Appellate court denies PAL’s P20-M refund

THE Court of Tax Appeals (CTA) has denied Philippine Airlines, Inc.’s (PAL) refund claim totaling P20.06 million representing its excise taxes for importations of liquor, wine, and tobacco for the period covering August 2014 to February 2018.

In a 25-page decision dated May 30 and made public on June 2, the CTA Special First Division said it did not find any illegal excise taxes that were refundable in favor of PAL.

“Petitioner (PAL) failed to present sufficient and convincing evidence to prove that the imported tobacco and alcohol products were not locally available in reasonable quantity, quality, or price, at the time of importation,” according to the ruling penned by Associate Justice Catherine T. Manahan, citing Presidential Decree No. 1590, or the law establishing the flag carrier.

The tribunal added the firm failed to provide evidence such as price lists of the said products to show that they were not locally available, which is mandated under law.

Under the law, PAL is exempted from the payment of excise tax on its tobacco and alcohol if the said products are not locally available in a reasonable quantity, quality, or price, and if the said supplies are important for the use of the franchisee in its transport and other incidental operations.

The case stemmed from separate demand letters issued by the Bureau of Customs that sought payment from PAL on imports worth P20.06 million.

In a separate dissenting opinion, Associate Justice Marian Ivy F. Reyes-Fajardo said PAL should be excused from excise tax imposition on its wines and liquors based on the testimony of its manager for in-flight materials purchasing division.

Citing Supreme Court jurisprudence, the magistrate said the manager’s declaration that the products were not locally available and the presented price lists from various local suppliers should be enough to grant the refund claim.

The tax court ruled that the manager’s testimony, standing alone, was not enough to prove that the imported tobacco products were not locally available.

“Taking my cue from PAL, petitioner adequately proved that its liquor and wines, imported from August 2014 to February 2018, were not locally available in a reasonable quantity, quality, or price,” Ms. Fajardo said. — John Victor D. Ordoñez