Commissioner of Internal Revenue vs. Thai Airways International Public Company Limited

AMENDED DECISION

.

-s~,....., MANAHAN, J .:

To be resolved before this Court are petitioner's Motion for Reconsideration (Re: Decision promulgated 9 January 2020) 1 filed on January 3 1, 2020 with respondent's

Comment/Opposition

filed on

June

30, 2020, and respondent's Motion for Partial Reconsideration filed on January 3 1, 20202 without3 petitioner's comment despite due notice4 . Petitioner is seeking for the reversal and setting aside of this Court's Decision dated January 9, 2020 (assailed Decision) 5 and the issuance of a n ew one instead. On the other h and, respondent is seeking for the reduction of the assessm ent for deficiency taxes, surcharge and interest to the amount of Php245,039.69. The dispositive portion of the abovem entioned assailed decision is quoted below: 1 Rollo, CTA EB No. 1853, pp. 139-150. 2 /d., pp. 117- 12 1.

3 /d., Record Verification dated July 6, 2020, p. 183. 4 /d., Resolution dated February 19, 2020, pp. 176-177.a-- s /d., pp. 100-112.

AMENDED DECISION

CTA EB No. 1853 (CTA Case No. 8597)

Page 2 of 12 7

“WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED for lack of merit. Accordingly, the assailed October 10, 2017 Amended Decision® and April 20, 2018 Resolution’? are hereby

AFFIRMED but with MODIFICATION as to the

assessments issued by [respondent]® against [petitioner]? for taxable year 2008 covering deficiency Income Tax, Value- Added Tax, Percentage Tax and Expanded Withholding Tax. [Petitioner]! is ORDERED TO PAY [respondent]!! the amount of SEX MILLION EIGHT HUNDRED EIGHTEEN

THOUSAND TWO HUNDRED NINETY-FOUR PESOS AND

FIFTY-SEVEN CENTAVOS (P6,818,294.57) representing basic deficiency Income Tax, Value-Added Tax, Percentage Tax and Expanded Withholding Tax and the twenty-five percent (25%) surcharge, twenty percent (20%) deficiency interest and twenty percent (20%} delinquency interest imposed under Sections 248(A)(3), 249(B) and (C) of the NIRC of 1997, as amended, respectively, computed until December 31, 2017, as follows:

Income Tax VAT Percentage Tax EWT Total

P 249,676.31 | P 422,422.05 P_2,337,509.93 | P 315,544.43 P 3,325,152.72 25% Surcharge 62,419.08 105,605.51 584,377.48 78,886.11 831,288.18 ee ee ee es .

Apr. 16, 2009 to Dec. 10, LI3S/IO5 da 182,639.93 182,639.93 Jan 26, 2009 to Dec. 10, L 415/365 days, 327,521.75 327,521.75 L415/365 da 1,812,370.71 1,812,370.71 Jan 13, 2009 to Dec, 10, L,428/365 da 246,902.71 246,902.71 Dec. 10, 2012 P 494,735.32 | P 855,549.31 ®4,734,258.12 P6,725,876.00 L41L/F65 days, P_ 1,807,247.40 1,807,247.40 P_ 243,963.39 243,963.39 20% Deficiency Interest from Oct. 22, 2016 to Dec. 31, 2017 gece" | mal | | | aaa 20% xX 436/365 da 20,252.40 20,252.40 ee eal 436/365 da: 100,918.36 100,918.36 (P2337, 509, 93- P2, 167,965.74 x 20% x 436/365 days 40,504.80 40,504.80 (P315, 544.43 x 20% x 436/365 days, 75,384.86 75,384.86

20% Delinquency Interest

Eee

2016 - L41U/305 a 382,504.95 382,504.95 6 Supra, Note 3.

