is signed only by the clerk of court by authority of the justices, unlike a decision. It does not require the certification of the Chief Justice. Moreover, unlike decisions, minute resolutions are not published in the Philippine Reports. Finally, the proviso of Section 4(3) of Article VIII speaks of a decision. Indeed, as a rule, this Court lays down doctrines or principles oflaw which constitute binding precedent in a decision duly signed by the members of the Court and certified by the Chief justice.'' Here, the subject alcohol products were imported from December 2013 to September 2014. In contrast, as aforementioned, the PAL Minute Resolutions dealt with importations from 2007 to 2010. Thus, any declarations made in the said minute resolutions will not affect the instant case. With the foregoing disquisitions, I submit that petitiOner failed to present sufficient and convincing evidence to prove that the subject alcohol products it imported were not locally avai_lable in sufficient quantity, quality, or price at the time of their importation.t Citation omiLLt:d. -.:mphasis and italics in tht: original tt:xt. and underscoring supplied.

CONCURRING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. v. Commissioner of Internal Revenue Page 9 of9 X------------------------------------------X All told, I vote to DENY the present Petition for Review for lack of merit and thereby, AFFIRM the Second Division's Decision dated 28 September 2021 and Resolution dated 22 June 2022.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC PHILIPPINE AIRLINES, CTA EB NO. 2657 INC., (CTA Case No. 10133) Petitioner, Present: -versus- DEL ROSARIO, P.J., RINGPIS-LIBAN, MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, JJ. COMMISSIONER OF Promulgated: iffJ!_ xIN__T_E__R_N__A_L__R-E- ~V~EsN~~U~E~~,~~�-------M--A-R--2--6-- 2025~/~:-- x DISSENTING OPINION FERRER-FLORES, J. : With due respect to our esteemed colleague, Honorable Associate Justice M~ria Rowena Modesto-San Pedro, I am constrained to withhold my assent on the ponencia. In the Decision penned by Honorable Associate Justice San Pedro, the Court En Bane denied the Petition for Review filed by Philippine Airlines, Inc. (PAL/petitioner) against the Commissioner of Internal Revenue (CIR/respondent) appealing the Decision dated September 28, 2021 i (assailed DecisionY and Resolution dated June 22, 2022 (assailed Resolution? rendered by the then Second Division of this Court (Court in Division). 1 Penned by Associate Justice Jean Marie A. Bacorro-Villena with the concurrence of Associate Justice Juanito C. Castaneda; Rollo, pp. 43 to 71 . 2 Penned by Associate Justice Jean Marie A. Bacorro-VilJena with the concurrence of Associate Justice Juanito C. Castaneda and Associate Justice Lanee S. Cui-David; Rollo, pp. 73 to 87.

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. vs. Commissioner ofInternal Revenue Page 2 of9 In denying the Petition, the ponencia ratiocinated that PAL's evidence was insufficient to prove that the imported alcohol products were not locally available in reasonable quantity, quality, or price. I respectfully disagree. Petitioner's alleged erroneous payment of excise tax was based on PAL's tax exemption under Presidential Decree (P.D.) No. 1590.3 In order to be exempt from payment of excise tax on its importation of alcohol products, petitioner must fulfill the following conditions, pursuant to Philippine Airlines, Inc. vs. Commissioner ofInternal Revenue4 and Section 13(b)(2) of P.D. No. 1590, viz.: (1) payment ofthe corporate income tax; (2) the said supplies are imported for the use of the franchisee in its transport/non-transport operations and other incidental activities;5 and, (3) they are not locally available in reasonable quantity, quality or price.6 There is no dispute that PAL was able to comply with the first and second conditions. The issue lies with the third condition. In several cases involving the same parties,7 to prove the third condition, PAL has consistently offered before this Court the following pieces of evidence: 1. Testimonies of PAL's Assistant Vice-President in charge of Catering and In-flight Sub-Department and/or Manager for \ 3 An Act Granting a New Franchise to Philippine Airlines, Inc. to Establish, Operate, and Maintain Air- Transport Services in the Philippines and Between the Philippines and Other Countries. 4 G.R. Nos. 206079-80, January 17, 20!8. 5 Commissioner of Internal Revenue, eta/. vs. Philippine Airlines, Inc., G.R. Nos. 215705-07, February 22, 20 17; Commissioner ofInternal Revenue, eta/. vs. Philippine Airlines, Inc., G.R. Nos. 2!2536-37, August 27, 2014. 6 !d. 7 PhWppine Airlines, Inc. vs. Commissioner ofInternal Revenue and Commissioner ofCustoms, CTA Case No. 8153. January 17. 2013: Phihppine AirUnes. fnc. vs. ('nmmissinner nf Internal Revenue and Commissioner ofCustoms, CTA Case No. 8!98, June 2, 2015; Philippine Airlines, Inc. vs. Commissioner ofInternal Revenue and Commissioner ofCustoms, CTA Case No. 8!30, December I, 2014; Philippine Airlines, Inc. vs. Commissioner ofInternal Revenue and Commissioner ofCustoms, CTA Case No. 8514, January 6, 20!5.

