PILIPINAS SHELL PETROLEUM CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL SECOND DIVISION PILIPINAS SHELL CTA CASE NO. 10352 PETROLEUM CORPORATION, Members: Petitioner, BACORRO-VILLENA, Acting Chairperson, and CUI-DAVID, JJ. -versus- COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. JAN 0 4 2024 / ~~- ~:'Yfr J{- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -J{ J DECISION CUI-DAVID, J. : Before the Court is a Petition for Review1 filed by petitioner Pilipinas Shell Petroleum Corporation on September 17, 2020, praying for the Court to render judgment ordering respondent Commissioner of Internal Revenue to refund or issue a tax credit certificate in the amount ofP85,040,348.00, representing petitioner's alleged excise taxes paid from September to October 2018 for Jet A-1 fuel imported during the period from May to September 2018, and sold to international air carriers during the period from September to November 2018. THE PARTIES Petitioner is a corporation organized and existing under the laws of the Philippines with office address at 41 st Floor, The Finance Center, 26th Street corner 9th Avenue, Bonifacio Global City, Brgy. Fort Bonifacio, Taguig City, Metro Manila, 1635. 2 It is engaged, among others, in the business of manufacturing, processing, treating, and refining petroleum for 1 Docket - Vol. I, pp. 6 to 4 1. " 2 Exhibit " P-I '', Docket - Vol. Ill, pp. 904 to 912.

DECISION CTA Case No. 10352 Corporation vs. Commissioner of Internal Revenue Pilipinas Shell Petroleum xP-a-g-e---2--o-f--3--6-----------------------------------------------------------------------x the purpose of producing marketable products and by-products and the subsequent sale thereof.3 lCBooucmraetmeaRduiessaspoitoofBnnIeIdnRretnoeRrft,noIaanodltne, rRDntehaivleliemRnoeuatvnehe,enr(QBuheuIRea()znCodIRNn,)aCitwsiiothytnoh,aehlwohdOledufrsfleiycoehfafeipcBpemuoaiailtnydttihebndege served with summons and other legal processes.4 THE FACTS AND THE PROCEEDINGS Petitioner avers5 that sometime in May 2018, it imported Jet A-1 fuel through its refinery in Tabangao, Batangas (First Importation), as follows: Arrival Date Vessel CRF No. Volume in Liters May 29,2018 MT Sunny Dream 18CBW10 7,540,772 p Allegedly, the First Importation was made when petitioner's a roduct storage tanks in Tabangao, Batangas, were operated as Customs Bonded Warehouse (CBW). Hence, no excise tax was paid during importation and storage in the CBW.6 When the Tabangao product storage ta nks were converted from CBW to non-CBW in September 2018, a portion of the Jet A-1 fuel from the First Importation remained in the said product storage tanks, as follows:7 Vessel CRF No. Remaining Volume in MT Sunny Dream 18CBW10 Liters 3,963,880 iCBctmhoBuerpWrroereerWasttmopuaiotatnihniooondnnftii-hnnCegdCgBevutctWaoasoxlti,nuolesvpmmseeefstrtohis'itrienioor(tnteBnohfeOoetoraCrfax)ralt-elhtpemeEPagaie42dpidM.n0rlJiyo0endl/tgolSuiAdytcqeg-st1uret,esdafmttnuothethreilaet,raygecanebosdtyrhtfraorceonlposlukoapnwgisovdhensf:rdsrttitoihnhnmgeeg ~ 3 Par. 4, Petition for Review, Docket- Vol. I, p. 7. and Issues (JSFI). Docket- V0L ll. p. 542. 4 Par. 1. Stipulatinn CtfFflcts . .lnint Stfpulnrinn nf Fnrfs 5 Par. 6, Petition for Review, Docket- Vol. I, p. 7. ' /d., Par. 6.1. 7 ld., Par. 6.2. 8 /d., Par. 6.3.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x SAD No. Vessel Payment Volume in Excise Tax Paid Date Liters 1"15,855,520.00 Cll011/CRF MT Sunny 18CBW10LOC4 Dream September 3,963,880 27,2018 Petitioner further avers that the remaining excise tax-paid 3,963,880 liters of Jet A-1 fuel from the First Importation were subsequently transferred to its storage tanks in the Joint Oil Company Aviation Storage Plant (JOCASP) at the Ninoy Aquino International Airport (NAIA) for subsequent sale and delivery to international air carriers for use or consumption outside the Philippines. 9 Also, in July 2018, petitioner imported Jet A-1 fuel through its refinery in Tabangao, Batangas (Second Importation), as follows: 1o Arrival Date Vessel CRF No. Volume in Liters July 10, 2018 MT Beluga 18CBW11 6,533,610 Pacific Similarly, the Second Importation was made at the time when petitioner's product storage tanks in Tabangao, Batangas were operated as CBW. Hence, no excise tax was paid during importation and storage in the CBW.11 Like the First Importation, a portion of the Jet A-1 fuel from the Second Importation remained in the Tabangao product storage tanks when said storage tanks were converted from CBW to non-CBW, as follows:12 Vessel CRF No. Remaining Volume in Liters MT BelugaPacific. - 18CBW11 ~820,682 L Petitioner also lodged the corresponding importation details for the remaining quantity through the BOC E2M System and paid the corresponding taxes therefor at P4.00/Liter, thereby converting the remaining volume into tax- paid Jet A-1 fuel, as follows: 13 SAD No. Vessel Payment Volume in Excise Tax Paid Date Liters 1"11,282,728.00 C11013/CRF MT Beluga 18CBW11LOC1 Pacific September 2,820,682 25, 2018 ' /d.. P�r. 6.4. " 10 /d,, Par. 7. 11 /d., Par. 7.1. 12 Id., Par. 7.2. 13 /d., Par. 7.3.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x In September 2018, petitioner again imported Jet A-1 fuel with a destination at the Port of Subic (Third Importation), as follows: 14 Arrival Date Vessel CRF No. Volume in Liters September 25, MT Grand Ace 18SUBOSLOC 19,117,173 2018 12 Petitioner avers that prior to the withdrawal of the imported Jet A-1 fuel from the BOC, it lodged the corresponding importation details through the BOC E2M System and paid the corresponding taxes therefor at 1"4.00/Liter, as follows;l5 SAD No. Vessel Payment Volume in Excise Tax Paid Date Liters l"76,468,692.00 C8518/CRF MT Grand 18SUB05LOC Ace 12 October 3, 19,117,173 2018 Allegedly, out of the 19,117,173 liters of Jet A-1 fuel from the Third Importation, 14,520,000 liters were subsequently transferred to its storage tanks in JOCASP for subsequent sale and delivery to international air carriers for use and consumption outside the Philippines.l6 Petitioner further avers 17 that for the period covering September to November 2018, petitioner sold the aforementioned excise tax-paid Jet A-1 fuel from the First, Second, and Third importations to various international airlines for use or consumption outside the Philippines, as follows: Customers From 1�� & 2nd Volume in Liters TOTAL Importations Air China Ltd. From 3�� 554,993 Air Niugini 131,215 Importation 339,983 Asiana Airlines Inc. 85,940 708,189 Cebu Air Inc. 96,339 423,778 3,508,422 China Airlines Ltd. 254,043 611,498 China Eastern Airlines Ltd. 1,329,807 611,850 294,303 China Southern Airlines Co. Ltd. 138,552 2,178,615 518,947 Federal Express Corp. 76,216 472,946 730,966 Jetstar Asia Airways Pte. Ltd. 127,576 218,087 172,342 Jin Air Co. Ltd. 332,454 391,371 535,061 Korean Airlines Co. Ltd. 78,222 398,512 1 596,622 Philippines Airlines Inc. 273,448 10,060,590 Qantas Airways Ltd. 332,307 94,120 1,167,834 261,613 14 /d., Par. 8. 2,959,029 1 264,315 { 15 /d., Par. 8.2. 318,645 7,101,561 16 !d., Par. 8.3. 849,189 17 !d. Par. 9.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Scoot Tigerair Pte. Ltd. 50,183 - 50,183 Silkair Singapore Private Limited 269,158 - 269,158 Xiamen Airline Co. Ltd. 140 996 - 140,996 Total Aviation Sales lin Liter~ 6,740,087 21,260,087 1'4.00 /Liter 14,520,000 1'4.00/Liter Excise Tax Rate P26,960,348.00 P4.00/Liter P85,040,348.00 Total Excise Tax Paid P58,080,000.00 Allegedly, the amounts billed by petitioner to the international airlines for the sale and delivery of Jet A-1 fuel for use and consumption outside the Philippines were denominated in foreign currency and net of excise taxes.1s On March 12, 2020, petitioner filed its letters application for refund or tax credit dated March 10, 2020, and Applications m No. 1914) with the Exc i se for Tax Credits/R efunds (BIR For (ELTAD) II of the BIR, 19 to Large Taxpayers Audit Division recover the excise taxes paid during the period from September to October 2018 on Jet A-1 fuel imported for the period from May to September 2018, and sold to international air carriers for the period from September to November 2018, in the aggregate amount of P85,040,348.00, computed as follows: Description Volume in Excise Tax Amount Liters Rate p 26,960,348.00 Sales to international 6,740,087 carriers of Philippine or 58,080,000.00 foreign registry under 14,520,000 P4.00 per liter Section 135 of the Tax p 85,040,348.00 Code 21,260,087 Total Due to respondent's alleged inaction, petitioner elevated its claim before the Court via the instant Petition for Review filed on September 17,2020. In his Answer'2� filed on December 11, 2020, respondent submits that petitioner's claim for refund lacks merit. According to respondent, Section 135 of the National Internal Revenue Code (NIRC) of 1997, as amended, does not automatically exempt from excise tax petroleum products sold to international carriers and exempt entities and agencies. Petitioner must first establish that it has complied with the provision of the law granting tax exemption, for which petitioner failed. ~ 18 /d., Par. I0. 19 Exhibits "P-54" to "P-57", Docket- Vol Ill, pp. 1216 to 1223. 20 Docket- Vol. I, pp. 457 to 464.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Further, petitioner's reliance on Section 135 of the NIRC of 1997, as amended, to support its claim for refund or issuance of tax credit certificate is misplaced. The invoked provision states that petroleum products sold to international carriers of the Philippine or foreign registry for their use or consumption outside the Philippines are exempt from excise taxes. Nothing in the said law states that petitioner is entitled to a refund or the issuance of a tax credit certificate for the excise taxes it paid on its imported Jet A-1 fuel. Lastly, respondent invokes the principle that taxes paid and collected are presumed to have been made in accordance with laws and regulations, and failure on the part of the claimant to present clear and convincing evidence showing that taxes were erroneously or illegally collected is fatal to its claim for refund. After the Pre-Trial Conference21 on February 12, 2021, a Pre-Trial Order22 was issued on May 31, 2021, based on the parties' Joint Stipulation of Facts and Issues23 filed on May 20, 2021. To prove its case, petitioner presented the following witnesses, namely: (1) Ms. Carla Angelica T. Peralta, petitioner's Import and Export Scheduler for Trading and Supply from February 2016 to November 2019; (2) Mr. Rommel F. Guevarra, petitioner's Terminal Operations Supervisor at the Tabangao Depot; (3) Mr. Matias D. Aquiatan, Jr., petitioner's Operations Manager, (4) Atty. Farida Nimfa G. Dimailig, petitioner's Country Tax Manager, (5) Ms. Berenice Angelique L. Flores, petitioner's Tax Advisor, (6) Ms. Maria Luz S. Verdejo, Head Librarian at the Carlos P. Romulo Library of the Department of Foreign Affairs - Foreign Service Institute; and (7) Atty. Walter L. Abela, Jr., the Court-commissioned Independent Certified Public Accountant (ICPA). Ms. Carla Angelica T. Peralta (Ms. Peralta) testified by way of a Judicial Af.fidavit24 that she was previously employed as an Import and Export Scheduler for Trading and Supply by petitioner from February 2016 to November 2019. \1 21 Minutes of the hearing held on. and Order dated. Febmary 22. 2021. Docket- Vol. II. pp. 512 to 513. 22 Docket- Vol. II, pp. 560 to 568. 23 Docket- Vol. II, pp. 542 to 558. 24 Exhibit "P-59", Docket- Vol. I, pp. 85 to I03; Minutes of the hearing held on, and Order dated, June I4, 202 I, Docket -Vol. II. pp. 570 to 571.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x pTsriscemohearfutaseipindertocieiwronMertynbgsaas,eestf.ircagiorPanesnsnutnedtiesrselbelaeorSedalftufpslJaolpseyerhaptdetidpleetyAiidrcto.o-il1hnitadAmiearoufercnpunc'dcsdoeeaollrdltrethIfdsdsmrJa.iouentpmptgoaspAnhrMltty-edo1a,aiyhfsnicutetdofoeratlo,rSmrEifpederixoepsliipnmttaieotatromitrcoetwrbbdnuiSeeutdrhrcyet,2hhtfr0ehhered1aeofuv8imsnili,nueniwnsbrlggotjha.cefieonatcInsrltft pifsifommuatewocetppirilnltoaoeiigrwtordAitteneieaclspedlttcairrooi'obnsnrJndekdlesusSeitnd,cauagitswrbsAersitchid-cotvh1ioliSaTeMrnruaegffgsgbuore.emieirdcnPliitmeTnaaBwranepnaalrikoldlmttlsfraaotin,sanirbgtntapoeiialoetrT.ssetnadidsptibiimosoaaicrrnnpnthrge,oiavrarprttiohegmenteedgiaadtniiiiJonnmdentatpSaelnoieurAdna'rbs-sts1ieecsTcddtfpoaouJombsreeretalpott.dn,argAFatnhagi-oyn1oeer- wtctTAfssws2iaahrototoph0-iexsoaen1mtepe1-shravTcpsra8feldJeoeoluaagst,reMrviribeoJeatpcmdtraleiauwseoe.ntlAndt.erstnagncoigupAP-vnit1efaroinfe-efkdoitr1ornrrnhfsonoSatudgoepmfemeleeciutdrrrntplBoaeohbwgtiJltnOwdfeemhoetuesaumCeaenCttxprscriodtbceoBnAitTnhrneiere-eWosesaadtrdJedtrebtcfou2udptacaadiorol0enenolneanylfl1rgucgdonslrii82yloantoweovasw,0omtdneprate1Ta.eead-uldpl5rdubWnaalrertebobekfouotrho-lanhrdesndyaproendmeatudanragcieatiocdalsdmladntwtdaeii.hodanptrduhtesseiSopacteCnrtdoCcrnhreaengBtolrkeBxpweoJaWpdiesodWesgmiaeu,sruttedtathcfpwriawAerdnttelotodite-leaadsohr1mirdnsttJntneeoetofekteadtprSuteBtsrhxahtaeerhaOg-eoAlamipbfdneeptCl-rtedio.1deeetnc,BatcAemrahaatatfaOanefameutJlbtntleCkxseeeeyeodede-drls.tr,f adtafiiaaommrnuxrldrlppieoivsoonsiwpamrrgMelittacnaaptnsaigtthof.diinieoorPcsdtnnitCemdardBogoupapifefWtrlsoitsJocJera:echeptslteate(idi1skrArsuA)sgie-otre-w1ried1eeqia.ofsqsufunf.euueidieriStlsm.eelhi,sdAtpedtiwiofocofoanchircredtoiuedcdiormdmdhefaidepbggnmnoooogttarohouttyddoatasstfttbhl;ihooneaeewanonrns,psdipdrpmmocaiepomyc(at3lienmd)iptscfeioesioeperannrafdtnntlaeyoidtriomwninffogstoenoottlnoa;flotxrtttewh(hheo2deeses)f y

