THE Court of Tax Appeals (CTA) affirmed the P897.4-million tax refund to Philippine Airlines, Inc. (PAL) over its importation of aviation fuel.

In a 15-page decision in February, the court sitting en banc denied for lack of merit the appeal of the Bureau of Internal Revenue and the Bureau of Custom on the decision of its first division in April 2018.

The court said PAL proved its entitlement for refund after showing that local supply of Jet A-1 fuel is not sufficient.

“The Court En Banc agrees with the findings of the Court in Division that respondent sufficiently proved that its imported Jet A-1 fuel is not locally available in reasonable quantity,” said the decision by Associate Justice Juanito C. Castañeda, Jr.

“Thus, respondent was able to prove its entitlement to refund by completely satisfying the requirements of the pertinent provisions of Section 13 of P.D. 1590. Hence, the Court En Banc finds the dismissal of the consolidated petitions to be in order,” he added.

Under Section 13 of Presidential Decree 1590 that granted PAL its franchise, the airline should prove that it has paid basic corporate income tax or franchise tax, whichever is lower, the imported material were used in its transport and non-transport operations and other incidental activities, and the material were not locally available in reasonable quantity, quality or price.

The court noted its division’s ruling that PAL was able to prove that the fuel was used for its transport operations through the submission of “Authority to Release Imported Goods.”

It also found that PAL met the third requisite because upon the division’s examination of the table on “Supply Demand Balance of Jet A-1 fuel” from the Department of Energy from 2001 to 2010, there is a shortage of locally available supply.

“Wherefore, the consolidated Petitions for Review in CTA EB Case Nos. 1901 and 1916 are dismissed, for lack of merit,” it said.

The court’s division in 2014 initially denied the petition for review of the airline, seeking a refund of the taxes it paid or importation of aviation fuel from February 2003 to December 2004.

Upon the appeal of PAL, the court in April 2018 granted the petition in an amended decision but reduced the refundable amount from P953.8, which was initially claimed by PAL, to P897.4 million.

The amount of P56.4 million was disallowed as it was not supported with import entry internal revenue declarations. — Vann Marlo M. Villegas

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