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. vs. Commissioner ofInternal Revenue Page 3 of9 In-Flight Materials Purchasing Division, Catering & In-flight Materials Purchasing Sub-Department; 2. Table of Comparison Between Cost oflmporting and Cost of Locally Purchasing Commissary and Catering Supplies; and, 3. Price List/s for specific period/s. In those cases, there were some instances that the Court in Division deemed the above pieces of evidence, among others, sufficient to establish that the imported alcohol products were not locally available in reasonable quantity, quality, or price. On the other hand, in those cases where the Court in Division deemed the evidence insufficient, the same was reversed by the CTA En Bane or even by the Supreme Court. Notably, the Supreme Court ultimately found that the pieces of evidence presented by PAL were sufficient to prove the third condition. We summarize these cases as follows: Ruling of the CTA Ruling ofthe Supreme Court Relevant Periods (Importations vis-3-vis I. CTA Case No. 8153, January 17, G.R. No. 215705-07, February 22, 2013. 2017. (20I7 PAL case) Price Lists) Period of Importation: October to December 2007 The CTA Division partially granted The Supreme Court affirmed the ruling Price Lists: PAL's refund finding that PAL has of the CTA granting PAL's claim for sufficiently proven its exemption from refund and held that: Philippine Wine Merchants the payment of excise taxes pertaining Price List dated January only to its importation ofliquors. " ... the matter as to PAL 1S 11,2007 supposed noncompliance with CTA EB Nos. 1029, 1031 & 1032, April30, 2014. the conditions set by Section 13 The CTA En Bane affirmed the above of P.D. 1590 for its imported ruling. supplies to be exemptfrom excise tax, are factual determinations that are best left to the CTA, which found that PAL had, in fact, complied 1-vith the above conditions. xxx Thus, without any showing that the findings of the CTA are unsupported by substantial evidence, its findings are binding on this Court." The CTA Division denied PAL's G.R. No. 240532, March 27, Period ofImportation: refund holding that PAL failed to prove (20/9 PAL case) January to July 2008 the third condition. The Supreme Court affirmed the ruling Price Lists: CTA EB No. 1363 (Amended of the CTA granting PAL's claim for Philippine Wine Merchants Decision), dated February 13,2018. refund and held that: Price List (for 2008) The CTA En Bane reversed the CTA " .. factual determinations that Division� s decision denying the refund. are best left to the CTA and The case was then remanded for cannot be reviewed by this Court determination of the refundable under Rule 45. The CTA is a amount. highly !:>peciaU:::.ed body that reviews tax cases and conducts trial de novo. Thus, without any showing that the findings of the

