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CTA upholds Air PHL refund ruling

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Court of Tax Appeals-CTA

THE Court of Tax Appeals (CTA) affirmed a May 2017 decision ordering the refund of excise taxes paid by Air Philippines Corp. (APC) on its importation of aviation fuel worth P235.6 million.

In a 36-page decision on May 2, the CTA, sitting en banc, denied the appeal of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) seeking to overturn a 2017 decision by the CTA second division, which ruled that APC is entitled to the refund of the excise taxes it paid between May 2003 and December 2004 for Jet A-1 fuel.

“After a judicious review of petitioners’ arguments and the record of the case, the Court En Banc finds no reason nor rhyme to modify much more reverse the assailed Amended Decision and Resolution of the Court in Division,” it ruled.

“It is evident that the arguments raised by both the CoC (Commissioner of Customs) and the CIR (Commissioner of Internal Revenue) have already been adequately addressed and passed upon by the Court in Division in the assailed Amended Decision and Resolution,” it added.

The court’s second division on May 8, 2017 ruled in favor of APC, saying the company satisfied all requisites for exemption from taxes pursuant to its franchise as it proved that the imported fuel was used for flight operations and other activities and that during the time of the importation, the Jet A-1 fuel was not locally available in reasonable quantity.

The CTA, in the decision, discarded the claim of the BIR and the BoC that APC failed to prove that the imported Jet-A fuel was not locally available in “reasonable quantity, quality, or price,” as the company submitted certifications issued by the Air Transportation Office (ATO) to support its claim.




ATO, according to its charter, is tasked to cooperate on any research and technical studies on “air navigation facilities including aircraft fuel and oil,” among others.

“The foregoing mandate negates the CIR’s contention that only the DoE (Department of Energy) could best determine the local availability in reasonable quantity, quality and price of the subject Jet A-1 aviation fuel,” the court said.

It also rejected the claim of the BoC that the court does not have jurisdiction over the allegedly erroneously-paid excise taxes of APC as the customs bureau has authority over matters involving duties and taxes on imported goods.

The CTA said that under the Tax Code, a taxpayer should file a claim for refund with the BIR within two years after its payment and no claim should be entertained in the specialized court unless the claim has been filed with the commissioner.

“Anent CoC’s contention that respondent committed intentional forum shopping, suffice it to say that the CoC is merely acting on a delegated authority given by the CIR. In fact, when the CoC failed to render a decision on respondent’s protest, and the 2-year prescriptive period under Section 229 of the NIRC (National Internal Revenue Code) of 1997, as amended, was about to end, that respondent filed its administrative claims for refund with the BIR, and subsequently with the CTA,” it said.

It also said that the Supreme Court previously said that when the two-year prescriptive period is about to expire, a taxpayer may not wait for the decision of the BIR “for purposes of judicial intervention.” “In fine, respondent cannot be faulted for complying with the mandated requisites under the law and taking the appropriate action to avoid the lapse of the 2-year prescriptive period.”

The decision was written by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Presiding Judge Roman G. Del Rosario and Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Cielito N. Mindaro-Grulla and Ma. Belen Ringpis-Liban. — Vann Marlo M. Villegas