Philippine Airlines, Inc. vs.

Commissioner of Internal Revenue

and Commissioner of Customs
CTA EB Case No. 1029, 1031
Facts:
Philippine Airlines, Inc. (PAL) was ordered to pay by the Bureau of
Customs (BOC) excise tax on its subsequent importations of wine,
liquor and cigarettes needed for its international flights consumption
in accordance with Section 6 of Republic Act 9334.
PAL paid the BOC the excise tax under protest in the amount of
Php6,329,735.21. Consequently PAL filed an administrative claim for
refund before the Commissioner of Internal Revenue (CIR) which was
not acted upon by the CIR. Hence, PAL filed a Petition for Review before
the Court of Tax Appeals (CTA) Special Second Division which granted
the claim for refund but only to a reduced amount of Php2,094,985.21.
PAL filed a Petition for Review before the CTA En Banc praying for
the refund of the remaining amount of Php4,234,750.00 paid as excise
tax. On the other hand, both the CIR and the BOC filed their Petitions
for Review seeking the reversal of the CTA Second Divisions Decision.
Issue:
Whether or not PAL is entitled to Tax Refund representing alleged
erroneously paid excise tax.
Ruling:
The CTA En Banc affirmed the ruling of the CTA Second Division.
In order to be exempted from payment of taxes, duties, charges,
royalties or fees due on all importations commissary and catering
supplies, it is imperative for PAL to prove, among others, that the
imported articles, supplies or materials are not locally available in
reasonable quality, quantity or price. Based on the totality of the
evidence presented, PAL has sufficiently established that the alcohol
products it imported are not locally available in reasonable price but
was not able to prove the same with respect to the imported cigarettes
when it failed to submit the price list of cigarettes from local suppliers.
Thus PAL is entitled to refund only in the amount of Php2,094,985.21.