PHILIPPINE AIRLINES, INC. (PAL) v. COMMISSIONER OF INTERNAL REVENUE AND COMMISSIONER OF CUSTOMS

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION PHILIPPINE AIRLINES, INC., CTA CASE NO. 7632 Petitioner, Members: -versus- CASTANEDA, JR., Chairperson CASANOVA, and COTANGCO -MANALASTAS,lJJ COMMISSIONER OF INTERNAL REVENUE AND COMMISSIONER OF Prom ulgated: CUSTOMS, SEP 0 9 2016 / Respondents. f: ~-~a . ~- )(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - )( I I: c<' AMENDED DECISION For resolution is the Motion for Partial Reconsideration of Decision) filed by petitioner Philippine Airlines, Inc., (PAL) on May 13, 2016. Relevant antecedents: On May 3, 2016, the Court rendered a Decision2 partially granting PAL's claim for refund or issuance of ta)( credit certificate (TCC) in the amount of P88,542,854.00 representing the specific ta)(CS paid for the importation of Jet A- 1 aviation fuel for its domestic flight operations for the period of April to June 2005. The respondents, Commissioner of Internal Revenue r (CTR) and Commissioner of Customs (COC), filed their separate Motion for Partial Reconsideration on May 11, 20 16 and June 2' 2016' respectively. 1 Rollo , pp. 1916-1967 . 2 Rollo , pp. 1903-193 1.

AMENDED DECISION Page 2 of 6 CT/\ Case No. 7632 PAL us. CIR and COC On the other hand, PAL filed a Motion for Partial Reconsideration of Decision and/ or to Reopen the Case for Presentation of Evidence3 on May 13, 2016. On ,July 12, 2016, the Court resolved to deny the respondents' Motion for Partial Reconsideration and granted petitioner's Motion to Reopen the Case for Presentation of Evidence. The case was set for hearing for the presentation of additional evidence. Consequently, the resolution of PAL's Motion for Partial Reconsideration of Decision was held in abeyance. On August 8, 2016, a hearing was held for the presentation of petitioner's additional evidence. Petitioner presented Mr. Emilio L. ,Jacinto, Chief Accountant, Revenue Accounting Division of the Bureau of Customs, Port Area, Manila, who identified his ,Judicial Affidavit lExhibit "D8"J, Letter dated June 6, 2016 from Zambrano & Gruba Law Offices requesting BOC for issuance of a certificate of payment lExhibit "BS"J, and Certification dated June 17, 2016 issued by Emilio L. Jacinto lExhibit "C8"l. Afterwhich, petitioner offered the following exhibits: "CS" Letter from Zambrano & Gruba Law Offices requesting BOC Revenue Accounting Division for "DS" the verification and issuance of a certificate of "D8-1" pay_menL Certification dated June 17, 2016 issued by Emilio L. Jacinto Judicial Affidavit of Mr. Emilio L. Jacinto; signature of Mr. ,Jacinto Considering that respondent interposed no objection to petitioner's offer of evidence, an Order11 was issued by the Court admitting the above-mentioned exhibits. Hence, petitioner's pending Motion for Partial V Reconsideration of Decision5 was declared submitted for resolution. 3 Rollo, pp. 1916-1967. 4 Rollo, pp. 2106-2108. "Rollo, pp. 1916-1967.

AMENDED DECISION Page 3 of 6 CTJ\ Case No. 7632 PAL vs. CIR and COC After weighing the pieces of evidence submitted by petitioner, the Court is convinced that a re-computation of the amount of specific taxes to be refunded to petitioner is in order. The Court stands by its ruling in the challenged Decision that based on the pieces of evidence on record, PAL complied with the three (3) requisites to be exempt from all taxes under Section 13 of PD No. 1590. However, in light of the testimony and additional pieces of evidence presented by petitioner, the Court shall touch upon the issue of the amount of specific taxes paid by petitioner and determine the amount that may be given as refund. Petitioner seeks the refund or the issuance of tax credit certificate in the total amount of P258,629,496.00, allegedly representing specific taxes imposed on its importations of Jet A-1 aviation fuel for domestic flight operations during the period of April to June 2005. In order to prove that the said specific taxes have been duly paid and remitted, petitioner presented official receipts (OR) issued by the Bureau of Customs (BOC) or the Authorized Agent Banks (ABB) of the BOC. The specific taxes as shown in the ORs amount to P258,629,496.00, viz: Official Date ofORs Import Entry Specific Taxes Receipts (ORs) and Internal per ORs issued by the AABs of Revenue Declaration the BOC (IERD) Nos. Exhibit "F-5" May 06, 2005 SN 62553215 P58,951,504.00 ~xhibit "H-5" May 13, 2005 ~xhibit "1-4" June 29, 2005 SN 62554186 57,767,575.00 Exhibit '\J-5" June 22, 2005 ~xhibit "K-4" June 28, 2005 SN 63265282 29,591,350.00 SN 63819892 53,274,605.00 SN 63819901 59,044,462.00 P258,629,496.00

