PILIPINAS SHELL PETROLEUM CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

.'i REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION PILIPINAS SHELL PETROLEUM CTA CASE NO. 11086 CORPORATION, Petitiomr, -versus- Members: RINGPIS-LIBAN, Cbairperso11, MODESTO-SAN PEDRO, a11d FERRER-FLORES, Jl. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Ull. I RespolldeJJ!. X---------------------------------------------------------------------------- --7-~ -~-i;~ ~:_-_-.- DECISION RINGPIS-LIBAN, J. THE CASE The Petition for RevieJ.]} filed on February 17, 2023, prays for the refund and/ or issuance of tax credit certificate in the amount of P113,487,216.00, allegedly representing petitioner's excise taxes paid from February to May 2021 on Jet .A-1 fuel sold to tax exempt international air carriers during the period from April to June 2021. 1 THE PARTIES Petitioner Pilipinas Shell Petroleum Corporation is a corporation organized and existing under the laws of the Philippines, with principal office address at 41 't Floor, The Finance Center, 26th Street corner 9th Avenue, Bonifacio Global City, Brgy. Fort Bonifacio, Taguig C i / 1 Summary of the Case, Pre-Trial Order dated JanuatY !2, 2024, Docket- \"ol. I, p. 248. 2 Exhibit "P-2�1", Docket - \'ol. II, pp. 50-I to 51 'J.

Page 2 of29 DECISION CT~-\ C\SE NO. 11086 Respondent is the duly appointed Commissioner ofinternal Revenue who can be served with processes and pleadings at Room 703, Bureau of Internal Revenue (BIR) National Office Building, Diliman, Quezon City.3 THE FACTS OF THE CASE Petitioner filed three (3) separate administrative claims for refund or tax credit certificate together, with the corresponding Applications for Tax Credits/Reflmds (BIR Form No. 1914), on ~August 24,2021,4 September 22,2021,5 and November 2, 2021,c' with the Excise Large Taxpayers Audit Division II of the BIR, seeking for the recovery of alleged excise taxes paid on Jet A -1 fuel sold to international air carriers for the period from r\pril to June 2021 for their use or consumption outside the Philippines, in the aggregate amount of P113,487,216.00, computed as follows: ~----~ ~-~ -~-- - - - - - - - - - -~~--~---- Administrative Product Volume in Exc::rl~;e~a~-- ---~~e~i-fic_T_a_x A~-o~~~ Claim Liters 1" Jet "\ -1 fuel 10,428,309 P4.00 P41 ,713,236.00 2nd --�---- �-- ------------~-----~-~-�� Jet .-\ 1 fuel 9,040,763 P4.SJO __ _ ---~ 36,163,_Q~2.00 -- I -"'-- 3rd 13,902,7 32 P4.00 35,610,928.00 - Jet :\-1 fuel - - - - � - -- -----~-- Total P 113,487,216.00 -----~- - - � - - - ~~-~-~~--- ~--~~~~-----~---~-------~-----�-'-------------- Petitioner filed the present Petitionfor Ret;inv on February 17, 2023.7 On ~April 14, 2023, respondent filed his AIJJJ.J)er/3 interposing the following special and affirmative defenses, to wit: (1) petitioner is not entitled to refund of excise taxes in the amount ofP113,487,216.00, representing alleged excise taxes on imported Jet A-1 fuel subsequently sold to international air carriers; and (2) claims for refund of excise taxes paid is authorized only by Section 130(D) of the National Internal Revenue Code (NIRC) of 1997, as amended. On April27, 2023, respondent transmitted the BIR Records of this case.9 The Pre-Trial Conference was initially set on "\ugust 8, 2023, 10 but was r later reset to, and held on, September 26, 2023. 11 Prior thereto, ReJpondent's Pre- ~1 Par. 1, Stipulation of Fact[s], .Join! S!ifJ/IIa!irJII of I ;Lid!' Li!ld f.,illf.l~ (fSFI), Docket - \ 'ol. I, p. 198. +Exhibits "P-21" to "P-21-1", Docket- \'ol. II, pp. -~91 to 4lJ I. 5 Exhibits "P-22" to "P-22-1", Docket \'ol. II, pp. 495 to :llJS. r, Exhibits "P-23" to "P-23-1" Docket-- \'ol. II, pp. -199 to 502. 7 Docket- Vol. I, pp. 6 to 35. x Docket-- \'ol. I, pp. 1(17 to II(>. ~Respondent's Compliai/(U dated .\pril2'i, 21123, Docket \'ol. I, pp. 121 to 123. 111 Notice of Pre-Trial Conference dated .\pril 2'1, 21123, Docket- \'ol. I, pp. 118 to 119. 11 Notice of Resetting dated Juh� 25, 202.'\, Docket - \'ol. I, p. 132; Minutes of the hearing, and Order dated, September 26, 2023, Docket-- \'ol. I, pp. I'J2 to 193, and 196 to 197, respectively.

Page 3 of29 DECISION CT\ C\SE NO. 11086 Trial Briif was flied on I'vlay 10, 2023, J:' while the Pre-Trial Brirffor Petitioner was submitted on September 21, 2023. 13 On October 25, 2023, the parties submitted their Joint Stipzdation ofFads and IssHes, 14 which was admitted and approved by the Court in its Resolution dated November 13, 2023, 1'' thereby deeming the termination of the Pre-Trial. The Pre-Trial Order dated January 12, 2024 was then issued. 16 As trial ensued, peuuoner presented its testimonial and documentary evidence. It offered the testimonies of the following individuals, namely: (1) Ivis. Nlerrie Marriel V. Veloso, 17 petitioner's Import/1-\dditives Scheduler; (2) Nlr. Patrick R. l\1analo, 18 petitioner's ,\irport Operations Manager; (3) Mr. l\1arvin Joseph Ilagan, 19 petitioner's Site Health, Safety, Security, and Environment Advisor; (4) l\Is. Berenice .--\ngclique L. Flores,211 petitioner's Tax Advisor; (5) Atty. r~�arida Nimfa C. Dimailig,' 1 petitioner's Country Tax Nlanager; (6) Ms. Maria Luz S. Verdejo/2 Head Librarian at the Carlos P. Romulo Library of the Department of Foreign .Affairs - l_;'oreign Service Institute; and (7) Ms. Rose Anne Apostol-Valix,2' the Court-commissioned Independent Certified Public Accountant (ICP.A).:c4 The Repottofthe ICPA was submitted on l\farch 18,2024.25 Respondent filed a l\1{w~festation on 1vlay 28, 2024, stating that he will not be presenting any witness_:>c, On May 30, 2024, petitioner filed its Formal Ojjer of Evidem:e,27 to which respondent submitted his COmment {Re: i"Orma! Offer ofEvidence) on May 31, 202( 12 Docket-- \'ol. I, pp. 126 l'O 12<J. u Docket�- \'ol. I, pp. 133 to 1-I<J. I" Docket - \'ol. I, pp. ll)8 to 21 I. 15 Docket- \'ol. I, p. 230. lr, Docket- \'ol. I, pp. 218 ro 251. 17 Exhibit "P-29", Docker � \'ol. I, pp. 12 ro 611; .\Iinutcs of hearing held on, and Order dated, .January 16, 202'1, Docket- Vol. I, pp. 256 to 258. 1 ~ Exhibit "P-30", Dockei ~-- \'ol. I, pp. C1l to 75; Minutes of hearing held on, and Order dated, January 16, 2024, Docket-~ \'ol. I, pp. 256 to 258. 1 ~ Exhibit "P-31", Docket- \'ol. I, pp. 76 to 82; i\Iinntes of hearing held on, and Order dated, February 20, 2024, Docker- \'ol. I, pp. 259 to 260. 211 Exhibit "P-32", Docket- \'ol. I, pp. 83 to%; i\Iinutes of hearing held on, and Order dated, February 20, 2024, Docket \'ol. I, pp. 25<J to 2(J(I. 21 Exhibit "P-33", Docker� \'ol. 1, p. 'J' to ]Ill; .\Iinutes of the hearing held on, and Order dated, March 14, 2024, Docket ... \'ol. I, pp. 2Cd to 262. 22 Exhibit "P-34", Docket-- \ 'ol. I, pp. 153 to !58; .\{inures of the hearing held on, and Order dated, March 14, 2024, Docket� \ �ol. I, pp. 26 I to 262. 21 Exhibit "P-85", Docket � \'ol. I, pp. 2'/.') to 280; .\linures of the hearing held on, and Order dated, .\pril11, � 2024, Docket- \'ol. I, pp. ?.68 to 269. 24 Oat/J oj'Co!JJIJ?i.i�JiOI! dated JanwllT IC1, 2.112.-1, Docket�- \'ol. I, p. 255; i\Iinures of hearing held on, and Order dated, January 16, 2rn1, Docker \'ol. I, pp. 25(J to 258. 25 Exhibit "P-35" (Refer to one Ill separate hinder). 2r, Docket-\'ol. I, pp. 288 to .291) 27 Docker- Yo!. II, pp. 2.92 to 335. 2R Docket-~ \'ol. II, pp. 65U to 652.

