G.R. No. 249407 - COMMISSIONER OF CUSTOMS AND COMMISSIONER OF INTERNAL REVENUE, VS. AIR PHILIPPINES CORPORATION (APC). [G.R. Nos. 250032 & 250047] COMMISSIONER OF CUSTOMS AND COMMISSIONER OF INTERNAL REVENUE, VS. PHILIPPINE AIRLINES, INC..D E C I S I O N - Supreme Court E-Library

Ruling

accordingly, ordered petitioners to refund to APC the amount of PHP 235,613,134.47 representing excise taxes paid under protest for the importation of Jet A-1 aviation fuel for the period of May 2003 to December 2004; and (2) for the Petition in G.R. Nos. 250032 & 250047 The Decision [6] dated May 10, 2019 and Resolution [7] dated October 16, 2019 of the CTA EB in CTA EB Nos. 1752 and 1756, which affirmed the Decision [8] dated July 17, 2017 of the CTA Third Division in CTA Case No. 8143. The CTA Third Division's ruling ordered petitioners to refund or issue a tax credit certificate in favor of Philippine Airlines, Inc. (PAL) in the amount of PHP 302,012,195.86 representing excise taxes paid for PAL's importations of Jet A-1 fuel for its domestic operations for the period of August 2008 to October 2008. [9] The Legal Antecedents of APC's and PAL's Refund Claims APC was granted a franchise to establish, operate, and maintain air transport services for the domestic and international carriage of passengers, mail, goods, and property, by virtue of Republic Act No. (RA) 8339 [10] (APC's franchise). [11] Following Section 11 of RA 8339, as amended, APC is entitled to the same tax exemption privileges granted to any of its competitors, including PAL, to wit: SEC. 11. Tax Provisions. The grantee, its successors or assigns, shall pay to the Philippine Government during the life of its franchise a franchise tax of 5% of the gross revenues derived by the grantee from its transport operations. In the event that any competing individual, partnership or corporation receives or enjoys tax privileges and other favorable terms which tend to place herein grantee at any disadvantage, then such provisions shall be deemed ipso facto part hereof and shall operate equally in favor of the grantee. The grantee shall, however, be subject to income tax levied under Title II of the National Internal Revenue Code, as amended, and tax on its real property under existing laws on revenues earned from activities other than air transportation. (Emphasis Supplied) Notably, Section 13 of Presidential Decree No. (PD) 1590, [12] otherwise known as the PAL's charter, grants PAL the option to pay a lower: (a) basic corporate income tax of 30% based on its net taxable income, or (b) franchise tax of 2% based on its gross revenues, in lieu of all other taxes, duties, and fees, viz. : SECTION 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine Government during the life of this franchise whichever subsections (a) and (b) hereunder will result in a lower tax: (a) The basic corporate income tax based on the grantee's annual net taxable income computed in accordance with the provisions of the National Internal Revenue Code; or (b) A franchise tax of 2% of the gross revenues derived by the grantee from all sources, without distinction as to transport or non-transport operations; provided, that with respect to international air-transport