CTA upholds PAL refund on 2008 jet fuel imports

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Philippine Airlines (PAL)

THE COURT of Tax Appeals (CTA) has upheld a P302-million tax refund granted to Philippine Airlines Corp. (PAL) in connection with its jet fuel imports in late 2008.

In a five-page resolution on Oct. 16, the court, sitting en banc, affirmed its May 10 ruling and denied the motions for reconsideration of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) over the tax refund granted to the airline.

“This Court is categorical in the assailed Decision that there is no cogent reason to depart from the Court in Division’s ruling that PAL was able to comply with all the requisites under Section 13 of Presidential Decree No. 1590 for it to be exempted from excise tax on its importations of Jet A-1 fuel used for its domestic operations as the conclusion reached by the Court in Division is supported by evidence,” the court said.

It also said that the court in division “squarely discussed PAL’s compliance with requisites under PD 1590, PAL’s franchise and it is sufficient even if only one qualification is proved on whether the imported product is not locally available in reasonable ‘quantity, quality, or price.’”

Section 13 of PD No. 1590, as amended by Letter of Instruction 1483, authorizes the airline’s tax exemption on its aviation fuel imports for use of domestic operations.


The BIR claims that the Authority to Release Imported Goods (ATRIG) is not sufficient alone to prove that the Jet A-1 was used by PAL for its transport and non-transport operations and failed to comply with all the requisites under Section 13 of PD 1590 for tax exemption.

The BoC, meanwhile claimed that the BIR has no jurisdiction for the refund claim of excise tax on imported articles as it is vested upon its office, there was no proof that the imported fuel was actually used in transport operations and not available in reasonable quantity, quality or price at the time of importation.

Both claimed that the court has no authority to rule on validity of BIR Ruling No. 001-2003, which was the basis of the BIR to assess PAL for specific taxes on importations of Jet A-1 used for domestic operations.

In the May 10 decision, the court ruled that PAL was able to use the imported fuel in domestic operations from August to October 2008 based on evidence it submitted which included the ATRIG. — Vann Marlo M. Villegas