PETRON CORPORATION v. COMMISSIONER OF INTERNAL REVENUE (consolidated with CTA Case No. 9993)

CTA Form No. K(For DCC) 1111111111111111111111 111111111111111111111111111111111111111111111 1111111111111 18-000540-0 I 06 REPUBLIC OF THE PHlLIPPINES COURT OF TAX APPEALS QUEZON C ITY SPECIAL FIRST DIVISION CTA CASE NOS. 9993 & I 0015 PETRON CORPORATION, Petitioner, -versus- NOTICE OF RESOLUTION COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFI CE OF TI-lE SO LI CITOR GE ' ERi\L 134 Amorsolo Street, Lcgazpi Village Makati City ATTY. AYESHA HANIA B. GU ILING-MATANOG ATTY. KRI STANNI CO S. ABAO ATTY. MCLAIR D. GARCIA Bureau of Interna l Revenue Room 703, Litiga tion Division. l31R National Office Bui lding Sen. Mi riam P. Defe nsor-Santiago Avenue Di liman, Quezon C ity OU-BALADAO & ASSOCI ATES 20th Floor, Chatham House, Ru fino cor. Valero Streets Salcedo Village. Makati City GREETINGS: You are hereby notified by these presents that on April 22, 2024, a Resolution was rendered in the abov e-entitled case, copy of w hi ch is attached hereto. Quezon C ity, Philippines, April 23, 2024. Page I of 1

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION PETRON CORPORATION, CTA Case Nos. 9993 & 10015 Petitioner, Members: - versus - DEL ROSARIO, PJ, Chairperson, MANAHAN, and REYES-FAJARDO, 11 COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. x-- -------------------------------- ~~w~~ REYES-FAJARDO, L.: For the Court's resolution is the Commissioner of Internal Revenue (CIR)'s Motion for Reconsideration 1 of the Decision promulgated on December 5, 2023, where the Court granted a partial refund in favor of Petron Corporation amounting to P459,958,622.12 representing erroneously paid excise taxes on petroleum products sold to international carriers and tax-exempt entities between January 1, 2017 to December 31, 2017. The CIR filed the instant Motion for Reconsideration, insisting that Petron Corporation is not entitled to the refund or credit sought because, in fact, there was no erroneous or illegal collection of excise taxes.2 Its main argument is that the exemption under Section 135 of the National Internal Revenue Code of 1997, as amended (Tax Code), benefits the buyer of the fuel; it cannot be invoked by the sellers thereof. The excise tax paid on the fuel upon importation/manufacture cannot be passed on by the seller to the buyer and included in the purchase price. This tax is the importer/manufacturer's direct liability. Thus, Petron Corporation's excise taxes payments on its imported/ manufactured Jet A-1 fuel and unleaded gasoline were not erroneous or illegal.3 1 Docket - Vol. 5, pp. 3266-3274. 2 Docket- Vol. 5, p. 3267. 3 Docket- Vol. 5, p. 3269-3270.

RESOLUTION CTA Case Nos. 9993 & 10015 In its Comment/ Opposition to the instant motion, Petron Corporation points out that the CIR's arguments are a mere rehash of those raised previously in its Answers. 4 It emphasizes that the exemption from excise tax under Section 135 is extended in favor of importers/ manufacturers of petroleum products if the same has been sold to international carriers and tax-exempt entities.s On February 14, 2024, the CIR's Motion for Reconsideration, with Petron Corporation's Comment/ Opposition, was submitted for resolution. After a careful review of the records of the present case, the Court finds no compelling reason to reverse or modify the Assailed Decision. The instant motion raises the same arguments already passed upon and discussed at length by the Court. The CIR has not adduced any substantial argument to warrant reconsideration or modification of the Assailed Decision.6 It is already settled that if the issues raised in the motion for reconsideration are mere reiterations of those which have already been passed upon and, in fact, adjudged as unmeritorious by the Court, these cannot be regarded as substantial and no longer require another full-blown discussion. 7 Any further discourse will only be unnecessary and repetitive.s To be sure, there is no merit in the CIR's argument that Petron Corporation cannot benefit from the tax exemption under Section 135 of the Tax Code. It is already settled that an importer or manufacturer has standing as the claimant of the excise tax exemption under Section 135. We repeat tha t, in the context of P etron C orporation's manufacture of petroleum products sold to various entities, the tax liability or the fiscal responsibility for the payment of excise tax remains with Petron Corporation, notwithstanding its capacity to transfer the economic weight or the tax burden, to its consumers. Pertaining to Section 135 of the Tax Code, in instances w here petroleum products are vended to tax-exempt entities, it is imperative that the benefit of such exemption aligns with the party actually bearing the tax liability. Consequently, the exemption should 4 Docke t - Vol. 5, p . _. s Docket- Vol. 5, p . _. 6 Shangri-la International Hotel Management, Ltd. v. Developers Group of Companies, Inc., G.R. No. 159938 (Resolution), January 22, 2007, 541 PHIL 138-143. 7 Roque, Jr. v . Commission on Elections, G.R. No. 188456 (Resolution), February 10, 2010, 626 PHIL 75-92. 8 Social Justice Society (SJS) Officers, et al. v. Lim, G.R Nos. 187836 & 187916, March 10,2015.

RESOLUTION CTA Case Nos. 9993 & 10015 Page 3 o�3 appropriately correspond to Petron Corporation, the entity shouldering the fiscal responsibility to settle the tax. When it is shown that the tax-paid petroleum products have become tax-exempt within the context of Section 135 of the Tax Code, the excise taxes which were previously paid thereon shall then be regarded as "erroneously or illegally collected," and, thus, subject to refund pursuant to Section 229 of the Tax Code. 9 WHEREFORE, in light of the foregoing considerations, the Commissioner of Internal Revenue's Motion for Reconsideration of the Decision promulgated on December 5, 2023 is DENIED for lack of merit. SO ORDERED. ~ ~ r. ~ -f~(�t~ MARIAN I~ F. RE4ES-FAJARDO Associate Justice WE CONCUR: .ROMAN G. DEL OSARIO Presiding Justice (Inhibited) CATHERINE T. MANAHAN Associate Justice 9 See Pilipinas Shell Petroleum Corp. v . Commissioner of Internal Revenue, G.R. No. 211303, June 15, 2021.