Page 4 of29 DECISION CT.-\ C-\SE NO. 11086 In the Resolution dated November 11, 2024,29 the Court admitted all of petitioner's offered exhibits. Respondent filed his A:1emorandmJz on November 26, 2024;30 while the MemorandHm for Petitioner was submitted on December 16, 2024.31 The present case was considered submitted for decision on January 7, 2025. 32 THE STIPULATED ISSUE The parties submit the following issue for this Court's resolution, to wit: "WHETHER OR NOT PETITIONER IS ENTITLED TO THE REFUND OF TAXES OR ISSUANCE OF TAX CREDIT CERTIFICATE (TCC) OF ALLEGED EXCISE TAXES ON IMPORTED JET A-1 FUEL SUBSEQUENTLY SOLD TO INTERNATIONAL AIR CARRIERS AND TO TAX-EXEMPT ENTITIES FOR USE OR CONSUMPTION OUTSIDE THE PHILIPPINES DURING THE PERIOD FROM APRIL TO JUNE 2021 IN THE AMOUNT OF P113,487,216.00."33 THE ARGUMENTS OF THE PARTIES Petitioner argues that it tirndy filed its claim for refund or credit for excise taxes erroneously, wrongfully, illegally, or excessively collected from excise taxes paid during the period from F'ebruary to lVIay 2021, pursuant to Sections 204 and 229 of the NIRC; and that petitioner is entitled to the recovery of excise taxes in the amount of P113,487,216.00 paid during the period from February to May 2021 on imported Jet .A-1 fuel sold to international carriers for use or consumption outside the Philippines during the period from April to June 2021. Respondent contends that petitioner is not entitled to refund of excise taxes on its alleged sales and deliveries of Jet L\-1 fuel to international carriers and to tax exempt entities in the amount ofP113,487,216.00 for the period April to June 2021; and that claims for refund of excise taxes paid is authorized only by Section 130(D) of the NIRC of 1997, as amended. I 2~ Docket- \'ol. II, pp. 656 to 65~'. 311 Docket-\'ol. II, pp. 659 to 66 i . :o-. .11 Docket- \'ol. II, pp. 6'1 to 32 Minute Resolution dated Januan� i, 202'1, Dod:d �� \"ol. II, p. 708 . .l.l Par. 2, Stipulation oflssucH,JSl'"l, Docket \"ol. I, pp. 19il to 199.

Page 5 of29 DECISIOK' CT\ C\SE NO. 11U86 THE COURT'S RULING The present Petiti.onfor Re;.Ji.eu.J is granted. Governing provisions for refund claims. Sections 204(C) and 229 of the NTRC of 1997 read as follows: "SEC. 204. �111tl;ori.!J; qf the CommiSJiomr to Compromise) Abate and Rq!md or Credit Ta.":a.r. -The Commissioner may- XXX XXX XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they arc returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Prot.Ji.ded, l1oweve1~ That a return filed showing an ovcqJayment shall be considered as a written claim for credit or refund." (Emphasis added) "SEC. 229. Reroz;e~y of Ta.'\" Erromott.rfy or Illegal!J Collected. -No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, b01vever, That the Commissioner may, even without a written claim therefor, refund or credit anv- tax where on the face of the return upon which ' payment was made, such payment appears clearly to have been erroneously paid." (Emp/;a.re.r added) (

DECISION CT-\. C\.SE NO. 11086 The afore-quoted provisions are clear: within two (2) years from the date of payment of tax, the claimant must first file an administrative claim with respondent before filing its judicial claim with the courts of law. Both claims must be filed within a two (2)-year reglementary period. Timeliness of the filing of the claim is mandatory and jurisdictional, and thus the Court cannot take cognizance of a judicial claim for refund filed either prematurely or out of time. It is worthy to stress that as for the judicial claim, tax law even explicitly provides that it be filed within two (2) years from payment of the tax "regardless of any supervening cause that may arise after payment."3-+ Moreover, the foregoing prcw1s10ns allow the recovery of taxes erroneously or illegally collected. 1\n "erroneous or illegal tax" is defined as one levied without statutory authority, or upon property not subject to taxation, or by some officer having no authority to levy the tax, or one which is some other similar aspect is illegal. 35 In other words, what can be refunded or credited is a tax that is erroneously, illegally, excessively or in any manner wrongfully collected. In short, there must be a wrongful payment because what is paid, or part of it, is not legally duc.-'c' Thus, for the present claim for refund or issuance of tax credit certificate to prosper, petitioner must not only establish that it timely filed its refund claim, it must likewise prove that the subject excise taxes paid are "erroneous or illegal". Petitioner timely filed it8 administrative and judidal claims. For excise tax on imported articles, in general, the same is paid by the owner or importer upon importation and prior to removal thereof from the customshouse as provided in Sections 129 and 131(A) ofthe NIRC of1997, as amended, to wit: "SEC. 129. Goods Sul:jed to Exrise Taxes. -Excise taxes apply to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported. The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV. XXX XXX xxx." (EmphaJiJ and zmderscoring added) "SEC 131. Pc!JII7zeJlt qfExcise TaxeJ on Imported Artides.1 :l.J CommiJ.rioner o/ ln!emal F..et�mm !'.!'. San J.f(~11d COIJ)(mt!ion. d Yeq., C.R. ~ os. IR07 40 and 180910, November 11, 2019. �1 Commt:ryiol!l'r oj'In!ema/ Retitl/111' l'i. Pi/ij1i11a.r J/ie/1 Petm/m;;; CI)IJ!ura!iotl, G.R. !\: o. 188,197, ~-\.pril 25, 2012, citing the definition provided in BL \CJ('S L.-\ w� DICTION .-\RY, f�'ifth Edition, p. 486. �16 CommiJJioner oflntemal 1\epw;;e 11.1. Sc111 1\oq11e Poll'er Corporation, e! .req., G .R. !'i os. 187485, 196113, and 197156, February 12, 2013.

Page 7 of29 DECISION CL\ C\SE NO. 11086 (1\) Peno11.r Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customshouse, or by the person who is found in possession of articles which arc exempt from excise taxes other than those legally entitled to exemptjon. XXX XXX xxx." (Em�p!1a.ri.r and underscoring added) Thus, based on the foregoing prov1s1ons, the two (2)-year period prescribed in Sections 204(C) and 229 of the NIRC of 1997, in relation to the aforequoted provisions of Sections 129 and 131 of the same Code, should be reckoned frorn the date of actual payn1ent of excise taxes. In this case, petitioner allegedly imported Jet .A-1 fuel from February 2021 to May 2021, though its refinery in Tabangao, Batangas, and paid the corresponding excise taxes thereof, as follows: 37 r r - SAD3SN~~ - ------�~- ----------- SAD Date Volume in I Rate Amount of Payment Date as per SSDT39 Barrels Excise Tax --1 C217240 ~--f~l;. T7~-i621 ...... --� -�� -� .��- --��--��--~-�� I P�I.OO Feb. 18, 2021 41 39,750 �- -- --- P30,862, 100.00 Apr. 27, 2021 4~ -� � - ~- -�--� ------------- Mar. 23, 2021 44 C394940 ---- �- 53,198 N.OO P3-1,256,380.00 i\Iar. 22, 2021 . 1- .. .._ -�-� --� --���- + - - - - - - l\.Iay 28, 2021 45 C57804r. "\pr. 29, :2():21 ___. 62,5()8 _j_~~l.~~~j P-HU-19,600.00 I "-\pr. 30, 2021 47 -. 48 1 July 8, 2021 C6355 4~ J\Iay 1 L 2021 30,260 ---�-P.-.J~.O-O-- - - -P-1-9-,513,372.00 l\.Iay 14, 20215� --�- - July 12, 2021 51 !-------+---�-�-- . ���- ..... 5 C708952 1\Iay :28, :2021 --� -- P-+-J-H-l-�I---- P-15,319,600.00 May 31,2021 3 July 23, 2021 54 69,9-10 I ____ [___ ____ ._ ,_. .l7 Refer to Exhibit "P-121" (Binder I of 6), pp. 2 to 3 and :\nnex ".-\-3" thereof. :l~ That is, "Single .-\dm.imstrati\-e Document". �19 That is, "Statement ofSerrlcmcnt of Duties and Taxes". 4" Exhibit "P-1-3'', Docket - \, ol. II, pp. 3.1R to 3-lll. 41 Exhibit "P-1-4", Docker ... \. ol. II, p..1T2. +2 Exhibit "P-1-'1-1", Docket \'ol. II, p. 313. n Exhibits "P-2-3" to "P-2-.)-1", Docket \'ol. II, pp. 35B to,)(,()_ +I Exhibit "P-2-..J", Docket� \'ol II, p. 362. 40 Exhibit "P-2-4-1", Docket \'ol. II, p. 3(,3. +r, Exhibits "P-3-3" to "P-3-3-1", Docker \'ol. II, pp. 37 1 to 376. +!Exhibit "P-3-"1", Docket �� \'ol. JI, p. 37B. 1 ~ Exhibit "P-3-4-1", Docket- \'ol. II, p. 3'9. -19 Exhibits "P-4-3" to "P--1-3-1", Docket� \'ol. II, pp. 391 to 393. 011 Exhibit "P-4-4", Docket \'ol. II, p. 395. 51 Exhibit "P-4-4-1", Docket \ ol. II, p ..1%. 52 Exhibits "P-5-3" to "P-5-.1-1 ",Docket . \'oL II, pp. "lOB to +I 0. 5�1 Exhibit "P-5--f", Docket� \'ol. 11, p I!:" 04 Exhibit "P-5-1-1 ",Docket \"oL 11, p I U.

Page 8 of29 DECISION CT"-\ C-\SE NO. 11086 [~--- I -263,563 1-P~I~(U) [--~~~~~7~~~101 ,352.00 I ] Thus, counting two (2) years from the earliest payment of excise tax on imported articles on 1-'ebruary 18, 2021, petitioner had until February 18, 2023, to file its administrative and judicial claims for refund. Considering that pelltloner filed its three (3) administrative claims for refund on August 2LJ, 2021,~) September 22, 2021,'1c' and November 2, 2021,5~1 while its judicial claim for refund on February 17, 2023,58 petitioner timely filed its administrative and judicial claims for refund within two (2) years from the earliest date of payment of the excise tax on imported Jet A-1 fuel in accordance with Sections 204(C) and 229 of the NIRC of 1997. In view of the tjrnely filing of the present Petitiol7 for Review, this Court has jurisdiction to entertain the same. Having settled the foregoing matters, the Court shall now determine whether the excise taxes paid by petitioner in February 2021 to May 2021 for imported .J ct A-1 fuel sold to international air carriers during the period from April to June 2021 arc illegal or erroneous, as claimed by petitioner. The excise taxc8 paid on 1inported Jet A-1 fuel sold to international air carriers are erroneously or illegally collected. Petitioner argues that its right to claim a refund of, or issuance of a tax credit certificate for, excise taxes paid on petroleum products sold to international carriers has already been recognized by the Supreme Court in CommzsJiomr ojl11temal Rel!emte ZJJ. Pilipi11aJ Shell Petroleum C01poration.59 Respondent counter-argues that petitioner, being an importer of petroleum products sold to international air carriers of Philippine or foreign registry, is liable to pay excise taxes due thereon as soon as they are in existence. Accordingly, the only instance that petitioner may invoke a claim for refund is the erroneous payment of the excise tax, but since the excise tax paid by petitioner was legally and validly collected, it is liable to pay such tax. Respondent also claims that Section 135 cannot be a source for petitioner's claim for refund, as it cannot be invoked by sellers, like herein petitioner, but only by the buyers who are exempt entities~ 55 Exhibits "P-21" to "P-:21-l", Docket \'oL II, pp. 191 to ~19-+. 56 Exhibits "P-22" to "P-22-1", Docket \~ol. II, pp. �195 to 198. 57 Exhibits "P-23" to "P-2.1-1" Docket \'ol. ll, pp. 1')9 to 502. 5~ Docket- \' ol. I, pp. 6 to Yi. 5~ 783 SCR:\ '190 (21Jl6). r.u Respondent's i\1emoral/(lllm, Docket \'ol. II, at p. M>.1.

