PILIPINAS SHELL PETROLEUM CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

CTA Fonn No.8 llllllllllllllll llllllllllllllllllllllllllllll lll llllllllllllllll 22-00033 1-0069 REPUBLIC OF THE PHILIPPINES COURT OFTAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA CASE NO. 10914 PILIPINAS SHELL PETROLEUM, NOTICE OF DECISION Petitioner, -versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legazpi Village Makati City ATTY. SYLVIA R. ALMA JOSE ATTY. LARA NICOLET. GONZALES Bureau of lntemal Revenue Room 703, Litigation Division, B!R National Office Building Sen. Miriam P. Defensor-Sant iago Avenue Diliman, Quezon City LAYUG CELICIOUS-SY & VILLAPANDO Unit 503, 5th Floor, The Linden Suites 37 San Miguel Avenue, Ortigas Center 1600 Pasig City GREETINGS: You are hereby notified by these presents that on January 19, 2026, a D ecision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, January 21, 2026. AttyE.xMecaurtiiaveJ~ ~~~~u~thIaInI -Te

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION PILIPINAS SHELL CTA Case No. 10914 PETROLEUM Members: CORPORATION, BACORRO-VILLENA, Acting Chairperson, and Petitioner, CUI-DAVID,fl. -versus - COMMISSIONER OF INTERNAL REVENUE, Promulgated: u/ ;1J!d JAN 19 2026 ,�1-�'ft>rt! Respondent. X--------- - ---------------- -- ---�~ ----------- X DECISION BACORRO-VILLENA, J.: Before the Court is a Petition for Review1 filed by petitioner Pilipinas Shell Petroleum Corporation (petitioner/PSPC) pursuant to Section 3(a)', Rule 8, in relation to Section 3(a)(2)3, Rule 4, of thet 1 Filed on 12 July 2022, Division Docket, pp. 6-414, with annexes. SEC. 3. Who may appeal; period to file petition. - (a) A party adversely affected by a decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of internal revenue taxes, or by a decision or ruling of th e Commissioner o f Customs, the Secretary of Finance, the Secretary of T rade and Industry, the Secretary of Agriculture, o r a Regiona l Trial Court in the exerc ise of its original jurisdiction may appeal to the Court by petition for review tiled w ithin thirty days after receipt of a copy of such dec isio n or ruling, o r expiration of the period fixed by law for the Com missio ner of Internal Revenue to act on the disputed assessments. In case of inaction of the Commissioner of Internal Revenue on claims for refund of internal revenue taxes erroneously o r illegally collected, the taxpayer must file a petition for review w ithin the two-year period prescribed by law from payment or collection of the taxes. (Emphasis and underscoring supplied) SEC. 3. Cases within the jurisdiction of the Court in Division. - The Court in Division sha ll exercise: (a) Exc lusive original over or appellate jurisdiction to rev iew by appeal the following: (2) Inaction by the Commissioner of Internal Revenue in cases invo lv ing disputed assessmen ts, refunds of internal revenue taxes, fees or other charges, pena lties in relation thereto, or other matters arising und er the National Internal Revenue Code or other laws admin istered by the Bureau of Inte rna l Revenue, where the National Internal Revenue Code or

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - ------ - - - - -- - -- - - ---- - - - - - - - - --- --- - --- - ----- - - --- - - - -X Revised Rules of the Court of Tax Appeals4 (RRCTA). It seeks a refund in the aggregate amount of P18,9o8a7o.oo, which allegedly represents excise taxes paid on petroleum products sold to Shell Philippines Exploration, B.V. (SPEX), an entity exempt from excise tax, covering the period from July to November 202o.s PARTIES TO THE CASE Petitioner is a corporation organized and existing under the laws of the Philippines with office address at 41st Floor, The Finance Center, 26th Street corner 9th Avenue, Bonifacio Global City, Brgy. Fort Bonifacio, Taguig City, Metro Manila, 1635.6 It is engaged, among others, in the business of manufacturing, processing, treating and refining petroleum for the purpose of producing marketable products and by-products and the subsequent sale thereof.7 Through its own refinery in Tabangao, Batangas (the "Tabangao Refinery"), petitioner generally produces, and sometimes imports, various petroleum products, including automotive diesel oil (ADO), which petitioner sells and delivers to different customers, such as SPEX. Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue (respondent/CIR), who is tasked t to assess and collect all national internal revenue taxes, fees, charges, and enforce all forfeitures, penalties, and fines connected therewith. He or she holds office at the Bureau of Internal Revenue (BIR) other applicable law provides a specific period for action: Provided, that in case of disputed assessments, the inaction of the Commissioner of Internal Revenue within the one hundred eighty day-period under Section 228 of the National Internal Revenue Code shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the Court and does not necessarily constitute a formal decision of the Commissioner of Internal Revenue on the tax case; Provided, further, that should the taxpayer opt to await the final decision of the Commissioner of Internal Revenue on the disputed assessments beyond the one hundred eighty day-period abovementioned. the taxpayer may appeal such final decision to the Court under Section 3(a), Rule 8 of these Rules; and Provided, still further, that in the case of claims for refund of taxes erroneously or illegally collected, the taxpayer must file a petition for review with the Court prior to the expiration of the two-year period under Section 229 of the National Internal Revenue Code[.] (Emphasis and underscoring supplied) A.M. No. 05-11-07-CTA dated 22 November 2005. Summary of the Case, Pre-Trial Order dated May 26, 2023, Division Docket, Volume I, p. 523. See Certificate of Filing of Amended Articles of Incorporation (AOI) dated 25 January 2019 (with attached Amended AOI), Exhibit "P-23'', id., Volume II, pp. l 077-1091. Paragraph 4, Statement of Facts, Petition for Review, supra at note 1, p. 7.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X � � � � � � � � � - - � � � � � � � � � � � � � - � � � � � � - � � � � � � - -- - � � � -- � � � � ���-X National Office Building, Agham Road (now, Senator Miriam P. Defensor-Santiago Avenue), Diliman, Quezon City.8 FACTS OF THE CASE From July to November 2020, petitioner imported ADO through its Tabangao Refinery, paying the corresponding excise taxes therefor, as follows: Vessel Single SAD Date Volume Amount of Payment Date Administrative Paid Excise Tax Mt. Silver Ebalina 10 July zozo Mt. CSC Amethyst Document 21 July zozo 48�353.795 1"290,122,770.00 13 July 2020 Mt. Oriental Gold (SAD) No. 03 August 2020 48,428-434 24 July zozo Mt. Songa Diamond u August 2020 48,521,)25 zgo,s7o,6o4.oo 04 August zozo Mt. Everhard Schulte c 1015182.9 19 August zozo 291,127,950.00 12 August :wzo Mt. Silver Hannah 26 August zozo I6,{IJ,202 98-479,212.00 zo August zozo Mt. Jason c 1015645'0 17 September zozo g6,g6s,ozz.oo 27 August zozo Mt. CSC Peace 29 September 2020 16,160,837 293.736,852.00 18 September zozo Mt. Nave Atria C 1016o8t1 13 October 2020 48,9 56,142 279,288,174�00 30 September 2020 Mt. BWYangtze 04 November 2020 46�548,029 t88,s6g,2oo.oo 14 October 2020 Mt. MR Leo c 101655112 13 November 2020 297,582,348.oo o6 November 2020 c 101695113 J1,428,zoo 16 November 2020 c 1017284'4 304,082,o88.oo c 1018385'5 49,597,o58 160,716, 738.oo c 10188gg'6 5o,68o,348 c 101960417 26,786,123 c 1020)2418 c 102098919 Petitioner alleges that a portion of imported and excise tax-paid ADO was subsequently sold and delivered to SPEX during the period t from July to November 2020. Petitioner withdrew said ADO from the Tabangao Re_finery and delivered it to SPEX pursuant to these transactions. Par. 1, 1. Stipulation of Facts. Joint Stipulation of Facts and Issues (JSFI). Division Docket. Volume I. p. 507. Exhibit "P-I-3", id .� Volume II, p. 841. 10 Exhibit "P-2-3", id .� p. 853. II Exhibit "P-3-3". id .� p. 866. " Exhibit "P-4-3". id .� p. 878. IJ Exhibit "P-5-3'', id., p. 890. 14 Exhibit "P-6-3", id., p. 902. 15 Exhibit "P-7-3", id .� p. 9I2. 16 Exhibit "P-8-3", id .� p. 924. Exhibit "P-9-3", id .� p. 936. 18 Exhibit "P-I0-3", id., p. 948. 19 Exhibit "P-II-3", id., p. 960.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X Since SPEX enjoys exemption from excise tax on purchases of ADO as a petroleum service contractor of the government under Service Contract No. 3820 ("SC 38"), petitioner further alleges that sales and deliveries of ADO to SPEX excluded excise taxes and were made net of such taxes. Petitioner accordingly received payment from SPEX for ADO sold net of excise taxes. Petitioner nonetheless paid excise taxes on ADO sold to SPEX. Thus, on o8 July 2021, petitiOner filed a letter-application for refund or tax credit dated 27 May 202121, together with the corresponding Application for Tax Credit/Refund (BIR Form No. 1914)22 (administrative claim), with the BIR's Excise Large Taxpayers Audit Division II (ELTAD II). Petitioner sought the recovery of excise taxes allegedly paid from July to November 2020 on ADO sold to SPEX, in the aggregate amount of'P18,9o8,37o.oo, computed as follows: Period Volume in Excise Tax Liters Paid July 2020 411,600 l"2,469,6oo.oo August 2020 596,232 September 2020 646,824 3�577.392.00 October 2020 411,752 3,88o,944�oo November 2020 2,470,512.00 1,084,987 6,509,922.00 TOTAL 3�151>395 PI8,908,J70.00 PROCEEDINGS BEFORE THE COURT Alleging respondent's inaction on its claim for refund or issuance of a tax credit certificate (TCC), on 12 July 2022, petitioner filed its Petition for Review23, praying, among others, that judgment be rendered declaring it entitled to a refund of, or issuance of a TCC for, t the aggregate amount of P18,9o8,370.oo. The amount represents the . excise taxes that petitioner paid on ADO sold to a tax-exempt entity, 20 Exhibits "P-17'' (Original Computer Printout) and "P-17-1" (Certified True Copy), id., pp. 978- 998 and 999-1064, respectively. Exhibit "P-22", id., Volume II, pp. 1074-1075. 22 Exhibit "P-22-1", id., p. 1076. Supra at note I.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X --- - - ---- - - -- - ---- - - ---- - - - - - --- -- ---- -- - - - - ---- ----- - -X i.e., SPEX, from July to November 2020. The case was docketed as CTA Case No. 10914 and raffled to the Second Division.24 On 17 August 2022, the Second Division issued Summons25 to respondent directing him or her to submit an Answer within 30 days from service. Respondent received the said Summons on 25 August 2022. 26 After the Second Division granted an extension of timez7, respondent filed his or her Answer.28 There, respondent cited the following special and affirmative defenses: (1) petitioner is not entitled to the refund of the subject excise taxes paid from July to November 2020 on its imported and locally-produced ADO that were allegedly subsequently sold and delivered to a tax-exempt entity; and (2) a claim for refund of excise taxes paid is authorized only under Section 13o(D)29 of the National Internal Revenue Code (NIRC) of 1997, as amended. On 27 October 2022, the Second Division issued a Notice of Pre-Trial Conference3�, setting the Pre-Trial Conference on 09 March 2023. Accordingly, on o6 March 2023, petitioner filed its Pre-Trial Briefl', while respondent filed his or her Pre-Trial Briefl2 on 09 March 2023. Meanwhile, on 27 January 2023, respondent transmitted to the Second Division the present case's BIR Records, consisting of 392 pagest 24 The Second Division is composed of Associate Justice Erlinda P. Uy (Ret.), as Chairperson, and Associate Justice Jean Marie A. Bacorro-Villena and Associate Justice Lanee S. Cui-David, as Members. Division Docket, Volume I, p. 417. See Summons dated 17 August 2022, id. 27 See Order dated 29 September 2022, id., p. 424. Filed on 20 October 2022, id., pp. 425-436. SEC. 130. Filing ofReturn and Payment ofExcise Tax on Domestic Products.- (D) Credit for Excise Tax on Goods Actual/y Exported. - When goods locally produced or manufactured are removed and actually exported without returning to the Philippines, whether so exported in their original state or as ingredients or parts of any manufactured goods or products, any excise tax paid thereon shall be credited or refunded upon submission of the proof of actual exportation and upon receipt of the corresponding foreign exchange payment Provided, That the excise tax on mineral products, except coal and coke, imposed under Section 151 shall not be creditable or refundable even if the mineral products are actually exported. (Emphasis supplied) 30 Division Docket, Volume I, pp. 438-439. 31 Id., pp. 445-457. 32 Id., pp. 458-461.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X ------- - - - --- - --- - ---- - - - - - - - - - - - - -- - -------- - - - --- - - - -X in one (1) folder.33 The Second Division noted the same in the Minute Resolution dated 30 January 2023.34 At the scheduled Pre-Trial Conference on 09 March 2023, the Second Division granted the parties a thirty (3o)-day period to file their Joint Stipulation of Facts and Issues (JSFI).3s Within the extended period granted by the Second Division36, on 20 April 2023, the parties filed their JSFIY On 11 April 2023, petitiOner filed a "Motion to Avail of the Provisions of Section 5, Rule 12 of the [RRCTA]"38 (Motion for Commissioning), requesting the appointment of Hazel D. Pangandian-Tabamo (Pangandian-Tabamo) of Roxas Cruz Tagle and Co., as the Independent Certified Public Accountant (ICPA). In the Resolution dated 11 May 202339, the Second Division approved the parties' JSFI, declared the pre-trial terminated, and set the possible commissioning of petitioner's ICPA and the initial presentation of petitioner's evidence on 11 July 2023 and 27 July 2023, respectively. Subsequently, on 26 May 2023, the Second Division issued a Pre-Trial Order4�, again confirming its approval of the JSFI and formally declaring the pre-trial proceedings terminated. Subsequently, in view of the reorganization of the three (3) Divisions of the Court effective 29 May 20234\ the present case was transferred to the First Division.42 oft In the trial that ensued thereafter, petitioner presented its _ testimonial and documentary evidence. It offered the testimonies )) See Compliance dated 27 January 2023, id., pp. 440-442. 34 ld., p. 444. 35 See Minutes of the Hearing and Order, both dated 09 March 2023, id., pp. 463 and 464-465, respectively. 36 See Resolution dated 20 April 2023, id., p. 506. J7 !d., pp. 507-519. 38 !d., pp. 472-484, with annexes. 39 ld., p. 521. 40 ld., pp. 523-529. 41 See Notice dated 29 May 2023, id., p. 530. The First Division is composed of Presiding Justice Roman G. Del Rosario (Ret.), as Chairperson, and Associate Justice Jean Marie A. Bacorro-Villena and Associate Justice Lanee S. Cui-David, as Members.