THE Court of Tax Appeals (CTA) has denied for lack of merit a motion for reconsideration filed by the Bureau of Customs (BoC) over the P137.1-million tax refund granted to Philippine Airlines, Inc. (PAL) in connection with the airline’s imports of aviation fuel.

In a seven-page resolution on June 4, the CTA sitting en banc affirmed a February decision which upheld the ruling of its third division, which found that PAL was exempt from paying excise taxes on Jet A-1 fuel imported between April and June 2010.

“After a careful examination of petitioner’s motion for reconsideration, the Court finds that the issues and arguments raised in said motion had already been sufficiently passed upon and fully discussed not only by the Third Division’s Decision dated April 5, 2017 and Resolution dated October 10, 2017 but also by the Court En Banc’s Decision dated February 7, 2019,” the court said.

“In sum, We found that no substantial argument was raised to merit reconsideration of our Decision promulgated on February 7, 2019,” it added.

In the motion the BoC maintained that the court in division had no jurisdiction over the case as there was still no decision from the bureau and the delay of the release of the decision does not justify the filing of administrative claims at the Bureau of Internal Revenue as well.

It also argued that the refund claim has no basis and lacked sufficient proof that PAL used the Jet A-1 fuel in its transport and non-transport operations.

The CTA reiterated that filing of administrative claim and judicial refund to forestall the running of the two-year prescriptive period for refund claims “is a taxpayer claimant’s right.”

“Thus, even if there is a pending administrative protest before the Collector of Customs, had respondent PAL awaited the action of the Collector of Customs and COC on its protest prior to taking court action pursuant to the NIRC (National Internal Revenue Code), knowing fully well that the prescriptive period was about to end, it would have lost not only its right to seek judicial recourse but its right to recover the excise taxes it erroneously paid to the government thereby suffering irreparable damage.”

The court also cited a ruling by the Supreme Court which states that once a written protest is filed with the Collector of Customs, its failure or inaction on the protest “should not be allowed to prejudice the right of the party adversely affected thereby.”

The court also upheld the division’s finding that PAL complied with the three requirements for its tax exemption under Section 13 of Presidential Decree (PD) No. 1950 which granted a new franchise to PAL.

The requirements for PAL to avail of the tax exemption under Section 13 of PD No. 1590 are the payment of basic corporate income tax, proof that the imported materials were used in its transport and non-transport operations, and were not locally available in reasonable quantity, quality, or price.

In the February decision, the CTA held that PAL paid its basic income tax and the Jet A-1 fuel were used in transport and non-transport operations through presentation of Authority to Release Imported Goods and witness testimony.

It also said PAL proved that the aviation fuel was not locally available in reasonable quantity, quality, or price through the certifications from the Air Transportation Office.

The decision was written by Associate Justice Cielito N. Mindaro-Grulla. — Vann Marlo M. Villegas