INQUIRER FILE PHOTO
MANILA, Philippines—The Bureau of Internal Revenue (BIR) has lost a P4.5million tax case against the Philippine Airlines.
Based on a decision dated June 22, 2012 but made only public Monday, the Court of Tax Appeals said the government failed to prove that Republic Act 9334, or the Act increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products that amended certain provisions of the National Internal Revenue Code of 1997 revoked PAL’s franchise under Presidential Decree 1590.
PAL imports cigarettes, liquor and wine for its catering and commissary supplies for its international flights.
The government argued that the repealing clause under RA 9334 “strongly manifests the intent of Congress to amend any special or general law inconsistent with it” including PD 1590.
“While it is true that Section 6 of RA 9334 states the all-encompassing phrase, ‘The provision of any special or general law to the contrary notwithstanding,’ such phrase cannot be considered as an express repeal of the exemptions granted under petitioner’s franchise because it fails to identify or designate the acts that are intended to be repealed,” the CTA said, adding that the provisions of PD1590 should be considered an exception to RA 9334.
The case stemmed when PAL was assessed with over P4.5 million excise tax in 2007 which it paid under protest but as it insist that it is exempted. PAL eventually filed for refund but the BIR failed to act on their petition prompting PAL to take the case to the CTA in 2009.
The Tax Court, in its ruling, said PAL is entitled to a refund after it has proven that the items they have imported are exclusively for international consumption, the supplies were not locally available at a reasonable quantity, quality or price and it has paid the corresponding Value Added Tax.
“Thus, based on the foregoing findings, this Court finds that petitioner was able to substantially comply with the requirements of PD 1590…consequently, we find petitioner entitled to a tax refund in the amount of P4,550,858.85,” the Tax Court said.