Page 9 of29 DECISION CT~\ C\SE NO. 11086 The Court disagrees with respondent. To recall, Section 129 of the NIRC defines excise taxes as taxes applied "to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported. xxx." As a corollary thereto, Section 135 of the NIRC of 1997, as amended, reads as follows: "SEC 135. Petrolmm Prod!!dJ Sold to International Carriers and Exempt EntitieJ or AgemieJ. - Petroleum products sold to the following arc exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided) That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; (b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their usc or consumption: Prr)J)ided, bowez!er, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; (c) Entities which are by law exempt from direct and indirect taxes." (EmjJ!JmeJ a!ld ;mderJcolillg added) A plain reading of the foregoing provision reveals that the words ((petrolet!m prodt!ds))were never qualified. 'T'he law did not distinguish whether the petroleum products sold were locally-manufactured or were imported, in order for there to be an excise tax exemption. \'Vhere the law docs not distinguish, courts should not distinguish. 61 Thus, the exemption given under Section 135 of the NIRC of 1997 may be resorted regardless of whether the subject Jet A-1 fuel was locally- manufactured or imported, so long as the conditions therein are complied with by the refund-claimant. Moreover, in Pilipil7aJ Shell PetrolemJl Corporation VJ. Commissiomr of Intemal Revemte (2021 Pilipi11aJ Shell case)/'~' the Supreme Court sitting En Bane discussed lengthily the nature of excise tax in this wise: f "By its nature, an excise tax under the Philippine taxation system pertains to the tax levied on certain goods, whether at 61 Manila lntematio11al AiJ1HJJ1 /�lll!lmritr 1'-'� Ciml1 o//ljJjJeal��, d a!, C .R. ~o. 155650, Julr 20, 2006. r.2 G.R. No. 211303,.June 15, 2U21.

Page 10 of29 DECISION CTJ\ C\SE NO. 11086 specific rate or ad z!a/orem. 1\s case law characterizes, an excise tax is not a tax on the exercise of a privilege, but rather a levy on certain articles which are manufactured or imported for domestic consumption. It is equally settled that that the accrual or liability to pay the same arises immediately upon importation or as soon as the goods come into existence when manufactured. Furthermore, excise taxes are indirect taxes, as opposed to direct taxes. Pertinently, these types of taxes relate to the statutory taxpayer who is obligated to pay taxes to the government. In this relation, one must understand the concepts of tax incidence (or the actual liability to pay the tax) and tax burden (the economic burden of the tax incident). On the one hand, direct taxes are 'those that are exacted from the very person who, it is intended or desired, should pay them; they arc impositions for which a taxpayer is directly liable on the transaction or business he is engaged in,' which means, the tax incidence and tax burden fall upon the same person. On the other, indirect taxes arc 'those that are demanded, in the first instance, from, or are paid by, one person in the expectation and intention that he can shift the burden to someone else. Stated elsewise, indirect taxes are taxes wherein the liability for the payment of the tax falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. When the seller passes on the tax to his buyer, he, in effect, shifts the tax burden, not the liability to pay it, to the purchaser as part of the price of goods sold or services rendered.' ~\s jurisprudence explains, 'this shifting process, otherwise known as 'passing on,' is largely a contractual affair between the parties. Meaning, even if the purchaser effectively pays the value of the tax, the manufacturer [or] producer (in case of goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition) or the owner or importer (in case of imported goods) [is] still regarded as the statutory [taxpayer] under the law. To this end, the purchaser does not really pay the tax; rather, he only pays the seller more for the goods because of the latter's obligation to the government as the statutory taxpayer.' Thus, when it comes to indirect taxes, the statutory taxpayer remains to be the manufacturer or importer of the articles. Despite being able to pass the burden of the tax to the buyer as an inherent component of the total price of the article, the onus to actually pay the excise tax and to remit the returns incidental thereto remains with th~ statutory taxpayer, wh}"

Page 11 of29 DECISION CL\ C\SE NO. 11086 must correspondingly benefit from any tax exemption. In effect, upon the sale of the goods, the portion of the price corresponding to the excise tax originally paid by the manufacturer or importer is not per Je the excise tax liability imposed under Section 129 of the Tax Code. The price passed on, and assumed by the buyer of the goods, is therefore no different from any other component cost in arriving at the price of the article sold, such as raw material cost or distributed overhead expenses. In a similar situation, the Court held that ' [e] ven if the consumers or purchasers ultimately pay for the tax, they are not considered the taxpayers. The fact that !statutory taxpayer/importer], on whom the excise tax is imposed, can shift the tax burden to its purchasers docs not make the latter the taxpayers and the former the withholding agent. !The purchaser/end-consumer] ultimately bears the tax burden, but this docs not transform [its] status into a statutory taxpayer.' This distinction between statutory taxpayer and the purchaser who assumes the tax burden when the costs of the taxes arc passed on to it as part of the purchase price is material to understand the 'exemption' granted under Section 135 governing excise taxes. III. },_t its core, the purpose of a grant of tax exemption is 'some public benefit or interest, which the law-making body considers sufficient to offset the monetary loss entailed in the grant of the exemption.' However, the object of the grant of tax exemption is not necessarily a natural person similar to how 'the objects of taxation arc either persons, property[,] and property rights within the jurisdiction of the taxing authority.' As such, generally speaking, the object of tax exemptions may either be personal or impersonal. Personal exemptions conceptually pertain to those 'granted directly in favor of such persons as are within the contemplation of the law granting the exemption.' On the other hand, an impersonal exemption may be said to exist when a tax exemption is 'granted directly in favor of a certain class of property.' If the tax exemption is impersonal in nature, then, regardless of who transacts with the property, the exemption should still apply. This framework of personal and impersonal tax exemptions underpins the exemption granted under Section 135 on excisable articles. Notably, the Court, in the 2014 PilipinaJ Sheil Resolution, stated that the 'exemption from payment of excise tax' under Section 135 is 'conferred on international carriers who purchased the petroleum products of respondent'; thus, in said case, the tax exemption under Section 135 covering said products was characterized as a grant of a personal tax exemptiof

Page 12 of29 DECISION CT\ C\SE NO. 11086 However, in the subsequent case of 2015 C!Jevron, the Court effectively abandoned the foregoing characterization, and instead, correctly categori;;;ed that the tax exemption under Section 135 is 'in favor of the petroleum products on which the excise tax was levied in the first place.' j\s such, the Court, in 2015 Chevron, vabdated the nature of Section 135 as a provision conferring an impersonal tax exemption, which, in fact, cogently squares with the nature of excise taxes being a tax on property, rather than a tax on persons. Being an impersonal tax exemption, Section 135 cannot be therefore interpreted as an exemption primarily conferred to the buvJ ers because 'the.r.. arc not under anv leQal dutv to pav the excise .I (._) .I .I tax.' To reiterate, upon the buyers' purchase of the articles, the 'excise tax' they pay, if any, is, in reality, a m.ere passed-on cost that forms part of the purchase price. Hence, while purchasers bear the economic burden, they do not, by the mere fact of assuming the passed-on costs, become legally regarded as statutory taxpayers. In this regard, I\ssociatc Justice Henri Jean Paul B. Inting aptly observed that 'a tax immunity would lose its meaning if we insist that it is available only to a person who, in the first place, has no obligation to pay the tax due on the subject article/transaction. It can only be enjoyed in its truest sense by the person who is liable for the tax and wishes to be immune from therefrom.' The impersonal nature of the tax exemption is also expressed in the wording itself of Section 135: XXX XXX XXX .As worded, the object of Section 135 itself is not the enumerated persons but rather, the 'petroleum products sold.' Palpably, based on Section 135's phraseology, the enumerated persons arc merely descriptive of the petroleum products, i.e., the persons to which the products are sold to. As such, the wording of Section 135 hews more closely with the character of impersonal tax exemptions, which is, in turn, consistent with the nature of excise taxes as taxes not on persons but on the goods/articles. ~\s equally observed by Associate Justice Alfredo Benjamin S. Caguioa, '[tJhe succeeding paragraphs (a), (b), and (c) do not confer nor refer to the tax exemption. Paragraphs (a), (b)[,] and (c) simply enumerate and describe the entities to whom petroleum products must be sold to make the excise tax exemption operative.' IV. A.t this juncture, it is likewise relevant to mention that since an excise tax is in the nature of a property tax, it is thus erroneof