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. vs. Commissioner ofInternal Revenue Page 4 of9 Ruling of the CTA Ruling of the Supreme Court Relevant Periods (Importations vis-a-vis The CTA En Bane found that the CTA are completely unsupported evidence presented by PAL IS by substantial evidence, as in this Price Lists) sufficient for the CTA Division to case, its findings are binding on evaluate that the costs of importing this Court". liquors are lower than purchasing them locally. CTA Case No.8198, August 14,2024. In view of the order of the CTA En Bane to remand the case to the CTA Division, as affirmed by the Supreme Court, the CTA Division determined the final amount refundable to PAL. 3. CTA Case No. 8130, December 1, G.R. No. 23I638, February 17, 2021. Period of Importation: 2014. (2021 PAL case) March to November 2007 The CTA Division denied the refund The Supreme Court partially granted Price Lists: finding that the information gathered PAL's petition and ordered the remand Philippine Wine Merchants from the two price lists are seriously of the case for determination of PAL's Price List for 2007 deficient to justify conclusion that the entitlement to a refund. The Supreme said imported items are not available in Court found the evidence presented reasonable quantity, quality or price in adequate to prove compliance with the the local market. conditions for exemption, to wit: CTA EB No. 1299, October 3, 2016. "Following prevailing The CTA En Bane affirmed the CTA jurisprudence, we are convinced Division's ruling denying the claim for refund. that PAL sufficiently proved The CTA En Bane held that the compliance with the second evidence presented by PAL was inadequate to prove that the imported condition for excise tax liquors, wines, and cigarettes were not locally available in reasonable exemption under Section 13 (b) quantity, quality or price, and is insufficient to establish its claim for a (2). The CTA committed a severe tax refund. deparlure from settled jurisprudence amounting to abuse or improvident exercise of authority when it ruled that the pieces of evidence PAL presented are 'inadequate' to show compliance with Section 13 (b) (2). While we have generally deferred and respected the ta.:-.; court's factual findings, the Court �will not hesitate to reverse its factual findings when there is a showing of gross error or abuse on the part ofthe CTA ". 4. CTA Case No, 8514, January 6, 2015. G.R. Nos. 236343-45 & 236372-74, Period of Importation: January 17, 2023. (2023 PAL case) June 2007 to October 2009 The CTA Division partially granted PAL's refund ruling that PAL was able The Supreme Court ruled in favor of Price Lists: Philippine Wine Merchants to substantiate its compliance with the PAL and ordered the refund of Price Lists for the years 2006, 2007, 2008, and requisites finding that the witnesses erroneously paid excise taxes. With 2009, sufficiently corroborated that the regard to the third condition, the Future Trade International Price List dated April 8, imported liquors, wines and cigarettes Supreme Court held that: 2009, were not locally available in reasonable quantity, quality or price and that the " ... We ulsu nute thut the Tables said goods were In-flight Materials. of Comparison and supporting price lists submitted by PAL ...................... . ...... corroborated CapJ~P.!.l!_'s

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. vs. Commissioner of Internal Revenue Page 5 of9 Ruling of the CTA Ruling of the Supreme Court Relevant Periods (Importations vis-a-vis CTA EB Nos. 1308, 1309, & 1311 testimony that the imported items April30, 2014. were not locally available in Price Lists) The Court En Bane affirtned the above reasonable quantity, quality or ruling. price. Thus, in line with Future Trade International prevailing jurisprudence, We Price List as of February The Court En Bane agreed with the agree with PAL that the CTA 2009, CTA Division's conclusion that PAL's erred in ruling that PAL has evidence sufficiently established that inadequately shown its Price List of Duty-Free the imported liquors, wines and compliance with Section I 3 (b) Philippines cigarettes were not locally available in (2) of PD I 590 as regards the reasonable quantity, quality or price. amount of!'240,283. 7I." As can be gleaned from the foregoing cases, the Supreme Court gave weight to the factual findings of this Court stating that, without any showing that the findings of the CTA are unsupported by substantial evidence, its findings are binding on the Supreme Court. Stated otherwise, the Supreme Court deemed the findings of the CTA in the above cases to be supported by substantial evidence. It is also worth noting that, in the 2021 PAL case,8 the Supreme Court categorically declared that PAL sufficiently proved compliance with the condition that the imported supplies are not locally available in reasonable quantity, quality, or price, as required under Section 13(b)(2) of P.D. No. 1590.9 In said case, PAL presented the sworn testimony of its Manager for In-Flight Materials Purchasing Division, Ms. Cheryl V. Capinpin, price list from one local supplier (i.e., Philippine Wine Merchants Price List) and the Table of Comparison, which were found to be sufficient to establish the non- availability of imported liquors and wines in reasonable quantity, quality, or pnce. \ I 8 G.R. No. 231638, February 17,2021 9 SECTION 13. xxx (b) A franchise tax of two per cent (2%) of the gross revenues derived by the grantee from all sources, without distinction as to transport or nontransport operations; xxx. The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed, or collected by any municipal, city, provincial, or national authority or government agency, now or in the future, including but not limited to the following: XXX XXX XXX (2) All taxes, including compensating taxes, duties, charges, royalties, or fees due on all importations by the grantee of aircraft, engines, equipment, machinery, spare parts, accessories, commissary and catering supplies, aviation gas, fuel, and oil, whether refined or in crude fo1111 and other articles. supplies. or materials: provided, that such articles or supplies or materials are imported for the use of the grantee in its transport and nontransport operations and other activities incidental thereto and are not locally available in reasonable guantitv. quality, or price; (Emphasis and underscoring supplied)