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Ms. Peralta continued that three (3) importations of Jet A- 1 fuel were received from May to September 2018. The first two (2) importations arrived at the Batangas port, while the third importation arrived at the Subic port. The First Importation was for 7,608,024 liters (by air) of Jet A-1 fuel, which came on May 29, 2018 at the Tabangao Refinery private port, which is within the jurisdiction of the Port of Batangas, based on the Certificate of Quantity Received. This importation was made when petitioner's product storage tanks were operated as CBW. As such, no excise tax was paid during importation and storage in the CBW. When the Tabangao product tanks were converted from CBW to non-CBW on September 13, 2018, 3,963,880 liters of Jet A-1 fuel remained from the First Importation, which remained stored in the Tabangao product storage tanks. Thus, to convert the same from tax-free into tax-paid inventory prompted by the conversion of the storage tanks from CBW to non-CBW, petitioner lodged the corresponding importation details for the remaining quantity of 3,963,880 liters through the E2M System and paid the corresponding taxes therefor. The Second Importation, on the other hand, was for 6,639,034 liters (by air) of Jet A-1 fuel, which arrived on July 10, 2018 at the Tabangao Refinery private port, based on the Certificate of Quantity Received. This importation was also made when petitioner's product storage tanks were operated as CBW. At the time of the conversion of the Tabangao product storage tanks from CBW to non-CBW on September 13, 2018, there were still 2,820,682 liters of Jet A-1 fuel remaining from the Second Importation, which remained stored in the Tabangao product storage tanks. Like the First Importation, petitioner also lodged the corresponding importation details for the remaining 2,820,682 liters through the E2M System and paid the corresponding taxes. The Third Importation was for 19, 117, 173 liters (by air) of Jet A-1 fuel, which arrived in September 2018 at the Subic port, within the jurisdiction of the Port of Subic, based on the Quantity Report dated September 25, 2018. The Third Importation of 19,117,173 liters of Jet A-1 fuel and the excise taxes paid thereon are covered by the following documents: (a) Ocean Bill of Lading No. HL2018JET051-2; (b) Proforma Invoice dated September 25, 2018; (c) SGS Stock Take Inventory Report dated September 25, 20 18; (d) Commercial Invoice dated October 29, 2018; (e) Single Administrative Document dated \1