Page 13 of29 DECISION CT~\ C\SE NO. 11086 to consider the operation of a tax exemption thereto in the same way as a transactional tax, wherein every purchaser and seller may be considered as a statutory taxpayer for every succeeding transaction, only ending with the final consumer. Rather, the exemption under Section 135 must be reconciled with the idea that liability for the tax attaches to the articles as soon as they come into existence or immediately upon importation. The Court, in the 2015 C!Jevro11, had already settled that the true status of the goods, whether ultimately taxable or tax-exempt, is actually conditional or subject to confirmation upon the sale of the articles to any of the entities enumerated under Section 135. This conditional taxability can actually be seen in another related provision in the Tax Code, i.e., Section 131 thereof: Section 131. Pc!J'IJJeJ!I ~lE\:ciJe Ta.\."eJ 011 Imported .r1t1ideJ. ~ (A) Per.sonJ Liable. -Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably- with the regulations ( of the Department of J.'inancc and before the release of such articles from the customs house, or by the person who is found in possession of articles which arc 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 arc subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation. xxx xxx xxx (Emphasis and underscoring supplied) As may be gleaned from Section 131 as above-cited, although certain articles may be free from excise taxes upon importation, they may subscqucntl:� become subject to the same depending on the subsequent buyer. This is essentially the same principle of subsequent confirmation espoused by the 2015 Chevron, and is also a necessary consequence of excise tax being a property tax, and not a tax on person~

DECISION CL\ CASE NO. 11086 Considering that the status of the petroleum products as tax-exempt solidifies upon the sale to any of the entities enumerated under Section 135, any excise taxes which were previously paid thereon would then be considered as 'erroneously or illegally collected,' and therefore, subject to refund. In turn, the petroleum products become exempt from excise taxes once it is determined that they are to be sold to, among others, international carriers. This reflects Section 135's wording, i.e., that the petroleum products are considered as tax- exempt once they arc 'sold to !inter alia] x x x li]nternational carriers.' Based on (a) the nature of excise taxes as a property tax and an indirect tax, and (b) the principle that a buyer, when shouldering the tax burden, docs not become the statutory taxpayer, it is thus clear that the purchaser of local products (such as international carriers) cannot be deemed to have been conferred a tax exemption when it has not been imposed a tax liability. In the ordinary course of things, international carriers do not manufacture or import petroleum products and hence, are not statutory taxpayers to which the exemption under Section 135 could pertain. If anything, international carriers merely bear the tax burden when the costs therefor arc passed on to them by the actual manufacturers or importers. However, as earlier discussed, the 'passing on' of the tax burden is largely a contractual affair between the parties and should not detennine the tax incidence imposed by law unless the contrary is provided. As such, the tax exemption under Section 135 must correspondingly benefit the one who actually bears the liability to pay the same (i.e., the importers I manufacturers of petroleum products sold to international carriers, among others), and not the one who simply bears the economic burden thereof (i.e., the purchasers of the products, such as international carriers)." (EmphmiJ adder0 Thus, the Supreme Court has already discredited respondent's claim herein that petitioner as the seller cannot claim a refund under Section 135 of the NIRC, as only the buyer who arc exempt entities can invoke the same. As explained by the High Court, the tax exemption under Section 135 must correspondingly benefit the one who actually bears the liability to pay the same (i.e., the importers/ manufacturers of petroleum products sold to international carriers, among others), and not the one who simply bears the economic burden thereof (i.e., the purchasers of the products, such as international carriers). Applying the foregoing doctrinal principles, upon petitioner's sale of its imported Jet ~A -1 fuel to various international air carriers, the status of the said sold petroleum product as ta:-.:-exempt solidifies. Consequently, the excise taxes it previouoly paid on the imported Jet ,\.] fuel became erroneouoly or illegal!;-

Page 15 of29 DECISION CT"\ C\SE NO. 11086 collected taxes that are proper subject of a claim for refund or credit under Sections 204(C) and 229 of the NIRC of 1997. The exci'ie tcJxes� due on the imported Jet A-1 fucl, 8ubjcct of the present claim, were duly paid by petitioner. For the period covering 1;cbruary to May 2021, pctltwner imported 263,563 barrels (equivalent to 42,600,338 liters) of Jet A-1 fuel from Shell International J-<~astcrn Trading Company and paid excise taxes thereon at P4.00 per liter. 63 The said importations arc likewise supported by the following documents: � - - - - - - � - - .. - 7nd 3rd ---~----- 5th 1�1 4th Importation Exhibit No. Documents Importa ti( m Importation 1mporta tlon Importation Exhibit No. :.;~~::.', Exhibi_t_N.n... .�.;Exhibit No. . l :�~f~.-r---~;t~~',�.~ Exhibit No. :~�:::, Oceu/7 Bill q/Lzding "P-�1�1 ,c,-1 Load Port Sumq Reporl.r "P---15"(' 9 ''P 2 ;,~;;-- ---~-u-- ;l;J-~'c7(;-�--~ "P-'~-2"77 I "P-5-2';/S (LPSRs) "P-1 2" tu "P- Projo17na fn!'oi(e Single. "1dmini.t"tratiz'e I 2 1"7-1 "P 2 3"~ 1 and "P 3-.1"83 and "P �"t-3"85 and .. - Domment.r (S.ADs) "P 23 l''tP "P 3 3 1"8-t "P-4-3--1 " 86 ------ "P-5-3"87 and "P '-� "P I 3"7') and 5-3-1 " 88 "P l 3 I''811 I - ---- (,3 Tables II.G and II.S, Exhibit "P-3.~'-. pp. - toi-l. Sec also Exhibits "P--16" and "P-..J.S", USB (Exhibit "P-35-2"). 6~ USB (Exhibit "P-.lS-2''), p. I. (,s USB (Exhibit "P-35-2"), p. 2. (,(,USB (Exhibit "P-35-2"), p. 1 67 USB (Exhibit "P-35-2"), p. �t. ox USB (Exhibit "P-35-2"), p 5. m USB (Exhibit "P-35-2"). p. I. 711 Docket- \'ol. II, p. 356. 71 Docket-\'ol. II, p. 3"72. 72 Docket�-\'ol. II, pp. 3Hi-l to .18'!. 73 Docket- \'ol. II, pp. HIS to -lti(L 7 1 Docket- \'ol. II, pp. 3.16 to.").)""'. 7S Docket- \'ol. II, p. 3.57. 76 Docket- \'ol. II, p. 3:3. 77 Docket- \'ol. II, p. 390. 7H Docket- \'ol. II, p. 40..,. 79 Docket- Vol. II, p. 338. 8ll Docket - \'ol. II, pp. 3YJ to 3-1 II. 81 Docket- \'ol. II, p. 35H. 82 Docket- \'ol. II, pp ..1.5') to )61 1. S.l Docket- \'ol. II, p. r-1. 8~ Docket- \'ol. II, pp. r.~ to 3:(l. ss Docket- \'ol. II, p. 391. 8" Docket- Vol. II, pp. 392 to 3'J3. 87 Docket- Vol. II, p. ~ws. ss Docket-� \'ol. II, pp ..I(J<.J to IIIJ.

Page 16 of29 DECISION CL\ C\SE NO. 111186 Statement.r qfSett!ement qf -- "P:?. �I" to "P 3-1" to "P-3- - - --�----�----�~------ "P--2-cl-1 " 911 4-1 " 91 " P 1 .J" to "P "P-4-4" to "P- "P-5-4" to "P-5. "P 2 5"9:, "P3 5"96 DHtie.r and Taxe.1� (SSDTs) 1-1-1 " 89 4-4-1 "92 1,93 "P 2 6"11111 Attt!Joli(y to Re!eaJe Imp011ed "P -1 5"9-l "P 2 7"111'1 "P-4-5"97 "P-5-5"98 Good1 (.ATRIGsL____ P- -4� -6- " 10- 2 -I,-~ "P-- 5- .Quanti(y Repo;1.r "P 1-6"9') "P 3-6"101 � - 6-"�103 Ta.--.: I l!l'OiteJ ------- "P-3-7"1116 " " P 1 7" to "P "P -4- 7" 107 "P-5-7"108 1-7 1"III-I .�1J.re.l:l"lnent ]\Jotice.r 'P -1-:1- :?." 1119 "P :i~~32~-:1 111-T~:I;~3~3_:?' 111 -�1 "P-4-3-2"112 "P-5-3-2" 113 ---- "P-5-8" 118 Official Receipl.r (ORs) "P-1 8" 11 -l "P-2-8"11:, "P-3-8"116 "P-4-8" 117 - - � - - - .. L__. ------ -��-� '----------- The ICPA examined petitioner's initial and final SADs and SSDTs for the subject importations and reported the following: 119 SAD (1-:xhihir,; "1'--J(,'" and ''1'-52") BOCOR& and E2MRcccipt SSDTs (l�:xhibi" "1'--18" and �'1'-S."\'') (Exhibit~ "l >-~5 � :tttd Set Vessel --~~~)-)T') SAD Volume Paid Amount of Excise Tax Total Assessed Amount of Excise Total Amount Paid Amount for the No. Tax Paid declaration --�--�---- C:21'2 -�_-; 15.61111 I' 30,8(,2.-HIO.OO _!' _ s:~.S'i_2.28~2~J r 30,862,40o.oo 1 1:2172 -_-:I \600 311.862,-100 (I() J> l.nn:--:'"" I s3_8-:-6.76123 3o,862,4oo.oo Difference !1,()23,77~:213) - - IN"TTT\T~ MT ,\NCI�J:-- <:"39-19 8,56-J,()<)) 1-1,2~6:-2~0JHI _ _ __ c~9.013.986 56 3-1,256,380.00 1.3-+:'. "(J-1! t;.(,IIS,Wil 3-1,432,280.00 I�IN.\l. NO.6 ----�-- (43,975) .H-+32.280 1111 W.356,7 62.97 111.112.-lll(J (175,900.00) 10,112.-lll(l -- -- - - - � - - �---�~-. Difference .t.:n:U-+3 J.17~,_2QQ.()02 ________ _{1,342,776.41) INJ'I'L \l. -~-')211.'!1 I 1.-IN.\l. l'v!T -111,-1-I'J.(J()()_()() 71J,202,fl83 37 -10,--149,600.00 -111,-1-l<J,(,IIO.O() � - - - - -- I Difference I�:L\NDR.\ --~------ &TIITI.\J. PIN I�: �--o - - -.- - -.-.- - --- =J 72,6-1'_771.28 2,-1-~-l.SK-'J I N.\J. (.:-,loCI 40,-1-19,600.00 -�--- r:~-T-r:63S~S (2,444~~~7-?!L __ S.\NT\'.\ [ C6355 I'J,'i 1:\.r:'..IHJ 3-1.3!-1.86-,.:.02_ 19,513,372.00 SJ23,-'l.() 1'),(,}).)_-:::-1.1)(1 - � - - � � - ------~-�-- 35,238,CJ-12 99_ -~-19,683,72-1.00 -'---- - ~ R9 Docket- \'oL II, pp. 3-1? 1o 313. 9!1 Docket-\'oL II, pp. 362 to 363. 91 Docket- \'oL II, pp. 378 to 379. n Docket- \'oL 11, pp. Yh to 3%. 9.l Docket- \'oL II, pp. -112 to 113. 94 Docket- \'oL II, p..1-1-1. 95 Docket-\'oL II, p. 361. %Docket- \'oL II, p ..)811. 97 Docket- \'oL II, p. _)9"". 9~ Docket- \'oL IT, p. Ill. 99 Docket- \'oL II, p. 31 :=i. lOll Docket- \'ol. II, p. 365. lilt Docket- \'oL II, p. 381. 1!12 Docket-\'oL II, p. 398. lil.l Docket--\'oL II, p. �115. 1114 Docket- \'oL II, pp. 3�1(, to .1:=i.1. too Docket- \'ol. TI, pp..)6(, to 3(N 1111� Docket- \'ol. TI, pp..1S2 to _)S:J to7 Docket-- \'oL II, pp _)<)<) ro 1112. wx Docket- \' ol. II, pp. II (l to II'). to9 Docket-\'oL II, p. 3-11. tlo Docket- \'ol. II, p. 361. r:. Ill Docket- \'oL II, P� 112 Docket- \'oL II, p..WI. t u Docket- \'oL II, p. ~II. 114 Docket- \'oL II, pp. 3:=i�l '" ))). tiS Docket- \'oL IT, p..r11. 11 " Docket- \ 'oL II, p . .\S6. tt7 Docket- \'ol. IT, p. -11!.\. ttx Docket- \'oL II, pp. -1?11 ro -121. tt9 Table ILH, Exhibit "P-.\5", p. 11.