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. I0 133) Philippine AirUnes, Inc. vs. Commissioner ofinternal Revenue Page 6 of9 Finally, it should be emphasized that, in the above cases, the covered periods of the price lists presented to prove the non-availability of the alcohol products coincided with the periods of the subject importations. In the ponencia, it was similarly discussed therein that, in majority of the Supreme Court Decisions and Minute Resolutions involving the same parties, it was ultimately held that the presentation of one supplier's price list, together with a Table of Comparison and testimonial evidence, that importing the subject alcohol products is cheaper than purchasing them locally, is sufficient to prove that the subject imported products were not locally available in reasonable quantity, quality or price at the time of importation. The ponencia, however, still held that the Court in Division did not err in denying PAL's claim, pointing out that the denial was not simply because there are only three price lists but because the evidence presented was not reliable and representative of the local market prices. The ponencia further observes that, in the Table ofComparison, out ofthe 24 types of alcohol listed, there were no comparative prices presented in evidence for the covered period of 2013; while, for 2014, only two comparative prices (equivalent to 8% of the products) were presented. In sum, only four out of 24 products, or only 16% of the alcohol products were actually compared in terms of prices during the two-year period covered. Based on these, the ponencia declared that the Court cannot make a conclusion that the imported products were not locally available in reasonable quantity, quality, or price at the time of importation. On this point, I forward a different disquisition. In the instant case, the subject of the claim for refund were the alleged erroneously paid excise taxes on alcohol products imported on various dates from December 2013 to September 2014. To prove that the alcohol products imported during said period were not locally available in reasonable quantity, quality, or price, PAL presented the following pieces of evidence: 1. Table of Comparison prepared by petitioner; 10 2. Judicial Affidavit of Ms. Capinpin; 11 3. Absolute Sales Corporation (ASC) Price Lists for 2013 and 2014; 12 4. Fa'"" Tcada Intanatlanal (FT/) Pc/ca Lie~> foe 2013 end 2014; " 1 10 Exhibit "P-28", Division Docket- Vol. II, p. 753. 11 Exhibit "P-31", Division Docket- Vol. I, pp. 339 to 458. 12 Exhibit "P-22", Division Docket- Vol. II, pp. 697 to 702. 13 Exhibit "P-23", Division Docket- Vol. II, pp. 703 to 713.

