THE Court of Tax Appeals (CTA) has granted a P402.9-million tax refund claim of Philippine Airlines, Inc. finding it enjoyed tax-exempt status when it made such excise payments on aviation fuel imports in 2009.
In a 20-page amended decision dated Sept. 26, the court’s special third division said the airline met the requisites for its tax exemption under the terms of its franchise.
The court noted that PAL was able to prove that its imported Jet A-1 fuel was used in its domestic operations base on the additional testimony by its Fuel Management Department and other documentary evidence.
It also said that PAL was able to prove that fuel was not locally available “in reasonable quantity” during the time of importation.
“All said, petitioner is entitled to a refund of the erroneously collected and paid under protest excise taxes in the aggregate amount of P402,855,943.00,” the court ruled.
According to Section 13 of Presidential Decree 1590, PAL’s franchise, for it to be exempt from paying taxes for its importation of Jet A-1 fuel, it must pay basic corporate income tax or franchise tax, prove that the imported fuel is used in its transport and non-transport operations, and is not locally available in reasonable quantity, quality or price.
The court noted that testimonies and documentary evidence such as Authority to Release Imported Goods and certifications from the Air Transportation Office (ATO) also proved that the imported fuel was used for its operations.
Certification from the ATO, now the Civil Aviation Authority of the Philippines, and a report from the Department of Energy indicated that in 2008 and 2009 jet fuel demand exceeded supply.
“Hence, the Jet A-1 fuel imported by petitioner was not locally available in reasonable quantity, justifying the subject importation thereby entitling petitioner to the tax exemption prayed for,” the court ruled.
The court in October 2015 denied the petition of PAL for failure to prove the requirements for exemption. The airline filed a motion for reconsideration and the court re-opened the case.
The decision was written by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Ma. Belen M. Ringpis-Liban. — Vann Marlo M. Villegas