Case Digest (G.R. No. 179800)
Facts:
Republic of the Philippines represented by the Commissioner of Internal Revenue (CIR), petitioner, vs. Philippine Airlines, Inc. (PAL), respondent, G.R. No. 179800, February 04, 2010, Supreme Court Third Division, Peralta, J., writing for the Court.PAL is a domestic air carrier that contracted PLDT for communications services and, for the period January 1 to December 31, 2002, paid PLDT 10% Overseas Communications Tax (OCT) in the total amount of P134,431.95. On February 24, 2004 PAL, through its AVP of Financial Planning and Analysis, filed with the Commissioner a claim for refund of P134,431.95, invoking P.D. No. 1590, Sec. 13 (the airline’s franchise “in lieu of all other taxes” clause) and BIR Ruling No. 97‑94.
Because the Commissioner did not act on the refund claim, PAL appealed to the Court of Tax Appeals (CTA) on April 22, 2004; the case was raffled to the CTA Second Division (CTA Case No. 6962, E.B. Case No. 273 before the CTA En Banc). The CIR defended, asserting that Section 120 of the 1997 NIRC imposes the 10% OCT on overseas communications and that PAL could claim exemption under its franchise only if it actually paid either the basic corporate income tax or the 2% franchise tax.
The CTA Second Division rendered a Decision on November 13, 2006 granting PAL’s refund claim but reducing the amount to P93,424.67 by disallowing P2,424.16 (non‑verification) and P38,583.12 (prescription). The Second Division held that PAL had validly availed of the option in Sec. 13 by choosing the basic corporate income tax alternative and that actual payment was not required even if the result was zero tax liability. The CIR’s motion for partial reconsideration was denied on February 7, 2007, and the CIR then sought review before the CTA En Banc.
The CTA En Banc affirmed the Second Division’s Decision in an August 9, 2007 Decision and issued a Resolution on September ...(Subscriber-Only)
Issues:
- Whether respondent PAL is exempt from the payment of the 10% Overseas Communications Tax under its franchise, P.D. No. 1590, Sec. 13, and therefore entitled to the refund pra...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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