TWO STATE agencies have filed a petition with the Supreme Court to allow the government to collect taxes from Philippine Airlines’ (PAL) importation of jet fuel.
The Finance department along with the Energy department, in a filing dated Nov. 10, urged the high court to “nullify the patently void orders” of the Pasay Regional Trial Court (RTC), which had prevented agencies from imposing excise taxes on the flag carrier amounting P666.19 million to date.
PAL is no longer qualified to enjoy tax exemptions on its aviation fuel importations in light of Presidential Decree (PD) 1590 and a certification issued by the Energy department on Dec. 20, 2002, the two agencies stated.
PD 1590, or the PAL Charter, states that the airline is exempted from paying taxes on its importation of petroleum products as long as the commodity is “not locally available in reasonable quantity, quality, or price.”
On the other hand, the DOE certification — which was requested by the Finance department in aid of its reassessment of tax exemptions — stated that “aviation gas, fuel and oil for use in domestic operation of domestic airline companies are locally available in reasonable quantity, quality and price.”
The Energy department certification had prompted the Bureau of Internal Revenue to issue on Jan. 29, 2003 a ruling which rescinded the tax exemption granted to PAL, reasoning that “[fuel] importations may not be given the same tax treatment as before as long as there is such available domestic supply of petroleum products.”
PAL had requested the Energy department to reconsider the certification it issued; however, the agency denied the carrier’s appeal.
The airline then went on to request a certification from the Air Transportation Office (ATO) which is now the Civil Aviation Authority of the Philippines.
The ATO in 2009 obliged and issued a certification stating that Jet A-1 Fuel, which PAL imports, “is not locally available (in reasonable quantity, quality and price) but is necessary/incidental for the operation of [PAL].”
PAL officials could not be immediately reached to comment.
Aside from filing a petition with the Court of Tax Appeals — which still has yet to issue a ruling — PAL also requested the Pasay Regional Trial Court to issue a temporary restraining order (TRO) preventing agencies from collecting import taxes.
In its July 12, 2010 decision, the trial court ruled in favor of PAL, saying that the airline “has shown and established the requisites for the issuance of a TRO.”
The TRO was warranted “to prevent continuous irremediable injury to the petitioner before the main case can be thoroughy adjudicated,” the ruling read.
The trial court’s ruling was further upheld by the Court of Appeals on Sept. 21, 2011.
PAL Holdings, Inc., which operates the flag carrier, had recorded a P475.14-million comprehensive net loss from April to June, latest filings show.
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By: Aubrey E. Barrameda
Source: Business World,Nov. 13, 2011
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