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------X October 2, 2018; (f) Authority to Release Imported Goods (ATRIG) dated October 1, 2018; (g) Computation Sheet o revised charges; (h) Statement of Settlement of Duties and Taxes (SSDT); (i) Updated SSDT with attached computation for additional taxes; and Ul BOC Official Receipt dated November 2, 2018. Finally, Ms. Peralta testified on the withdrawals of imported Jet A-1 fuel. According to her, the imported Jet A-1 fuel stored at product tanks is withdrawn from the Tabangao Refinery through the Tabangao Terminal or the Subic Terminal and delivered directly to the JOCASP or the Clark Aviation Services Inc. (CASI) facility. The Jet A-1 fuel stored at the JOCASP or CASI facility is eventually sold and delivered to international air carriers. Also, by way of a Judicial Affidavit, 25 Mr. Rommel F. Guevarra (Mr. Guevarra) testified that he has been the Tenninal Operations Supervisor at the Tabangao Depot of petitioner since January 2019. As Tenninal Operations Supervisor, he is responsible for (a) overseeing and accounting for the receipts and withdrawals of all fuels, including Jet A-1 fuel, from the Tabangao Refinery through the Tabangao Depot; (b) supervising and monitoring asset maintenance and truck movements at the Tabangao Depot; (c) determining the focal point for other financial matters of the Tabangao Depot; and (d) determining the focal point for Tabangao Depot's issues relating to information technology. Mr. Guevarra declared that upon the withdrawal of the Jet A-1 fuel from petitioner's Tabangao Refinery through the Tabangao Depot, the imported Jet A-1 fuel is delivered to JOCASP located at NAIA. According to him, by the time the Jet A-1 fuel is withdrawn from the Tabangao Refinery through the Tabangao Depot, the Jet A-1 fuel will already be excise tax paid. When asked how the withdrawals of imported Jet A-1 fuel from the Tabangao Refinery through the Tabangao Depot are monitored, he explained that both the Tabangao Refinery and the Tabangao Depot have Official Register Books (ORB) that respectively record the withdrawals of Jet A-1 fuel from the Tabangao Refinery to the Tabangao Depot and from the Tabangao Depot to the JOCASP at the NAIA or the CASI facility in Clark. The ORB indicates the "withdrawals" of Jet A-1 fuel f 163 to 168; Minutes of the hearing held on, and Order dated, June 14, 202 Docket- Vol. II, pp. 570 to 571.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x and the running balance thereof for a specific period for the Tabangao Refinery and the Tabangao Depot, as the case may be. The ORB is signed by a Revenue Officer on Premises and an authorized representative of petitioner. Finally, as the imported Jet A-1 fuel is removed from the Tabangao Refinery through the Tabangao Depot, a Withdrawal Certificate (WC) and Bulk Delivery Note (BDN) accompanies the Jet A-1 fuel, which indicates the quantity and destination of the deliveries to JOCASP. Mr. Matias D. Aquiatan, Jr. (Mr. Aquiatan), also by way of a Judicial Affidavit,26 testified that as petitioner's Operations Manager, he is responsible for monitoring all receipts of petroleum products, including imported Jet A-1 fuel and their subsequent deliveries to international and domestic customers through JOCASP located at NAIA and CASI in Clark, Pampanga. He also oversees the stock movements in JOCASP and CASI, which involves receipts and withdrawals of imported Jet A-1 fuel from both facilities. Mr. Aquiatan declared that petitioner maintains two (2) product storage tanks for imported Jet A-1 fuel: one, in its Tabangao Refinery in Batangas for Jet A-1 fuel importations arriving at Batangas port, and the other, in its Subic Terminal for Jet A-1 fuel importations arriving at Subic port. He added that imported Jet A-1 fuel withdrawn from the Tabangao Refinery is delivered to either JOCASP or CASI storage facility, while imported Jet A-1 fuel withdrawn from the Subic Terminal is delivered to JOCASP. According to him, upon withdrawal from the Tabangao Refinery through the Tabangao Depot in Batangas or from the Subic Terminal, the imported Jet A-1 fuel is delivered directly to JOCASP via lorries or tank trucks for sale and delivery to international air carriers. The Jet A-1 fuel withdrawn from the Tabangao Refinery through the Tabangao Depot and delivered to JOCASP is accompanied by a BDN and WC. On the other hand, the Jet A-1 fuel withdrawn from the Subic Terminal and delivered to JOCASP is accompanied by a BDN and a Gate Pass. After Jet A-1 fuel is received in JOCASP, it is sold to petitioner's air carrier customers. A daily Product Movement Report (DPMR) is generated daily, indicating the receipt of Jet A-1 fuel, the ~ 26 Exhibit "'P-61", Docket- Vol. I, pp. 172 to 184; Minutes of the hearing held on, and Order dated, June 14, 2021, Docket- Vol. II, pp. 570 to 571.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x volume of Jet A-1 fuel received, and its eventual withdrawal for delivery to customers. Mr. Aquiatan also declared that from JOCASP, the Jet A- 1 fuel is delivered to international air carriers via a specialized vehicle that pumps the Jet A-1 fuel directly into the tank of the air carrier. The specialized vehicle has a meter that determines the volume of Jet A-1 fuel pumped into the air carrier. He added that upon delivery of the Jet A-1 fuel to the air carrier, petitioner presents to the authorized representative of the international air carrier a document called Aviation Service Return (ASR), where the customer acknowledges receipt of the delivery and the corresponding volume of Jet A-1 fuel. The ASR is either printed through petitioner's Data Capture System (DCS) or manually prepared when the system is down. With DCS, the details of the delivery are immediately captured by petitioner's computer system, enabling it to generate a report daily. The DCS may generate a Supplier Sales Report to summarize the daily deliveries to a particular airline customer. It indicates the ASR number and the date, the customer, the aircraft registration number, the volume of Jet A-1 fuel delivered to that customer, the aircraft's destination, and the invoice number and date. Finally, Mr. Aquiatan declared that the exemption from payment of excise taxes depends on whether the customer is an international air carrier, whether the country of registry of such international air carrier has an existing air transport agreement with the Philippines, and whether the customer will use the Jet A-1 fuel for an international flight. According to Mr. Aquiatan, this is determined at that stage of sales negotiation when petitioner enters into a supply agreement with the customer. At that stage, the customer is tagged in petitioner's system as exempt or taxable. Upon actual delivery of the Jet A-1 fuel to the air carrier, petitioner can confirm that the customer is indeed an international air carrier. On the other hand, Ms. Farida Nimfa G. Dimailig (Ms. Dimailig) testified27 that she caused the filing of petitioner's claim for a refund and took an active part in preparing the documents that would prove petitioner's entitlement to the refund. i 27 Exhibit "P-62", Docket- Vol. I, pp. 258 to 265; Minutes of the hearing held on, and Order dated, June 14, 2021, Docket- Vol. II, pp. 570 to 571.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Ms. Dimailig stated that the basis of petitioner's present claim is Section 135 of the NIRC of 1997, as amended, in relation to Sections 204 and 229 of the same Code. However, for purposes of determining which sale of Jet A-1 fuel by petitioner to the international carrier is exempt from excise tax, the witness claimed that petitioner relied on the provision of Section 135 of the NIRC of 1997, as amended, which provides the conditions for such exemption as follows: (1) the international air carrier is registered in a country which grants a reciprocal tax exemption to a Philippine-registered air carrier, and (2) the Jet A-1 fuel sold is used or consumed outside the Philippines. In the case of Philippine Airlines, its exemption from excise tax is based on its legislative franchise, i.e., Presidential Decree No. 1590, specifically Section 13. The same is true with Cebu Air, Inc. (Cebu Pacific), i.e., Republic Act No. 7151, specifically Section 11 thereof. The witness further testified that upon its request, petitioner was furnished by the Department of Foreign Affairs (DFA) with a list of countries granting reciprocal tax exemptions to Philippine-Registered/Designated Air Carriers based on the air transport agreements executed by the Philippines with those countries. After determining the countries of registration of the international airline customer, petitioner will then confirm the tax exemption by securing certified true copies of the Air Transport Agreements executed by the Philippines with the relevant countries. By examining the respective Air Transport Agreements, petitioner ascertains whether the countries of registry of the international carriers to which Jet A-1 fuel was sold during the relevant period of the claim grant reciprocal tax exemption to Philippine-registered international air carriers. Finally, upon a determination that the Jet A-1 fuel sold to international airline customers is exempt from excise tax, the price used in the sales invoice for the Jet A-1 fuel sold and delivered to the tax-exempt international customer is net of v excise taxes.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Ms. Berenice Angelique L. Flores (Ms. Flores), for her part, testified28 that she is familiar with the instant case by virtue of her employment and position as Tax Advisor of petitioner. As petitioner's Tax Advisor, she reviews documents in connection with petitioner's refund claims and verifies petitioner's entitlement thereto. As such, she is in possession of the documents relating to the administrative refund claim of the instant case. Since this refund claim pertains to excise taxes paid on Jet A-1 fuel sold to international carriers, which are exempt from excise tax, Ms. Flores declared that she reviewed documents relevant to petitioner's importation of Jet A-1 fuel, payment of taxes and duties on the importation; withdrawal and release of Jet A-1 fuel from the Tabangao Refinery through the Tabangao Depot of from Subic Terminal; and subsequent transfer of the Jet A-1 fuel for eventual sale to international air carriers. According to Ms. Flores, petitioner filed claims for refund/tax credits of the excise taxes paid on the imported Jet A-1 fuel sold to international air carriers with the BIR through BIR ELTAD II. Petitioner filed two (2) separate letters with BIR ELTAD II, which constitute the administrative claims for refund/tax credit of excise taxes paid during the period from September to October on Jet A-1 fuel imported during the period from May to September 2018 and sold and delivered to international air carriers for the period September to November 2018, to wit: (1) Letter dated March 10, 2020, and filed on March 12, 2020, for the refund/tax credit of excise tax paid for 6,740,087 liters of imported Jet A-1 fuel for P26,960,348.00, which was sold to international air carriers for the period from September to October 2018; and (2) Letter dated March 10, 2020 and filed on March 12, 2020 for the refund of excise tax paid for 14,520,000 liters of imported Jet A-1 fuel for P58,080,000.00, which was sold to international air carriers for the period from October to November 2018. She added that the letters were filed with the ELTAD II of the BIR and the respective Applications for Tax Credits/Refunds (BIR Form 1914). Witness Maria Luz S. Verdejo (Ms. Verdejo) is the Head Librarian at the Carlos P. Romulo Library of the Department of Foreign Affairs - Foreign Service Institute (Romulo Library) and ~ 28 Exhibit ''P-63", Docket- Vol. I, pp. 409 to 422; Minutes of the hearing held on, and Order dated, July 26, 202 I, Docket -Vol. II, pp. 597 to 598.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x the custodian of the agreements entered by the Philippine Government. She testified29 that petitioner wrote a letter requesting a certified true copy of the Republic of the Philippines - United States of America (RP-USA) Agreement and the various Republic of the Philippines- Papua New Guinea (RP-PNG) Agreements. Ms. Verdejo informed petitioner through a Certification dated September 9, 2020, that the Romulo Library cannot provide a certified true copy of the RP-USA Agreement because the original is not in its possession. She also issued a Certification dated March 17, 2021, stating that the Romulo Library does not possess the original copies of the Interim RP- PNG Agreement and the RP-USA Agreement and attached the photocopies thereof. Finally, she issued a Certification dated November 11, 2021, stating that the Romulo Library does not possess the original copies of the 2011 RP-PNG Agreement and the 2018 RP-PNG Agreement and attached the photocopies. Ms. Verdejo, however, declared that while the RP-USA Agreement and various RP-PNG Agreements were not among the original documents turned over to the Romulo Library when it was designated as the repository of original agreements, the Romulo Library has in its possession a book of Philippine Treaty Series, a Collection of the Texts of Treaties and other International Agreements to which the Philippines is a Party edited and annotated by Haydee B. Yorac, Volume VII, 1974- 1978 containing the complete text of the Interim RP-PNG Agreement on pages 217-218 thereof. The Romulo Library also has in its possession a book of the Philippine Treaty Series, A Collection of the Texts of Treaties and Other International Agreements to which the Philippines is a Party edited and annotated by Haydee B. Yorac, Volume IX, 1982-1983, containing the complete text of the RP-USA Agreement on pages 239-265 thereof. Moreover, the Romulo Library has photocopies of (a) a certified true copy of the 2011 RP-PNG Agreement issued by the DFA Office of Legal Affairs and (b) the 2018 RP-PNG Agreement. According to Ms. Verdejo, while the originals can no longer be found, these Agreements are still in effect based on the records in the Romulo Library as the DFA refers to these ~ 29 Exhibit "P-108", Docket- Vol. II, pp. 708 to 715; Order dated February 7, 2022, Docket- Vol. II, p. 818.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Agreements from time to time and acknowledges the existence of the same since its effectivity up to the present time. Petitioner's last witness ICPA Walter L. Abela, Jr. (ICPA Abela) testified30 that after performing the procedures outlined in their Report dated December 21, 2021 and Supplemental Report dated January 31, 2022, they found that the full amount of the total claim of P85,040,348.00, representing excise taxes paid on Jet A-1 fuel sold and delivered to international carriers of Philippine or foreign registry for their use or consumption outside the Philippines for the period from September 17, 2018 to November 22, 2018, was properly supported by relevant documents. There being no more witness to present, and upon the instance of petitioner's counsel, petitioner was granted thirty (30) days from May 16, 2022, or until June 2022, to file a Formal Offer of Evidence (FOE). Respondent was also given thirty (30) days from receipt of petitioner's FOE to file his comment. 31 On June 15, 2022, petitioner filed its Formal Offer of Evidence with Manifestation [On Offer of Provisionally Marked Exhibits P-50-1, P-65-1, and P-65-2 as Originals under Rule 130 of the Revised Rules of Courtj,32 to which respondent filed his Comment (on Petitioner's Formal Offer of Evidence) on June 27, 2022. 33 Likewise, on June 27, 2022, respondent filed a Manifestation, 34 stating that he would no longer present any witness. In the Resolutions dated August 2, 2022,35 and October 17, 2022, 36the Court admitted petitioner's offered exhibits. On November 25, 2022, and in compliance with the Court directive, respondent filed his Memorandum,37 while petitioner filed its own38 on December 12, 2022. � 30 Exhibits "P-I 09" and "P-11 0", Docket- Vol. II, pp. 697 to 704, and 843 to 851, respectively; Minutes of the hearing held on, and Order dated, May 16, 2022, Docket- Vol. II, pp. 852 to 854. 31 Order dated May 16, 2022, Docket- Vol. II, pp. 853 to 854. 32 Docket- Vol. Ill, pp. 860 to 903. 33 Docket- Vol. Ill, pp. 1272 to 1274. 34 Docket- Vol. TJI. pp. 120R to 1270. 3S Docket- Vol. Ill, pp. 1277 to 1280 36 Docket- Vol. Ill, pp. 1293 to 1295. 37 Docket- Vol. Ill, pp. 1296 to 1304. 38 Docket- Vol. Ill, pp. 1316 to 1352.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x On January 11, 2023, the instant case was submitted for decision.39 Hence, this Decision. THE ISSUES The issues 40 submitted by the parties for this Court's resolution are as follows: A. WHETHER OR NOT PETITIONER HAS COMPLIED WITH THE REQUIREMENTS UNDER SECTION 229 OF THE 1997 NATIONAL INTERNAL REVENUE CODE, AS AMENDED, FOR THE RECOVERY OF INTERNAL REVENUE TAXES THAT HAVE ALLEGEDLY BEEN ERRONEOUSLY, WRONGFULLY, ILLEGALLY, OR EXCESSIVELY ASSESSED OR COLLECTED. B. WHETHER OR NOT PETITIONER IS ENTITLED TO THE RECOVERY OF EXCISE TAXES IN THE AMOUNT OF P85,040,348.00 PAID DURING THE PERIOD FROM SEPTEMBER TO OCTOBER 2018." Petitioner's Arguments: Petitioner argues that it timely filed its claim for refund or credit for excise taxes erroneously, wrongfully, illegally, or excessively collected from excises taxes paid from the period of September to October 2018, pursuant to Sections 204 and 229 of the NIRC of 1997, as amended; and that it is entitled to the recovery of excise taxes in the amount of P85,040,348.00 paid for the period from September to October 2018 for Jet A-1 fuel imported for the period from May to September 2018, and sold during the period from September to November 2018 to international air carriers for use or consumption outside the Philippines, as (a) it previously paid excise taxes on the Jet A-1 fuel sold to international air carriers, (b) it sold the imported and excise tax-paid Jet A-1 fuel covered by the First, Second, and Third importations to international air carriers, which are billed and collected free of excise tax, (c) its sale of Jet A-1 fuel to international air carriers is exempt from excise tax, and (d) it is clearly entitled to a refund or the issuance of tax credit certificate for excise taxes paid on Jet A-1 fuel sold to international air carriers.\,.<! 39 Resolution dated January II, 2023, Docket- Vol. Ill, p. 1356. 40 Par.2, Proposed Stipulation of Issues, JSFI, Docket- Vol. II, pp. 542 to 543.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Respondent's Arguments: cpitNeeSmhrexxIeeetRcepcdiimtCotiisiitsroeopRtswcnnettueeaedhesarxr1itpnnJci3piotefch5siientetcitdpAacoeroertlofs-eeof1nltavaetwthrf,inualuedhxymdeeioNlcsancaphsIsgrtrRoekhetotlCdhinhaddniecteutgtdiolcpeocatsfoeeeiwso;tntrsrihtstttiieoheintfaosrilraocdennttralaehtefttotarhefadiuuoneiioftsnnnrdeooetdas,rmeelnirnoeasanctoxrtiioanitrctcltuioieiccsasnodalsleptenlrueyrartataoroiral-enlevxaycracxiesraseepg;sirrmrorueaooipnfenpevfuastdriiiandsndftdetrahtth.ooanhaoamxndetrt THE COURT'S RULING Sections 204(C) and 229 of the NIRC of 1997, as amended, pertinently provide that: "SEC. 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX oopyCbdurgvrreveeeeenoaodcaensrolfmeueetrairadrtpifeesllmuvulatmoeccynoy(fiCdwto:odsfmi)onsro.eiPao"reidnCndofrrnit.ctorunte(tepueihvBsreorNsdeinaenordnhninoalletadaeagldlcablfsel,atorrcsntyiecbrehleudhviaetdsentnoehihrigmcwnuiteeeromussfeoenuueeftvpfrpsoappndueoiurrsxpradndste,rplsdyeecaciftademtrrmuhathedyeanmawdetpa)edxshdntsrpeiieaetttsosrasiwhf,rofiotahlrrtehueaeearvwsatrnontrxateuodrafeilfirtn,nuuhtsuhnteetaneehooawvynfdorttueirhulrscpaewiihplebltdrteyaiiyoieennsti,nesmhagrohnredilroetntwftipraoiwufseeurictrxiritnoslwnrnnchleodedsegrotfegheditraotd(aahoehl2nioinllerdnt)eyl,f wmbbchahcCoeoseaeiaoetlseruvihlnelnenerelstatcetpacshftfc"abeiotoeeSntiedelrdedEelrCed,etdCounhocu.a,rn.-etmnlwedlNcet2rmediehoxeol2greilccwa9eslstopeeds.huicvrsicteliooeshtRatrtrniteiooevyoeoemducserrr,oot;htlpffyvooonaabrearrroovuurnrcotdeyttoeyehrufsfseborouunudaereinfccaisnniendhhttsTyngiy.oaosa,tsrpxnauenohcexarirayrEtn,rlleorolaoidprmnfnlrbieotatteeynpnaehnoaermnrcuaoylonntlsacsuyasaeilesb,unyilrelmeymtdroaeoiewerinnoravndrgrsdleeoluitundemlnfomlllugylegiaeneeghfygfduhaiaaatlllabevnatlllldsoeyeyyxy ~