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - ---- - -- - - - -- - - ----- - - - - - - - - - - - - -- - - - - - - - - - - - - --X the following witnesses: (1) Anna Beatriz M. Verge! DeDios (DeDios), petitioner's Import/Additives Scheduler; (2) Alfonso Paolo F. DelaCruz (Dela Cruz), petitioner's Supply Scheduler; (3) Berenice Angelique L. Flores (Flores) petitioner's Senior Tax Adviser; (4) Atty. Farida Nimfa G. Dimailig (Atty. Dimailig) petitioner's Country Tax Manager; and (s) ICPA Pangandian-Tabamo. During the os September 2023 hearing, petitioner presented the testimonies of its witnesses, DeDios and Dela Cruz.43 De Dios' testimony was offered to prove the following: (1) the process and document flow in connection with petitioner's importation of ADO from July to November 2020, the payment of taxes thereon, the withdrawal of such imported ADO from petitioner's Tabangao Refinery, and the sale and delivery thereof to various customers, including SPEX; (2) the circumstances relating to petitioner's importation of ADO for the period from July to November 2020; (3) payment of the corresponding customs duties, excise taxes and fees on said importations and withdrawals of ADO; (4) correlation between the arrival of ADO importations during period from July to November 2020 and the withdrawals or removals of ADO sold and delivered to SPEX during the same period; and (s) that imported ADO sold and delivered to SPEX during the period from July to November 2020 originated from importations subject of the instant refund claim. 44 On cross-examination, De Dios noted that petroleum products stored in the product tanks at petitioner's Tabangao Refinery are mixed together and there is no specific designation for each importation.45 t Petitioner did not conduct any redirect examination.46 43 See Minutes of the Hearing and Order, both dated 05 September 2023, Division Docket, Volume II, pp. 586-A to 586-E and 586-G to 586-J. See Judicial Affidavit of Anna Beatriz Vergel de Dios dated 09 July 2022, Exhibit "P-25'', id., Volume I, pp. 130-296, with attached exhibits. 45 TSN dated 05 September 2023, pp. 22-23. 46 Id., p. 23.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X Petitioner's next witness, Dela Cruz, testified to establish the following: (1) process and documentation governing withdrawals of ADO from petitioner's Tabangao Refinery and the subsequent sale and delivery thereof to SPEX; and (2) that ADO imported through and withdrawn from the Tabangao Refinery during the period from July to November 2020 was assessed excise taxes that petitioner paid and that ADO subsequently sold and delivered to SPEX originated from imported petroleum products subject of the instant refund claim.47 On cross-examination, Dela Cruz confirmed that once petroleum products are stored in tanks, Coco Methyl Ester (CME) is thereafter added. However, when asked how he informed the Bureau of Customs (BOC) of specific petroleum products withdrawn when individual importations become commingled with other importations, he stated that he did not know.48 Petitioner did not conduct any redirect examination.49 In another hearing held on 14 September 2023, petitioner presented the testimonies of its witnesses, Flores and Atty. Dimailig.so Flores testified to prove the following: (1) petitioner's general procedure and flow of documents on the importation and withdrawals of petroleum products, particularly ADO, for sale and delivery to various customers, including SPEX, as well as the payment of excise taxes thereon; (2) its general procedure and the flow of documents on its claim for refund or tax credit of excise taxes paid on the sale and delivery of ADO to tax-exempt entities like SPEX; (3) correlation between the withdrawals or removals of ADO imported for the period from July to November 2020 through petitioner's Tabangao Refinery and the sale and delivery thereof to SPEX within the same period; (4) ADO sold and delivered to SPEX from July to November 2020 originated from imported ADO on which taxes were paid during the same period; (s) prices of ADO billed to tax-exempt entities like SPEX _ are net of excise taxes; and (6) filing with the BIR, through the ELTADt 47 See Judicial Affidavit of Alfonso Paolo F. Dela Cruz dated 12 April 2023, Exhibit "P-26", Division Docket, Volume I, pp. 494-504, with attached exhibits. 48 TSN dated 05 September 2023, pp. 27-28. Id., p. 28. 50 Minutes of the Hearing and Order, both dated 14 September 2023, Division Docket, Volume II, pp. 732-735 and 736-738, respectively.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X-- - - - -- - - - - --- ---- - ----- - - - - - -- - -- --- - --- - - - ---- ---- - - -X II, on o8 July 2021, of the administrative claim for refund or tax credit of excise taxes paid on ADO imported during the period from July to November 2020 and sold and delivered to SPEX during the same periodY Petitioner did not conduct any cross-examinationY As for Atty. Dimailig, she testified to the following: (1) petitioner is entitled to the instant claim for refund or tax credit of excise taxes paid on the ADO's importations and withdrawals for the period from July to November 2020, which ADO was subsequently sold to SPEX during the same period; and (2) the sale of ADO to SPEX for use in its petroleum operations in the Philippines is exempt from excise tax pursuant to Presidential Decree (PD) No. 8753, as amended, in relation to Section 13554 of the NIRC of 1997, as amended.55 Petitioner did not conduct any cross-examination.56 On 20 October 2023, the First Division received Pangandian-Tabamo's Report57 of even date, along with a 51 See Judicial Affidavit of Berenice Angelique L. Flores dated 09 July 2022, Exhibit "P-27", id., Volume I, pp. 308-366, with attached exhibits; Supplemental Judicial Affidavit of Berenice Angelique L. Flores dated 08 September 2023, Exhibit "P-27-2", id., Volume II, pp. 591-661, with attached exhibit. TSN dated 14 September 2023, p. 11. 53 TilE OIL EXPLORATION AND DEVELOPMENT ACT OF 1972. 54 SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are 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 use or consumption: Provided, however, 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; and (c) Entities which are by law exempt from direct and indirect taxes. (Emphasis supplied) 55 See Judicial Affidavit of Farida Nimfa G. Dimailig dated 12 July 2022, Exhibit "P-28", Division Docket, Volume I, pp. 367-414, with attached exhibits; Supplemental Judicial Affidavit of Farida Nimfa G. Dimailig dated 08 September 2023, Exhibit "P-28-2", Division Docket, Volume II, pp. 662-731, with attached exhibit. TSN dated 14 September 2023, p. 17. 57 Exhibit "P-67", Division Docket, Volume II, pp. 740-776. 58 Exhibit "P-67-2".

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - ---- -- - - - -- - - ---- - - - - - - - - - - - - - ---- - - - - - - - - - - - -X containing related exhibits and annexes. The First Division noted this submission in a Minute Resolution dated 27 October 2023.59 On o8 November 2023, petitioner presented the testimony of its last witness, ICPA Pangandian-Tabamo.60 She attested to the following: (1) performance of her functions as an officer of the Court appointed to conduct an audit examination in relation to these consolidated cases, pursuant to Section 5, Rule 12 and Rule 13 of the RRCTA; (2) as ICPA, she examined petitioner's supporting documents and summarized her findings in her ICPA Report dated 20 October 2023; (3) petitioner imported ADO from July to November 2020 and sold them to SPEX within the same period; (4) petitioner paid the excise tax for the subject ADO sold to SPEX; and (5) the subject ADO was actually sold to SPEX for the period from July to November 2020 in relation to the contract of SPEX as a service contractor of the government under SC 38.61 During cross-examination, ICPA Pangandian-Tabamo explained that Proforma Invoices serve merely as proof of purchase that initially triggered importations of ADO which, in turn, became the basis for the claim for excise tax refund. She clarified that the ADO's supplier issued these invoices. When asked about her declaration that screenshots of General Ledger (GL) postings supported the Statements of Settlement of Duties and Taxes (SSDTs), she confirmed that she personally reviewed the GL postings in the accounting system and verified that these matched descriptions reflected in printed copies by comparing them against system records.62 Petitioner did not conduct any redirect examination.63 On 04 December 2023, after completing the presentation of its oft testimonial evidence, petitioner filed its Formal Offer of Evidence64 _ (FOE) consisting of Exhibits "P-1" to "P-67-2", inclusive 59 Division Docket, Volume II, p. 793. 60 See Order dated 08 November 2023, id., pp. 796-798. 61 See Judicial Affidavit of Hazel D. Pangandian-Tabamo dated 20 October 2023, Exhibit "P-66", id., pp. 781-787. TSN dated 08 November2023, p. 9. 6] !d. 64 Division Docket, Volume II, pp. 807-837.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X sub-markings. On 07 December 2023, respondent filed his or her Comment65 thereto. In the Resolution dated 19 February 202466 (FOE Resolution), the First Division admitted petitioner's exhibits, except Exhibit "P-2o"67, for failure to correspond with the description in the FOE. Additionally, the Court noted that Exhibits "P-q" and "P-q-1"68 lack specific indications that they pertain to SC 38 and that Exhibits "P-29" and "P-67'' both pertain to the ICPA Report, and scheduled the initial presentation of respondent's evidence on 16 April2024. On 14 March 2024, petitioner filed a Motion for Reconsideration69 (MR) of the FOE Resolution70, requesting the reconsideration of the denial of, or the admission of, Exhibit "P-2o". Respondent filed his or her Comment71 thereto on 01 April 2024. In the Resolution 13 June 202472, the First Division granted petitioner's MR after finding sufficient basis to confirm that the payment details in Exhibit "P-2o" relate to petitioner's sale of ADO to SPEX. On o6 August 2024, respondent presented his or her lone witness, Revenue Officer (RO) Angelika Arugay (Arugay).73 RO Arugay testified to the following: (1) she holds the position of RO I and was then assigned to the BIR's ELTAD II; (2) her duties include the investigation or examination of all internal revenue tax cases; (3) she reviewed and evaluated petitioner's claim for refund on . imported and locally-produced ADO allegedly sold and delivered t o t 65 !d., pp. I092-1094. 66 !d., pp. 1101-1103. 67 Although the FOE describes this exhibit as a "Sample of reports generated through SAP showing payment details on ADO sold to SPEX," the marked document fails to show that posting date, amount, and bank order reference pertain to payments for ADO sold to SPEX, as the document contains no reference to either ADO or SPEX. 68 Supra at note 20. 69 Division Docket, Volume II, pp. 1104-1107. 70 Supra at note 66. 71 Division Docket, Volume II, pp. 1109-1111. !d., Volume Ill, pp. 1117-1120. 7) See Minutes of the Hearing and Order, both dated 06 August 2024, id., pp. 1143-1145 and 1146- 1147, respectively.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - ----- - - -- - --- - - - -- - - --- - -- - - - - - - - -- - - - - - - -- - - ----X SPEX, a tax-exempt entity, in the total amount of f'18,9o8,37o.oo; (4) Letter of Authority (LOA) SN: eLA2o2ooooo3894 I LOA-124-2022- oooooo46 dated 01 April 202274 authorized the audit of petitioner's excise tax refund claim, and she was part of the team assigned to conduct said audit; (5) in the Memorandum Report dated 16 November 202275, his team recommended the denial of petitioner's refund claim for failure to comply with the mandatory requirements prescribed under the provisions of Section 13576 of the NIRC of 1997, as amended; and (6) Officer-In-Charge Assistant Commissioner for Large Taxpayers Service Jethro M. Sabariaga (OIC-ACIR Sabariaga) approved her team's recommendation, leading to the issuance of the Denial Letter dated 26 January 202677, which was served on petitioner through registered maiF8 on 02 February 2023.79 On cross-examination, RO Simon confirmed that the list of supporting documents enumerated under Revenue Memorandum Order (RMO) No. 19-2oo680 does not constitute an exhaustive list. She answered in the affirmative when asked to clarity if this would mean that petitioner may submit other documents to establish that petroleum products delivered to international or tax-exempt carriers were sold net of excise tax. She further attested that she examined importation documents submitted by petitioner, sales invoices issued to SPEX, and proofs of payment made by SPEX. She likewise acknowledged that ADO subject of this case was sold to and paid for by SPEX.81 Petitioner did not conduct any redirect examination.82 On 07 August 2024, respondent filed his or her FOE83, consisting t of Exhibits "R-1" to "R-4", inclusive of a _sub-marking. Petitioner filed a Comment84 thereto on 12 August 2024. 74 Exhibit "R-1 ", BIR Records, Folder 2, p. 375. 75 Exhibit "R-2", id., pp. 389-398. 76 Supra at note 54. 77 Exhibit "R-3", BIR Records, Folder 2, pp. 425-426. 78 Exhibit "R-3-1 ", id., pp. 423-424. 79 See Judicial Affidavit of Revenue Officer Angelika Arugay dated 12 July 2024, Exhibit "R-5", Division Docket, Volume III, pp. 1128-1137. 80 Prescribing the Guidelines and Procedures for the Processing of Pending Claims for Tax Credit/Refund of Excise Tax paid on Petroleum Products. " TSN dated 06 August 2024, pp. 8-10. 82 !d., p. 10. 83 Division Docket, Volume 111, pp. 1152-1156.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X In the Resolution dated 13 November 202485, the First Division admitted all of respondent's exhibits and granted both parties a period of 30 days from notice within which to file their respective memoranda. In compliance with the Court's directive, on 16 December 2024, respondent filed his or her Memorandum86, while petitioner filed its �! Memorandum87 on 23 December 2024. ' In a Minute Resolution dated 17 January 2025, the First Division considered the instant case submitted for decision.88 ISSUES As the parties so stipulated, the sole tssue for this Court's resolution is - WHETHER PETITIONER PILIPINAS SHELL PETROLEUM CORPORATION IS ENTITLED TO ITS CLAIM FOR REFUND IN THE AMOUNT OF Pt8,9o8,37o.oo FOR THE ALLEGED EXCISE TAXES PAID ON PETROLEUM PRODUCTS SOLD TO SHELL PHILIPPINES EXPLORATION, B.V. FOR THE PERIOD FROM JULY TO NOVEMBER 2o2o8 9 ARGUMENTS Petitioner asserts that it timely filed a claim for refund or tax credit of excise taxes erroneously, wrongfully, illegally, or excessively collected for excise taxes paid during the period from July to November . 2020, pursuant to Sections 204(C)90 and 2299' of the NIRC of 1997, a s t 84 ld .� pp. 1160-1162. ss Id., pp. 1167-1168. 86 Id., pp. 1169-1190. s7 Id.,pp.1192-1221. 88 ld., p. 1223. 89 Par. 2, II. Stipulation of Issues, JSFI, supra at note 37, p. 508. 