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airhnes, Inc. vs. Commissioner of Internal Revenue Page 7 of9 5. Minivan Enterprise (MEnt) Product Price Lists for 2013 and 2014; 14 and, 6. BIR Revenue Memorandum Circular (RMC) No. 90-2012 15 Consistent with the previous rulings of this Court, as affirmed by the Supreme Court, it is my position that the above pieces of evidence presented in the instant case are sufficient for the Court in Division to evaluate that the costs of importing alcohol products are lower than purchasing them locally. Particularly, it can be determined therefrom that the cost of certain imported alcohol products is lower than the prevailing purchase price from local suppliers during the period of importations. A perusal of the Table of Comparison shows that, while a majority of the imported alcohol products do not have a comparative local price, there are still some products which met the criteria that the cost of importing such alcohol product is lower than purchasing it locally, to wit: Total no. of bottles of Actual Comparati ve Local Total imported Imported Price per no. of Price List No. Product Imported bottles products Cost per (in PhP) Remarks Charles Heidsick with Bottle Brut Reserve 12% 2 Remy Martin comparative ! (in PhP) VSOP local rice 3 Russian Vodka StandardQriginal 6 3,600 998.08 X With local price per 4 Ballantines Scotch 2014 FT1 Price/is!; Whisky Camus Extra 550.94 X however, the Elegance Rawson Private effectivity date Release Shiraz Cabernet (December 15, 2014) Penfolds Private does not coincide Release Chardonnay with period of importation (October 13,}014) 6 1,560 1,560 . With comparative 215.50 local price based on 6 960 ' 2014 MElli Price List dated January 8, 2014. X 14 Exhibit "P-29", Division Docket- Vol. II, pp. 754 to 755. 15 Exhibit "P-24", Division Docket- Vol. II, pp. 714 to 736.

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines. Inc. vs. Commissioner ofInternal Revenue Page 8 of9 No. Product Imported Cartons No. of Total Total no. of Actual Comparati Remarks 90 bottles no. of bottles of Imported ve Local 8 Charles Heidsick bottles imported Cost per Price per With local price per Brut Reserve 12% per products Price List 2014 FTI Price List; carton 540 with Bottle (in PhP) however, the (in PhP) effectivity date 6 comparative X (December 15, 2014) local rice 1,016.65 does not coincide with period of importation (October 2014). With comparative local price based on 2014 MElli Price List dated January 8,2014. Johnnie Walker 198.43 X Black Label 2,400 26.93 50.00 With comparative l. ...... ; (()enex) local price based on 12 J&B Rare Scotch 20/4 ASC Price List Salute 21 Years : Qld �cqtch \'l]]isj(y dated January 6, 16 Stolichnaya Gold 2014. 70 cl 10 Patron Silver 6 12 72 X i Tequila X 13 12 156 X 20 Chivas Royal X 21 65 12 780 Queen Adelaide 1,409.25 ! Chardonnay 1,061.77 Asahi Super Dry Beer 24 2,400 28.26 50.00 With comparative local price based on Release X 2014 ASC Price Li.�t Chardonnay dated January 6, 2014. 2,400 108.62 50.00 With comparative 28.26 . local price based on X 2014 ASC Price List dated January 6, 2014. 215.00 Total 24,480 9,372

DISSENTING OPINION CTA EB No. 2657 (CTA Case No. 10133) Philippine Airlines, Inc. vs. Commissioner of Internal Revenue Page 9 of9 Prescinding from the above, I submit that PAL has sufficiently proven its compliance with the third condition insofar as the specific alcohol products (i.e., item nos. 6, 10, 13, 21 and 23 in the above table) with comparative prevailing prices from local suppliers are concerned. It is likewise observed that, while there are only four alcohol products with comparative local prices, it still makes up of at least 38% (i.e., 9,372 of 24,480) of the total number of bottles imported. Nonetheless, I wish to stress that PAL's entitlement to the refund should not be narrowly based on whether PAL was able to prove its compliance with the conditions for exemption from excise tax for all or a majority of the imported alcohol products. Rather, each imported alcohol product should be tested against the conditions for the excise tax exemption. In this case, each imported alcohol product should be evaluated for compliance with the third condition, i.e., that the same is not locally available in sufficient quantity, quality, or price at the time of importation. Consequently, the related excise tax paid on the imported alcohol products whose compliance to the third condition was sufficiently proven should necessarily be refunded to PAL. Such ruling would be consistent with the Supreme Court's declaration on the aforecited cases also involving the same parties and same issues. All told, I vote to PARTIALLY GRANT the instant Petition for Review and REMAND the case to the Court in Division for the determination of the refundable amount of excise taxes erroneously paid on its importation of specific alcohol products which were proven to be locally unavailable m sufficient quantity, quality, or price at the time of importation. c=t.F~s Associate Justice