DECISION CTA Case No. 10352 Corporation vs. Commissioner of Internal Revenue Pilipinas Shell Petroleum xP-a-g-e---1-8---o-f--3-6----------------------------------------------------------------------x 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, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." (Boldfacing supplied) Under the afore-quoted provisions, to be entitled to a refund of erroneously or illegally collected tax, the following requisites must be satisfied and established: 1. that the tax has been erroneously or illegally collected, or the penalty has been collected without authority, and/ or any sum has been excessively or in any manner wrongfully collected; and 2. that the claim for refund or credit has been filed within two years from the date of payment of tax, or penalty, regardless of any supervening cause that may arise after payment. As in other refund cases, the Court must first determine the timeliness of the filing of petitioner's administrative and judicial claims for refund. Sections 204 and 229 of the NIRC pertain to the refund or credit of erroneously or illegally collected taxes. Section 204 applies to administrative claims, while Section 229 to judicial claims. In both instances, the claim must be filed within two (2) years from the date of payment of the tax or penalty. Note that Section 229 further requires that an administrative claim for rtaexfupnadyeor rmcaryedsietemk juusdticfiirasltinbteerlvoedngteidonwfiotrhththeeclCaIiRm.b41efTohree the (2)-year prescriptive period is mandatory regardless of two any supervening cause that may arise after payment.42 In fine, the filing of the claim for refund or credit with respondent is a prerequisite to the filing of the Petition for Review with this Court. However, both actions must be filed within two (2) years from the payment of the tax being refunded or credited. ~ 41 CBK Power Company Limited vs. Commissioner of Internal Revenue, G.R. Nos. 193383-84, January 14, 2015 and 42 Commissioner ofinternal Revenue vs. CBK Power Company Limited, G.R. Nos. 193407-08. 9, 2014. vs. Manila Electric Company (MERALCO), G.R. No. 181459, June Commissioner ofInternal Revenue

DECISION CTA Case No. 10352 Corporation vs. Commissioner of Internal Revenue Pilipinas Shell Petroleum xP-a-g--e--1-9--o--f--3-6----------------------------------------------------------------------x Petitioner's administrative and judicial claims for refund were filed within the 2-year prescriptive period. eipanxdesctmititasiiennRoitnesteccatrroaxasrtdeoihvnoraeendvtaheSneaedulpsnijtmutetidhmpliaocbtrieStapraleet2pcito7tliaetn,iimo2monb0sfe1erfr8Joe.mr4t32aaA7drC,e-e1oftuuh2fnnu0edte2i.fnl0igr,ssuttwbtpoojaey(c2tmf)iloyeefenattrhiostes,f for Accordingly, petitioner's administrative and judicial claims refund or credit were seasonably filed on March 12, 2020,44 and September 17, 2020,45 respectively. The excise taxes paid on imported Jet A-1 fuel sold to international air carriers were erroneously or illegally collected. iSnetcetrinoPanetti1iot3ino5anloefratihcrleaciNamIrRsriCethrosaft1is9it9se7xi,emamsppoatrmtefedrnodmJeedte, xAwc-hi1siecfhutearlexasdousln:ddetor pCraordriuecSrstEsCsa.onl1dd35toE. xthePmeepftrotollloEewunmtinitgiePasrroeoderuxceAtsmgepSntocflidreosm.toe-xIcnitsPeerenttraaoxtil:oeunaml rPiarenerngtogdeivusrimltndara(eyatatidy)ioo,onbnnseTattIhdlohneicastbiaetprerrorunpistsaerheetredeissoocosnrrfhpaicoabelolntelrnldcoybsalbeuireynmrsuittmaepohcrtrescieooSdpnoreridfocnoardunPaeutcthsbcaeiitorldsiywnepdoipttfseihhnodFeetlidhsnPteaoohnrrirtloacuigeplfe,eopstruithenaapeiegnnossnkden: recommendation of the Commissioner; ttcorhoreeuaaintrgiteer(sunyb,)scoeicefossnoaEverixdexneecfmtmooironppensttiugss mneafnripnonttdimittoeiorenstns:hiametPoiriolrraionnrvaatiletgdarceexnandearc,rstiiieoehpsrnoeaowtrclreooeavlvxgeeeuerrre,mmeedpmTptherbeaonnyttdtsiutttfciahoetxesrs ~ sold to Philippine carriers, entities or agencies; and 43 Exhibit "P-14", Docket- Vo\.111, p. 960. 44 Exhibits "P-54'" to "P-57", Docket- Vo1lll, pp. 1216 to 1223. 45 Docket- Vol. 1, pp. 6 to 41.

