THIRD DIVISION
G.R. Nos. 212536-37, August 27, 2014
COMMISSIONER OF INTERNAL REVENUE AND COMMISSIONER OF CUSTOMS, Petitioners, v. PHILIPPINE AIRLINES, INC., Respondent.
D E C I S I O N
VELASCO JR., J.:
SEC. 6. Section 131 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:cralawlawlibrary
“SEC. 131. Payment of Excise Taxes on Imported Articles. -
“(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, x x x before the release of such articles from the customs house, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption.
“In the case of tax-free articles brought or imported into the Philippines by persons, entities, or agencies exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the importers thereof x x x.
“The provision of any special or general law to the contrary notwithstanding, the importation of x x x cigarettes, distilled spirits, fermented liquors and wines x x x, even if destined for tax and duty-free shops, shall be subject to all applicable taxes, duties, charges, including excise taxes due thereon. This shall apply to [said items] x x x brought directly into the duly chartered or legislated freeports x x x, and such other freeports as may hereafter be established or created by law x x x. (emphasis added.)
BOC Official Receipt Number | Date of Payment | Amount Paid |
138110892 | February 5, 2007 | PhP 1,497,182 |
1138348761 | February 26, 2007 | PhP 1,525,480 |
138773503 | March 23, 2007 | PhP 1,528,196.85 |
WHEREFORE, premises considered, the instant Petition for Review is hereby GRANTED. Accordingly, respondents are hereby ORDERED TO REFUND to petitioner the amount of P4,550,858, representing petitioner’s erroneously paid excise taxes.
SO ORDERED.chanrobleslaw
SECTION 24. This franchise, as amended, or any section or provision hereof may only be modified, amended or repealed expressly by a special law or decree that shall specifically modify, amend or repeal this franchise or any section of provisions. (emphasis added)
That the Legislature chose not to amend or repeal [PD] 1590 even after PAL was privatized reveals the intent of the Legislature to let PAL continue to enjoy, as a private corporation, the very same rights and privileges under the terms and conditions stated in said charter.10 x x x
While it is true that Sec. 6 of RA 9334 as previously quoted states that “the provisions of any special or general law to the contrary notwithstanding,” such phrase left alone cannot be considered as an express repeal of the exemptions granted under PAL’s franchise because it fails to specifically identify PD 1590 as one of the acts intended to be repealed. x x x
Noteworthy is the fact that PD 1590 is a special law, which governs the franchise of PAL. Between the provisions under PD 1590 as against the provisions under the NIRC of 1997, as amended by 9334, which is a general law, the former necessary prevails. This is in accordance with the rule that on a specific matter, the special law shall prevail over the general law, which shall be resorted only to supply deficiencies in the former. In addition, where there are two statutes, the earlier special and the later general – the terms of the general broad enough to include the matter provided for in the special – the fact that one is special and other general creates a presumption that the special is considered as remaining an exception to the general, one as a general law of the land and the other as the law of a particular case.11
In this case, PAL’s franchise grants it an exemption from both direct and indirect taxes on its purchase of petroleum products. Section 13 thereof reads:SEC. 13. In consideration of the franchise and rights hereby granted, the grantee [PAL] shall pay to the Philippine Government during the life of this franchise whichever of subsections (a) and (b) hereunder will result in a lower tax:cralawlawlibraryBased on the above-cited provision, PAL’s payment of either the basic corporate income tax or franchise tax, whichever is lower, shall be in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges, except only real property tax. The phrase “in lieu of all other taxes” includes but is not limited to taxes that are “directly due from or imposable upon the purchaser or the seller, producer, manufacturer, or importer of said petroleum products but are billed or passed on the grantee either as part of the price or cost thereof or by mutual agreement or other arrangement.” In other words, in view of PAL’s payment of either the basic corporate income tax or franchise tax, whichever is lower, PAL is exempt from paying: (a) taxes directly due from or imposable upon it as the purchaser of the subject petroleum products; and (b) the cost of the taxes billed or passed on to it by the seller, producer, manufacturer, or importer of the said products either as part of the purchase price or by mutual agreement or other arrangement. Therefore, given the foregoing direct and indirect tax exemptions under its franchise, and applying the principles as above-discussed, PAL is endowed with the legal standing to file the subject tax refund claim, notwithstanding the fact that it is not the statutory taxpayer as contemplated by law.14 (emphasis ours)chanrobleslaw
(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 two per cent (2%) of the gross revenues derived by the grantee from all sources, without distinction as to transport or nontransport operations; provided, that with respect to international air-transport service, only the gross passenger, mail, and freight revenues from its outgoing flights shall be subject to this tax.