90 SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. ~ The Commissioner may- (c) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - ----- --- - - --- - - ------ - - - - - - - - - - - -- - - - - - - -- - - - ---X amended. Petitioner further argues that it is entitled to recovery of excise taxes in amount of P18,go8a7o.oo paid during the period from July to November 2020 on ADO sold to SPEX, on grounds that: (a) petitioner previously paid excise taxes on petroleum products (i.e., imported ADO) sold to a tax-exempt entity, particularly SPEX; (b) petitioner sold excise tax-paid imported ADO to a tax-exempt entity free or net of excise tax; and (c) petitioner's sale of imported ADO to SPEX enjoys exemption from excise tax. Respondent, on the other hand, contends that petitioner is not entitled to the refund of excise taxes allegedly paid during the period from July to November 2020 on imported and locally produced ADO that petitioner allegedly sold and delivered to a tax-exempt entity, particularly SPEX, in amount of P18,go8,370.oo. Respondent further asserts that denial of petitioner's administrative claim for refund rests on sound factual and legal grounds. Respondent likewise maintains that the authority to grant refund of excise taxes arises only under Section 13o(D)92 of the NIRC of1997, as amended. RULING OF THE COURT t After a careful and thorough evaluation of the parties' respective evidence and the applicable laws,_ rules and regulations, the Court finds the instant petition meritorious. 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: Provided, however, that a return filed showing an overpayment shall be considered as a written claim for credit or refund. 91 SEC. 229. Recovery of Tax Erroneously or Illegally 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, 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. Supra at note 29.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X ---- - - - - - - - -- ---- - ----- - - - - - - --- -- ------ - - - ----- ---- - - -X Both Sections 204(C) and 229 of the NIRC of 1997, as amended, deal with the refund of erroneously or illegally collected taxes. Particularly, Section 204(C) applies to administrative claims, while Section 229 to judicial claims.93 Section 204(C) of the NIRC of 1997, as amended, provides: SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may - (c) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are 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: Provided, however, that a return filed showing an overpayment shall be considered as a written claim for credit or refund.94 Relative thereto, Section 229 of the NIRC of 1997, as amended, reads: SEC. 229. Recovery of Tax Erroneously or Illegally 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. t 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 See CBK Power Company Limited v. Commissioner of Internal Revenue, G.R. Nos. 193383-84 & 193407-08, 14 January 2015. Emphasis supplied and italics in the original text.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X-- - - - --- - - - --- ---- - -- --- - - - - --- -- - --- - --- - - - ----- ---- - -X 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.9s In Commissioner of Internal Revenue v. Carrier Air Conditioning Philippines, Inc.96, the Supreme Court ruled as follows: Sections 204 and 229 fixed the same period of two years for filing an administrative claim for refund before the Bureau of Internal Revenue and to sue before the Court of Tax Appeals. CBK Power Company explained that as long as these two acts fall within the two-year period, there is no legal impediment to the judicial claim for refund. Consequently, from the plain language of the law, it does not matter how far apart the administrative and judicial claims were filed, or whether the Commissioner of Internal Revenue was actually able to rule on the administrative claim, so long as both claims were filed within the two-year prescriptive period. The afore-quoted provisions are clear. Within two (2) years from the date of payment of the tax or penalty, the taxpayer-claimant must first file an administrative claim with respondent before filing a judicial claim before this Court. Both claims must be filed within a two (2)-year reglementary period. Timeliness of the filing of the claim is mandatory and jurisdictional; hence, this Court cannot take cognizance of a judicial claim for refund filed either prematurely or out of time.97 Thus, so long as the judicial claim was filed within two (2) years from the date of payment of the tax or penalty, and within such period, an administrative claim was filed before filing such judicial claim, this Court has jurisdiction to entertain the latter. Moreover, the foregoing provisions allow the recovery of taxes erroneously or illegally collected. An "erroneous or illegal tax" is~ U defined as one levied without statutory authority, or upon property not 95 Emphasis supplied and italics in the original text. <J6 G.R. No. 226592, 27 July 2021; Citation omitted and italics in the original text. 97 Commissioner of Internal Revenue v. San Miguel Corporation, G.R. Nos. 180740 & 180910, II November2019.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X ------- - - - --- - -- - - ---- - - - - - - - - - - - --- - --------- - - --- - - - -X subject to taxation, or by some officer having no authority to levy the tax, or one which is some other similar aspect is illegaJ.98 Thus, for the subject claim for refund to prosper, petitioner must not only establish that it has timely filed its refund claim, but it must also prove that the subject excise tax paid is an "erroneous or illegal tax." PETITIONER TIMELY FILED ITS ADMINISTRATIVE AND JUDICIAL CLAIMS. The case records show that, from July to November 2020, petitioner imported ADO through the Tabangao Refinery and paid the corresponding excise taxes thereon, as follows: Vessel SAD No. SAD Date Volume Paid Rate Amount of Payment Date Mt. Silver Ebalina (in Liters) r'6.oo Excise Tax 13 July 2020 100 Mt. CSC Amethyst (101518299 10 July 2020 24 July :w:wto~ 21 July 2020 48>353.795 6.00 P2gO,l22,770.00 04 August 2020104 Mt. Oriental Gold C1ms645'0 ' 48,428,434 18 September zozo'0 5 Cwt6o87'03 P2go,57o,6o4.oo Mt. Songa Diamond 03 August 2020 48,521,)25 6.00 12 August 2020107 (1016551106 291,107,202,00 o6 October zozo108 Mt. Everhard Schulte n August 2020 !6,413,202 6.00 Cwt6gst109 19 August 2020 20,748.oo - 20 August 2020''0 99 16,160,8)7 6.oo Pzgr,I27,950.oo 100 101 98,469.}00.00 1 o::: 9,912.00 I 03 Pg8.479,212.oo 104 96.747.624-00 105 106 Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, 107 25 April 2012, citing the definition provided in BLACK'S LAW DICTIONARY, Fifth Edition. 108 p. 486. Exhibit "P�l�3", supra at note 9. '" See Statement of Settlement of Duties and Taxes (SSDT) with Customs Reference No. Cl 015182, Exhibit "P-1-4". Division Docket, Volume II, p. 842. 110 Exhibit "P-2-3", supra at note 10. See SSDT with Customs Reference No. CIOI5645, Exhibit "P-2-4", Division Docket, Volume II, p. 854. Exhibit "P-3-3", supra at note II; Exhibit "P-46", Page 3 of 10, USB (Exhibit "P-67-2"). See SSDT with Customs Reference No. CIOI6087, Exhibit "P-3-4", Division Docket. Volume II, p. 867. See Official Receipt (OR) dated 18 September 2020, Exhibit "P-3-9", id., p. 874. Exhibit "P-4-3", supra at note 12; Exhibit "P-46", Page 4 of 10. USB (Exhibit "P-67-2"). See SSDT with Customs Reference No. CIOI6551, Exhibit �'P-4-4", Division Docket, Volume II. p. 879. See OR dated 06 October 2020, Exhibit "P-4-9". id., p. 886; Exhibit "P-47'' Page 4 of 10, USB (Exhibit "P-67-2"). Exhibit "P-5-3"", supra at note 13; Exhibit "P-46", Page 5 of 10, USB (Exhibit "P-67-2"). See SSDT with Customs Reference No. Cl 016951, Exhibit "P-5-4", Division Docket, Volume II, p. 891.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X ----- -- - - - - -- - --- - ----- - - - - - - --- - ------- - - ----- - --- - - - -X Vessel SAD No. SAD Date Volume Paid Rate Amount of Payment Date Excise Tax o6 October 2020m Mt. Silver Hannah C1017284m (in Liters) Mt. Jaso�n 217,398.oo 27 August zozoliJ Mt. CSC Peace s Cm183 5u4 26 August zozo 48,956,142 6.00 P96,96s,ozz.oo 18 September zozous Mt. Nave Atria 17 November zozou6 'Mt. BW Yangtze Cim88gg117 17 September zozo 46,548,029 6.00 293.736,852.00 Mt. MR Leo C1mg6o4u9 279,177.474-00 30 September zozou8 Total (1020524122 29 September 2020 }1,428,200 6.00 14 October zozo'20 (1020989124 6.00 110,700.00 02 December 2020 121 13 October 2020 49.597,058 f'279 1288,174�00 o6 November 202012l 04 November 2020 50,680,348 6.00 P188,s6g,zoo.oo 16 November 2020125 13 November 2020 26,786,123 6.00 294A99as6.oo J,o8z,ggz.oo 431,873,493 P297�582,348.oo PJo4,o82,o88.oo P16o,716,738.oo P2,591,24o,gs8.oo The following are the pertinent dates relative to petitioner's claim for refund or tax credit, viz: Date of Payment Two (2)-Year Date of Date of judicial Prescriptive Period Administrative Claim 13 july 2020 24 july 2020 13 july 2022 Claim 12 July 2022 127 04 August zozo 24 July 2022 18 September zozo 04 August 2022 o8 July 2021'26 12 August zozo 18 September 2022 12 August zozz Ill See OR dated 06 October 2020, Exhibit "P-5-9", id., p. 898. 112 Exhibit "P-6-3", supra at note 14. II J See SSDT with Customs Reference No. CI0\7284, Exhibit "P-6-4". Division Docket, Volume II, p. 903. 114 Exhibit "P-7-3'", supra at note 15; Exhibit "P-46". Page 6 of I0, USB (Exhibit "P-67-2""). 115 See SSDT with Customs Reference No. C\018385, Exhibit "P-7-4''. Division Docket, Volume II, p. 913. 116 See OR dated 17 November 2020, Exhibit "P-7-9", id.� p. 920; Exhibit "P-47" Page 6 of 10, USB (Exhibit "P-67-2"). 117 Exhibit "P-8-3". supra at note 16. 118 See SSDT with Customs Reference No. C I018899. Exhibit "P-8-4", Division Docket, Volume 11, p. 925. 119 Exhibit "P-9-3", supra at note 17; Exhibit "P-46", Page 8 of I0, USB (Exhibit "P-67-2"). 120 See SSDT with Customs Reference No. CIOI9604, Exhibit "P-9-4". Division Docket. Volume II, p. 937. 121 See OR dated 02 December 2020, Exhibit "P-9-9". id .� p. 944. 122 Exhibit "P-1 0-3", supra at note 18. 123 See SSDT with Customs Reference No. C I020524, Exhibit "P-I 0-4", Division Docket, Volume 11, p. 949. 124 Exhibit "P-11-3", supra at note 19. 125 See SSDT with Customs Reference No. C\ 020989, Exhibit "P-11-4", Division Docket, Volume 11, p. 961. 126 Exhibits "P-22" to "P-22-1 ", supra at notes 21 and 22. 127 Supra at note I.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X-- - - - -- - - - - --- ---- - - - --- - - - - --- � - - -- - - --- - - - ---- - - ---- -X Date of Payment Two (2)-Year Date of Date ofJudicial Prescriptive Period Administrative Claim o6 October zozo zo August zozo o6 October 2022 Claim o6 October zozo zo August 2022 27 August zozo o6 October zozz 18 September 2020 27 August 2022 17 November zozo 18 September 2022 30 September 2020 17 November 2022 14 October zozo 30 September 2022 oz December zozo 14 October zozz o6 November zozo oz December zozz 16 November zozo o6 November zozz 16 November zozz Based on the foregoing, petitioner's earliest excise tax payment for importations made during the period from July to November 2020 occurred on 13 July 2020. Counting two (2) years therefrom, the last day for petitioner to file its administrative and judicial claims for refund fell on 13 July 2022. Accordingly, petitioner timely filed its administrative and judicial claims on o8 July 2021 and 12 July 2022, respectively. EXCISE TAXES PAID ON IMPORTED PETROLEUM PRODUCTS SOLD TO A TAX-EXEMPT ENTITY, PARTICULARLY SHELL PHILIPPINES EXPLORATION, B.V. (SPEX), WERE ERRONEOUSLY OR ILLEGALLY COLLECTED. Petitioner alleges that it sold ADO to a tax-exempt entity, specifically SPEX, which enjoys exemption from both direct and indirect taxes pursuant to Section 135(c)128 of the NIRC of 1997, as amended. Respondent, invoking Section 135 of the NIRC of 1997, as amended, also argues that the excise tax due on the subject t transactions cannot be included in the. purchase price because the buyer already holds a tax-exempt status. 128 Supra at note 54.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - ---- - -- - - --- - - --- --- - - - - - - - - - - - -- - - - - - - -- - - - - --X Respondent further maintains that Section 135 of the NIRC of 1997, as amended, does not grant exemption to sellers. Instead, said provision enumerates specific instances where petroleum products, when sold to international carriers and other entities listed therein, enjoy excise tax exemption. Respondent asserts that Section 135 cannot serve as a legal basis for petitioner's claim for refund and cannot be invoked by sellers such as petitioner, but only by buyers that qualify as exempt entities. Thus, respondent concludes that petitioner cannot rely on the exemption granted to such entities as a ground to recover excise taxes paid. We cannot sustain respondent. In relation to the afore-quoted Sections 204(C)'29 and 229'3� of the NIRC of 1997, as amended, the present claims for refund or issuance of a TCC are governed by the following provisions of the NIRC of 1997, as amended, viz: SEC. 129. Goods and Services Subject to Excise Taxes. - Excise taxes apply to goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition and to things imported as well as services performed in the Philippines. The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV. For purposes of this Title, excise taxes herein imposed and based on weight or volume capacity or any other physical unit of measurement shall be referred to as 'specific tax' and an excise tax herein imposed and based on selling price or other specified value of the good or service performed shall be referred to as 'ad valorem tax.' SEC. 131. Payment ofExcise Taxes on Imported Articles. - (A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, t 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 are 1:29 Supraatp. 15. 130 Supra at pp. 15-16.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X������--�����-��--����-�����---�-��-���-�����������--� �X exempt from excise taxes other than those legally entitled to exemption. SEC. 135� Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are 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 ofthe Commissioner; (b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption: Provided, however, 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; and (c) Entities which are by law exempt from direct and indirect taxes.'3' In Chevron Philippines, Inc. v. Commissioner of Internal Revenue13Z, the Supreme Court held that excise tax paid by the statutory taxpayer on petroleum products sold to any of the entities or agencies named in Section 135 of the NIRC of 1997, as amended, and exempt from excise tax, is deemed illegal or erroneous, to wit: Excise tax on petroleum products is essentially a tax on property, the direct liability for which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any excise tax paid by the statutory taxpayer on petroleum products sold to any of the entities or agencies named in Section 135 of the National Internal Revenue Code (NIRC) exempt from excise tax is deemed illegal or erroneous; and should be credited or refunded to the payor pursuant to Section 204 of the NIRC. This - is because the exemption granted under Section 135 of the NIRCt Italics in the original text, emphasis and underscoring supplied. 