DECISION CTA Case No. 10352 Corporation vs. Commissioner of Internal Revenue Pilipinas Shell Petroleum xP-a-g-e--2--0--o--f--3-6----------------------------------------------------------------------x (c) Entities which are by law exempt from direct and indirect taxes. oeaStPcdsmoxgfeioiun.caetrlephticinnspsisreefcuuieeOinnipfmcNteaotanhapsasIetctR,eoxteStfhrCeCuahcfbtelsroeoolouerlinuiosfldtnttqtrtsP1htrhtJueno9eeeerarvoct9urntrrelet7eloaaxhAri,llitcnsapye-miayi1gnoueswsmtndeifiiinfaa,nutttoiCmlaehorrtClxoechnetresaaohenerppsrnemredor.oafdpeirmpubneaadArnnoirdti,esisdovdceosseetcnainoexo-oi,ntonncemn4rdrtsi6mdettpuchiweropinolbdestoahtgrmhssiitifcmumeecfiIatdarhrtnospsofnteeoJpoemcxtrererrheieentttnrtaeimsaehvAtdtpolifeop-ouofSJ1RltnpnvneeeteefaeddctavunrdyetAxeoeitimnoilnnlr-.tot1nvueic,cceonerrfas1eeukttlv3dhldeeooys5lieidr.f,-tt The Court finds for petitioner. anptderloomeexeiscsvteetraobemionlrenrlAldtpygeeetqeuudipdmuxoiml,astenaaohlmiipnrg,nferruipiveeovftrcdgeedeaeo.anadcuaulrtdcusdurftiTntlrsrnsteoedhghssmdeeoassorlthoodflSeaorftxwSewhuwciceeelmitcdhrsidetopeewointoolneohotnrsoar1cetdexatr31ndsl.5l3to,ydh5o"tiesmfspWootdetsaihftihnunrlseetogbotuhrinulNjfeneeegiaIugscRctmNhutahtC.iuIsJesRpre4oheC7trtflhdoawA1edwoo9-hufT1rc9echodi17ttmfuons9hum"eds9epe,sir7loawt,yriwtnoetthahebroanesedeests therein are complied with by the claimant. Relevantly, the disquisition of the Supreme Court on Section 135 of the NIRC of 1997, as amended, which is petitioner's legal basis for its claim for refund, is enlightening, to wit: posiaRittmmltrhhgnleaoeueeeptvpgunsoepepattecrneroa"ltxitbutEereyyoreeeyrsxoorm)ctcrl.CneaeiposutxrAaouatenr,nmdimnxosodeyptntteneharaed(peruxeyNogxreeSiIuordcndRroeasdiinCcsrniSuaeent)(tecniceipoe.ctttfddeesaanxt.tlixvs,reiou2shoaomnonpb0loremlida4pulodu1iietlatmdf3odryntf5tfborubhStfopyefoeohemraarfecoctcpnhttrdwtreNiyheueuooxhedIrcpnRcisoeitceittCNsrfshea1r,.eatdt3tiyuTphts5toipteheaoiorrrteixonstorssraeefaydseiiilneslfnustftntuh,Iscaibdtnnettexieeihtatdrpeoceel,NeaalsamrdytIytunRhoeoietsasaeCoderrr,l the petroleum products."48 (Boldfacing supplied) , . / 46 783 SCRA 490 (2016). ~ 47 Manila International Airport ACuotmhomriistsyiovsn.eCr ooufrItntoefrAnaplpeRaelvse, neutea,!.G, .GR..RN. oN.o2.1105853665,0S, eJputleym2b0e,r20010,62.015. 48 Chevron Philippines, Inc. vs.

DECISION CTA Case No. 10352 Corporation vs. Commissioner of Internal Revenue Pilipinas Shell Petroleum Px-a-g-e---2-1--o--f-3--6----------------------------------------------------------------------x peonenttriStoelAlecedtsuiotmtonhecp1lr3aso5itdmaoutfuacttthroseerfsyNuonIltRdadxCtopo,faaitysnhetearemsrtnuehabnatjdtieoecpndtaa,eiladxsccatithshrereeitepaeraxxsy,ceimspseepetanitittadixtohbenesaersreoeoindsf is deemed illegal or erroneous. Likewise, in Commissioner ofInternal Revenue vs. Pilipinas tpsShthraeoetdluSlutuPocpertrtsyerosmtolaeelxudCpmtaooyCuieornrtrtpectorahnrtaeaagtttiioooprnnia,c4aia9dllwlcytahhrdierceihecerlxaisnc,rveiisodseletvhnteaatdixtttelpheseedtoitstonaiomanpeereertp,frauoarnlstedituehomse,r credit of the excise taxes paid under Section 135, to wit: "xxx We therefore hold that respondent, as the stcsgtaorraxelatddnuoitttnteoodoriftyesitxnthapetexeemrpterpnaxotaycliteeoiirsuonewmnfathralpooxrmceioassdrtdurhitiiceretperspcsa,,taiildysytmhfeloienearntbpiltltaeelottettrfdoeorslptaeoaiuhdyamavetrhixpenecrfgiuoesndxebduceticeaostnexrs under Sec. 135 (a) of the NIRC." (Boldfacing supplied) eams(wixpt.oaaeep.nutm,luiuleTdmpsfstahabiocuoneftsnruut,cehrfuogeaenncadcdofrpt,iduenerplrrmttererroSsaoersderdloyecuoutrcionmeotpfoldnry,po1uworrd3oerpuh5sdoicepmuoentochrfpnttteoohshdrrreeetaienosrNdttwh'IsesbRaenxyCleeeprtmohrJtooofpeerttt1esai9fstnmra9tAyoat7pumt-,ooi1torafotensretx,hyrfac)uemtiteasbheleexuennptttdaaiwtetyxtiahadeeexes,rss enumerated under Section 135 of the NIRC of 1997. Records show that petitioner, through its refinery in Tcdroaubmdaeensgtriaecofi,anBiirnagctaaprnrrgoieacrses,s.sg,eIwnf ephreiactlihltyiaoprnreeorfdonurecseeadslseJeattodAdiin-t1tieofrnunaealltsisofurnpoapmllyat,nhidet tries to buy from local sources first before it imports. 5� Petitioner resorts to occasional importation of finished Jet instance, the refinery shuts down or if the A-1 fuel if, for A-1 fuel exceeds the projected supply of locally demand for Jet manufactured Jet A-1 fuel.Sl when pet itioner operated its Tabangao product as a CBW from the date of ap proval by the BOC v However, storage tanks 49 G.R. No. 188497 (Resolution), February 19,2014. 50 Exhibit "P-59" (Q&A No. 10), Docket- Vol. I, pp. 87 to 88. 51 Exhibit "P-59" (Q&A No. 11 ), Docket- Vol. I, p. 88.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x in July 201552 until its closure in September 2018,53 petitioner was not allowed to locally produce Jet A-1 fuel, so all Jet A-1 fuel stored in its Tabangao product storage tanks was sourced or imported from abroad.54 Thus, these storage tanks contain only purely imported and tax-free Jet A-1 fuel during the CBW period. When the CBW was terminated sometime in September 2018, all remaining imported and tax-free Jet A-1 fuel was accounted for and reported to the BOC. These converted Jet A-1 fuels were declared with the BOC, and the corresponding excise and value- added taxes were paid. All Jet A-1 fuel withdrawn from the Tabangao product storage tanks after conversion from bonded tanks to non-bonded tanks thus became tax-paid fuel. 55 Petitioner received three importations of Jet A-1 fuel from May to September 2018. First Importation: The First Importation for 7,608,024 liters of Jet A-1 fuel, which arrived on May 29, 2018 at the Tabangao Refinery, is under the jurisdiction of the Port of Batangas based on the Certificate of Quantity Received. 56 This was declared under CRF 18CBW10LOC4 and shipped in the vessel MT Sunny Dream. This importation was made when the product storage tanks were operated as CBW. As such, no excise tax was paid during importation and storage in the CBW.57 The following documents covered the importation of 7,608,024 liters of Jet A-1 fuel: a. Single Administrative Document dated May 29, 2018, with reference number 20 18CBW023B;58 b. Certificate of Quantity Received dated June 3, 2018;59 c. Survey Report No. OGC-18-0908 dated July 10, 2018;60 d. Letter Request for Special Permit to Discharge (SPD) dated May 28 20 18�61 , ,~ 52 Exhibit "P�2'', Docket- Vol. III, pp. 913 to 915. 53 Exhibit "P�2�1 ",Docket- Vol. III, pp. 916 to 917. "Exhibit "P�59" (Q&A No. II), Docket- Vol. I, p. 88. 55 Exhibit "P�59" (Q&A No. 14), Docket- Vol. I, pp. 88 to 89. 56 Exhibit "P�4", Docket- Vol. Ill, p. 920. 57 Exhihit ''P-59" (Q&A No~ . .:;;o to 51). Oock~t- Vol J. pp. Qn to QR. 58 Exhibit "P�3", Docket- Vol. III, pp. 918 to 919. 59 Exhibit "P�4", Docket- Vol. Ill, p. 920. 60 Exhibit "P�5", Docket- Vol. Ill, pp. 921 to 936. 61 Exhibit "P�6", Docket- Vol. III, p. 937.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x e. Bills of Lading No. OP-01 dated May 22, 2018,62 with attached Certificate of Origin,63 Certificate of Quality,64 Aviation Fuel Tank Release Certificate,55 Vessel Ullage Report, 56 Cargo Manifest;67 f. Customs Invoice- Bulk Product dated May 24, 2018, with no. ITAKZY0002;6s g. Letter dated May 29, 2018;69 h. Tax Invoice dated June 4, 2018, with number 90706465/PJO At the time of the conversion of the Tabangao product tanks from CBW to non-CBW on September 13, 2018, there were still 3,963,800 liters of Jet A-1 fuel remaining from the First Importation, which remained stored in the Tabangao product storage tanks. Thus, to convert the same from tax-free into tax-paid inventory prompted by the conversion of the storage tank from CBW to Non-CBW, petitioner lodged the corresponding importation details for the remaining quantity of 3,963,880 liters through the E2M System and paid the corresponding taxes therefor m the amount of P15,855,520.00.71 The remaining excise tax-paid 3,963,880 liters of Jet A-1 fuel, supported by the following documents, were subsequently transferred to petitioner's storage tanks in the JOCASP at NAIA for subsequent sale and delivery to international air carriers for use and consumption outside the Philippines:72 a. Single Administrative Document dated September 24, 2018;73 b. Computation sheet of revised charges;74 c. Request for Correction of Data in Single Administrative Document and Order of Payment;75 i d. ATRIG dated September 24, 2018;76 e. SSDT dated September 27, 2018;77 f. Commercial Invoice dated February 8, 2019.78 62 Exhibit "P-7", Docket- Vol. JII, p. 938. 63 Exhibit "P-7-1", Docket- Vol. III, p. 939. 64 Exhibit "P-7-2", Docket- Vol. III, pp. 940 to 944. 65 Exhibit "P-7-3", Docket- Vol. III, p. 945. 66 Exhibit "P-7-4", Docket- Vol. III, pp. 946 to 947. 67 Exhibit "P-7-5", Docket- Vol. JII, p. 948. 68 Exhibit "P-8", Docket- Vol. JII, p. 949. 69 Exhibit "P-9", Docket- Vol. Ill, p. 950. 70 Exhibit "P-10", Docket- Yo. JII, pp. 951 to 953. 71 Exhibit "P-14", Docket- Vol. Ill, p. 960. 72 Par. II, Memorandum for Petitioner, Docket- Vol. Ill, p. 1325. "Exhibit "P-11", Docket- Vol. JII, p. 954. 74 Exhihit "P-11-1 ��. Oocket- Vol. TiL pp. <)55 to 9:<=;6 75 Exhibits "P-12" to "P-12-1 ", Docket- Vol. Ill, pp. 957 to 958. 76 Exhibit "P-13'', Docket- Vol. JII, p. 959. 77 Exhibit "P-14", Docket- Vol. JII, p. 960. 78 Exhibit "P-15", Docket- Vol. JII, p. 961.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Second Importation: The Second Importation for 6,639,034 liters of Jet A-1 fuel, which arrived on July 10, 2018 at the Tabangao Refinery, is under the jurisdiction of the Port of Batangas based on the Certificate of Quantity Received. 79 This was declared under CRF 18CBW11LOC1 and shipped in the vessel MT Beluga Pacific. This importation was made when the product storage tanks were operated as CBW. As such, no excise tax was paid. so The following documents covered the importation of 6,639,034liters of Jet A-1 fuel: a. Certificate of Quantity Received;Bl b. Commercial Invoice with number 18CBW11LOC1.82 At the time of the conversion of the Tabangao product tanks from CBW to non-CBW on September 13, 2018, there were still 2,820,682 liters of Jet A-1 fuel remaining from the Second Importation, which remained stored in the Tabangao product storage tanks. Thus, to convert the same from tax-free into tax-paid inventory prompted by the conversion of the storage tank from CBW to non-CBW, petitioner lodged the corresponding importation details for the remaining quantity of 2,820,682 liters through the E2M System and paid the corresponding taxes therefor. The remaining excise tax paid 2,820,682 liters of Jet A-1 fuel, supported by the following documents, were subsequently transferred to petitioner's storage tanks in JOCASP at NAIA for subsequent sale and delivery to international air carriers for use or consumption outside the Philippines:s3 a. Single Administrative Document dated September 24, 20 18;84 b. ATRIG dated September 24, 2018;85 c. Computation sheet of revised charges, with attached Request for Correction of Data in Single Administrative Document and Order of Payment;86 d. SSDT dated September 27, 2018;87 "Exhibit~~-l:.::k:~f~::~:l.::::ipt dated May 23, 2019.88 \ / ~ 80 Exhibit "P-59" (Q&A Nos. 52 to 53), Docket- Vol. I, pp. 98 to 99. 81 !d. 82 Exhibit ''P-17", Docket- Vol. Ill, p. 963. 83 Par. 16, Memorandum for Petitioner, Docket- Vol. III, p. 1327. 84 Exhihit "P-18". Docket- Vol. Ill. p. 964. 85 Exhibit "P-21", Docket- Vol. Ill, p. 969. 86 Exhibits "P-19" to "P-19-2", Docket Vol. Ill, pp. 965 to 967. 87 Exhibit "P-68.5", USB. 88 Exhibit "P-22", Docket- Vol. Ill. pp. 970 to 971.

