THE Court of Appeals (CA) has stopped the government from imposing excise taxes on importations of aviation fuel for airlines’ domestic operations.
In a 28-page ruling penned by Associate Justice Maria Elisa Sempio Diy, the CA’s Twelfth Division affirmed the decision of the Regional Trial Court (RTC) in Pasay City on February 27, 2014, favoring the petition filed by flag carrier Philippine Airlines seeking to declare null and void the certification issued by the Department of Energy (DOE) on December 20, 2002, which states that “aviation gas, fuel and oil for
use in domestic operation of domestic airlines are locally available in reasonable quantity,
quality and price”.
The said certification became the basis of the Department of Finance (DOF) and the Bureau of Internal Revenue in withdrawing the tax-exemption privilege accorded to airlines on the importation of aviation fuel for use in their domestic operations starting 2003.
The RTC in Pasay City did not give merit to the DOF and the DOE’s contention that it is the Court of Tax Appeals (CTA)—and not the trial court—which has jurisdiction over the issue.
Likewise, the Lower Court ruled that it is the Civil Aviation Authority of the Philippines (Caap) that has authority to issue a certification on the availability of aviation fuel locally in reasonable quality, quantity and price.
In junking the appeal of the DOF and the DOE to reverse the ruling of the RTC in Pasay City, the CA held that the trial court properly exercised its jurisdiction over the case.
It held that the provisions of Republic Act (RA) 9282 (An Act Expanding the Jurisdiction of the CTA) do not provide that the CTA has jurisdiction to rule on or review the validity of the issuances of the DOE.
“The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the
Constitution is within the jurisdiction of the regular courts,” the CA stressed.
Likewise, the CA agreed with the RTC in Pasay City that the
Caap—and not the DOE—is the proper authority to certify the availability of aviation fuel in reasonable quantity, quality and price.
The CA explained that by virtue of RA 9497, the Caap inherited the powers and functions of the Air Transportation Office, which was earlier called the Bureau of
Air Transportation.
It noted that under Section 35 of the law, the powers and functions of the director general of the Caap include the authority to take charge of the technical and operational phases of civil aviation and the authority to coordinate with any research agency on matters relating to aircraft fuel.
“In other words, the Caap, which is under the Department of Transportation, is the primary agency mandated to maintain the proper quality standards for everything related to civil aviation, including aircraft, equipment and supplies, as well as aviation fuel.”
Furthermore, the CA ruled that there is no provision in Presidential Decree 1206 creating the DOE that gives the agency the authority to issue certification on the local availability of aviation fuel.
“In sum, the Caap appears to be the proper agency vested with power and authority to issue certifications on availability of aviation fuel. On the other hand, the DOE has the power to certify on general matters of fuel supply that do not relate to civil aeronautics or aviation,” the appellate
court ruled.
Concurring with the ruling were Associate Justices Ramon M. Bato Jr. and Manuel Barrios.