7 Supra, Note 5.

8 Should be “petitioner”.

9 Should be “respondent”.

10 Should be “respondent”.

11 Should be “petitioner”. oa.

CTA EB No. 1853 (CTA Case No. 8597) |

L 411/365 da L41L1/365 da LALU/365 da

20% Delinquency Interest

from Oct. 22, 2016 to Dec. 31, 2017 (P°- 494,735.32 -P164,904,22 eae X 20% x 436/F65 da 40,130.27 (PB55, 549.31 x 20% Xx fF 436/365 da 204,394.25 661,468.54 3,660,294.91 3,660,294.91 a eee Po 495,847.24 495,847.24 40,130.27 204,394.25 (PA, 734,258.12 - PZ, 167,965.74 -P5S4L, 991.43 -P1,680,915.90? x 20% x 82,036.32 82,036.32 ais] saan 436/365 da 153,217.15 153,217.15 Dec. 31, 2017 P1,130,660.35 | ?2,148,926.36 | P10,324,341.56 | P1,609,745.89 ‘vest: Payments "> aera |__|» anapease| - suse] snr | -—Sasones72 | «ds. ma | 31, 2017 a P2,148,926.36 | _2,523,918.66 | P1,609,745.89 | __ P 6, 818,294.57 In addition, [petitioner]}4 is ORDERED TO PAY [respondent]!5 delinquency interest at the rate of twelve percent (12%) computed from January 1, 2018 until full payment thereof, pursuant to Section 249(C) of the Tax Code, as amended by Republic Act No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN) and as implemented by RR No. 21-2018, on the total amount of P2,008,244.09, representing the total amount due as of December 10, 2012 after deducting payments made by petitioner on October 21, 2016, as determined below:

Amount Due as of December 10, 2012 P 494,735.32 | P 855,549.32 | P4,734,258.12 641,333.25 | P 6,725,876.00 Less: PaymentsMadeonOct.21,206 | | | f[{ _| | 164,904.22 | p2,167,965.74| sss 2,332,869.96 Basic Tax P 164,904.22 583,217.48 Deficiency Interest up to Dec. 10, 2012 120,628.57 1,680,915.90 P_ 326,758.84 P| P4,390,873.07 P| P_4,717,631.91 P167,976.48 | P855,549.32 | P343,385.05 P641,333.25 | P2,008,244.09

Total

Percentage

Net Amount Due

Petitioner's Motion for Reconsideration

Petitioner argues that this Court cannot consider evidence that is not on record and must be formally offered citing Section 34, Rule 132 of the Rules on Evidence. Petitioner also argues that respondent is liable for the following:

a. Storage fee amounting Php14,309,779.86 is a revenue not forming part of the Gross Philippine Billings, hence, subject to the regular rate of 35%;

b. Deficiency fringe benefit tax, interest and penalty;

c. Deficiency withholding tax on compensation, expanded withholding tax, and penalty;

d. Under-declaration of respondent's revenue amounting to Php64,316,514.11 for taxable year 2008 for its failure to support its claim of non-revenue passengers;

e. Under-declaration of respondent's revenue amounting to Php137,796.00 on rebooking fee which must be included in the computation of gross income tax;

f. Under-declared commission paid to brokers amounting to Php4,369,695.63 which must be included in the computation of gross income; and

g. Under-declared commission paid to brokers amounting to Php9,796,614.39 which must be included in the computation of gross income tax.

Upon

perusal of the records of the case, the abovementioned arguments cited in the instant motion are the same arguments he raised in the Petition for Review which were already disposed of in the assailed Decision, hence, the same are mere reiterations or rehash arguments. In Madeleine Mendoza-Ong v. Hon. Sandiganbayan and People of the Philippines 16 , the Supreme Court ruled that

CTA EB No. 1853 (CTA Case No. 8597)

· courts need not tackle those rehash or reiterated arguments because it will be useless to reiterate itself, to wit: "Concerning the first ground abovecited, the Court notes that the motion contains merely a reiteration or rehash of arguments already submitted to the Court and found to be without merit. Petitioner fails to raise any new and substantial arguments, and no cogent reason exists to warrant a reconsideration of the

Court's

Resolution. It would be a useless ritual for the Court to reiterate itself." (Emphasis supplied) Thus, this Court will not anymore discuss those same arguments raised in the Petition for Review.