The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed, or collected xxx, now or in the future, including but not limited to the following:cralawlawlibrary
1. All taxes, duties, charges, royalties, or fees due on local purchases by the grantee of aviation gas, fuel, and oil, whether refined or in crude form, and whether such taxes, duties, charges, royalties, or fees are directly due from or imposable upon the purchaser or the seller, producer, manufacturer, or importer of said petroleum products but are billed or passed on the grantee either as part of the price or cost thereof or by mutual agreement or other arrangement; provided, that all such purchases by, sales or deliveries of aviation gas, fuel, and oil to the grantee shall be for exclusive use in its transport and nontransport operations and other activities incidental thereto;chanroblesvirtuallawlibrary
2. All taxes, including compensating taxes, duties, charges, royalties, or fees due on all importations by the grantee of aircraft, engines, equipment, machinery, spare parts, accessories, commissary and catering supplies, aviation gas, fuel, and oil, whether refined or in crude form and other articles, supplies, or materials; provided, that such articles or supplies or materials are imported for the use of the grantee in its transport and transport operations and other activities incidental thereto and are not locally available in reasonable quantity, quality, or price;chanroblesvirtuallawlibrary
x x x x
Endnotes:
* Acting member per Special Order No. 1756 dated August 20, 2014.
** Acting member per Special Order No. 1762 dated August 20, 2014.
1Rollo, pp. 12-24.Penned by Associate Justice Juanito C. Castañeda, Jr. and concurred in by Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, and Amelia R. Cotangco-Manalastas, with Presiding CTA Justice Roman G. Del Rosario and Associate Justice Ma. Belen M. Ringpis-Liban dissenting.
2 Id. at 163-166.
3Section 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 of subsections (a) and (b) hereunder will result in a lower tax:cralawlawlibrary
(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 two per cent (2%) of the gross revenues derived by the grantee from all sources, without distinction as to transport or nontransport operations; xxx
The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed, or collected by any municipal, city, provincial, or national authority or government agency, now or in the future, including but not limited to the following:
x x x x
2. All taxes, including compensating taxes, duties, charges, royalties, or fees due on all importations by the grantee of aircraft, engines, equipment, machinery, spare parts, accessories, commissary and catering supplies, aviation gas, fuel, and oil, xxx and other articles, supplies, or materials; provided, that such articles or supplies or materials are imported for the use of the grantee in its transport and transport operations and other activities incidental thereto and are not locally available in reasonable quantity, quality, or price.
4 An Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products, Amending for the Purpose sections 131, 141, 142, 143, 144, 145 and 288 of the National Internal Revenue Code of 1997.
5 Rollo, pp. 522-537.
6 Id. at 538-547.
7SEC. 22. Franchises of Domestic Airlines. - The provisions of P.D. No. 1590 on the franchise tax of Philippine Airlines, Inc., R.A. No. 7151 on the franchise tax of Cebu Air, Inc., R.A. No. 7583 on the franchise tax of Aboitiz Air Transport Corporation, R.A. No. 7909 on the franchise tax of Pacific Airways Corporation, R.A. No. 8339 on the franchise tax of Air Philippines, or any other franchise agreement or law pertaining to a domestic airline to the contrary notwithstanding:(A) The franchise tax is abolished;8 G.R. No. 198759, July 1, 2013, 700 SCRA 322.
(B) The franchisee shall be liable to the corporate income tax;
(C) The franchisee shall register for value-added tax under Section 236, and to account under Title IV of the National Internal Revenue Code of 1997, as amended, for value-added tax on its sale of goods, property or services and its lease of property; and
(D) The franchisee shall otherwise remain exempt from any taxes, duties, royalties, registration, license, and other fees and charges, as may be provided by their respective franchise agreement.
9Commissioner of Internal Revenue v. Central Luzon Drug Corporation, G. R. No. 159647, April 15, 2005, 456 SCRA 414.
10 G.R. No. 180066, July 7, 2009, 592 SCRA 237, 261.
11 Id.
12 G.R. No. 198759, July 1, 2013, 700 SCRA 322.
13 Id. at 336.
14 Id. at 337-339.
15Commissioner of Internal Revenue v. United International Pictures, AB, G.R. No. 169565, January 21, 2009, 577 SCRA 1, 5.
16 Id.
17 G.R. Nos. 167274-75, July 21, 2008, 559 SCRA 160.