COMMISSIONER OF INTERNAL REVENUE v. PHILIPPINE AIRLINES, INC.

REP UBLIC OF THE PH ILIPPINES Court of Tax Appeals QUEZON CITY EN BANC COMMISSIONER OF CTA EB NO. 1752 INTERNAL REVENUE, (CTA Case No. 8143) Petitioner, -versus- PHILIPPINE AIRLINES, INC., Respondent. X- ---- -------------- - - - -X COMMISSIONER OF CTA EB NO. 1756 CUSTOMS, (CTA Case No. 8143) Petitioner, Present: -versus- DEL ROSARIO, P.J. , CASTANEDA, JR., PHILIPPIN E AIRLINES, INC., UY, Respondent. F A B O N -VIC T ORINO , MINDARO-GRU LLA, RINGPIS -LIBAN , MANAHAN, BACORRO-VI LLENA, and MODESTO-SAN PEDRO, JJ. Promulgated : OCT16 2~ X- - - - - - - - - - - - - - -- - ----- - - - - ---- - -- - - - ~ ~-Y--'t:U7~ RESOLUTION DEL ROSARIO, P.J .: This resolves the following: 1) The Motion for Recons ideration (Re: Resolutio n (sic) promulgated 10 May 2019) filed on June 4, 2019 by petitioner Commissioner of Internal Revenue (CIR) in CTA EB No. 1752, with Comment/Opposition (to Petitioner Commissioner

Resolution CTA EB Nos. 1752 & 1756 (CTA Case No. 8143) Page 2 of5 Internal Revenue's Motion for Reconsideration dated 3 June 2019) filed by respondent on July 17, 2019; and 2) the Motion for Reconsideration filed on May 31, 2019 by petitioner Commissioner of Customs (COC) in CTA EB No. 1756 via registered mail, and received by this Court on June 13, 2019, with Comment/Opposition (to Petitioner Commissioner of Customs' Motion for Reconsideration dated 30 May 2019) filed by respondent on August 7, 2019. Both motions assail this Court En Bane's Decision promulgated on May 10, 2019, the dispositive portion of which reads: WHEREFORE, premises considered, the Petitions for Review filed by the Commissioner of Internal Revenue and Commissioner of Customs on December 12, 2017 and December 28, 2017, respectively, are DENIED for lack of merit. Accordingly, the July 17, 2017 Decision and November 20, 2017 Resolution of the Court in Division in CTA Case No. 8143 are AFFIRMED. SO ORDERED. C/R's Motion for Reconsideration In his Motion, CIR insists on the following: (i) the Court has no jurisdiction to rule on the validity of BIR Ruling No. 001-2003; (ii) the Authority to Release Imported Goods (A TRIG) alone is not sufficient to prove that the imported Jet A-1 aviation fuel was used by respondent for its transport and non-transport operations; and, (iii) respondent failed to comply with all the requisites under Section 13 of Presidential Decree No. 1590 for it to be exempted from excise tax on importations of Jet A-1 fuel used for its domestic operations since it failed to submit a certification from the Department of Energy (DOE) anent the sufficiency of total fuel supply in relation to total demand. In its Comment/Opposition (to Petitioner Commissioner of Internal Revenue's Motion for Reconsideration dated 3 June 2019}, PAL argues that CIR's motion is merely a rehash of the arguments presented in its Petition for Review, which have been weighed and rejected by this Court in the assailed Decision.

Resolution CTA EB Nos. 1752 & 1756 (CTA Case No. 8143) COG's Motion for Reconsideration In his Motion, COC contends that: (i) the CIR has no jurisdiction on a claim for refund of excise tax on imported articles and jurisdiction thereon is vested with the COC; (ii) the Petition filed with the Court cannot be said to be an appeal from the COG's decision or inaction as the Collector has not yet acted upon PAL's protest; hence, there is no decision of the Collector that may be reviewed by the COC, and no ruling of the COC that may be appealed to the Court; (iii) the Court has no authority to review, much less invalidate, BIR Ruling No. 001-2003 and the December 20, 2002 DOE Certification; (iv) assuming that the Court has the power to pass upon the validity of BIR Ruling No. 001-2003, PAL failed to exhaust its administrative remedies, i.e., request the Secretary of Finance to review the ruling as provided in Department Order No. 23-01 and its implementing Revenue Memorandum Circular (RMC) No. 44-2001; and, (v) there is no proof that the imported Jet A-1 fuel was actually used in PAL's transport operations and that Jet A-1 fuel was not locally available in reasonable quantity, quality or price at the time of the importation. In its Comment/Opposition (to Petitioner Commissioner of Customs' Motion for Reconsideration dated 30 May 2019}, PAL contends that COG's motion is merely a rehash of its previous arguments presented in its Petition for Review dated 21 December 2017 as in fact they have been considered and dismissed in the assailed Decision. THE COURT EN BANG'S RULING The Court finds that the CIR and COG's arguments raised in their respective Motions for Reconsideration are mere reiteration or amplification of their arguments presented in their respective Petitions for Review, and Memorandum, all of which were duly considered in the assailed Decision. The Court has made an extensive discussion on this matter on pages 14 to 22 of the assailed Decision. As regards COG's contention that there is no proof that Jet A-1 fuel was not locally available in reasonable quantity, quality or price, and that this Court did not even address this issue in the Decision, the same is patently without merit. 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

Resolution CTA EB Nos. 1752 & 1756 (CTA Case No. 8143) Page 4 of5 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. To be sure, the Court in Division has squarely discussed PAL's compliance with the requisites under Section 13 of PO 1590 based on admitted evidence; it further re-echoed the interpretation of the Court En Bane in Commissioner of Internal Revenue vs. Philippine Airlines, lnc. 1 that the qualification - "quantity, quality or price", is alternative and not cumulative, and it is sufficient even if only one qualification is proved. This Court totally agrees with the conclusion of the Court in Division as the same is not contrary to law and is supported by evidence. All told, this Court finds no justifiable reason to disturb the conclusions in the assailed Decision. WHEREFORE, premises considered, the Motion for Reconsideration (Re: Resolution (sic) promulgated 10 May 2019) filed by petitioner Commissioner of Internal Revenue on June 4, 2019, and the Motion for Reconsideration filed by petitioner Commissioner of Customs on May 31, 2019 are DENIED for lack of merit. SO ORDERED. WE CONCUR: Presiding Justice J... Q...~�~ c. a..Y-~-..&.,_ ER~P.UY JlfANJTO C. CASTANEDA, JR. Associate Justice Associate Justice ~ t.,.,. M.,..:~. (;'nJL.t CIELITO 'N'. MINDARO-GRULLA Associate Justice 1 CTA EB No. 1308, 1309 and 1311, February 27, 2017.

Resolution /~'0~ CTA EB Nos. 1752 & 1756 (CTA Case No. 8143) CkfHERINE T. MANAHAN Page 5 of5 ON LEAVE MA. BELEN M. RINGPIS-LIBAN Associate Justice