DECISION CTA Case No. 10352 Pilipinas Shell Page 25 of 36 Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Third Importation: jSTdw1uuha8rhbitSirieisUccddd.hBTBiIcSm0h9at5reeiproLpoiTnvtOrheetCoiamdrftdibaiotennhInmrdeSpw2Pseoh5aoprs,itrtpaet 2tspmoit0eoofbd1nrSe8efiru.donb2rtia0hc1Tt1e9hb8t,iM1ahsas1eTet7wdlG,Sea1uaros7asbn3nedi cddlteihctAPeseltoarcoQsrerretou,a1dfgai2sJneuvetwnifettadsiyAcstehie-Rrl1lii.nteyCfpTutRohehmrlFeet, atBhtOrPoC4u,.Bg0phe0ef/ttolhiirtteeieoBrwn.OeirtChldEor2daMgweidSnygtshtteehmecoairmnredpsoppraotinedddtihnJeegtciomAr-rp1eosrpftuoaetnildofinnrogdmetataxtihelses tahnedfotThllheoewaimTnhgoiruddnoctImuompfoeerxntactstii:soentaoxf e1s9,p1a1id7, 173 liters of Jet A-1 fuel thereon were covered by a. C1SPO8GrocoSmeSfUaomSBnretm0Bor5acciLliklIaOnolTCvfao;ILk9ince3avedoIidnincvageteenNddtooa.SrtyHeepdLRtee2Omp0oc1brt8eotJrbdE2eaTr5t0e,5d22190S-,12e8;p2;99t00e11m8b, erw2i5th, 2018;92 b. number c. d. e. Single Administrative Document dated October 2, 2018; 94 f. ATRIG dated October 1, 2018;95 g. SCSoDmTpudtaatteidonOschtoebetero3f ,re2v0i1s8e;d97charges;96 h. 1. BcUoOpmCdpaOtuetfdafitciioSanlSRDfoeTrcaeiddpdattidetidaotneadNl oNtavoxevemse;bm9e8brer2222,, 2018, with attached 2018.99 J. aaAdadmdam-a1dttoeoeitudufdiuAnonOeNtntnlicaonoftlevgfooxertbPmataeo7mtxbrh6eoeie3s,nnr4,,al3622ytrwc8i02toP,1a,6ni7s8m925,o20ps1,f05.1uo1038bIr0rE3t,meaI,vat8wRiiets0oDitat8enlthd.s.hC0ett0RbhhHNpyeafooatwra8pypt5eeme1t1vtat8ie8eict,t1nri8hio,0to8en0anfd3eonea,rr4r,scu5poerwp2amxediecfldpllaiielstuteeceetaxtradisscttnaiigosSoSxefSnStJfDtDhoaeoeTrTxtf 9199999999099887654321009EEEEEEEEEEEExxxxxxxxxxxxhhhhhhhhhhhhiiiiiiibiibihibibbbbbbbbiiiiiiitiittiiittttttsttt""""""""""P""PPPPPPPPPPP---------33---22226222053298769543"91"""""_"""","",,,,,,,,DO(DDtDDDUDDoQooooSoooo&o"ccBcccPcccckAkkkk.k-kkke3eeeeeeeetN1tttttt-tt-------o--1VVVVsVVVVV".ooo,ooooool5lllllD.ll.l....4...IlIIoIIIIlIftllllllollllclllll,l.,,,,,,,k5pp(pppppep5b......pp)ta999,.9-9.9c8R88897kD9V85432877..oo.o...92lfc.pttkooI.lel999t,8-78p173Vp..).o. l9.8I6, pp. 99 to 100. to 987. 101 Exhibit "P-30", Docket- Vol. Ill, p. 985.