DECISION CT.'\. C'\.SE NO. 1108CJ �--- ----.----- --~- Difference �-- !\IT CLOH.Y (42,588) (170,352.00)_ :923,TlS-2_7)_ � � - - __Q'7_Q,352.0Q2_t-�- - INITL\1. I 1.3:~'! .'JIIO l'IN \L (:70 -- -- '!,816,86-+.17 . \Difference 11.3~9.91)(1 8'! .f.'i.31'!.61HI.OO 45,319,600.00 ') 3 1-_.::2()-..~-- 1--�-�� 42,600,338 L ----------- --- ~--� -���-�--'--'-- 00~,\N C7C 89 42,686,901 L -I-5.319.6UO 01! --- ----8-~-_1_~:+.07!_:�:1._ 45,319,600.00 ----- ------- --. ---�- ~otal Initial SADs/SSDTs . . - -��� .... .... - __(2~lg207.27) 86,563 L ~otal Final SADs/SSDTs !170,~~11~g()O _ _ P29 5,201,590.07 P170,401,352.00 PS, 052,419.8-t P170,747,604.00 t�l'?Q,'7_4'7~Q4_._0()____ __!'30 1.91 rroTAL ----- p 346,252.00 p 1.84 _ . _P _ ~�,252.QQ_ --~ _ '-----� .An examination of the Bureau of Customs (BOC) ORs and E2l\1 Customs Payment Receipts shows the following: 1 11 :' Exhibits ---- VAT Excise Tax Miscellaneous Total "P-55" & --� OI No./ ----�- --------------------- "P-57" Payme_n t Reference p 1/~~_,2_"72.28 .-\t p. 1 f> 1,1123,-'2.T f> p 0.01 1,3,12_2/(J.il .-\t p. 2 ------ ------�- .�\t p. 3 IJ 12:�-5.12 -------����--� 0.99 2,4cH ,88"' -')I 01915-4-3--6--' 86/~()2!CT2 0.02 '!23,7"75-') _-\t p. 4 01916366,.1.. 05/2U21C'NI'! 2, III,BS".S') -~- --- -�--- -� ---- --- p 019163778 8U/21121Cl Sll 1.98 2,317,2o'.T .�\t p. 5 019163787'9 /2U21 C6:'>:i'1 "75.1, 12."\.9"7 .- __ ._17_1_)_,~2_2.00 3.00 P8,052,419.84 019182419""'2/2021 C71J8CJ ------�------- TOTAL 2,317 ,205.2'! --- --- � - - - - - - - - - - ---�-----�~---- -- P7 ,882,064.84 P170,352.00 Thus, the excise taxes on petitioner's importations ofJet A-1 fuel for the period February to l\Iay 2021 were duly paid and all the excise tax payments are supported by S.1\Ds, SSDTs, and BOC ORs. The corresponding .\TRICs of the foregoing importations are as follows: 1 ~ 1 ------- E) hi bit Vessel Control Date BILL OF Quantity Release Excise Tax ,-;, lNo. i\IT BIR0217215119138 l�cb. 18.21121 LADING NO. p 30,862,400.00 UNIQUE BIR0322215155860 ?liar. 23, 21P I "P __ H..-\Ri\IONY BIR0423215198011 .\pr. 2o, 21121 i-i'HiN ',715,()01 1.00 34,256,380.00 i\IT .-\NGEL .\Ltl� I', 21121 40,449,000.00 ,-, (at P� 1) N0.6 June, 3, 21121 21U330ill11IFBLl I �-- 19,513,3 72.00 i\IT 45,319,600.00 ''P __ EL\NDR.\ 8,56-1,09. i.OO P170,401,352.00 PINE (at p~_2) C)( II 11 111,112,.101 1.00 "P --J-n i\IT S.-\NTY.-'1. BIR0512215218317 CS\\"133'!91 1,878,3-L .IJO ')U219 11,329,901 .00 (at p. 3) i\IT GLORY BIR060125240540 TOTAL 42,600,338 .00 "P _,...,, OCE.\N (at P.:. I) " P --'I?" (at fl� Moreover, the following findings by the ICP.A is noted by this Court, vi<-/ .122 "\," "The review period spans from April 2021 to Junc 2021. However, due to the transition ofTlF''' to SHIFT''" throughout May 20;- 1211 Exhibits "P-55" and "P-.'i-", L"SB (Exhilm "P-3.'i-2") 121 .-\nnex E, Exhibit "P-.1.'i", l'SB (I �:xllliJir "P-35-2"). m III (B), (C) and (E), Exhibit "P-.15", pp. 1.1 o111d I'!. 121 That is, "Tabangow Import r:;~cility". 12~ That is, "Shell Import Facility rn TaiJang;ro".

Page 18 of29 DECISION CL\ C\SE NO. 110tl0 to June 2021, importations of Jet "\-1 fuel were directly delivered to Tabangao Depot and as a result, no receipt and withdrawal transactions were made in Til; during the said period. Thus, only withdrawal documents of TIF for ~April 2021 were available for review. xxx of the final volume of 42,686,901 J, of imported Jet A- 1 fuel based on final S"\Ds/SSDTs, only 16,262,550 L pass through the TIF, due to the transition xxx to SHIFT. xxx Importations of Jet A-1 fuel for the period of ;\fay 2021 to June 2021 were directly delivered to 'fabatwao Depot xxx." l~ Using the first-in, first-out method,~'5 the ICPA traced the movement of petitioner's imported Jet ,\-1 fuel Ivolume in li tcrs (L)] in the Tabangao Import Facility (TIF) for the period I;cbruary to .\pril 2021, summarized thus:126 Additions Deductions Balance 11,968,496 Beg. Balance, Fcbruan 1, 2021 263,130 11,705,366 For local production Februan� 11,200,000 Withdrawals (2.!.2021 to 3.1~.2021) 505,366 For local production ;\Luch 291,470 213,896 1st Importation 7,872,910 7,659,014 we 201861140~ 360,()()()] ~: 7,659,014 213,896 7,512,910 From Beginning Balance 146,104 From 1st importation 6,720,000 792,910 Withdrawals (3.20.2021 to 4.9.2021) 731,639 61,271 For local production .\pril 2nd Importation 8,603,536 8,664,807 we 201800611625 560,000L: 61,271 8,603,536 498,729 8,104,807 From 1st importation 6,600,000 1,504,807 From 2nd importation 1,504,807 Withdrawals (4.11.2021 to 4.29.2021) End. Balance, .�\pril 30, 2021 The ICP.\ likewise cxarnined the Qffio.af Record Books (ORBs) of petitioner's Tabangao Depot and found the following: 171 "Table 111.7-Tabangao J:)epot ()RB~. Month Total Receipt in Removals Additive Jet A-1 Total Exhibit Refinery Get A-1) Removal Reference ____:_\pril 20~~-~.~-~~~~- lil,ll9,'J'J I~'J:) 111,119,991.% tlJ19 10,120,000 lt1,'59,9SCJ.7tl 8.59 10,760,000 i\Iay 202_!_ 111,"5'!,98'!.'11 'J ,2:W,'!92.03 '.Ill 30,119,974.29 L ~~ 24.08 L 9,240,000 June 2021 9,23'!,')92 (,,) 30,120,000 L 30,!19,974.26 L TOTAL I Based on the foregoing, we noted that Tabangao Depot removed a total of 30,120,000 L of Jct "\- 1 fuel for the period - I of April2021 to june 2021. Out of the 30,120,000 L, 10,120,000 -------------------- \'ol. l, pp. Stl to tl9. 125 Q&"-\-21 and 22, Fxhib11 ''P 3:0", Docket 12r. III(D), Exhibit "P-35", pp. 1.) to 18~ 127 III(F), Exhibit "P-35", p l'J