132 G.R. No. 210836, 01 September 20 15; ltalics in the original text, emphasis and underscoring supplied.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X-- - - - -- - - - - --- - --- - - ---- - - - - - -- -- - --- - --- - - - ---- - ---- - -X must be construed in favor of the property itself, that is, the petroleum products. Relevantly, as the Supreme Court clarified in Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue'33, "[c]onsidering that the status of the petroleum products as tax-exempt solidifies upon the sale to any of the entities enumerated under Section 135 [of the NIRC of 1997, as amended], any excise taxes which were previously paid thereon would then be considered as 'erroneously or illegally collected,' and therefore, subject to refund." Moreover, the High Court explained that "the tax exemption under Section 135 [of the NIRC of 1997, as amended] 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)." Pursuant to Section 135(c) of the NIRC of 1997, as amended'34, petroleum products sold to entities that are by law exempt from direct and indirect taxes are exempt from excise tax. The phrase "which are by law exempt from direct and indirect taxes" describes the entities to whom the petroleum products must be sold to render the exemption operative. Section 135(c) of the NIRC of 1997, as amended, should thus be construed as an exemption in favor of the petroleum products on which the excise tax was levied. The exemption cannot be granted to the buyers, i.e., the entities that are by law exempt from direct and indirect taxes, because they are not under any legal duty to pay the excise tax.'35 Clearly, upon petitioner's sale of petroleum products to entities that are by law exempt from direct and indirect taxes, the status of the t sold petroleum products as tax-exempt solidifies. Consequently, the excise taxes previously paid on these petroleum products become erroneously or illegally collected taxes. These taxes are then the proper 133 G.R. No. 211303, 15 June 2021. 134 Supra at p. 21. 135 See Chevron Philippines, inc. v. Commissioner of Internal Revenue, supra at note 132.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - ---- -- - - - - -- - --- - ------ - - - - - - -- - --- ---- - - ---- - - --- - - - -X subject of a claim for refund or credit under Sections 204(C)'36 and 229'37 of the NIRC of 1997, as amended. As can be gleaned from the above disquisitions, to be entitled to a refund or the issuance of a TCC, the following must be demonstrated: (1) the entity to which the taxpayer-claimant sold the petroleum products is an entity exempt by law from both direct and indirect taxes; and, (2) the taxpayer-claimant, as the statutory taxpayer, paid the excise taxes claimed on the petroleum products sold to the exempt entity. Section 12(a) of PO 87, or "THE OIL EXPLORATION AND DEVELOPMENT ACT OF 1972," provides that contractors operating under a service contract executed with the Government for petroleum exploration and production enjoy exemption from all taxes, except income tax, to wit: SEC. 12. Privileges of contractor. - The provisions of any law to the contrary notwithstanding, a contract executed under this Act may provide that the Contractor shall have the following privileges: (a) Exemption from all taxes except income tax.'J8 To establish that petitioner sold petroleum products to a tax- exempt entity, petitioner offered in evidence the SC 38'39, by and between the Government of the Republic of the Philippines and Occidental Philippines, Inc. and SPEX, which the contract identifies as Contractor. t Under SC 38, the Contractor shall have the right of exemption from all taxes except income tax, to wit: 136 Supraatp. 15. I 37 Supra at pp. 15-16. 138 Emphasis supplied. 139 See Exhibits "P-IT' and "P-17-1", supra at note 20.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X SECTION VI RIGHTS AND OBLIGATIONS OF THE PARTIES 6.2 CONTRACTOR shall have the following rights: (a) Exemption from all taxes except income tax[.]'4� Petitioner further offered in evidence "Amending Agreement # 1" dated 15 July 2019'4' between SPEX and petitioner, which states that the parties entered into a purchase contract for the "Supply of Marine Gas Oil" dated 30 July 2014 identified by agreement number Ul47079� Likewise, petitioner presented a Certification'42 issued by SPEX, which states that SPEX used ADO purchased from petitioner during period from July to November 2020 for the operation of its marine vessels. Correspondingly, as a petroleum service contractor under PD 87, SPEX qualifies as an entity exempt by law from direct and indirect taxes. Thus, the excise taxes that petitioner paid to the Government, as statutory taxpayer, on petroleum products sold to SPEX constitute taxes erroneously or illegally collected and may be subject to refund in favor of petitioner. The Court shall now determine whether petitioner has sufficiently substantiated its claim by presenting sufficient evidence to establish that: (a) the excise taxes on the imported petroleum product (i.e., ADO), which is the subject of the present claim, were duly paid; and (b) the said imported ADO were sold and delivered to a tax- exempt entity. As a preliminary matter, and to properly appreciate the subject transactions, the Court shall first discuss the process flow and documentation involved in the importation of ADO, its removal from t the Tabangao Refinery, and its subsequent sale and delivery to SPEX, a tax-exempt entity. '" Emphasis supplied. '" Exhibit "P-62", USB (Exhibit "P-67-2"). 142 Exhibit "P-63'', id.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X PROCESS FLOW OF THE IMPORTATION, REMOVAL FROM THE TABANGAO REFINERY, AND SUBSEQUENT SALE AND DELIVERY OF AUTOMOTIVE DIESEL OIL (ADO) TO SHELL PHILIPPINES EXPLORATION, B.V. (SPEX), A TAX- EXEMPT ENTITY. 1. IMPORTATION In her Judicial Affidavit'43, De Dios, petitioner's Import/Additives Scheduler, detailed the process flow governing the importation of ADO. According to her, petitioner's process and document flow for the importation of ADO consists of the following stages: (1) requisition of goods and importation; (2) arrival and discharge of imported goods; and (3) payment of taxes and import duties.'44 De Dios further explained that the importation process for petroleum products, particularly ADO, commences when petitioner's Trading and Supply Department determines the necessity and volume requirements for importation and thereafter coordinates with regular suppliers to communicate the required volume of petroleum products to be imported.'45 Once a prospective supplier expresses willingness to meet required volume, the Trading and Supply Department commences negotiations on the price of ADO. Upon agreement on the price, petitioner places an order for the purchase of AD0.'46 De Dios added that in facilitating shipments of imported ADO, the shipper prepares a Bill of Lading (BL) and furnishes copies to both petitioner and supplier, together with other supporting documents such as the Load Port Survey Report (LPSR), among others. The supplier thereafter issues a Proforma Invoice to petitioner, indicating the quantity of ADO purchased, which petitioner submits to the BIR and the BOC.'47 Thereafter, petitioner's Trading and Supply _� Department issues an internal advice to the Tax Department and thet 143 Q&A Nos. II to 39, Judicial Affidavit of Anna Beatriz Verge! de Dios dated 09 July 2022, Exhibit "P-25'', supra at note 44, pp. 133-139. 144 Q&A No. II, Exhibit "P-25'', supra at note 44, p. 133. '" Q&A No. 12, id. 146 Q&A No. 13, Exhibit "P-25", supra at note 44, p. 134. 147 Q&A No. 14, id.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X -- - - - --- - - - --- ------ ---- - - - - --- � -- ---- --- - - -- --- - - --- - -X Finance Department of the Tabangao Refinery, informing them of the estimated time of arrival of the imported ADO at the Batangas Port.148 De Dios detailed further that upon receipt of the internal advice and prior to the imported ADO's arrival, petitioner, through its broker, lodges the importation details, such as the name of importer, name of vessel, port of destination, terms of delivery, and quantity of ADO, and uploads the corresponding supporting documents, including the BL, LPSR, and Proforma Invoice, through the BOC's Electronic-to-Mobile (E2M) System.149 Petitioner, through its broker, thereafter generates the Single Administrative Document (SAD), which contains all information encoded through the E2M System, including the assessment of taxes and duties payable on a particular importation.1so Once generated, petitioner's representative and the BOC's representative sign the SAD. The SAD then serves as basis for petitioner's payment of assessed taxes and duties to the BOC under a tentative liquidation. s1 1 Moreover, based on the SAD, petitioner's Accounts Payable Team issues an internal advice to the Global Payment Team to initiate the transfer of funds to the BOC's account through Security Bank's Pass 5 System. Witness DeDios explained that Security Bank's Pass 5 System integrates with the BOC's E2M System; thus, any payment made and verified through Security Bank's Pass 5 System automatically reflects in the BOC's E2M System. s1 2 De Dios narrated further that after petitioner pays the taxes and duties under its tentative liquidation1s3 through Security Bank's Pass 5 System, the BOC generates an SSDT154 via the BOC's E2M System.'ss. She explained that if the importation is taxable, the BOC requirest 148 Q&A No. 15, id. 149 Q&A Nos. 16 and 17, Exhibit "P-25", supra at note 44, pp. 134-135. \50 Q&A No. 21, Exhibit "P-25", supra at note 44, p. 135. !51 Q&A No. 22, Exhibit "P-25'', supra at note 44, p. 136. 152 Q&A No. 23, id. !53 There are times when the price of ADO at the date of issuance of Customs Invoice differs from its price at the date of arrival of the importation as will be shown in the Final Invoice issued by the supplier. Since the payment of taxes and duties as shown on the SAD is based on the tentative price shown in the Customs invoice, such payment has to be finalized by way of payment of the taxes and duties on the price differential, which is usually minimal, if there is any; Q&A No. 33, Exhibit "P-25", supra at note 44, p. 138. 154 The SSDT names petitioner as the company that settled the taxes and duties, and provides, among others, the assessment reference number, the receipt number and date, the mode of payment, and the total amount of taxes and duties paid. The assessment reference number and total amount paid appearing in the SSDT correspond to the assessment reference number and total assessed amount in the SAD; Q&A No. 24, Exhibit "P-25'', supra at note 44, p. 136. !55 Q&A No. 24, id.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X pet1t10ner to secure and present the BIR's Authority to Release Imported Goods (ATRIG)'56 before the BOC actually releases the SSDT to the importer or broker.1s7 Upon receipt of the internal advice, petitioner applies for an ATRIG with the BIR and submits the required supporting documents, including the BL, Customs Invoice, and SAD.1S8 According to De Dios, once the vessel arrives at a Philippine port, petitioner presents the SSDT to the port authorities, which then authorizes the discharge of imported ADO into the storage tanks at the Tabangao Refinery. Upon completion of full discharge, meaning complete transfer of the final batch of ADO into the storage tanks at the Tabangao Refinery, petitioner issues a Certificate of Quantity Received159 (CQR).160After the final discharge of imported ADO from the vessel, petitioner undertakes a final liquidation of the importation by filing a "Request for Correction of Data in SAD" and attaching the Final Invoice (or Tax Invoice)161 issued by the supplier. The date of last discharge is based on the "date received" as shown in the CQR.162 Subsequently, the BOC generates page two (2) of the SAD and manually computes the revised charges and final liquidation amount. If the computation shows an additional amount due, the BOC issues an Assessment Notice to the importer.'63 De Dios also explained that the BOC confirms the final payment of taxes and duties through issuance of an Official Receipt (OR). However, when taxes and duties paid under tentative liquidation equal t or exceed amount computed during final liquidation, the BOC does not issue an Assessment Notice or OR. In such instances, the BOC issues only one (1) SSDT for the subject importation.'64 156 An ATRIG constitutes permission from the BIR to withdraw the ADO from the Tabangao Refinery, but only after the importer settles the applicable taxes and duties. For taxable importations, the ADO cannot be withdrawn by petitioner without the ATRIG. If the imported article to be imported is subject to excise tax, the ATRIG shows the amount of excise taxes to be paid. Since ADO is an excisable article, the ATRIG for imported ADO indicates the amount of excise taxes to be paid thereon, Q&A No. 26, Exhibit "P-25'', supra at note 44, p. 136. 157 Q&A No. 25, id. 158 Q&A No. 27, Exhibit "P-25'', supra at note 44, p. 137. 159 The CQR indicates the quantity of the products received and their last discharge at the Tabangao Refinery. Since ADO is usually discharged over the course of several days depending on the volume, the date of last discharge is indicated as the "Date Received" in the CQR; Q&A No. 31, Exhibit "P-25'', supra at note 44, p. 137. 160 Q&A No. 31, id. 161 Q&A No. 36, Exhibit "P-25'', supra at note 44, p. 138. 16:! Q&A No. 34, id. 163 Q&A No. 35, id. 164 Q&A No. 38, Exhibit "P-25'', supra at note 44, p. 139.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - ---- -- - - - -- - - ------ - - - - - - - - - - - ---- - - - - - - - - - - - -X 11. REMOVAL FROM THE TABANGAO REFINERY Petitioner's Tax Advisor, Flores, and its Supply Scheduler, Dela Cruz, also discussed the removal of imported ADO from the Tabangao Refinery and the subsequent sale and delivery of such imported ADO to SPEX in their respective Judicial Affidavits.'65 Both Flores and Dela Cruz detailed that upon arrival of the imported ADO at the Tabangao Refinery (now called Import Facility), it is stored in the product storage tanks located therein. Petitioner then adds an additive, CME, to improve the quality of ADO before the sale and delivery to SPEX. In this case, petitioner loaded ADO onto SPEX vessels berthing at petitioner's jetty in Tabangao, Batangas.'66 According to them, petitioner thereafter records ADO's receipts, similar to other petroleum products received in the Official Register Book (ORB) of the Tabangao Refinery. Petitioner then submits the ORBs for each month to the BIR for monitoring purposes.'67 Petitioner likewise records removals of ADO from the Tabangao Refinery in same ORB.'68 Flores noted that petrtwner adopts a first-in, first-out (FIFO) method'69 in withdrawing or removing ADO from the storage tanks at the Tabangao Refinery.'7� Aside from the ORB entries, petitioner records removals of ADO in the Daily Product Deliveries Reportt 165 See Judicial Affidavit of Berenice Angelique L. Flores dated 09 July 2022, Exhibit "P-27", supra at note 51; Judicial Affidavit of Alfonso Paolo F. DeJa Cruz dated 12 Apri\2023, Exhibit "P-26", supra at note 47. 