G.R. No. L-1502 - People vs. Bautista

Petitioners: Department of Finance (DOF) and Department of Energy (DOE)
Respondent: Philippine Airlines, Inc. (PAL)
Originated from consolidated cases G.R. Nos. 198609-10 and G.R. No. 229812 related to tax liabilities on importation of aviation fuel.

On October 30, 2002, Finance Secretary Jose Isidro N. Camacho wrote to Energy Secretary Vincent S. Perez, Jr., requesting certification on local availability of aviation fuel.
The DOE replied on December 20, 2002, certifying that aviation fuel is locally available in reasonable quantity, quality, and price.

Based on DOE's certification, the BIR Commissioner Guillermo L. Parayno, Jr. issued BIR Ruling No. 001-03 on January 29, 2003.
This ruling withdrew excise tax exemptions on importations of aviation fuel for domestic operations, citing the local availability of aviation fuel.

In May 2005, Republic Act No. 9337 (Expanded Value-Added Tax Law) was enacted, imposing excise taxes on petroleum products, including aviation turbo jet fuel.
Under the law and BIR Ruling No. 001-03, Philippine Airlines was imposed excise taxes on aviation fuel imports and paid under protest.

Philippine Airlines moved to reconsider DOE’s certification; the motion was denied.
PAL sought certification from the Air Transportation Office (ATO) during fuel importations stating fuel was not locally available in reasonable quantity, quality, or price.
After ATO was replaced by the Civil Aviation Authority of the Philippines (CAAP), certifications continued the same.

While tax refund cases were pending at the Court of Tax Appeals, PAL filed a Complaint/Petition for Declaration of Nullity and Injunction against DOE’s certification before RTC.
RTC issued a Temporary Restraining Order, then a Writ of Preliminary Injunction enjoining reliance on DOE's Certification and related rulings to impose excise tax on PAL.
DOF and DOE’s motions for reconsideration and voluntary inhibition of the trial judge were denied.

CA dismissed DOF and DOE’s petitions for certiorari, holding RTC had jurisdiction over the injunction involving DOE’s certification.
CA noted the injunction was to preserve the status quo and was not an attack on tax assessments.
Subsequently, CA affirmed RTC’s Decision declaring DOE’s Certification null and void.
CA observed that the proper agency to certify aviation fuel availability is CAAP, not DOE.

DOF and DOE filed consolidated petitions before the Supreme Court to reverse CA and RTC decisions.
DOF and DOE contended that the RTC lacked jurisdiction as the matter involved tax liabilities governed by the Court of Tax Appeals (CTA).
PAL argued that the certification issue was administrative, not tax-related, hence regular courts had jurisdiction.
PAL denied forum shopping or litis pendentia despite parallel tax refund cases before the CTA.

Whether the Regional Trial Court had jurisdiction to hear and decide the Petition for Nullification of the Department of Energy’s Certification.
Whether the injunctions issued by the Regional Trial Court enjoining reliance on DOE’s Certification and related rulings were proper.
Whether the Department of Energy had the authority to issue the certification on local availability of aviation fuel.
Whether the proper venue to challenge the factual basis of BIR Ruling No. 001-03, which imposes excise taxes, is the Court of Tax Appeals.
Whether the Regional Trial Court judge committed grave abuse of discretion in denying motions for voluntary inhibition and to set affirmative defenses for hearing.