G.R. Nos. 209353-54 and 211733-34, July 6, 2015.
Republic of the Philippines, represented by the Commissioner of Customs, and Commissioner of Internal Revenue, Petitioners, vs. Philippine Airlines, Inc. (PAL), Respondent.

FACTS

Respondent Philippine Airlines, Inc. (PAL) filed claims for a refund totaling ₱4,469,199.98, representing allegedly erroneously paid excise tax for the period July 2005 to February 2006. After the Bureau of Internal Revenue (BIR) failed to act on its administrative claims, PAL filed two Petitions for Review with the Court of Tax Appeals (CTA). The CTA Second Division consolidated the cases and granted the refund. The Commissioner of Internal Revenue (CIR) and the Commissioner of Customs (COC) filed separate Motions for Reconsideration, which were denied. They then elevated separate Petitions for Review to the CTA en banc, which were consolidated. The CTA en banc denied both petitions, ruling that PAL was entitled to the refund. The COC and CIR filed the present Petitions for Review on Certiorari before the Supreme Court.

ISSUE

The principal issue is whether Sections 6 and 10 of Republic Act (R.A.) No. 9334 expressly repealed Section 13 of Presidential Decree (P.D.) No. 1590, thereby removing PAL’s tax exemption on imported commissary supplies.

RULING

The Supreme Court denied the Petitions, finding no merit. The Court held that R.A. No. 9334 did not expressly repeal the tax exemption granted to PAL under its franchise, P.D. No. 1590. The Court reiterated the basic principle of statutory construction that a later general law does not ordinarily repeal a prior special law unless the repeal is express. A reading of the pertinent provisions shows no express repeal of PAL’s exemption. Section 13 of P.D. No. 1590 grants PAL an exemption from all taxes, duties, and charges on importations, including commissary supplies, provided they are for its use and not locally available. Section 24 of the same decree states that the franchise may only be modified, amended, or repealed expressly by a special law. While Section 6 of R.A. No. 9334 contains a “notwithstanding clause,” it fails to specifically identify P.D. No. 1590 as an act to be repealed. Furthermore, P.D. No. 1590 is a special law governing PAL’s franchise, while R.A. No. 9334 is a general law; thus, the special law prevails. The Court cited its prior ruling in CIR v. PAL (G.R. Nos. 212536-37, 27 August 2014), which involved the same parties and issues, as controlling precedent. Therefore, PAL remained entitled to the refund of the erroneously paid excise taxes.