166 Q&A No. \2, Judicial Affidavit of Berenice Angelique L. Flores dated 09 July 2022, Exhibit "P- 27", supra at note 51, p. 311; Q&A No. II, Judicial Affidavit of Alfonso Paolo F. DeJa Cruz dated 12 Apri\2023, Exhibit "P-26", supra at note 47. 167 Q&A No. 13, Judicial Affidavit of Berenice Angelique L. Flores dated 09 July 2022, Exhibit "P- 27", supra at note 51, p. 311. 168 Q&A No. 14, Judicial Affidavit of Berenice Angelique L. Flores dated 09 July 2022, Exhibit "P- 27", supra at note 51, p. 312. 169 According to Ms. Flores, under the FIFO method, the earliest ADOs stored in the tanks are also the first ones removed therefrom. She illustrates that if petitioner stored imported ADO in a tank on January I, then, on January 15, petitioner stored locally manufactured ADO in the same tank. When petitioner removes ADO from the storage tank, it first withdraws from the imported stock stored on January \. Petitioner must exhaust the imported ADO stored on January I before it can withdraw the locally manufactured stock stored on January 15. As a result, the ADOs remaining at the end of a certain period consist of the stocks most recently stored in a particular tank, Q&A No. 21, Judicial Affidavit of Berenice Angelique L. Flores dated 09 July 2022, Exhibit "P-27", supra at note 51, p. 314. 170 Q&A No. 20, id.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X (DPDR).'7' In addition, petitioner prepares a report denominated as "Daily Removals and Excise Tax Due," which reflects the removal of petroleum products, including ADO, and the corresponding excise tax due thereon.'72 Before the removal of the imported ADO from the Tabangao Refinery, petitioner prepares a Withdrawal Certificate'73 (WC), which the BIR's Revenue Officer on Premises (ROOP) and petitioner's representative sign.174 Petitioner accompanies the withdrawal of ADO from the Tabangao Refinery for sale and delivery to SPEX with a Bulk Delivery Note'75 (BDN) and a Certificate of Bunker Deliveries (CBD).'76 Petitioner also maintains a Liquidation Report (LR)'77 that specifically monitors the ADO sold and delivered to customers, including SPEX. Through this LR, petitioner tracks the volume of ADO sold and delivered to SPEX and traces such volumes to the corresponding source importations.'78 111. SALE AND DELIVERY TO SPEX It was further detailed that once delivery of ADO to SPEX, petitioner's SAP program, which serves as its computerized accounting system, immediately captures the details and information relating to the ADO sold and delivered to SPEX. Unit prices of petroleum products and other applicable charges already reside in the SAP _ system, which automatically generates the corresponding Salest 171 The DPRD shows the date of removal, its shipment reference number, the Withdrawal Certificate covering the same, and the amount of excise tax paid thereon, Q&A No. 14, Judicial Affidavit of Berenice Angclique L. Flores dated 09 July 2022, Exhibit "P-27'', supra at note 51, p. 312. 172 Q&A No. 14, id. 173 The WC shows the source of the ADO, its destination, the date of its withdrawal, and its volume at the time withdrawn. When the ADO withdrawn from the Tabangao Refinery is imported, it is indicated in the WC that the same is "tax-paid". This means that the ADO was drawn from imported stock and the excise tax thereon has already been paid to the BOC; Q&A No. 14, id. 174 Q&A No. 14, id. 175 The BDN shows where the product comes from, the buyer, and where the product is delivered. It likewise indicates the load date, product description, and the delivered quantity. The vessel to which the ADO is loaded is likewise indicated, Q&A No. 15, id. 176 Certificate of Bunker Deliveries shows the delivery date, the product, the name of the vessel, the corresponding WC number, and the volume delivered. It is signed by a representative of petitioner and of the vessel to which the ADO is located, Q&A No. 15, id. 177 Among others, the Liquidation Report summarizes the excise taxes on the ADO sold and delivered to SPEX and the document under which the excise taxes were paid, which consists of the corresponding importation document if the ADO is imported. The Liquidation Report also shows the deliveries of ADO to SPEX, the WC and BDN accompanying the deliveries of ADO from the Tabangao Refinery to SPEX, the petitioner's Invoice through which petitioner bills SPEX for the ADO sold and delivered, and the payment received by petitioner from SPEX for the ADO thus sold and delivered, Q&A No. 22, Exhibit "P-27", supra at note 51, p. 314. 178 Q&A No. 22, id.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - ---- - - - --- - - - - - -- - - - - - -- - - - - - - - -- - - ------- - - - -- - - - - -X Invoice'79 (SI) reflecting the amount due from the customer. SAP also enables generation of various reports based on the data encoded in system.'8� Flores explained that when the sales price reflected in the SI includes the excise tax, the individual line items in the SI show an "Excise Duty Element" line, which represents the excise tax imposed on the ADO sold. Conversely, when the sales price reflected in the SI excludes the excise tax, the SI does not contain an "Excise Duty Element" line.'8' Flores further stated that petitioner retrieves the details of any SI through the SAP program by entering the corresponding SI number. Upon entry, the system displays the price components of each billed item through the "G. Standard Invoice (ZF2) Display: Item Data" screen'8\ which allows the determination of whether the sales price reflected in the SI includes the excise tax.'83 She also explained that SPEX's payments for the ADO purchased from petitioner appear on the bank statements.'84 Lastly, Flores clarified that SPEX applies 8% final withholding tax (FWT) on its payments to petitioner because petitioner qualifies as a petroleum service contractor under PD 1354.'85 To prove the withholding and remittance of tax, SPEX issues the corresponding BIR Form No. 2306, or Certificate of Final Tax Withheld at Source. Flores added that the 8% FWT constitutes full and final payment of income tax on earnings derived by petitioner from transactions with SPEX.'86 PETITIONER DULY PAID EXCISE TAXES DUE ON IMPORTED u AUTOMOTIVE DIESEL OIL (AD~ SUBJECT OF THE PRESENT CLAIM. 179 Sales Invoice indicates, among others, the quantity, unit price, any other charges, and the total amount due for the ADO sold and delivered to SPEX. Since SPEX is an excise tax-exempt entity, the sales price does not include an excise tax component. Otherwise, the sales price would have included excise tax; Q&A No. 37, Exhibit "P-27", supra at note 51, pp. 317-318. ISO Q&A No. 28, Exhibit "P-27", supra at note 51, p. 316. 181 Q&A No. 39, Exhibit "P-27", supra at note 51, p. 318. 182 The "G. Standard Invoice (ZF2) Display: Item Data" shows the details of every item billed under an invoice such as the sales price of the fuel, the excise tax, and VAT; Q&A No. 40, id. 183 Q&A No. 40, id. 184 Q&A No. 43, Exhibit "P-27", supra at note 51, p. 320. 185 IMPOSING FINAL INCOME TAX ON SUBCONTRACTORS AND ALIEN EMPLOYEES OF SERVICE CONTRACTORS AND SUBCONTRACTORS ENGAGED IN PETROLEUM OPERATIONS IN THE PHILIPPINES UNDER PRESIDENTIAL DECREE NO. 87. 186 Q&A No. 45, Exhibit "P-27", supra at note 51, p. 321.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X Proof of payment of the subject taxes constitutes an essential requirement in refund cases because, while the collection of taxes may be found to be illegal or erroneous in theory, a taxpayer-claimant cannot recover amounts that it did not actually pay or remit to the Government. Witness De Dios testified that eleven (n) ADO importations arrived at petitioner's Tabangao Refinery for the period from July to November 2020, detailed as follows:187 � Vessel SAD No. SAD Date Volume Paid Amount of Payment Date Excise Tax Mt. Silver Ebalina (I015I82. 10 July :zo:zo188 48�353-795 13 july 2020 Mt. CSC Amethyst 21 July 2020 48,428,434 P290,122, 77o.oo 24 July :zo:zo Mt. Oriental Gold C1or5645 48.521,325 :zgo,s7o,6o4.oo 04 August :zo:zo Mt. Songa Diamond Cro16o87 03 August :zo:zo 12 August :zo:zo Mt. Everhard Schulte C1or6551 I6,41J,202 291,127,950.00 :zo August :zo:zo Mt. Silver Hannah C1016gst u August :zo:zo 27 August :zo:zo Mt. jason 19 August 2020 16,160,837 g8,479,212,00 18 September :zo:zo Mt. CSC Peace (1017284 30 September 2020 Mt. Nave Atria 26 August :zo:zo 4s, 95 6,142 g6,g6s,o:z:z.oo 14 October 2020 Mt BW Yangtze C1or8385 17 September :zo:zo 48,s4S,o:zg189 293.736,8s:z.oo o6 November 2020 Mt. MR Leo C1or8899 29 September 2020 27g,:z88,174�00 16 November 2020 C1019604 31,428,200 I88,s6g,:zoo.oo Total (1020524 13 October 2020 297�582,348.00 (1020989 04 November 2020 49.597,058 304,o82,o88.oo 13 November 2020 50,680,348 160,716,738.oo 26,786,123 P2,591,240,958.oo To substantiate foregoing importations, petttwner presented before this Court the following documentary evidence, all of which witness Pangandian-Tabamo, the Court-commissioned !CPA, examined, as follows:19� Documents Presented Exhibit Annexed to the Description for Importations No.'9' JCPA Report'9' "P-36" Billing documents based on BL Proforma Invoice/ A volume and global pricing standards Customs Invoice "P-35" issued by Shell International Eastern B Trading Company (SIETCO). BL Issued by the carrier to the shipper that detail the type, quantity and destination of the goods being 187 Q&A No. 40, Exhibit "P-25'', supra at note 44, pp. 139-140. 188 Corrected from I0 June 2020 to I0 July 2020. Order dated 05 September 2023, supra at note 43. 189 It should be 46,548,029, Exhibit "P-46" (p. 6). USB (Exhibit "P-67-2"). 100 See ICPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 749. 191 USB (Exhibit "P-67-2"). 192 I d.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - ---- - -- - - --- - - ------ - - - - - - - - - - - -- - - - - - - -- - - - - --X Documents Presented Exhibit Annexed to the Description for Importations No.191 !CPA Report'9' carried. These serve as a shipment LPSR "P-37'' c receipt when the carrier delivers the c goods at destination. SGS Philippines, Inc. "P-37'' Certificate E Reports which contain the volume, Initial SAD "P-4o" F consignor, and consignee details, ATRIG "P-38" G proforma invoice price, and ''P-41 " H destination, issued by the attending Bank Certification "P-42" I port surveyor at the load port. Initial SSDT "P-39" A "P-44" Certificates, which has the same Initial Assessment Notice B purpose as the LPSR, issued by SGS (AN) "P-43" Philippines as attending port E surveyor. Final Invoice/Tax Invoice "P-46" H Provide information on the details of CQR "P-47'' I import declaration based on BL. "P-45 " Final SAD "P-48" J Clearance from the BIR once tentative liquidation to BOC is Final SSDT "P-49 " J settled. Final Assessment Notice Issued by the bank as proof of (FAN) payment for initial SAD. BOCOR Proofs of payment of tentative SAD. E2M Customs Payment Provide information on taxes and Receipt duties due for settlement on tentative liquidation. Billing document based on actual volume received and global pricing standards issued by SIETCO. Report which contains the actual volume received by the import terminal issued by the attending port surveyor. Provide updated information on the details of import declaration based on actual volume received per CQR, if higher than the volume declared in the BL. If actual volume received is lower than the volume declared in the BL, no re-computation is done and the initial/tentative SAD becomes the final SAD. Proofs of payment of final SAD. Provide information on taxes and duties due for settlement on final liquidation. Issued by the BOC after settlement/liquidation of the additional duties and taxes for an import entry, if there was any adjustment. Receipt generated from E2M System after settlement/liquidation of the additional duties and taxes for an import entry, if there was any adjustment.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - ----- - - -- - --- - - - -- - ---- - - - - - - - - - --- - - - - - --- - - --- -X Based on the !CPA's review'93, as verified by the Court, the excise tax totalling t'2,591,240,958.oo with respect to the subject n ADO importations was duly paid. Documentary evidence, including BLs, CQRs, SADs, SSDTs, among others, properly supports such total payment, as summarized below: US Barrels at Volume (Liters Excise Tax Exhibit No. 6o Farenheit at Observed at r6.oo'~4 Set Temperature) BL Date CQR SAD ATRIG- BL SSDT First Importation (MT Silver Ebalina) Initial 300,000 48.353-795 P2gO,l22,770.00 o8 july 2020 ��r-3s". P� 1'~\ "P-4o", p. "P-42", p. "P-38", p. 1'~7; "P�l�J"'"H 1'"': "P-1- "P-1"'"" 1'~"; "P-1- 4"'"" s""" Final JOO,OOO 48.353-795 zgo,JH,770.oo "P-43", p. 1'"'l "P-46, p. "P-47'', p. 1""'4 1'"1 Difference , Second Importation (MT CSC Amethyst) Initial 299-998 48.428,434 !1>2g0,570,604.00 19 july 2020 "P-3s". P� 2'"r'; "P-4o", p. "P-42", p. "P-38". p. 2"'8; "P-2- 2'""; "P-2- 2'-'"; "P-2- "P-2"'"7 3"'"~ 4":m s""l "P-43'', p. Final 299-998 48.428,434 290,570,604.00 2"4 "P-46", p. "P-47'', p. 2''5 2"" Difference P291,107,202.oo 30 july 2020 "P-35", P� 3"7: "P-4o", p. "P-42", p. "P-38", p. Third Importation (MT Oriental Gold) 3"'; "P-3- 3"l; "P-3- Initial "P-3""H 3"9: "P-3- 3��,,., 4""' 5""4 \93 Annexes A to J. id. 194 The !CPA noted that for the purpose of computing the excise tax, the volume in Liters at Observed (Obs) Temperature indicated in the BL was used as the excise tax base at a rate of 1'6.00; See ICPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 753. \95 USB (Exhibit "P-67-2"). 196 Division Docket. Volume II. p. 838. 197 USB (Exhibit "P-67-2"). 198 Division Docket. Volume II. p. 841 199 USB (Exhibit "P�67-2"). 200 Division Docket, Volume II, p. 842. ::!01 USB (Exhibit "P-67-2.'). 202 Division Docket, Volume II, p. 843. 203 USB (Exhibit "P-67-2"). 204 USB (Exhibit "P-67-2"). 205 USB (Exhibit "P-67-2"). 206 USB (Exhibit "P-67-2"). 207 Division Docket. Volume 11. p. 850. 208 USB (Exhibit "P-67-2"). 209 Division Docket, Volume II, p. 853. 210 USB (Exhibit "P�67�2"). 211 Division Docket, Volume II, p. 854. USB (Exhibit "P-67-2"). 2\3 Division Docket, Volume II. p. 855. 214 USB (Exhibit "P-67-2"). 2\5 USB (Exhibit "P-67-2"). 216 USB (Exhibit "P-67-2"). 2\7 USB (Exhibit "P-67-2"). :?.\8 Division Docket, Volume II, p. 862. 21 'l USB (Exhibit "P-67-2"). 220 Division Docket, Volume II, p. 866. 22\ USB (Exhibit "P-67-2").