Respondent's Motion for Partial Reconsideration

As to respondent's motion, it argues that there were wrong figures in the assailed Decision and that there were payments not considered in the assailed Decision. As stated in the assailed CTA En Bane Decision, respondent is liable for the amount of 1"6,818,294.57, representing basic deficiency Income Tax, Value-Added Tax (VAT), Percentage Tax and Expanded Withholding Tax (EWT) covering taxable year 2008 and the related surcharge, deficiency and delinquency interests as of December 31, 2017. However, respondent submits that the said amount should be reduced to 1"245,039.69 due to the following reasons:

"a. Respondent Thai Airways noted wrong figures on honorable CTA en bane Decision (Annex C).

b. The payment made by respondent Thai Airways on October 24, 2017 of 1"6,053,621.55 was not reflected (Annex D) The proof for this payment was submitted to the honorable Court's Third Division through a Manifestation filed by respondent Thai Airways on November 10, 2017."-

CTA EB No. 1853 (CTA Case No. 8597) .

With regard to the alleged wrong figures, respondent presented a comparative summary1 7 of the assessment totals per CTA En Bane Decision vis-a-vis its own computation. As shown in the comparison, the amounts of 1'1,130,660.35 and 1'2, 148,926.36 indicated in the dispositive portion of the assailed CTA En Bane Decision as "Total Amount Due as of Dec. 31, 20 1 7" for Income Tax and VAT, respectively, should have allegedly been 1'937,622.94 and 1'1,822,330.46, respectively. Thus, respondent points out that there was an error or overstatement in the summation of the figures in the respective amounts of 1'193,037.41 and 1'326,595.90 totaling 1'519,633.31, as shown below:

Per Respondent Thai

Per CTA En Bane Decision

Ainways~computaUon

Difference

Income Tax

VAT

Income Tax

VAT

Income

VAT

Total

Tax

Basic Tax

p 249,676.31 p 422,422.05 p 249,676.31 p 422,422.05 25%

Surcharge

62,419.08 105 605.51 62,419.08 105,605.51 20%

Deficiency

Interest

182,639.93 327,521.75 182,639.93 327,521.75

Total

Amount

Due as of

Dec. 10, 2012 p 494 735.32 p 855 549.31 P494 735.32 p 855 549.31 .

- - 20%

Deficiency

Interest

from Oct.

22, 2016 to Dec. 31, 2017 20 252.40 100 918.36 20 252.40 100,918.36 20%

Delinquency

Interest

from Dec.

11, 2012 to Oct. 21, 2016 382 504.95 661 468.54 382 504.95 661 468.54 20%

Delinquency

Interest

from Oct.

22, 2016 to Dec. 31, 2017 40 130.27 204 394.25 40 130.27 204,394.25

Total

Amount

Due as of

Dec. 31, ..,n1'7 ., 1~n 11:.11:.n "211:.

~ 'lAO 0_,11:. "2JI:.

...,.,.,. .:;._,..., OA ... Ol'!ot'l "2"2R AJI::

•'I0"2R"2'7A'I

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~:.nl!i! on •1:'11'11 11:."2"2 .,, To clarify, in the report previously submitted by the respondent, which was adopted in the CTA En Bane Decision, the amounts of 1'1,130,660.35 and 1'2,148,926.36 represent the sum of the following figures:

CTA EB No. 1853 (CTA Case No. 8597)

Income Tax VAT

P _ 249,676.31 25% Surcharge 62,419.08

20% Deficiency Interest Po

Apr. 16, 2009 to Dec. 10, 2012 | a9 630.03, 'P249,676.31 x 20% x 1335/ 365 days 182,639.93 Jan 26, 2009 to Dec. 10, 2012 (P422,422.05 x 20% x 1,415/ 365 days P2, 337,509.93 x 20% x 1,415/365 days Jan 13, 2009 to Dec. 10, 2012 (P315,544.43 x 20% x 1,428/ 365 days Total Amount Due as of Dec. 10, 2012 P 494,735.32 20% Deficiency Interest from Dec. 11, 2012 to Oct. 21, po 2016 ;