DECISION CTA Case No. 10352 Pilipinas Sheil Page 26 of 36 Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x f0iP1on199lcl83,ol17u4w18d,s875e:8,d71477.803in304li1tt0he(3rPesa7m6op,ofa4uy6inmm8t,ipe6nno9grt2t.te0omd0PaJ4de,el8te6sA9sto-,51.7PB1870O.250C,05T,3hbu3ern,8od0kde8eirfn.f0e0dOr)eoRnwcnewNaaooss.f Value-added tax P3,934,695.00 Excise tax 934,884.00 Total Duties/Taxes P4,869,579.00I04 ospimurebtcpistooienroOqtsnauuueteimtron'sopntf,tsista1othol4neer,ao5a1gu2n9et0ds,,1i0dtd1ae0enl70itk,vlh1esiet7rey3iPrnlsthoiwitlJeiienOrprstpCeeiornAsnfeuSasJbP.te1sioteoinqsnAau-le1NanAiftrulIAycelatrrofarrrinoesmrCfseAftroShrrIeeduf3sotrecort Petitioner sufficiently proved that it had erroneously paid excise taxes on imported Jet Aaa-mi1rofcuuanerltroiseofrPlsd77bto,u0ti5no6ten,8rlny8a4it.n0io0tn.hael faFpoieilrrltsloiittnw,ieoFsSs:noe1efr0cor6ortanthldhle,eegiarepnduedlrsyieoTsdohorilrdcdfrooeinmxmscupismoSerpetattpaittoixeonmnposbauietdtrosiJdvteoeatrtiAhoNe-u1osPvhfeiunimletibleperpfnrrioanmte2iso0,n1taha8sel, Volume in Liters l�t & 2nd Customers 3�� Importations TOTAL Air China Ltd. Importation Air Niugini 131,215 554,993 Asiana Airlines Inc. 423,778 339,983 Cebu Air Inc. 85,940 708,189 China Airlines Ltd. 254,043 3,508,422 China Eastern Airlines Ltd. 96,339 611,498 China Southern Airlines Co. Ltd. 611,850 294,303 Federal Express Corp. 1,329,807 518,947 Jetstar Asia Airways Pte. Ltd. 2,178,615 730,966 Jin Air Co. Ltd. 138,552 172,342 Korean Airlines Co. Ltd. 472,946 535,061 Philippines Airlines Inc. 76,216 1,596,622 218,087 10,060,590 127,576 391,371 332,454 398,512 78,222 94,120 273,448 261,613 332,307 1,264,315 2,959,029 7,101,561 102 Exhibits "P-31" to "P-31-1", Do cket- Vol. Ill, pp. 986 to 987. \~� / Exhibit ''P-32. Docket- Vol. p. 988. et- Vol. Ill, p. 1329: IOJ Exhibit m. 104 Par. 22, "P-31-1, Docket- 105 Memorandum for Vol. Ill, p. 987. Petitioner, Dock 100. Exhibit "P-59" (Q&A No. 56), Docket- Vol. I, p. 106 Par. 9, Petition/or Review, Docket- Vol. I, p. 11.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Qantas Airways Ltd. 318,645 849,189 1,167,834 Scoot Tigerair Pte. Ltd. 50,183 50,183 Silkair Singapore Private Limited - Xiamen Airline Co. Ltd. 269,158 - 269,158 Total Aviation Sales (In Liters) 140,996 - 140,996 Excise Tax Rate 6,740,087 21,260,087 "1'4.00 /Liter 14,520,000 "1'4.00/Liter Total Excise Tax Paid P26,960,348.00 P85,040,348.00 "1'4.00 /Liter P58,080,000.00 Alleging that the international air carriers to which it sold imported Jet A-1 fuel are exempt from excise taxes under Section 135(a) of NIRC of 1997, petitioner seeks the recovery of excise taxes paid thereon in the amount of P85,040,348.00, as computed above. For the sale of petroleum products to an international air carrier to 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 the case of Philippine-registered air carriers, the latter's proof of authority to operate international flights; 2. Proof that the imported JetA-1 fuel were used or consumed outside the Philippines; and 3. Proof that the imported Jet A-1 fuel sold to international air carriers was stored in a bonded storage tank and had been disposed of in accordance with the rules and regulations. Petitioner complied with the first requirement. Petitioner presented the Certifications 107 issued by the Civil Aviation Authority of the Philippines (CAAP) on September 14, 2020, which confirm the country of registry of each of the international air carriers enumerated therein, subject of the instant claim. With regard to petitioner's international air- carrier customers which are of Philippine registry, namely, Philippine Airlines, Inc. and Cebu Air, Inc., petitioner presented the Certification 108 from the Civil Aeronautics Board (CAB) dated September 7, 2020 which certifies that: a. Philippine Airlines, Inc. has been granted a franchise permit through Presidential Decree No. 1590 from June 11, 1978 to present, and 107 Exhibits "P-48-2" and "P-48-3'", Docket- Vol. III, pp. I083 to 1092. 108 Exhibit "P-51 ",Docket- Vol. III, p. 1209.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------X b. Cebu Air, Inc. has been granted a franchise permit through Republic Act No. 7151 (R.A. 7151), which was approved on August 30, 1991,from the date of effectivity of R.A. 7151 to present. The said airlines are authorized to operate and maintain air transport services in the Philippines and between the Philippines and other countries, and that R.A. 7151 and P.D. 1590 authorized Cebu Air, Inc. and Philippine Airlines, Inc. to operate international flights from the date of effectivity of R.A. 7151 and P.D. 1590 to present, including the year 2018. As to the second requirement, the CAB Certification dated September 7, 2020109 shows that the international air carriers of foreign registry listed therein have been issued with Foreign Air Carrier's Permit (FACP), which authorized them to operate international flights only for a period, covering, but not limited to, the year 2018. Further, the Aviation Service Returns (ASRs)1 10 submitted by petitioner indicated the details of the Jet A-1 fuel deliveries made by petitioner to international air carriers, including the ongm and destination of the international carriers. It can be seen from each of the ASRs that the route of the international air carrier named therein (whether of foreign or Philippine registry) is only between the Philippines and other countries, proving that the sold imported Jet A-1 fuel was used or consumed outside the Philippines. Hence, the second requirement was satisfactorily met. We proceed to the third requirement, i.e., that the imported Jet A-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 their respective Judicial Affidavits, Ms. Carla Angelica T. Peralta, petitioner's former Import and Export Scheduler for Trading and Supply, 111 Mr. Rommel F. Guevarra, petitioner's Terminal Operations Supervisor at Tabangao Depot, 112 and Mr. Matias D. Aquiatan, Jr., petitioner's Operations Manager, 113 explained the process and documentation of the receipts and withdrawals of imported Jet A-1 fuel at petitioner's storage tanks in Tabangao Refinery through the Tabangao Depot or Subic Terminal and its subsequent delivery to JOCASP and CASI for eventual sale to international carriers. 109 !d. 110 Exhibits "P-98.1" to "P-98.1 086", USB. 111 Exhibit "P-59", Docket~ Vol. I, pp. 85 to 103. 112 Exhibit "P-60", Docket~ Vol. I, pp. 163 to 168. 113 Exhibit "P-61 ". Docket~ Vol. I. pp. 172 to 184.

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x It was explained that petitioner maintains two (2) product storage tanks for imported Jet A-1 fuel: one, in its Tabangao Refinery in Batangas for Jet A-1 fuel importations arriving at Batangas port, and two, in its Subic Terminal, for Jet A-1 fuel importations arriving at Subic port. After the imported Jet A-1 fuel is unloaded and stored in product tanks at petitioner's Tabangao Refinery or Subic Terminal, the imported Jet A-1 fuel stored at product tanks is withdrawn from the Tabangao Refinery through the Tabangao Terminal or from Subic Terminal and delivered directly to JOCASP or the CASI facility. Imported Jet A-1 fuels withdrawn from the Tabangao Refinery are delivered to JOCASP or CASI storage facility, while imported Jet A-1 fuel withdrawn from the Subic Terminal are delivered to JOCASP. However, the subject importations in this case were withdrawn from both the Tabangao Refinery and Subic Terminal and transferred only to the JOCASP facility in NAIA. Upon withdrawal from the Tabangao Refinery through the Tabangao Depot in Batangas or the Subic Terminal, the imported Jet A-1 fuel is delivered directly to JOCASP via lorries or tank trucks for sale and delivery to international air carriers. The Jet A-1 fuel stored at the JOCASP covered by the subject importations is eventually sold and delivered to international air carriers. The arrivals of importation and the withdrawals of Jet A-1 fuel in the Tabangao Refinery are recorded and summarized in the ORB, which is jointly signed by an authorized representative of petitioner and the Revenue Officer on Premises (ROOP). The ORB indicates the "receipts" and "removals" of Jet A- 1 fuel for a certain period and the running balance of stored Jet A-1 fuel for that period. It also shows the production of local Jet A-1 fuel for the period. As for the imported Jet A-1 fuel removed from the Tabangao Refinery through the Tabangao Depot, a WC and BDN accompany the Jet A-1 fuel, which indicates the quantity and destination of the deliveries to JOCASP. i

DECISION CTA Case No. 10352 Pilipinas Shell Page 30 of 36 Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x In addition, a Liquidation Report is prepared at the Tabangao Refinery, which summarizes the wes to record withdrawals of imported Jet A-1 fuel. By the time the Jet A-1 fuel is withdrawn from the Tabangao Refinery through the Tabangao Depot, the Jet A-1 fuel will already be excise tax paid. cittimhhmoeevppeooeBrrxreIOttfcdeeiedtdsih.se, eJt"tehSTaJteixaennxAtcoePt-nA1ha-teti1hhdfiwu.es"feuielwm,elwpethtiootecrhtobesavdeaenmrJwoseetittathhtAWiedo-1renwa,wfiiut"nhneTddlaifrxcwraaowaPtmseaasiladtlh,otr"heremaarrtdeeeymfatihnponesvaeiratfdylhuetaoiolstf PwrTeaeictsrehsmid.viOrenadnawlatahsalesrreeotphtmoherreoternefhdirtoaoimnnrdetda,hrteehbSeyaGcapcrSeroitSmvittaiopolcasnknoeiIfrenidmvbeabpnsyoteoradtrayBtoiRDnoeNnptihoanerntt,dhqaeuanaSdGnuttabihttieeyc After Jet A-1 fuel is received m JOeASP, it ts sold to petitioner's air carrier customers. cd1ua isflutyoe,Amli nerDder sicac.eialiyvt ienPdg,r ot hadneudcrte ciMtesiopevtveomefnJetneuttaAlR-ew1pifotuhretdlr,(aDtwhPeaMlvRof)ol urimsdeegleoinvf eeJrreyatt eAtod- adrdeleesclsoiotvirinednWraedytdhiictoeoiannntpeiotmedhftepittthhoiDeoerrtnPeeJeMdiern'RtJs. eAaet-ia1Arrl-cf1iaeurrfeurlrieeewlfreiisctrhruwedsdirttaohtwmod.nrearTfwsr,honetmfhrveotohmwleuiJmtfOhaedceiraAlaniwStdyPatalfhroieesr fidasuiierreelqccpautFulriyrprmiopiepnmeretsdoJdvwOtiihaineteAtahotSsaatpPhnme,ekcteihaoatieelfrirJtzchteeahedtrarAvatie-eid1rhre.icfctuaelreerrlmitiehisrna.detesTpliuthvhemeerspevpdsoetltcouhiameilniJetzeeeotrdfnAJva-ete1ithofAinuc-ela1ell twaphirhreeesccreeoaUnrrtrtrpshieoesentrpocoaduntehsddltieiovoncemagruuyevmtrhooeolfaunrcJmtikeznecteaodAolwlf-re1lJedeepdftrAugeAeevsl-sie1atnrtotifeoaucttneheilvei.pSeateiroorvfficcttahehreerRieidenret,tuleiprrvnenetari(yttAiiooSannRnead),rl \1