Page 19 of29 DECISION CT\ C\SE NO. 11086 L ofJet _,\-1 fuel came from' rn~, while the remaining 20,000,000 L (10,760,000 Lin I\lay 2021 and 9,240,000 L in June 2021) were directly delivered to Tabangao Depot due to the transition ofTIF to SHIFf." Notably, the transfer of 10,120,000 L of Jet .A-1 fuel from the TIF to Tabangao Depot in ~-\pril 2021 is supported by u;,Tithdmzvaf Certijitates (WCs).128 Further, the ICP~\ examined the \\/Cs from the Tabangao Depot to the following destinations: 1:><J --��- Total Jet A-1 Total Jet A-1 Tc tal Jet A-1 Fue Withdrawn Fuel Withdrawn Exhibit No. Month (Volume in L) Fuel Withdrawn QJ:c 1l1111e in L) . . . __ _ (Volume in L) To JOCASP 1311 To CASI~"11 "P-62" (at pp. 234 to 500) IJ6u.nuo1 --~- - - - -- - . - -- ----�- ----�-- ------- 7,960,()(1() c)j::zli.ooo 9,1:20,000 _ L.:S_()O,OOO ____ 10,680,000 ------------ �------ 1,680,000 ... _ ~-~~~l)JlOO "P-62" (at pp. 501 to 721) __ 7J60,(l()() 4,600,000 . 28,~40AO_O___ _ --� 24,240,000 -~---- The foregoing withdrawals from the Tabangao Depot are also supported by BHlk Delive~y ]\'oteJ (BDN s) showing where the product comes from, the buyer and where the product is delivered, the delivery date, product description, and the ordered and delivered \'olumc of Jet "\-1 fuel.U:> However, the ICP~ \ found that several BDNs are not signed by the driver and/or authorized storage representative: 13 ' r----�-- -�-� �- .- � - - - - - � � - -� �~---- ~-- Delivery On Delivery Order Shipment Sold Product Ordered Deliv ered (Date) Number Number by Number Sold to I lescription Qty (L) Qty (L) "-\pr. 9, 2021 2563t:l9t:2 1520339395 PSPC 40,000 Jun. 3, 2021 �---� --- 2579HCHP �. U,IIIHI "-\pr.1 0, 2021 2563633')9 1521)312230 1\Iay 14, 2021 720911696 25"73561 )(,II I I JOC\SP Je t ~-\-1 BULK 25KI(J"J(,')K 'tr1K7 5 --- 25"''!1-IIW' PSPC: -1--IOC~�\SPI)c t .-\-1 BULK 40,000 IIJ,OIIII 15203 1113:) ------~- 722676029 25~91-15:11 ----- 1.'121 1.1-12'' :il I -- PSPC JOC\SP Je t _-\-1 BULK 40,000 --- -�- 10,01 II I 15~113-131-18 720980736 - --- ------ PSPC _I OC\SP Jc t .-\-1 BULK 40,000 0,111111 -�-�-- 1521!.)1.121.., ---~ -------- ----- ~----- - - - - 72204�1001 Jun. 14,2021 723027929 PSPC JUC:.\SP _lc t .\-1 BULK 40,000 lll,IJIIIJ - - - - - - - -- -� �- - -- - -��-�---~~-~ ------- --- Jun. 19,2021 723214051 PSPC JOC.-\SP Je t .-\-1 BULl( 40,000 111,01111 Jun.20,2021 723249680 PSPC I JOC\SP I Je t.\-1BULI( 40,000 111,111!11 280,000 L ~- ---~~---�-� - � � - ----------~ -� TOTAL 280 000 ], An examina6on of the summary of .raieJ invoiceJ.l."l-+ issued by petitioner to international air carriers, which is subject of the instant claim for refund, reveals that the foregoing deliveries were not included thcreiy 12H Exhibit "P-60", USB (F:xhibit "P-35-2"). 1 2~ "\nnex L, Exhibit "P-35", L'SB (Exhibit "P-35-2"). 1111 That is, '~Joint Oil Compan1� _\nation Storage Plant". 11 1 That is, "Clark~-\ nation Sen�icc:; Inc." Ll2 Exhibit "P-63", l'SB (Exhihi1 "P-.15-2"). See also l�:xhihit "P-35", p. 20. Ill Table III.I2, Exhibit ''P-.15". p 21. 114 ~\nnex R, Exhibit "P-35", L'SB (LxbiiJlt "1'-:1:1-2").

DECISION CT_\ C\.SE NO. 11086 Further examination of the removals from Joint Oil Company Aviation Storage Plant QOCf\SP) to international air carriers shows that of the 24,240,000 L withdrawn from the Tabangao Depot, only 23,891,686 L were delivered to international air carrier customers: 1 "' - ---- -- -�i- �--�---, -��� Date Total Volume ,. 1 .h d I Amount of Specific ! W r aw n T Exhibit No. It 1 ____(Volume in I) __ .. _ __ ---~~--- ____� April2021 8,R12,-I-19 Tax Paid _ _L ___ '~J"J::.Q"i-" (at pp. 1 to 30L __ 7,902,293 Tax Paid __ :___ "P-6i'_~_EE- 31 to 61) diay_20~:~~ une 2021 Tax Paid ____1 ___"P-64" (at pp. 62 to 91) 7,116,91-1 - ---T61-;-AI~ 23,891,6861_- .. --------------- As to the withdrawals from Clark Aviation Services Inc. (CASI), the ICPA found that the same were not supported by \\'lCs as they were operated by a third party. 136 However, petitioner's daily S lock lviollifori'tg cmd Liq11idation Report..r (SMLRs) likewise contain the pertinent information necessary to trace the movement of Jet A-1 fuel from C"-\SI to the specific international air carrier customers, to wit: Ui Month As!;}~l~~~:~~- .-~~::;;�,b~~:to~O)~ - __ ~,J96c~Z0__[_~~~�:l" (atpp. 61 to 123) I _�~\pnl 2021 1,711,521_ ~- _"P~84" ~atpp_:.1_24t~l~lL-j - l\1~~2( li l June 21!21 4,597 ,051 L _1 _ __ --~J Thus, of the 4,600,000 L withdrawn from the Tabangao Depot, only 4,597,051 L were delivered to international air carriers. 138 The Court also notes that the foregoing withdrawals based on the SivfLRs also indicate the corresponding At;iation Sen.Jite Ret1m1J (~\SRs). A summary of ~\SRs and Jakr i1woiaJ prepared by the ICPA reveals that a total of28,447,374 L ofJet .\-1 fuel were sold to the following international air carriers for the period ,\pril1, 2021 to June 30,2021:1.39 Customer ___ Q~~n_tity (L)_ .�\JR NIL'GINI LTD "\IR.\SL\ BJ�JZIL\D 637,266 CTIIN.-\ .-\IRIJNFSJ;l'D 50,596 Cl-liN.\ CEN'T'R\L l / )NCIL\0 .\IRLINJ:O:S 968,800 co 72,533 CHINA. 1�:.\STFRN .\IRLINES 984,147 ETHIOPL\N ~\IRUNES 303,297 FEDER. \l _EXPRL�:SS CORP 5,452,322 HONG KONC; AJRJ JNLS JETST.\R .\SL\ .\TR\\'.\\'S PTE LTD 5,693 60,334 l\L\L\ \'SL \ .\ TRLJ N J-:s BJ-:RJ I.\ D 1-l-9,425 us Table III. 13, Exhibit "Jl-.)5", p. 21. tv ur. III()), Exhibit "P-35", p. 22. m Table III.14, Exhibit "P-35", p. ")") u~ III G), Exhibit "P-35", p. 2:'. l.l~ ~�\nnexes Q, Q.I, and R of [xhiiJit "P-'l)", L'SB (r�:xhibir "P-Yi-2").

Page 21 of29 DECISION CT\ C\SE NO. 111186 PHILIPPINE ATH....\SL\ INC 228,172 PHILIPPINE .\IRLINES INC 19,-~71,026 XL\1\IEN ,\IRLINF CO LTD 63,763 --��---�- ��- - -- -~3~!~~!,P4 ~~ Grand Total The Court notes that the subject sales to international air carriers came from petitioner's importations in the period February to May 2021, after all the beginning inventory was withdrawn. However, petitioner's claim for refund consists only of 28,371,804 1,: Exhibit No. 1-lil Volume in L Excise Tax Rate Excise Taxes Paid "P-21" 1I I, 128. 3119 P-l.! HI p 41,713,236.00 "P-22" <JJI 111}(>3 P-I.!HI 36,163,052.00 8, <)(12,7 32 P I.UO _ _]_5,61 0,928.00 "P- 23" 28,371,804 L p 113,487,216.00 The ICP~-\ found that the difference of 75,570 L (28,447,374 L less 28,371,804 L) pertains to fud purchased locally and is not part of petitioner's importation claimed for refund. The difference was based on the actual volume indicated in _r\SRs per specific custon1crs vs. the total volume subject for excise tax refund, broken down as follows: I+l I Quantity in !Quantity in Difference ~-- ------- ~- ----� --- lnelivery Date (Volume in ASRNo. Customer L per actual L per Remarks Exhibit No. I L) ASRs claimed I 1 ASRs IM'r I, 2021 J\I00113 79 J�'L.:DE:\ 1(,,:1:1.1 1,1o-l I "l'hc difference of 15,089 L "P-C>:>'�~. J\Iay 4, 2021 I:i,OfN Ipertains to liters purchased locally I as l!ldiCated 111 the DPi\IR whtch 1s (at p ..l 1 ) f- ------- nf~t_IJa_rt_o_f our review_.~~~- May 4, 2021 1805 ETHTOPT The difference of 11,267 L May 4, 2021 .\IRU:\1�::; I 11 ,2(1..., Ipertains to liters purchased locally [).'))3 :-',(J-16 "P-oo" ------ ------- as indicated in the DPJ\IR which is (<It p. 3 U) J\10011387 FEDE:\: 1').21 jl) 11,555 nm ]_Ja~t~f__c:>_l:~ reyiew. "P-(,(,'' ---,---,-~~- The difference of 4,654 L I I..(J:'i-1 Ipertains to liters purchased locally as indicated in the DPi\IR which (at p ..HI) ---- 1s D_Q) part of our review. PHILIPPI~ 1803 S'i)-\11 11,251 �fhe difference of 44,560 L .\IRLI:\1 :s I 1-1,5()(1 Ipertains to liters purchased locally "P-oll'' hC as indicated in the DPJ\IR which is (at p. 3 !:') ----- TOTAl~ ... -��� L}Qt_part ~X<:>~~_r_�e_,_'i_e_''-'�------� 75,570 L 135,486 L 59,916 L The Court finds the foregoing in order. Thus, there is no doubt that the excise taxes due on the imported Jet .-\-1 fuel, subject of the present claim, were duly paid by petitioner. Petitioner proved that it erroneously paid excise taxes on the importedJet ;I 1411 Docket- \"ol. II, pp. -191 to 5112. 141 Table III.18, Exhibit "P-35", p. 23. St�c also L�:xhi!Jit "P-oS", p. S, USB (Exhibit "P-35-2").