(P249,676.31 x 20% x_1,411/365 days) P___ 193,037.41 (P422,422,05 x 20% x 1,411/365 days P2,337,509.93 x 20% 1,411/365 days Po P315,544.43 x 20% x 1,411/365 days Po 20% Deficiency Interest from Oct. 22, 2016 to Dec. 31, 2017 P249,676.31-P 164,904.22 x 20% x 436/365 days 20,252.40 (P422,422.05 x 20% x 436/365 days (P2,337,509. 93-P2, 167,965.74 x 20% x 436/365 days 0 us mm IDS

N Oo |N

“I ul [No a Dn itn

NO 2 In

aa am iN ~ in |o wi Be 1 P 315,544.43 x 20% x 436/365 days 20% Delinquency Interest from Dec. 11, 2012 to Oct. P| 32504.95{| P 494,735.32 x 20% x 1,411/365 days 855,549.31 x 20% x 1,411/365 days Po 661,468.54 P4,734,258.12 x 20% x 1,411/365 days ee eee P64 1,333.25 x 20% x 1,411/365 days ee ee 20% Delinquency Interest from Oct. 22, 2016 to Dec. 31, 2017 (P 494,735.32 -P164,904.22 -P41,226.05- P120,628.5718 x 20% x 1,411/365 days} 40,130.27 P855,549.31 x 20% x 1,411/365 days Po 204,394.25 (P4, 734,258.12 - P2,167,965.74 -P541,991.43 - P1,680,915.9019 x 20% x 1,411/365 days P64 1,333.25 x 20% x 1,411/365 days ee Total Amount Due as of Dec. 31, 2017 _P1,130,660.35 | —P2,148, 926.36 1) © ~ a

Ne]

- Noticeably, the amounts of P193,037.41 and P326,595.90, allegedly representing 20% deficiency interest due from December 11, 2012 to October 21, 2016 for deficiency Income Tax and VAT, respectively, were not shown in the assailed CTA En Banc Decision, thus, making the “Total Amount Due as of Dec. 31, 2017” of P1,130,660.35 and P2,148,926.36 for deficiency Income Tax and _ VAT, 18 P164,904.22 x 20% x 1,335/365 days. 19 P2,167,965.74 x 20% x 1,415/365 days. & P 855,549.31 P.-_-326,595.90 100,918.36

CTA EB No. 1853 (CTA Case No. 8597) respectively, overstated by 1"193,037.41 and 1"326,595.90, respectively, or in the sum ofP519,633.31. After careful deliberation over the additional arguments of respondent, We find no error in the summation of the figures arrived, i.e., P1, 130,660.35 and P2, 148,926.36, representing "Total Amount Due as of Dec. 31, 2017" for respondent's deficiency Income Tax and VAT liabilities, respectively, for taxable year 2008. The alleged overstatement of 1"519,633.31 merely resulted from the inadvertent omission of the amounts ofP193,037.41 and 1"326,595.90, representing 20% deficiency interest due for the period December 11, 2012 to October 21, 2016 for deficiency Income Tax and VAT, respectively.

As to the alleged payment made by respondent on October 24, 2017 in the amount of 1"6,053,621.55, respondent attached to its Motion the corresponding Payment Form (BIR Form No. 0605)2°, Filing Reference No. 2 !, and eFPS Payment Form and confirmation22, which were marked as "CERTIFIED TRUE COPY OF THE ORIGINAL" by respondent's General Manager, Polapat Neelabhamorn. In BPI-Family Savings Bank, Inc. v. Court of Appeals, Court of Tax Appeals and the Commissioner of Internal Revenue23, the Supreme Court allowed the appreciation of the document attached to the Motion for Reconsideration filed before the CTA. In the said case, the Supreme Court pointed out that the law creating the CTA specifically provides that proceedings before it shall not be governed strictly by the technical rules of evidence. The Supreme Court added that: "xxx The paramount consideration remains the ascertainment of truth.