AMENDED DECISION Page IJ of 6 CTA Case No. 7632 PAL us. CIR and COC In the assailed Decision6, it is the ORs marked as Exhibits "F-5" and "I-4" which were given credence, thus, only the amount of P88,542,854.00 was ordered to be refunded to PAL. To substantiate its claim that. it. paid the amount. of specific taxes reflected in the ORs marked as Exhibits "H-5", "J-5" and "K-4", petitioner presented Mr. Emilio L. Jacinto, Chief Accountant, Revenue Accounting Division of the BOC, who identified and affirmed the truthfulness and veracity of the contents of his ~Judicial Affidavit fExhibit "D8"l and the two documents attached thereto, li.e., Exhibit "B8", Letter dated ~June 6, 2016 from Zambrano & Gruba Law Offices requesting BOC for issuance of a certificate of payment; and Exhibit "C8", Certification dated June 17, 2016 issued by Emilio L. Jacintoj. Mr. ~Jacinto testified that he issued the certification pursuant to the request of PAL's counsel. In the said certificate, Mr. Jacinto certified that. the following IERDs "were verified issued to PHILIPPINE AIRLINES, INC., and the corresponding custom_s duties) taxes and other charges found collected and remitted to the Bureau of Treasury'': Official Receipts IERD Nos. Amount Exhibit "I I-5" SN 62554186 57,767,575.00 Exhibit "J-5" SN 63819892 53,274,604.00 Exhibit "K-4" SN 63819901 59,044,461.00 P170,086,640.00 The testimony of Mr. Jacinto and the documents attached to his ~Judicial Affidavit, taken together with all the pieces of evidence on record, persuades this Court. that. petitioner indeed paid the amount of specific taxes reflected in the ORs marked as Exhibits "H-5", "J-5" and "K-4". v Thus, the amount of 170,086,640.00 shall be added to the amount which was granted by this Court to be refunded to petitioner in the Decision7 dated May 3, 2016, to wit: 6 Supra, Note 2. r Supra, Note 2.

AMENDED DECISION Page 5 of 6 CTA Case No. 7632 PAL us. GR and COC 88,542,854.00 Refund of specific taxes granted to 170,086,640.00 petitioner in Decision dated May 3, 2016 258,629,494.00 ADD: Specific Taxes supported by Judicial/\ffidavit and Certification issued by Mr. F:milio L. Jacinto: SN 62554186 57,767,575.00 SN 63819892 53,274,604.00 SN 63819901 59,044,461.00 Hence, considering the evidence presented by petitioner, it has proven and substantiated its entitlement to a tax refund or issuance of tax credit certificate in the amount of P258,629,494.00. WHEREFORE, premises considered, petitioner's Motion for Partial Reconsideration of Decisions is GRANTED. Accordingly, the Decision9 dated May 3, 2016 is MODIFIED with respect to the amount of specific taxes to be refunded to petitioner. The respondents arc ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE to petitioner in the amount of P258,629,494.00, representing the specific taxes paid for the importation of Jet A-1 aviation fuel for its domestic Oight operations for the period of April to June 2005. SO ORDERED. ~~~~ AMELIA R. COTANGCO-MANALASTAS Associate Justice WE CONCUR: ~ c.a.Q--~ot./<.1 CAES~SANOVA Associate lJ usticc JtJANITO C. CASTANEDK, JR. Associate lJ u sticc s Rollo, pp. 1916-1967. 9 Supra, Note 2.

AMENDED DECISION Page 6 of 6 CT/\ Case No. 7632 PAL us. CIR and COC CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. a~c~c.~l~� JUANITO C. CASTANEDA, JR. Acting Presiding \Justice