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - ----- --- - - --- - - -- - ---- - - - - - - - - - - -- - - - - - - -- - - ----X US Barrels at Volume (Liters Excise Tax Exhibit No. at Observed at P6.oo'94 Set 6o Farenheit BL Date BL SAD ATRIG Final Temperature) 291,127,950.00 ]00,499 CQR SSDT 48,)21.)25 (P20,748.oo) "P-43", p. "P-46", p. "'P-47", p. 3"1 3'"'' 3"7 Difference (3.458) Fourth Importation (MT Songa Diamond) Initial 101,760 16,411,550 1'98.469,300.00 10 August 2020 "P-35", P� 4�x; "P-4o", p. "P-42", p. "P-38", p. 4'1"; "P-4- 4'1': "P-4- "P-4""~ 4',_,: "P-4- 3"'1' 4"')) s"�li "P-46", p. "P-47", p. Final 101,760 16>413,202 98.479.212.00 "P-43", p. 4"17 4'JH (l'g,g12.00) 4')6 DiHerencc (1,652) Fifth Importation (MT Everhard Schulte) Initial 100,005 !6,124,604 Pg6,747,624.oo 16 August 2020 "P-35, P� 5'-W; "P-4o", p. "P-42". p. "P-38". p. "P-5"'4" 5'41; ��p. 5. s�-~�: ��r-s- 5'..': "P-s- 3.. , . , 4 ..,.... s"''" "P-46", p. "P-47", p. Final 100,005 16,160,8]7 g6,96s,o22.oo "P-43", p. 5,4H 5'49 (P217,398.oo) 5'"'7 Difference (]6,233) Sixth Importation (MT Silver Hannah) Initial 301,070-58 48.956,142 P293�7 36 . 8 52.oo 18 August 2020 ��p.35", p. 6'1"; "P-4o", p. "P-42", p. '"P-38, p. 293-736,8;2.00 "P-6""5' 6'1"': "'P-6- 6'..,..; "'P-6- 6'1"; "P-6- "P4]", p. 6�1H 3"">1 4"'" s""'" Final 301,070�58 48,9s6,142 No Final - 222 Division Docket, Volume II, p. 867. USB (Exhibit "P-67-2"). 224 Division Docket, Volume II, p. 868. 225 USB (Exhibit "P-67-2"). 226 USB (Exhibit "P-67-2"). '227 USB (Exhibit "P-67-2"). 228 USB (Exhibit "P-67-2"). 229 Division Docket, Volume II, p. 875. 230 USB (Exhibit "P-67-2"). 2~ I Division Docket, Volume II, p. 878. 232 USB (Exhibit "P-67-2"). 233 Division Docket, Volume II, p. 879. 234 USB (Exhibit "P-67-2"). 235 Division Docket, Volume II, p. 880. 236 USB (Exhibit "P-67-2"). 237 USB (Exhibit "P-67-2"). USB (Exhibit "P-67-2"). 239 USB (Exhibit "P-67-2"). 240 Division Docket, Volume II, p. 887. 241 USB (Exhibit "P-67-2"). Division Docket, Volume II, p. 890. 243 USB (Exhibit "P-67-2"). 244 Division Docket, Volume II, p. 891. 245 USB (Exhibit "P-67-2"). 246 Division Docket, Volume II, p. 892. 247 USB (Exhibit "P-67-2"). 248 USB (Exhibit "P-67-2"). 249 USB (Exhibit "P-67-2"). 250 USB (Exhibit "P-67-2"). 25\ Division Docket, Volume II, p. 899. 252 USB (Exhibit "P-67-2"). 253 Division Docket, Volume II, p. 902. 254 USB (Exhibit "P-67-2"). 255 Division Docket, Volume II, p. 903. 256 USB (Exhibit "P-67-2"). 257 Division Docket, Volume II, p. 904. 258 USB (Exhibit "P-67-2").

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X US Barrels at Volume (Liters Excise Tax Exhibit No. 6o Farenheit at Observed at P6,oo'\>4 Set Temperature) BL Date BL CQR SAD SSDT ATRIG SA0"19 Difference Seventh Importation (MT Jason) !niti<ll 289-402.53 46�529,579 1'279.177474�00 14 September zo:~.o "P-35", P� 7''"'; ''P-4o", p. "P-42", p. "P-38", p. 7'6': "P-7- 7'-64 : "P-7- "P-i''6' 7'''''; "P-7- 3''>(�J 4"'"' s"'n: Final 289.402.53 46,s4Bmg 279,288,174-00 '"P-43", p. "P-46", p. "P-47'', p. 7'0M 6�1.~ 6''" Difference (18,450) (f'llO,?OO.OO) Eighth Importation (MT CSC Peace) Initial 195.345 31>428,200 Pt88,s6g,zoo.oo 27 September 2020 ''P-3s", p. 8'7': "P-4o", p. "P-42", p. '"P-38", P� "P-8"'7' 8m; "P-8- 8'71; "P-8- 8'77; "P-8- 3"'>74 4"27(� 5"''~ Final 195.345 31o428,20o t88,569,20o.oo "P-43", p. "P-46", p. "P-47", p. 8 2 79 7'&' 7'H' Difference Ninth Importation (MT Nave Atria) Initial 308,ogo.71 49,083,226 P294o499,356.oo u October 2020 "P-35", P� 9'~'; "P-4o", p. "P-42", p. "P-38", p. "P-9"'H> 9'~"': "P-g- 9'Hr,; "P-g- 9'HH; "P-g- Final 3o8,ogo.71 49-597.058 297.)82,348.oo "P-43", p. 3"'~1 4"'H7 s"'H'' Difference (513,832) (P3,082>992.oo) 9'9" "P-46", p. "P-47", p. . 8'9' 8'~' As noted by the !CPA, no final SAD was generated as the unit price per proforma invoice and volume per BL was higher than the final invoice and CQR, thus, the initial SAD became the final SAD; See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 758. 260 USB (Exhibit "P-67-2"). 2.61 Division Docket, Volume II, p. 909. 262 USB (Exhibit "P-67-2"). 263 Division Docket, Volume II, p. 912. 264 USB (Exhibit "P-67-2"). 2.65 Division Docket, Volume II, p. 913. 266 USB (Exhibit "P-67-2"). 267 Division Docket, Volume II, p. 914. 268 USB (Exhibit "P-67-2"). 269 Id. 270 Id. 271 Id. Division Docket, Volume II, p. 92 I. 273 USB (Exhibit "P-67-2"). 274 Division Docket, Volume II, p. 924. 275 USB (Exhibit "P-67-2"). 276 Division Docket, Volume II, p. 925. 277 USB (Exhibit "P-67-2"). 278 Division Docket, Volume II, p. 926. 279 USB (Exhibit "P-67-2"). 280 Id. 281 I d. 282 Id. 283 Division Docket, Volume II, p. 933. 284 USB (Exhibit "P-67-2"). 285 Division Docket, Volume II, p. 936. 286 USB (Exhibit "P-67-2"). 287 Division Docket, Volume II, p. 937. 288 USB (Exhibit "P-67-2"). 289 Division Docket, Volume II, p. 938. :0.90 USB (Exhibit "P-67-2"). 291 I d. :'.92 I d.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X s,, US Barrels at Volume (Liters Excise Tax Exhibit No. 6o Farenheit at Observed at P6,oo'94 BL Date BL CQR Temperature) SAD SSDT ATRIG Tenth Importation (MT BW Yangtze) Initial 314,919 so,68o,348 1'304,o82,o88.oo 03 November 2020 "P-3s". P� "P-40", p. "P-42", p. "'P-38", p. 10'~1; "p.10"1o4 10'~'; "P-10- w'"7; "P-10- 1o'"": ��p. 3"'"" 4">oH 1o-s"~'" Final 314.919 so.680,348 304,082,o88.oo "P-43", p. "'P-46", p. "P-47'', p. gl"' gl''l 1o>~� Difference Eleventh Importation (MT MR Leo) Initial 167,144 26,786,123 PJ6o,7t6,738.oo o8 November 2020 "P-3s". P� ltl"4; "'P-4o", p. "P-42", p. "P-38", p. "P-n"'"' nl"0; "P-n- uJ"X; "P-n- n>'"; "P-n- 160,716,738.oo 3")"7 4")"" s")" Final !67,144 26,786,123 "P-43", p. "P-46", p. "P-47", p. Difference nl" JOl''l )01'4 Total- 2,6,8,233�82 431,2gg,868 P:~.,s87,799�208.oo Initial ;o.,6,8,233�8;o. 431,873,493 ;o.,59l,Z40,958.oo Total - <sn.6:~.s) (P3>441>750,00) Final Total- Difference The table above shows a total discrepancy of 573,625 liters between the quantity of imported ADO unloaded for delivery at the Tabangao Refinery, as indicated in the CQR, and the quantity declared t in the BL.3'5 This discrepancy resulted in the assessment and payment of additional taxes amounting to P45,378,917�973'6, inclusive of excise tax of1'3,441,750.oo.317 293 !d. 294 Division Docket, Volume II, p. 945. 295 USB (Exhibit "P-67-2"). 296 Division Docket, Volume II, p. 948. ::!97 USB (Exhibit "P-67-2"). 298 Division Docket, Volume II, p. 949. 299 USB (Exhibit "P-67-2"). 300 Division Docket, Volume II, p. 950. 301 USB (Exhibit "P-67-2"). 302 !d. 303 !d. 304 !d. 305 Division Docket, Volume II, p. 957. 306 USB (Exhibit "P-67-2"). 307 Division Docket, Volume II, p. 960. 308 USB (Exhibit "P-67-2"). 309 Division Docket, Volume II, p. 961. 3 I0 USB (Exhibit "P-67-2"). 3 II Division Docket, Volume II, p. 962. 312 USB (Exhibit "P-67-2"). 313 !d. 314 !d. 115 See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 756. 316 Table 11.16, !CPA Report dated 20 October 2023, Exhibit "P-67'', supra at note 57, p. 759. 317 573,625 liters at 1'6.00 excise tax rate.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - -- -- - - -- - - - -- - - ---- -- - - - - - - - - - - - -- - - - - - - -- - - - ---X The ICPA found that the additional taxes of f>45,378,9I7.97 (including the excise tax of f>3A41,750.oo) were paid as evidenced by BOC ORs and E2M Customs Payment Receipts, to wit: 3'8 Sot VAT FMF Amount Amount of Total Items Global Total Assessed Assessment BOCOR (b) of Fees Excise Tax Taxes Taxes Amount for the Notice Exhibit (a) No.J'9/ E2M (o) (d) (e=oa+b+c+d) (fj Declaration Customs (g=e+f) Payment !'2gD,J:ll.,770.00 Receipt~ 290,1Z2,770.00 First Importation (MT Silver Ebalina) Pzgo,s7o,6o4.oo Initial P124,035�336.7o 290,570,604.00 P414,t58,m6.7o P1,z8o.oo 1'414,159�386.70 419,357.614,27 419,Js8,8g4.27 Final 129,234.843�27 I'LOO P291,107,202.oo 1,280.00 (Ps,Igg,so7�57l 291,127,950,00 (Ps,tgg,so7�57l Difference (Ps,lgg,so6.s7l - (Pt.oo) (P:zo,748.oo) "P-1-8"1" "P-1-g"1" Second Importation (MT CSC Amethyst) Pg8,469,JOO.OO 98.479,212.00 Initial P123,6og,J83.81 (Pg,gu.oo) f'414,179�987.81 1'1,280.00 1'414,181,267.81 419,209,J8L93 1,280.00 419,210,661.93 Final u.. 8 , 6 J 8 , 7 7 7 - 9 3 !'g6.747.624.00 (P5,o:zg,J94�u) (Ps,o:zg,J94�t:z) Difference (Ps,o29,394-12) g6,g65,022.00 "P-2-S"l'l "P-2-g"J'--~ (P2t7,398.oo) Third Importation (MT Oriental Gold) P:zgJ,7J6,8s:z.oo Initial Pn2,922,J51.15 293.736,8s2.oo p 414,029.553-15 1'1,280.00 P414,0J0,8JJ.IS 418,6JJ,795-0J 1,280.00 418,6JJ,075�03 Final 127,50J,845�03 P279,177.474�oo (P4,6o2,24t.88) 27g,:z88,174-00 (!"4,602,241-88) Difference (P4,58t,493�88) (Pno,,oo.oo) " P - J - 8 " 1' ' "P�J�g"J'I' Fourth Importation (MT Songa Diamond) f>188,s6g,2oo.oo 188,56g,zoo.oo Initial f>42,J76,6J7�18 1'140,845�937�18 1'1,280.00 1'140,847.217.18 142,299-516.36 1,280.00 142.300,796.36 Final 43.820,304�36 (f"l,453o579�18) (f"IA53o579-t8) Difference (f"l,443o667,t8) "P-4-9"1' 7 Fifth Importation (MT Everhard Schulte) Initial P41,581,J22.o1 I'1J8,J28,g46.o1 1'1,280.00 l'IJ8,JJO,:z26.ol 140,048.754-30 1,280.00 140,0j0,034�30 Final 4J,08J.7J2.29 Po.o1 (Pt,'7tg,8o8.2g) (Pt,719�8o8.:zg) Difference (P1,so:z,4to . :z8) "P-5-8"~'~ "P-s-g"l'~ - (Po.ot) Sixth Importation (MT Silver Hannah) Initial P121,246,:zgo.66 f'414o98J,142.66 1'1,280.00 1'414.984.422.66 414.983,142.66 1,280.00 4'4-984.422.66 Final 121,246,2go.oo Difference - .ll" - Seventh Importation (MT Jason} Initial Pl05,JOO,g6j.IO P2,917,10j-48 PJ87,J95-544�S8 !'1,28o.oo f>J87.J96,824-58 394.920,975�08 1,280.00 394.922,2jj.08 Final n2,714,538.go 2,gJ8,262.18 {P7,52.5>4JO.j0) (P7o525o4JO.j0) Difference (P7,41J,s73-8o) (Pl,tj6.7o) f>l62,287.467.81 "P-7-8"1J1 "P-7-g"ll' 266,JJO,OOJ.50 Eighth Importation (MT CSC Peace) I Initial 1'71,747-921.71 f>1,970�J46.l0~ P1,280.00 I 1'262,288,747�8' I . Final 75.790.457�39 I 1,970,J46.1o f>o.01 1,zso.oo 1 266,JJ1,28J.50 318 Annex J, Exhibit "P-67'', USB (Exhibit "P-67-2"). 319 Exhibit "P-48", USB (Exhibit "P-67-2"). 320 Exhibit "P-49", id. 3:!1 Division Docket, Volume II, p. 848. !d., p. 849. 323 ld., p. 860. 324 Id., p. 861. 325 Id., p. 873. 326 Id., p. 874. 327 Id., p. 886. 328 ld., p. 897. 329 Id., p. 898. 330 The ICPA noted that for importation MT Silver Hannah, no additional excise tax was paid since it has a higher unit price and volume per initial assessment than the final assessment; See ICPA Report dated 20 October 2023, Exhibit "P-67'', supra at note 57, p. 759. 331 Division Docket, Volume II, p. 919. 332 Id., p. 920.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - ------ - -- - - --- - - ------- - - - - - - - - - - -- - - - - - - -- - - - ---X Sot VAT FMF Amount Amount of Total Items Global Total Assessed Assessment BOCOR (a) (b) of Fees Excise Tax Taxes Amount for the Notice Exhibit Taxes (<) (d) (e=a+h+c+d) Declaration No.l'9/ E2M (0 (g=e+f) Customs Payment Difference (P4,o42,535�68) (Po.oi) (P4,o42,535�69) (P4,o42,535�6g) "P-8-S"m ReceiptP" Ninth Importation (MT Nave Atria) "P-8-g">34 Initial P!l4,704,709.05 PJ,o77,202.73 P294,499�356.oo P412,281,267.78 1'1,280.00 P412,282,547-78 "P-g-g"H" ],109,416.70 297.582,]48.oo 416,802,176.8] 1,280.00 416,8oJ,456.8] Final u6,ll0.412.1] (f"32,21]-97) "P-to-g"llM (P],o82,ggz.oo) (P4,sw,gog.osl (P4,52o,gog.osl Difference (Pl->405 170].08) "P-g-S"ns "1'-u-g"w� Tenth Importation (MT BW Yangtze) Initial P111,go8,83J.58 I'J,177,JJ2.02 P304,o82,o88.oo P419,168,251.6o 1'1,280.00 1'419,169,531.60 J,177.JJ2.02 304,082,o88.oo 424.475.410.12 1,280.00 424,476,6go.12 Final 117,215,988.1o 2.00 (P5,3o7,t 5B.s2) (P5,J07, 15B.sz) Difference (Ps,Jo7,ts6.s2) (P2.00) "P-1o-8"m Eleventh Importation (MT MR Leo) lnitiill P6o,Ol],158.47 !'