Verily, the quest for orderly presentation of issues is not an absolute. It should not bar courts from considering undisputed facts to arrive at a just determination of a controversy." Based on the foregoing ruling of the Supreme Court and considering further that petitioner did not controvert the veracity of the said payment forms as he did not file his 2o Rollo, CTA EB No. 1853, Annex "A", p. 164. 21 Id., Annex "B", p. 165.

" Id., Annexes "C" and "D", pp. 166 and 167.

CTA EB No. 1853 (CTA Case No. 8597)

Comment/ Opposition to respondent’s Motion, the abovementioned documents are hereby admitted by the Court.

Likewise, in its Motion, respondent stated that it had already paid the amount of P245,039.69 on January 29, 2020 attaching thereto the corresponding Payment Form (BIR Form No. 0605)74, Filing Reference No.25 and eFPS Payment Form and confirmation?6. Again, based on the abovementioned ruling of the Supreme Court in the BPl-Family Savings Bank case and the failure of petitioner to controvert the veracity of the said payment forms, said documents are admitted by this Court.

After taking into account respondent’s payment of the amounts of P6,053,621.55 and P245,039.69 on October 24, 2017 and January 29, 2020, respectively, this Court still finds respondent liable to pay the amount of P407,832.64, computed as follows:

Income Tax | VAT _| Percentage Tax | sewn | Total

20% Deficiency Interest | |

Apr. 16, 2009 to Dec.

182,639.93 182,639.93 10, 2012 (P249,676.31 x 20% x X 1,415/365 days, 327,521.75 327,921.75 (P2,337,509.93 x 20% X 1,415/365 aayS, 1,812,370.71 1,812,370.71 Jan 13, 2009 to Dec. 10, 2012 (P315,544.43 X 20% X 1, 428/365 days Dec. 10, 2012 P 494,735.32 P 855,549.31 | ? 4,734,258.12 P 6,725,876.00

20% Deficiency Interest

from Dec. 11, 2012 to Oct.

21, 2016 1411/3605 da P 193,037.41 P 193,037.41 ee ee ee L 411/365 days, P 1,807,247.40 1,807,247.40 1 1411/3065 days, P 243,963.39 243,963.39 24 Rollo, CTA EB No. 1853, Annex ‘F”, p. 168. 25° Id., Annex “F-2, p. 170.

CTA EB No. 1853 (CTA Case No. 8597)

20% Delinquency Interest

from Dec. 11, 2012 to Oct.

21 2016 (P 4~;:35.32 ~ 20% X 1 411 '365 davs 382 504.95 (!'855,549.31 ~ fO% X 1 411/365 daV<.

661 468.54 (!'4,734,258.12 X 20% X 1 411/365 da:SJ (P641,333.2S.~f0% X 1411/365 da

Total Amount Due as of

Oct. 21. 2016 P1 070 277.68 P1 843 613.75 Less: Payment made on Oct. 21. 2016

Basic Tax

p 164 904.22

Surcharge

41 226.05

Interest

Deficiency

Interest

p 120 628.5727

Delinquency

Interest

268 197.8629

Total Interest

p 388,826.43

Total Payment

p 594,956.70

Net Amount Due as of

Oct. 21 2016 p 475,320.98 1'1.843.613.75

20% Deficiency Interest

from Oct. 22, 2016 to Oct.

24 2017 (1'249,676.31- 1'164,904.22 X 20% X 368/365 davsJ p 17 093.77 (1'422,422.05 X 20% X 368//365 days) p 85 178.80 (1'2,337,509.93- 1'2,::7,965.74: 20% X 368. '365 davs (1'315,544.43 X 20% X 368/365 days)

20% Delinquency Interest

from Oct. 22, 2016 to Oct.