P;lge 22 of 29 DECISION CL\ C\SE NO. 1W86 A-1 fuel .<wid to tax exempt international air carriers. For the period from .\pril to June 2021, petitioner sold the said excise tax- paid Jet A-1 fuel, from its importations during the period from February to :May 2021, to interna6onal carriers of Philippine or foreign registry for their use or consumption outside the Philippines: 1 -~" 1. Air.r\sia Bcrhad 2. Air Niugini Ltd. 3. China .r\irlincs Ltd. 4. China I~astcrn .\irlincs Co., Ltd. 5. China Central J.onghao .\irlines Co. 6. Ethiopian ,\irlines Enterprise Sc. 7. Federal Express Corp. 8. Hong Kong ~\irlines J.imited 9. ]etstar "\sia ,\irways Pte. Ltd. 1O.l\1alaysia "\irlines Berhad 11. Philippines "\ir_\sia Inc. 12. Philippine .\irlines 1nc. 13.Xiamen ,\irline Co. J.tel. In order for the sale of petroleum products to an international air carrier be exempted from excise tax under Section 135(a) of the NIRC of 1997, as amended, petitioner must present the following: 1. proof of foreign registry of the international air carriers, or in case of Philippine-registered air carriers, the latter's proof of authority to operate international flights; 2. proof that the imported Jet },-1 fuel were used or consumed outside the Philippines; and 3. proof that the imported Jet .\-1 fuel sold to international air carriers were stored in a bonded storage tank, and had been disposed of in accordance with the rules and regulations. First requirement: Proq/qffore~gll n.;giJt~J! of the intematio11al air t{.mien or i11 mJe q/ Philippine-regi.rtered air mrrim, i/;e latter's proof of attt!Jorit_y to operate illtemalio;;a/ flight.r. To prove its compliance with the j!n"! requirement, petitioner presented Certijication.r issued by the Civil .\viation "\uthority of the Philippines (CA_A.P) ,v 1 ~2 Table I\'. 2, Exhibit ''P-3:1", p 2).

Page 23 of29 DECISION CT-\ C-\SE NO. 11086 dated February 9, 2023 and ~larch 21, 2023, 1+3 which confirm the countries of registration of the international air carriers, whom petitioner allegedly sold and delivered Jet A-1 fuel subject of the present claim for use and consumption outside the Philippines. Petitioner likewise presented the Cert4itation dated February 6, 2023 from the Civil Aeronautics Board (C\B), 1++ showing that the enumerated international carriers therein are grantees of Foreig11 Air Carrier'.r Permit (FACP) and are "authorized to operate international flights only and operating for the period which includes, but arc not limited to the year 2021". The same Certification likewise certifies that: 1) Philippine ,\irlines, Inc. has been granted a Congressional Franchise through Presidential Decree (PD) No. 1590, signed on Junc 11, 1978, to operate and maintain air transportation services in the Philippines and between the Philippines and other countries. Philippine "\irlines by virtue of PD No. 1590 operated international flights from June 11, 1978, to the present. 2) Philippines .\ir.\sia Inc. has been granted a Congressional Permit (though its predecessor "-\sian Spirit Inc.) Republic .Act No. 9183 and a Certificate of Public Convenience and Necessity (CPCN) via C\B Resolution No. 34 (Brvi04A-07- 13-2017) to operate and maintain air transportation services in the Philippines and between the Philippines and other countries. �!'he said permits authorize the said airline to operate international flights in the year 2021. Also, peutwncr presented a list of countries granting reciprocal tax exemptions to Philippine-registered/designated air carriers based on air transport agreements between the Philippines and those countries,145 and as contained in the Department of 1;orcign Affairs' (DF.Ns) letter dated September 22, 2020. 1+() Summarized below arc the below enumerated international air carrier and Philippine-registered customers to whom the jet A.-1 fuel were delivered during the subject period, with their respective countries of registration based on the CAAP certification and with the F"\CPs to operate international flights based on CAB Ce1tijimtion:(11 t�l.l Exhibit "P-68", USB (L:xhihn "J'..J:i-2"). ~~~Exhibit "P-69", LJSB (l'xhibir "P .1S-~.'') 1 ~ 5 Exhibits "P-77" to "P-fn'', L'SB (l~xhiln 1 "P .1S-?"). 1-1r. Exhibit "P<F', LJSB (Lxhiha "P-35-2'').

DECISION CT\ C\SE NO. 11086 �- ��----� ---�------------- -�-- --- ---- ----- Customer N arne Country of Listed on Certification Countries with Registration Issued by which the Airasia Berhad Air Niugini Ltd. i\lalm�sia Philippines has Papua Nc\\. concluded Air China Airlines Ltd. China Eastern Guinea Services Airlines Co., Ltd. China Agreement, and as China Central China Longhao Airlines Co. per DFA's letter Ethiopian Airlines Enterprise SC - - - - - ----------- . ----- --.----- Federal Express CAB CAAP Corp Hong Kong Airlines \'es Yes ----------�- Limited Jetstar Asia Airways Yes Yes Yes Pte Ltd. Malaysia .Airlines -~----------- Berhad Philippines Airasia Yes Inc. Philippine Airlines Yes Yes Yes Inc Yes Xiamen Airline Co Yes Yes Ltd. China No Yes Yes Ethiopia Yes Yes Yes L'nited Slates Yes Yes Yes of _-\rncrica �- Hongkong Yes Yes Yes Singapore Yes Yes Yes ---- �- \I ala 1�sia Yes Yes Yes Philippines Yes Yes Not Applicable Philippines \"es Yes Not Applicable c:hina Yes Yes Yes Notably, although the China Central Longhao .Airlines Co. was not listed in the Certijimtionissued by c~\B, the submitted .ASR shows that theJetA-1 sold to it was used and consurned outside of the Philippines as will be discussed momentarily. Second requirc1nent: Proqf tlwt t!Je imported Jet A -1 Jitel 1:vere 11.red or COJ?JII!77ed outside the Phi!ippineJ. Records show that the ,\SRs J.JJ submitted by petltloner indicated the details of the Jet ,\-1 fuel deliveries made by petitioner to international air carriers, including the oriPin and destination of the international carriers. It can (._ (_) be seen from each of the ~-\SRs that the route of the international air carrier ~ 1-17 Exhibit "P-66", USB (Exhibit "P-Yi-:.'").

DECISION CT-\ C-\SE NO. I IUBCl named therein (whether of foreign or Philippine registry) is only between the Philippines and other country. The ICP1\ reported that tbe Jet, \-1 fuel sold to the foregoing international air carriers were loaded to aircrafts of international air carriers with the following flight destinations indicated as airport codes in the ASRs: J-+s ----- Airport Codes Flight Destination - Airports Quantity (L) L\.L'C CAN -- ---~ Sl:'D LOS ,\NCJ-:JJ�:S INTERN.\TION:\L .\ RPORT 12,544,317 CDG JFK ---- -� -- --------- 2,688,499 TPE -- LCK CL .\N(;/1-lOL' B.-\I\'UN INTERN.\T ~)N,\L PVG 2,242,154 POM .\IRPC)l\.'J' --�---�---�- MEL SYDNEY J-..:.INCSI�Olill Sf\.LITJ-I 2,209,996 DPS IN'fERN,\'l'ION.\1, ,\IRPORT 1,556,057 ~ NG~-- --- �---------- -----------���--- HKG CIL\RLES DE G.\L'LL.E INTERn\TI )J'HL .ADD .\JRPORT HND .. - - --- ---------- .. -- ------~---------- KUL JOHN F J(ENNEDY INTERN"�\TION1 ,L ~~UI\1~ .\IRPORJ' FOC T.\1\\._\N T-\OYL'.\N TNTFRNXriON :\L 1,329,831 !---------- �----- \11\.POR'T -- ~ SF~ --�- -- - - - - - -- 1,234,827 MEl'vi R1CKJ:NB.\CI--.:I.:I\. TNTERN.\TION.\J HRI - -- --- .-\IRP( )JZ'f' szx -- - -- --- 770,212 XMN Sf I.\NCJI.\1 PL'l)ONG INTERN X riO N,\L 637,266 SIN ,\IRPORT --�- -------�- - --- ------- 1- POET f\.IORESLW _J,\CKSONS INJ ERN.\TION.\L ----�-- f\.Il:J.BClL'RNI�: INTLRNXl'IONr\L" ,IRPORT 594,659 - 373,10~-1 NC U\..\1 I R.\1 (R\LI) INTERNXTIC )N:\L 336,6291 .\ 11\.PO l\T 290,488 ----- �--r----� 288~3851 CI IUBL. CENTR.\1R INT'ERN,-\T'IO ~:\L 230,345 ,\JRPORT ------���-� 200,021 ---- 184,345 I IClNC kONG INTF�:RN.-\TIOn-\L --- "\IRPORT' -- -- -------- - 180,599 _\[)DIS .\B.\B\ BOLL IN'T'ERN"\TI )NA.L - - - -- .\IRPC HU' ----------- 121,079 �1�c )[(YC l IN'llJ\N. \'l'TON.-\1, .\IRPO rr - - -------------------- KL'.\1..\ Ll_"l\IPL'R INTERN.\TION. L .\IRPOIU' ------------- .\NTONIO B. \\'CJN PAT INTERN:\ riONAL .\lRPORT - -- - - Fl'/.IIOL' Cf I.\NCLE TNTERNATIC )N.-\L .\11\.PCll\'f - - - - - -- S.-\N l;R.-\NC1SC:O TNTERN.-\TION. J, .\TRPC lRT ����------ - ;\fl�:f\.IPIIIS INTLRNATION.\L .\TRPORT 100,390 f\.L\Tl.\L\ R.\J.\P.\KS"\ INTERN.\ =�roN:\L 87,937 72,063 .\IlZPORT 63,763 -- -�-- ------ -------- ---------�� -------� 60,334 S!IEN/.HEN R\0',\N INTERn\TTONA.L 7 .\JRPORT ------- XI.\l\IEN c;.-\OQJ INTERNATION, \L ,\11\PORl - - - ----------- SINC \PORE Cl 1.\NCI INTERN XI �ron-\L .\IRPCll\.T ---- --- - - I+H Table I\'. 4, Exhibit ''P-Yi", pp. :?.C1 ro ::.�.