!,679.317-72 P160,7t6,738.oo 1'222,419,214.19 1'1,280.00 1'222,420,494-19 1,679,317-72 !60,716,7]8.00 n8,J97.567-36 1,280.00 228,Jg8,847�36 Finill 66,om,j10.64 !'1.00 (P5,978,J53�17) {Ps,g7B,JsJ.17) Plz,821 0J04,0S (Pl.oo) P2,j87,799,208.oo P],64o,on,419.47 P14,o8o.oo 1"],640,091,499�47 Difference (Ps,97B,J52,17) 12,8;4,674�72 z,;gi,l40,gj8.oo J,6ss,4s6,JJ7�44 14,080.00 ],68j,4j6,J37�44 "P-u-8"m (P3J,370.67) P4.o2 (PJ,44I,750.00) (P45,J78,gt7�97) (P45,J78,gt7,97) Total-Initial Pt,OJ9o456,go7�42 (1"4.02) Total-Final t,o81,]60,700.70 Total Difference (P4lo90J,79J,28) Based on the foregoing, petitioner duly paid total excise taxes amounting to f'2,591,240,958.oo, which corresponding importation documents properly support. Said amount includes excise taxes of f'18,9o8,370.oo paid on the ADO importations that form the subject of the present claim for refund.w To prove that the imported ADO, for which petitioner claims an exctse tax refund of PI8,9o8,37o.oo, was duly withdrawn from importations made during period from July to November 2020 - on which petitioner paid total excise taxes amounting to f'2,591,240,958.oo - petitioner submitted the following documentary evidence before this Court: Documents Exhibit Annexed to the Description Presented for No.J+Z !CPA Report"' A monthly terminal report showing all the received quantity and � Withdrawals "P-s 4"344 I< to L ORB JJ3 Jd., p. 931. 334 Jd., p. 932. 335 ld., p. 943. 336 !d., p. 944. 337 !d., p. 955. 338 !d., p. 956. 339 !d., p. 967. 340 !d., p. 968; There is a 1'1.00 difference between the additional VAT due of 1'5,978.353.17 and the amount paid as reflected in the BOC OR, which is 1'5,978,352.17. 341 See ICPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 759. USB (Exhibit "P-67-2""). 343 !d. 344 Division Docket, Volume II, pp. 788-792.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - ----- - - -- - --- - - - -- - ---- - - - - - - - - - - -- - - - - - --- - - ----X Documents Exhibit Annexed to the Description Presented for ICPA Report343 Withdrawals No.34~ withdrawn quantity of each petroleum product prepared by the M terminal onerators of petitioner. DPDR "P-55" N Daily report showing the daily removals of each petroleum WCs "P-s1" oroduct from Tabanoao Refinerv. p Certificate that shows the source of the ADO, its destination, the BDNs "P- 52" date of its withdrawal, and its volume at the time withdrawn. The Q WC also indicates the composition of ADO 82 in volume, which is CBDs "P-s3" 98% Base Diesel and 2% eM E. The WC is prepared and signed by the ROOP of the BIR and a petitioner's representative. System-generated document issued by petitioner signifying proof of delivery. The BDN shows where the product is delivered. It likewise indicates the load date, product description, the delivered auantitv, and the vessel to which the ADO is loaded. Serve as petitioner's delivery document, signed by petitioner and the vessel's authorized representatives, and issued to support the We and Delivery Note. The CBD shows the delivery date, the product, and the name of the vessel, the corresponding we number, and the volume delivered. As the Court verified, ICPA found that n importations were duly lodged in the ORB345, and that the actual volumes recorded in the ORB and the total volumes received, as reflected in the corresponding CQR346, are identical,347 Details appear below: Date Product Actual/CQR Invoice/BL (Surplus)/ Received Type Loss Liters Set Barrels Liters at Air Barrels Liters at Air 19 July 2020 (A) (B) (A-B) First (87,633) Importation ADOBo <99.771.36 48,266,162 JOO,OOO 48.353.795 (8,820,J<li) (MT Silver 8,696,839 Ebalina) 31 July 2020 ADOBo 245,761.06 19,6o8,13'l 299�998 48.428,434 Second 01 August 2020 8,696,839 - 3.458 Importation 53,960.38 - (MT esc 1,652 Amethvst) 07 August 2020 ADOBo )00,772.82 48.521,325 300,499 48,sJ7,867 Third 36,233 Importation 15 August 2020 ADOBo 101,793�68 16,413,202 101,760 16,4U,55o (MT Oriental (444,007) Gold) 26 August 2020 ADOBo 100,295�61 J6,J60,837 100,005 16,124,604 Fourth 0�v 18,450 Importation 07 September 2020 ADO Bo 300,)29�97 48.512,135 301,070�58 48, 95 6,142 (MT Songa 24 Seotember 2020 ADOBo 280.4'"�25 46,s48,o2o 46,s29,579 Diamond} 289.402.51 Fifth Importation (MT Everhard Schulte) Sixth Importation (MT Silver Hannah} Seventh 345 See Official Register Book (ORB), Exhibit "P-54", id., pp. 788-792. 346 Exhibit " P-43" , USB (Exhi.b.it " P-67-2" ). 347 See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 761.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X Set Date Product Actual/CQR Invoice/BL (Surplus)/ Type Importation Received Barrels Liters at Air Barrels Liters at Air Loss Liters (MT jason) (A) (B) (A-B) Eighth 04 October zozo ADOBo 194,812.15 31,384.706 195.345 JIAZ8,zoo (43-494) Importation 21 October 2020 ADOBo 307,396.26 49-597-058 3D8,ogo.7t 4g,o8J,226 513,832 (MT esc 10 November zozo ADOBo 314,505�70 50,592,914 314-919 50,680,348 (87,434) Peace) zo November zozo ADOBo 166,505.14 26,722,2)8 167,144 z6,786,1z3 (63,88;) Ninth 43t,zgg,868 (276,290) z,675d59�4o 431,023,578 2,678,233�83 Importation (MT Nave Atria) Tenth Importation (MTBW Yangtze) Eleventh Importation (MT MR Leo) Total Petitioner subsequently unloaded and stored 2,675,359-40 barrels of imported ADO, equivalent to 431,023,578 liters at air, in designated product tanks at the Tabangao Refinery. Thereafter, in compliance with Republic Act (RA) No. 9367, otherwise known as the "Biofuels Act of 2oo6," petitioner added a locally produced additive, CME, to ADO to improve its quality prior to sale and delivery to SPEX.348 As a result of the CME addition, the final product, now referred to as "ADO B2", consisted of 2% CME and 98% original ADO (ADO Bo). Petitioner thereafter loaded finished product, ADO B2, onto various vessels for delivery to SPEX.349 A review of the ORB3so confirms movement of ADO Bo and ADO B2 during period from July to November 2020. The !CPA's examination corroborates these movements, as reflected below: Table l11.3- Movement of ADO Bo35' ADOBo ADOBo ADOBo ADOBo ADOBo ADOBo Opening Ending Period Importations Importations Volume sent Volume Balance not covered by covered by to production Balance (Taxable Year review Withdrawn (in (in liters) review of ADO B2 (in liters) (in liters) :zo:zo) (in liters) liters) [F=A+B+C-D-E] [A] (in liters) [C] [D] [E] July [B] . J0,624,J:Z13~~ 23,188,533 - 348 50,832,094 87,874,295 1J1,270,601 349 350 See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, pp. 761-762. 351 ld., p. 762. See ORB, Exhibit "P-54", supra at note 345; USB (Exhibit "P-67-2"). See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 763.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - ----- - ---- - -- - - - --- - - - - --- -- - - -- - --- - - - ----- ---- - -X Table III.3- Movement of ADO Bo35' Period ADOBo ADOBo ADOBo ADOBo ADOBo ADOBo (Taxable Year Opening Importations Importations Volume sent Volume Ending Balance not covered by to production Withdrawn (in Balance 202.0) (in liters) covered by of ADO B2 (in liters) (in liters) review review [F=A+B+C-D-E] August [A] (in liters) liters) [E] September (in liters) [D] 19,673.245 30,624,)22 [B] [C] - October 22,468,o8o November 19,673.245 - 89.792,203 100,743,280 4,515,565 28,699.156 Total 22,468,o8o - gs,o6o,164 87.749.764 - 27,259,804 28,699,156 - 80,981,763 74.750,687 - 49.678.389 77,Jlj,l53 128.{32,894 4615665 100,510483 431,023,578 522,947,226 Table 111.4- Movement of ADO BvSJ Period (Taxable ADO B2 Opening ADO B2 Volume ADO Bo2 Volume ADO B2 Ending Year zozo) Balance Produced from Withdrawn for Balance (in liters) ADO Bo sent to delivery to (in liters) July [A] customers, [D=A+B-C] August Production including SPEX September (in liters) (in liters) 27,950,163 October November [B] [C] 18,664,849 Total 22,896,685 18,469,195 1J2,176,2n uz,6g5,243 13,279.931 20.356,o53 27,950,163 102,406,240 m,6gi,S54 18,664,849 8g,120,210 84,888,J74 22,896,685 75,668,674 85,28 5.428 13,279.931 123,315,896 130,)92,018 529,763,353 527,876>495 Based on Table Ill.3, the !CPA noted that 426,so8,013354 liters of ADO Bo, out of the total 522,947,226 liters used in the production of ADO B2, originated from importations made during the period from July to November 2020.355 On the other hand, based on Table lll.4, the ICPA verified that production yielded a total of 529,763.353 liters, of t which 98%, or 519,168,o85.94356 liters, consisted of ADO Bo. The ICPA likewise verified total withdrawals of 527,876.495 liters, of which 98%, or 517,3I8,96s.w357liters, consisted of ADO Bo.358 352 There is a discrepancy of I liter; The !CPA Report indicates 30,624,322 liters, but upon recomputation, the correct volume should be 30,624.321 liters. 353 See !CPA Report dated 20 October 2023, Exhibit "P-67''. supra at note 57, p. 764. 35 .. ADO BO Importations covered by review of 431,023.578 liters less ADO BO Withdrawn not related to the claim for refund of 4,515,565 liters. 355 See !CPA Report dated 20 October 2023. Exhibit "P-67". supra at note 57. p. 764. 356 98% of 529,763,353 liters. 357 98% of 527.876,495 liters. 358 See !CPA Report dated 20 October 2023. Exhibit "P-67". supra at note 57, p. 764.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - ---- - -- - - - -- - - ------ - - - - - - - - - - - -- - - - - - - -- - - - ---X In a Letter dated 24 August 2o2o3s9, which respondent received on 03 September 2020, petitioner informed respondent of its decision to discontinue its refinery operations and shift to full importation. It should be noted that a portion of the period covered by the present claim coincided with the time prior to the cessation of petitioner's refinery operations in August 2020. Consequently, petitioner adopted the FIF0360 method for withdrawal or removal of ADO from the storage tanks at the Tabangao Refinery. As the records yield, to trace the withdrawals of ADO B2 to the corresponding importations of ADO Bo, the !CPA computed ADO Bo component representing g8% of ADO B2 opening balance and withdrawals and applied this computation against the running balance of ADO Bo using the FIFO method.36' An analysis of Annex 0362 of the !CPA Report shows that the first withdrawal of 42o,ooo liters of ADO B2, as well as the subsequent withdrawals for sale and delivery to SPEX, originated from importations made during the period from July to November 2020, as shown below: Particulars Volume Beginning Balance 363 4 1 , 2 8 8 , ) 4 4 . 1 0 Add: Importation not related to the subject claim for refund (Navig8 Strength) so,832,094-46 Less: 98% of ADO B2 Withdrawals before the withdrawal of 42o,ooo liters for sale and delivery to SPEX 22,428,163.38 44.8)6,335-74 July 1 to 6, 2020 31,946,g8o.8o July 7 to 18, 2020 (7,091,041.36) July 19 to 27, 2020 Deficit 359 Exhibit "P-65", USB (Exhibit "P-67-2"). 