24 2017 (P 494,735.32 - 1'164,904.22- 1'41,226.05-1'120,628.57 X 20% X 368/365 daV<) 33.871.42 (1'855,549.31 X 20% X 368/365 days) 172 516.24 27 1'164,904.22 x 20% x 1,335/365 days. 2s 1'2,167,965.74 x 20% x 1,415/365 days. 29

Total Interest Paid

3 660 294.91 495 847.24 P10 201 800.43 p 1 381 143.88 p 2 167,965.74 541 991.43 p 1 680 915.9028 3 409 549.8330 p 5,090,465.73 p 7,800,422.90 p 2.401.377.53 p 1 381,143.88 p 34 187.54 p 63 627.59 1'388,826.43 Less: Deficiency Interest on the partial payment of basic tax of1'164,904.22 120,628.57

Delinouencv Interest Paid

1'268.197 .86 30

Total Interest Paid

1'5,090,465. 73 Less: Deficiency Interest on the partial payment of basic tax of 1'2,167,965.74 1,680,915.90

Delinquency Interest Paid

1'3,409,549.83 382 504.95 661 468.54 3 660 294.91 495 847.24 P14 496 835.74 p 2 332 869.96 583 217.48 p 1 801 544.47 3 677 747.69 p 5,479,292.16 p 8,395,379.60 p 6 101 456.14 p 17 093.77 85 178.80 34 187.54 63 627.59 - 33 871.42 172 516.24 --

CTA EB No. 1853 [CTA Case No. 8597)

(1'4,734,258.12- P2,167,965.74- P541,991.43- P1,680,915.90) X 20% X 368/365 daysj (1'641,333.25 X 20% X 368/365 days)

Total Amount Due as of

69 241.48 69 241.48 129 320.90 129 320.90 Oct. 24, 2017 p 526,286.17 P2,101,308.79 p 2,504,806.55 p 1,574.,_092.37 p 6 706 493.88 Less: Payment made on October 24. 2017

Basic Tax

p 84 772.09 p 422 422.05 p 169 544.19 p 31~544.43 p 992 282.76

Surcharge

21 193.02 105 605.51 42 386.04 78 886.10 248 070.67

Deficiency Interest

250 887.66 1 296 043.65 520 182.74 972 801.37 3 039 915.42

Delinquency

Interest

111,931.79 !,_661,420. 91 1 773 352.70

Total Payment

p 468 784.56 p 1 824 071.21 p 2 393 533.88 p 1 367 231.90 p 6 053 621.55

Net Amount Due as of

Oct. 24 2017 p 57 501.61 p 277 237.58 p 111 272.67 p 206 860.47 p 652 872.33

Less: Payment on

January_29, 2020 245 039.69

Net Amount Due as of

Ja11. 29, ~020 -- - - - - - - - - ·- --·-- __ P_ 407,832.64 It is to be noted that the "Net Amount Due as of Oct. 24, 20 17" of !'652,872.33 represents the remaining deficiency interest and delinquency interest due for deficiency income tax, VAT, percentage tax and EWT, as shown below:

Deficiency

Delinquency

Basic Tax

Surcharl(e

Interest

Interest

Total

Income Tax

p - p 0.01 p 21 254.88 p 36 246.72 p 57 501.61

VAT

- - 277 237.58 277 237.58

Percentage Tax

- 0.01 111 272.66 111 272.67

EWT

Total

- 0.01 206 860.46 206 860.47 p - p 0.03 p 132,527.54 p 520,344.76 p 652,872.33 The amount of !'652,872.33 represents the final amount due from respondent and no further interest shall accrue thereon considering that the bases for the computation of the deficiency and delinquency interests were already covered by the payment made by respondent on October 24, 2017.

WHEREFORE, premises considered, petitioner's Motion for Reconsideration (Re: Decision promulgated 9 January 2020) is DENIED for lack of merit, and respondent's Motion for Partial Reconsideration is hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED to pay the Bureau of Internal Revenue the remaining amount of P407,832.64 which represents the balance due for deficiency and delinquency interest charges . ......._

CTA EB No. 1853 (CTA Case No. 8597)

WE CONCUR:

t'~· 'j'. /h ..... -.. .v£.~.&£--­ CATHERINE T. MANAHAN

Associate Justice

Presiding Justice

9u~-t;-c..~l Q .rifANITO C. CASTANEDA(JR.

Associate Justice

'k.~ ~ MA. BELEN M. RINGPIS-LIBAN

Associate Justice

(On Leave)

ERLINDA P. UY

Associate Justice

"'-

JEANM~

Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

Presiding Justice