Page 26 of29 �-��� ---- ---- ... --- -- DECISION CL\ C-\SE NO. 11086 .NLL\_11 SU3J-L\SH CH.\.NDlL\ BOSE ccu TNTLRN.\TIUN.\L .\IRPORT 15,364 ----- ---. ------------------ -~-------- 14,912 BI<l<.. R\NGKOl...:. SL'\'""\RN"\.BHL::rvn .AIRPORT -+------- f--------��--��� l\IIRT , \IRPORT 11,688 lVfYY ... 8,109 CGO 28,447,374 L /JILNC~ZHOL' ::\.JNZl-lENC; INTERN \"flON.\L ,\IRPORT ---�- ----1 L ~l'~~?'AL The Court finds the foregoing to be acceptable and proper. In view of the foregoing dis(juisitions, petlt1oner was not only able to prove the foreign registry of its international air carrier customers, and the authority to operate international nights of its Philippine-registered air carrier J custon>ers, but also the fact that the in>ported ct , \-1 fuel were used or consumed outside the Philippines under Section 135(a) of the NIRC of 1997, as amended. Third require1ncnt: Pro~f 1/wt t/;e imported}et A-1 jitel Jold to i!ltematio!la! air carrierJ were .rtored i11 a bo11ded Jlomge ta11k, and !Jad been diJpoJed ?li11 a(wrda!lce JJJitb t!Je rules and regzt!ationJ. To prove that the imported Jet .-\-1 fuel sold to international air carriers were stored in a bonded storage tank, and had been disposed of in accordance with the rules and regulations, petitioner presented its officers, particularly, l'vis. Veloso, 149 Mr. J\Ianalo, 1'11 ;\Ir. Ilagan, 1' 1 and Ms. Flores, 1s:> to explain the importation process and documentation of the receipts and withdrawals of Jet A-1 fuel at petitioner's storage tanks in its TIF and Tabangao Depot and the subsequent delivery to J()C.\SP and C,\SI for eventual sale to international earners. It was explained that all of the imported Jet A-1 fuel are stored 1n petitioner's TIF and completely discharged on the following dates, to wit: 153 Date Completely_l)isc~_~_rg~?_ _ 1'' Importation February :26, :20:21 :2nd l1nporL1tion !\larch 31, :20:21 :Jrci ltnportarion 1'\la\� 08, :20:21 -1' 11 lmportanon l\Iay 17, :2021 5' 11 Importation June 06, 2021 t+~ Exhibit "P-29", Docket \"ol. L pp. 12 to (,1)_ rl 1511 Exhibit "P-30", Docker \ol. l, pp. (d ro ':i. 151 Exhibit "P-31", Docker \"ul. L pp -(,to K2. 152 Exhibit "P-32", Docket - \"ol. L pp. 0.) ro %. IS.l Q&.-\ ;fl, Exhibit ''P-29'', Docket \ ol. I, pp. '11 to 52.

Page 27 of29 DECISION CL\ C\SE NO. 11086 From the TTF, the fuel pass through the Tabangao Depot and is delivered to petitioner's storage facili6cs in J OCc\SP at the Ninoy .[\quino International Airport in Nianila and CASI at the Clark International Airport in Pampanga by lorries or tank trucks. The importations, as well as withdrawals, of Jet A-1 fuel are recorded and summari:;;ed in the ORB which is jointly signed by an authorized representative of petitioner and respondent's revenue officer on premises. \'\/ithdrawals of subject jet fuel from the Til<, Tabangao Depot, JOCASP or CASI to aircraft refuelling at the airports are covered by \'\/Cs. 154 The BOC rcc]uircs an .\'1'RJ C; issued by the BIR before the SSDT is released. This constitutes permission from the BIR to withdraw theJetA-1 fuel from the TIP after the settlement of the taxes and duties due thereon. Imported articles cannot be withdrawn without the ,\TRIGs. 155 By the time the _let \-1 fuel is withdrawn from the TIF through the Tabangao Depot, the excise taxes on the Jet ,\-1 fuel should have already been paid and indicated in the \X'Cs. Removals from the Tabangao Depot are also accompanied by BDNs, while movement of Jet A-1 fuel in JOCASP and CASI is monitored through Daily Product l\Iovement Reports (DPMRs) and SMLRs. 156 Deliveries to air carrier customers arc supported by .ASRs showing the date of delivery, the air carrier customer, the aircraft registration number, the destination of the air carrier and the volume of J ct "\-1 fuel delivered. The customer acknowledges receipt of the delivery and the corresponding volume of Jet A-1 fuel. 157 Upon delivery of the Jet "\-1 fuel, the details and information arc immediately captured by petjtjoner's S. \P program and the corresponding sales invoice is generated. 1 's H the imported Jet "\-1 fuel is sold and delivered to an international air carrier, the sales price excludes the excise and duty components. 159 In support of the foregoing, pcuuoner submitted, among others, the various documents mentioned such as .\TRIGs, 1r'11 ORBs, 1c' 1 \'\/Cs, 16~ DPNIRs,163 tv lo.J Q&~-\. 7, 10 to !2, F::-.:hiiJit "P-)11'', Dockt�l \'ol. I, pp. (,)to 65. 155 Q&~\ 25 to 26, Exhibit "1)-29", Dnckl't \ ol. I, p. 1:-\. lSI> Q&~\ 11 to 13, Exhibit "P~_)II", Docket \'ol. L pp. (>�I to (>'i. 157 Q&.\ 19 to 20, Exhibit "P-111", Docket \'ol. L pp. 6(, lo 6-. loK Q&.-\. 28, Exhibit "P-)0", Docket \'ol. 1, p. 6'J. lo~ Q&.-\. 24 and 27, Exhibit "P-Y".", Dockl't \'ol. 1, pp W! to '!II. 1w Exhibit "P-47", L'SB (Lxhib1t "P-Yi-2"). lrd Exhibits "P-58" and "P 'ilJ'', L'SB (l:xluhit "1'-">'i-.~") 1r.2 Exhibits "P-60", "P-o?", ami ''P-(, 1", l SB (l�:xhtbit "P-Yi-::"'). lr..l Exhibit "P-65", LlSB (l�:xhibit "P-.1:1-2").

Page 28 of29 DECISION CT'\. C'\.SE NO. II U86 SMLRs, 164 BDNs, 1c'' ,\SRs, 1c,c, and Jakr im;oiaJ161 issued by petitioner to international airlines, which were all examined by the ICPA. The foregoing documents, mmmg others, arc in order. Thus, petitioner has proven that the imported Jet .\-1 fuel sold to international air carriers were stored in a bonded storage tank, and had been disposed of in accordance with the rules and regulations. In view of petitioner's compliance with the foregoing three (3) requirements, it sufficiently proved that the excise taxes it paid for the imported Jet A-1 fuel and subsc<.]ucntly sold to tax-exempt international air carriers were erroneous. Thus, petitioner is entitled to the refund of taxes or issuance of tax credit certificate of the excise taxes in the amount ofP113,487,216.00, which it paid on its imported .Jet ,-\-1 fuel for the period fmm February to Ivfay 2021 and sold to tax-exempt international air carriers during the period from April to June 2021, pursuant to Sections 2Ckl and 229 of the NIRC of 1997, as amended. ACCORDINGLY, the present Petitiollfor Re!Jiezv is GRANTED. Respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTil'ICATE in favor of petitioner the amount of P113,487,216.00, representing excise taxes paid on its imported Jet .A-1 fuel for the period from h.'bruary to ;\Jay 2021 and sold to tax-exempt international air carriers during the period from .\ priI to Junc 2021. SO ORDERED. /u.. 4.,.~.... ) ...____ MA. BELEN M. RINGPIS-LIBAN AJJodate Jmtice WE CONCUR: (On Leave) MARIA ROWENA MODESTO-SAN PEDRO AJJoo.ate .JI!Jfite ~#'.~ COR~ON G. ~,,~~R~~RES /hJouate .J/1.\flte 11�1 Exhibit "P-8-1", L'SB (l.xhiiJH "'1'-"\1- 11�5 Exhibit "P-63", USB (F�:xhillll "!' .1:1-2"). 11'" Exhibit "P-66", USB (1-�:xhihu "P .1.~-:'.'} 11�7 Exhibit "P-71", USJ3 (Exl11lnt '�1'-.'>~<.l'').

Page 29 of29 DECISION CT~\ C\SE NO. 11086 ATTESTATION I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ~-~ -t. ....__ MA. BELEN M. RINGPIS-LIBAN Associate ]!!stice Chai1person CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Cl. ~ ? '----� MA. BELEN M. RINGPIS-LIBAN Actina Pre.ridinojlfstice 0 0