DECISION CTA Case No. 10352 Pilipinas Shell Page 31 of 36 Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x cftcauouoirrrrnelnrisien,gunTenmrcsehyccpef,eutoiinrraovremenettdhnooecoupfyunaestxyatassclmniedidsebeeaniwnlttltadeehfxdroeeedrsebnP.tlyhiehvetielpriosepyfatpiloetieinxfoecoJnsifeseeJtrweAtettao-rx1Aee-ts1fhd.ueeefnulPioenfelmottieriitnrniunoasfantoeeteirdroe,ainngiianndnl capPs(IpOpZontyaaeeRtFmvsytsatBi2tiesmcmttens,iihm,oeoIt1iD1eonsnnn21di1srs4etesyihsrrpossWopulsnuRwartupCefmoiyebrindpsnpo,mmto1PgoimIo1nrnairru"tstttidrOt,tenyDees1roitvd1p2nonPf2e0,e3uMatorenavttSftwRisrhmdiuo)nehseep,bnw,oai1ne1iactn12cttoialh2g6ioCfftoniBoBaawPoraitnAAaineerhlldyllSm.re/eiiedRrnnre'Mosbgessna,,msa1lIetv,lnticte1eoar17kosem1orntmxsSipieosracaodp"BeumllumesaDiittsJncdnaieNutadInroetsndriadc,"zrvinAuiPec1oebc1mdriuir9ayeicstcelehiSatnsenohGcAtvgwriescisiSfDtdoissfytCieuuuehdnStneocaGactduthvioiialarinnbctsattnsgg-"ekys, rcctp1eaoa7elxrnt,eriesvti2siueao0Irmnpnn1staep8dirthod'oistifoocsonutPnoNmsohtuJaouielelpvtnistpeptcimsplAlde.aieb-nmi1meeterhfnueoo2tef2arPll,Phfs8i2oorl50erilep,dp10ipo8g4air,nn0nt,e,wd3sr1a4e2df4sg8oei.rlpt0sihtvrt0rhoeeyeprreeeIpdfCproelrPrytreoAisosteidhunnsepttStiepiarnerotpngerutadteeestmixedotcbhniboesaayerrlt drddcasseiaeourusleltrppaaiervtlpp.eleueooocdHrnrwrtytrntoAiieetwennnhdcasgugeec,dsvmoradteerdbohebdrtotlfo,eieaencrri.fgu,lieouelnmlylspdel,hToevotaiwnhhanppstneuiemsnftst,ogi,aecltdlamnit6oeothrt0hwteonea0enfseuiu:,ulrn0sCl'Cmst0oos0bouceuuelxfrlrcratiat,htiPmemfp2criaiesor,nn4sodudaJ0dlstevd0ueitoo,xct0lnncAthu0io-amds01tete.oe0sf,fatc0tusharedcixeplespeehstrdpiBtttoeoiiaatuDnlniiyialnov,Nmdtneiasroeetnibh1rnne2d'eest,ss 114 Exhibits "P-71" to "P-73", USB. " 115 Exhibits "P-99.1" to "P-99.380, USB. 116 Exhibits "P-95.1" to "P-95.4", USB. 117 Exhibits "P-98.1" to "P-98.1 086", USB. 118 Exhibits "P-100.1" to "P-I 00.147", USB. 119 Exhibits "P-101.1" to "P-101.532", USB. 120 Exhibit "P-91", USB. 121 Exhibit "P-I 02.1" to "P-I 02.363", USB. 122 Exhihits "P-96. I .I" to "P-96.147.1". {]SR. 123 Exhibits "P-97.1" to "P-97.30", USB. 124 Exhibit "P-107". 125 As indicated in the Reconciliation of Delivery Notes and Aviation Service Returns for the period September 17, 2018 to November 22, 2018; Exhibits "P-105.1" to "P-105.4", attached to Exhibit "P-66".

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Exhibit No. Shipment No. Delivered To Volume in Liters "P-101.53" 31,220 1520259132 Qantas Airways Ltd 8 780 40,000 "P-101.58" 1520259140 Qantas Airways Ltd 40,000 "P-101.177" 1520260168 Phili!Jpine Airlines Inc. 2,832 "P-101.242" 1520260364 Philippine Airlines Inc. 13,949 Cebu Air Inc. 10,943 12 276 Cebu Air Inc. 4,885 2,438 China Eastern Airlines 7,725 6,201 "P-10 1.243" 1520260365 Air China Ltd. 6,286 Air China Ltd. 12,465 34,815 China Airlines Ltd. 5,185 8,615 China Airlines Ltd. 15,810 6,179 China Airlines Ltd. 9,396 18,099 China Southern Airlines 7,567 14,334 "P-101.319" 1520260995 Korean Airlines Co. Ltd. 9,029 Philippine Airlines 30,971 802 "P-1 0 1.342" 1520261121 Philippine Airlines 15,293 Cebu Air inc. 14,250 9 655 Air Niugini Ltd. 8,468 19,873 Cebu Air inc. 7,166 4,493 "P-1 0 I. 369" 1520261318 Federal Express 15,893 Philippine Airlines 6,229 17,878 China Eastern Airlines 14,823 16,501 "P-1 0 1.388" 1520261511 Philippine Airlines 8,676 Philippine Airlines 4,901 "P-101.442" 1520261894 Philippine Airlines 31,141 Cebu Air Inc. 3,958 4,134 Cebu Air Inc. 13,123 Cebu Air Inc. 11,734 11,009 "P-10 1.454" 1520261892 Philippine Airlines 600,000 Korean Airlines Co. I' 4.00 1'2,400,000.00 Air Niugini Cebu Air Inc. "P-101.473" 1520262007 China Airlines Ltd. Korean Airlines Co. China Southern Airlines "P-10 1.474" 1520262118 Korean Airlines Co. Korean Airlines Co. Asiana Airlines Inc. "P-1 01.475" 1520262117 Asiana Airlines Inc. Asiana Airlines Inc. Philippine Airlines "P-1 0 1.498" 1520264991 Phili!Jpine Airlines Federal Express Corp. Cebu Air Inc. Cebu Air Inc. Cebu Air Inc. Total Liters Rate Per Liter Disallowed Excise Tax

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x 2sdo0elu1irv8ce,Me1r2di6oesrafersotoovsmehrpo,wewttihinttehiiodnCnroaethwur'ersatlAsniTnodRtteeaIrGdtneatdfhotiraoettnahtrahellieeFariiinrrtsshttcaIaamnnrptrSiocerelrtapaitctmeiuomsinntb.ocemlrued2re4sd,, fAAJAiJtaSumheeTT-nce1ettRRphlAAoesIfIAiGGuTendr-A-1tetRdu.1atlssillItfhecGeIiiuffsraoomtueetftncwelaoheesolnfsrtsenornictfTorttaesihhamorxretieanitefmdctidntticuaaphhsioltmnbmaeoeeetgbyrsotTottlboaaauepuaepxntnebbnaieedroteatrwtsmtninoSoiitiamcgfiuitfmsnohlaepeepsnddoxapx,ioercodlcdRtraryineiht'suw,seseeeetffModniritAeunoftaisaosetsmTb.xsxrryRdCesimyedtuusIsahGoepeberterretoljottfaetShBhoibcItAubeerImietRberonitpCepminogpoctoBaeeoparneiTrlWtidoxi.wdecrcw.rtaaitFiphmtesiTnohetedeShi.drrdrniitoeJPrntoaaaaoeuecEdxlxwnttre,,xaaa.ApfJtttl1btthhho2th-eela17reeeeetr,t flStcTdcIoiamloeetalaxellvppbioieremtvoaswserern,emCstrig:odaniwoeb1aft2niesote8obhrsJrneytieeRodtwsea2eotirfm4ahnAuiis,nnetro-eecg1Surre2Feynndt0fpiath.ru1tttsoaehei8tCotlfmaPnotIbtc5amsnheoilh,spes4rveooa0eq2ueirdr5ur4tlaeaa,de,rd5cttlni2e6iaote0r4lbbnryr1oe.yi,08fetu0hpr,Wtspdeahar,iotnCenseinastlysiaultoAlthwbowendTejwdieaehRtrtehcistI'ecdostGdadh,ircotdahlffwaetdoehiadtreamhrea1tlleatei,tfe3eihdcrlir5oeelneia1mdssxit,Fmht3cantiia9ahernson1ssdeettt Withdrawal l~o~~u:;. Deli~"' Note Dote """!bit Date ~:.-;~ Voi~';;;,tn a-:_~:,: In 9/29/2018 """!bit 9/30/2018 9/14/2018 2018447773 915,866 P-99.1 1/ !0/2018 5330180 Cebu 2/10/2018 5331644 Cebu 2/10/2018 5331646 Cebu 40,000 P-101.147 875,866 5333678 Cebu 40,000 P-101.!48 8l5,866 ' 5333679 Cebu 4Q,OOO _P-10).141_ 795.866 " 5335691 Cebu 40,000 nol.!50 755,866 5339083 Cebu 40,000 P-!01.!51 715,866 "''"""18 5340189 C_<l>u 40,000 P-!01.!51 67_>,866_ 7nn,7018 5340190 Cebu 40,000 P-101.!51 635.866 RnM?OIR 5342198 Cebu 40.000 p. !01.!54 595.866 5342815 Cebu 40.000 P-101.155 555,866 9/10/2018 5344218 Cebu 40.000 P- !0 J.J56 515,866 !0/10/2018 5346521 Cebu 40,000 P-101.!57 475,866 40,000 no I.!58 435,866 40,000 P-101159 395,866 126 Exhibit "P-13", Docket- Vol. Ill, p. 959. 127 Exhibit "P-59" (Q&A No. 34), Docket- Vol. I, 128 Exhibit "P-104.1", attached to Exhibit "'P-66". p. 93.

DECISION CTA Case No. 10352 Pilipinas Shell Page 34 of 36 Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x Total (in Liter.) 1,395,866 Leu: Not covered by the (44,4715) claim as 1,351,391 hiehllchted in the above table 4.00 PS,40S,564.00 Net total (In litera) Tu: Rate Disallowed Excise Tax wiSeNnseeottprevaetrbeenmelGmairsbtirbvihoeoeenrnrnteaho2ltau20htas01ei.18rt8fhcoefaroerargernixoediJcrniessgte,sfruApotbaem-s1xteietqSsifuoeunepietnetlertpmlyiwambiadepssroofrtalrotdobemldNetooftSvroeoempmtsatubexfem-fMreibcx2aieeye0rmn1t8pttlooy,t tSheectrieoAdnlulsct2oe0ldd4,aampneotdiut2ino2tn9oefroPfi7st7he,en0t5Nit6IlR,e8Cd8t4oo.f0t1h09,e9cr7oe,mfaupsnudatmeodrencardseefddoi,ltlobuwunstd:einr

DECISION CTA Case No. 10352 Pilipinas Shell Page 35 of 36 Petroleum Corporation vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------X SafrpRrfSueoeneeeEeprspdtpliFprttRteieoUiesmsomeWonmNenvpldbnDdiHbeoeeetreriEnwrtonrtotRatgriotCf1EniiiI7onltoNFSeh,ntmdOSoeet2dUrvmhRbn0eueeEEiyra2mrsr,ti0AsoinbPiorpnegoieiTnrerlsndeitaoA2pheumlPui0XrecnsAia1eosapliCR8ydfesre.sTRIrpnciSIEocaaatAhedoDirmeLdrrnIlfniLolsTreeaoiYurPxdlmCsnceeRGtEirtdMsereRRueovdaoTrAle,tyiefnIaNnutFtuxghTomIePeeCESst7ihDACsie7oen.pToO,nst2rEApteRp3aiemcoitD4nrcnsrib,tEoao7eJfrtRdP8adreiovEe4it2fnnotD.r0iAg0rto1ilo-0motoy18on,n,f SO ORDERED. kuttiJAnt, !CONCUR: LANEE S. CUI-DAVID Associate Justice ...... ATTESTATION wreraictehreIodfatithnteescotoptnhisnauitoltntahtoeiof cnthoebnecCflouorsueirott'nshseDiincvaitsshieoenwa.baosvaesDsiegcniesdiontowtehree ...... JEANMA Special 2nd Division Acting Chairperson

DECISION CTA Case No. 10352 Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------x CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Special 2nd Division Acting 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's Division. ~. ~de..-... _.,., ' - - - MA. BELEN M. RINGPIS-LIBAN Acting Presiding Justice