360 According to Ms. Flores, under the FIFO method, the earliest ADOs stored in the tanks are also the first ones removed therefrom. She illustrates that if petitioner stored imported ADO in a tank on January I, then, on January 15, petitioner stored locally manufactured ADO in the same tank. When petitioner removes ADO from the storage tank, it first withdraws from the imported stock stored on January 1. Petitioner must exhaust the imported ADO stored on January 1 before it can withdraw the locally manufactured stock stored on January 15. As a result, the ADOs remaining at the end of a certain period consist of the stocks most recently stored in a particular tank; Q&A No. 21, Exhibit"P-27", supra at note 51, p. 314. 361 Table III.5, !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, pp. 766-767, in relation to Annex 0, USB (Exhibit "P-67-2"). 362 USB (Exhibit "P-67-2"). 363 Sum of ADO BO opening balance of23,188,533 liters and 18,099,811.\0 which represents 98% of ADO B2 opening balance of 18,469,\95 liters; Exhibit "P-54", supra at note 345, p. 788.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - ---- - - --- - - - - - - -- - - ---- - - - - - - - - - - - - - --- - - - - - - - - - - ---X Particulars Volume Add: First Importation (MT Silver Ebalina) 48,266,!62 Ending Balance, before the first withdrawal of42o,ooo 41,175,12.0.64 liters for sale and delivery to SPEX on July 27, 2020 Based on the foregoing table above, a deficit of 7,091,041.36 liters existed before the first withdrawal of 42o,ooo liters on 27 July 2020. The first importation received on 19 July 2020 covered this deficit. As the !CPA noted, the running balance of ADO Bo prior to the first withdrawal for sale and delivery to SPEX amounted to 41,175,120.64 liters, which remained less than the total importation volume of 48,266,162 liters delivered by MT Silver Ebalina. Consequently, the first withdrawal, along with the subsequent withdrawals for sale and delivery to SPEX, originated from the importations that form subject of the present refund claim.364 On the other hand, the total available ADO B2 recorded in the ORBs from July to November 2020 amounted to 548,232,548 liters, comprising an opening balance of 18,469,195 liters and 529,763,353 liters produced during the period.365 Of this total, 537,267,897.04366 liters represented ADO Bo. Total withdrawals reflected in the monthly ORBsh corresponded with the withdrawals recorded in the DPDR368, as summarized below: Table lll.6 Taxable Volume of Withdrawals of ADO 82 (in Liters) ADOBo Year Component in ORB Exhibit DPDR Exhibit Reference Liters (98% of 2020 (Annex L) Reference (Annex M) 122,695 ,243 "P-s4", p. 1 "P-ss", po. 1 to 4 ADO Bz) Month m,691,554 "P-s4", o. 2 122,695�243 "P-ss", oo. 5 to 7 july 84,888,374 "P-54", o. 3 m,691,554 "P-ss", oo. 8 to 20 120,241,)38.14 85,285.428 "P-s4", o. 4 84,888,374 "P-ss", pp. 21 to 28 109,457.722.92 . August 123,'115,896 "P-54", p. 5 8s,285o428 83,19o,6o6.52 Seotember 527,876,495 123,315,896 i "P-ss", oo. 29 to 44 83.579.719-44 527,876,495 120,849,578.o8 October I 5'7�318,965.10 � November 0 Total See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 768. See Table lll.4, !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 764. 364 98% of 548,232,548 liters. 365 Annex L, USB (Exhibit "P-67-2"). Annex M, id. '" 367 368

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X The ICPA found that, from July to November 2020, petitiOner had withdrawn a total of 527,876,495369 liters of ADO B2 for sale and delivery to its customers, including SPEX. Of this volume, 426,5o8,o13370 liters of ADO Bo originated from importations covered by the subject refund claim.371 From this amount, the ICPA traced 3,151,395 liters as specifically attributable to sales and deliveries to SPEX37Z, itemized as follows:373 Date Withdrawn Exhibit Volume of Volume of Total Volume Specific Tax No.J74 Base Diesel CME (ADO Bz"6) [A] x P6.oo (ADO Bom) 27 July 2020 "P-s1", p. 1 8.400 420,000 Pz,46g,6oo.oo 27 August zozo "P-s1", p. z [A] 12,168 3�577.392.0� o6 September 2020 "P-si", P� 3 4n,6oo g,zoo 6o8.400 n September 2020 "P-si", p. 4 596,232 2,704,800.00 24 September 2020 "P-si", p. s 45o,8oo 2,001 460,000 12 October 2020 "P-si'', p. 6 98,os9 588, 35 4-oo 16 October 2020 "P-si", P� 7 97.965 1,999 Ioo,o6o 587 ,79 o.oo 13 November 2020 313,896 6.406 99�964 1,883,376.oo 25 November 2020 s "P-51", p. 97,856 1�997 587,136.00 26 November zozo 98.326 320,302 s89,956.oo 28 November zozo "P-si", P� 9 539,000 2,007 "P- 51", p. 10 97,874 11,000 99.853 3,2J4,000.00 Total "P-s1", p. u 349.787 100,333 3� 1 51 �395 1,997 sso,ooo s87,244.oo 7,139 99.871 z,og8,722.oo 64>3'4 356,926 Pr8,go8,370.oo J,215,709 Examination of the WCs shows that the ADO Bo (Base Diesel) bore the notation "Tax Paid", which indicates that excise tax on imported ADO had already been paid to the BOC. The ICPA further t noted that, when ADO was intended for delivery to SPEX, the destination appeared either as "SPEX Bunkering" or simply "Bunkering."377 )69 Annex L, id.; See ORB, Exhibit "P-54", supra at note 345. 370 See Table 111.3, !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 763; Total ADO BO Importations covered by review of 431,023,578 liters less ADO BO Withdrawn without going through production of 4,515,565 liters; The 1CPA traced the withdrawal covered by WC No. 2018609486 and found that it was not among the WCs related to deliveries to SPEX (see !CPA Report dated 20 October 2023, Exhibit "P-67'', supra at note 57, p. 764). 371 See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 768. 372 Annex 0, USB (Exhibit "P�67-2"). 373 Annex N, id. !d. 375 98% of ADO B2 (Base Diesel). 376 Base diesel and CME. 377 See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 769.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - -- ----- - -- - ---- - - -- ---- - - - - - - - - - - - -- - - - - - - -- - - - ---X In sum, petitiOner successfully proved that it withdrew 431,023,578378 liters of ADO from importations made during the period of July to November 2020. Of this total volume, 3,151,395 liters were withdrawn from the Tabangao Refinery for sale and delivery to SPEX, a tax-exempt entity. THE IMPORTED AUTOMOTIVE DIESEL OIL (ADO), SUBJECT OF THE PRESENT REFUND CLAIM, WERE SOLD AND DELIVERED TO SHELL PHILIPPINES EXPLORATION, B.V. (SPEX). Petitioner sold and delivered imported ADO to SPEX, a tax- exempt entity, pursuant to the Service Contract dated n December 1990, or SC 38379, executed between the Government of the Republic of the Philippines and Occidental Philippines, lnc. and SPEX, which contract designates SPEX as Contractor, as well as the Amending Agreement # 1 dated 15 July 2019380, and the Certification issued by SPEX.38' To establish that pet1t10ner sold and delivered excise tax-paid ADO to SPEX and that it billed and collected payment for such sales net of excise tax, petitioner presented following documentary evidence: Documents Exhibit Annexed to the Description Presented for Sales No.JBz "P-s6" !CPA Report38' and Invoicing "P-s7'' Billing document generated from SI R petitioner's SAP system, a ZFz Display computerized accounting system, once product has been delivered. Screenshot of pricing details from the G. Standard Invoice (ZF2 Display) T feature of petitioner's SAP program via transaction code VFo3. ZF2 system is sorted by date of delivery. 178 See Table 111.3, !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, p. 763. 379 See Exhibits "P-17'' and "P-17-1 ", supra at note 20. 380 Exhibit "P-62", supra at note 141. "' Exhibit "P-63", USB (Exhibit "P-67-2"). 38~ !d. 383 !d.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X Documents Exhibit Annexed to the Description Presented for Sales No.JB2 !CPA Report''' and Invoicing "P- 58" Proof of payments of the customer Proof of Payments u which are online screenshots of bank Certificate of statement. Creditable Tax Withheld at Source "P-sg" v Proof of withholding of final tax on (BIR Form No. 2306) customer's payments. LR A Report prepared by petitioner to support the claim documentation and submitted with supporting documents "P-6o" - to tax authority. The LR accounts the stock movements by FIFO method from the importation of ADO Bo to sale of ADO B2. The !CPA verified petitioner sold and delivered 3,151,395 liters of ADO withdrawn from the Tabangao Refinery to SPEX during the period from 27 July 2020 to 28 November 2020, broken down as follows: Date Total Volume we BDN CBDN SI Invoice Withdrawn (ADO B2'84) Exhibit Exhibit Exhibit No.l88 Amount Exhibit No.JB7 27 july 2020 420,000 N o . 38 ' No.J86 "P-s6", pp. 1 to 2 1'9,369.486.oo 27 August 2020 "P-s1", p. 1 "P-s3", p. 1 "P-s6", pp. 3 to 4 13,190,902,92 o6 September zozo 6o8,4oo "P-s1", p. z "P-s2'', p. 1 "P-s3", P� 2 "P-56", pp. 5 to 6 9�940,830.00 n September zozo "P-sz", p. z "P-53", p. 3 "P-56", pp. 7 to 8 2,u5,598.6o 24 September 2020 460,000 "P-51", P� 3 "P-52', p. 3 "P-53", p. 4 "P-56", pp. 9 to 10 1,961,823-49 12 October 2020 "P-s1", p. 4 "P-52', p. 4 "P-53", p. 5 {(P-56", pp. u to 12 6,270,296.01 16 October 2020 wo,o6o "P-52", p. 5 "P-s3", p. 6 "P-s6", pp. 13 to '4 '�99'�598�04 13 November 2020 99.964 "P-51", P� 5 "P-52", p. 6 "P-53", p. 7 "P-56", pp. 15 to 16 1,923,634-44 25 November 2020 320,302 "P-51", p. 6 "P-5z", P� 7 "P-53", p. 8 "P-56", pp. 17 to 18 n,600.435�oo 26 November 2020 99,853 "P-s1", P� 7 "P-52', p. 8 "P-s3", p. 9 "P-56", pp. 19 to 20 2,106.449�17 28 November 2020 100,}33 "P-51", p. 8 "P-52", p. 9 "P-53", p. 10 "P-s6", pp. 21 to 22 7,528,176.u sso,ooo "P-51", P� 9 "P-52", p. 10 "P-s3", p. u Total 99.871 "P-s1", p. 10 "P-52", p. n P67,999,229�78 356,926 "P-s1", p. n J,215,709 384 Base diesel and CME. 385 USB (Exhibit '"P-67-2"). 386 !d. 387 !d. 388 !d.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - -- - - --- -- - --- - --- - - ---- - - - - ------ --- - --- - - -- --- - ---- - -X An examination of petitioner's Sis reveals that all pertain to sales to SPEX and contain no "Excise Duty Element" line. A review of the ZF2 Display389 likewise confirms the absence of any excise tax component. Accordingly, petitioner neither billed nor collected excise tax on its sale of ADO to SPEX.39o Moreover, the ICPA found that all the SJs39' totaling P67,999,229.78 were supported by proof of payment, including online screenshots of bank transactions.392 The ICPA further noted that the difference ofr'5-439,938.38 represented the 8% FWf imposed pursuant to PD 1354393, considering petitioner's status as a petroleum service contractor. Results of the examination appear summarized below: SJ ZF2 Online Invoice Amount per 8% FWT Exhibit No.''� Exhibit Screenshot Amount Online No,395 1'1,804,831.11 "P-s6", pp. 1 to 2 of Bank Screenshot of 795,266.{0 "P-s6", pp. 3 to 4 "P-si', p. 1 Statement Bank Statement 169,247�89 "P-s6", pp. s to 6 "P-si', p. 2 156.945�88 "P-s6", pp. 7 to 8 "P-si', p. 3 Exhibit 1'9,369-486.oo 1'20, 755-557�81 501,623.68 "P-s6", pp. 9 tow "P-si', p. 4 No.J96 13,190,902.92 159.327.84 "P-s6", pp. n to 12 "P-si', p. s 9.940,830.00 9,14s.s63.6o 153,890.76 ~'P-56", pp. 13 to 14 "P-s7'', p. 6 "P-sB", p. 1 2,ns.s98.6o 1,946,350.71 1,o96,sso.73 "P-s6", pp. 15 to 16 HP-si', p. 7 1,961,823�49 1,804,877.61 602,254-09 "P-s6", pp. 17 to 18 HP-si', p. s "P-58", p. 2 6,270,296.01 5,768,672�33 "P-s6", pp. 19 to 20 "P-si', p. 7 "P-s8", p. 3 1,991,598.04 1,832,270.20 Ps,439�938.38 "P-s6", pp. 21 to 22 "P-si', p. 8 "P-s8", p. 4 1,923,634-44 1,769,743�68 UP-s7", p. 9 "P-s8", p. s n,600A3S�Oo "P-sB", p. 6 2,106-449�17 12,610,333�44 "P-s8", p. 7 7.528,176.11 6,925,922.02 "P-s8", p. 8 P67,999,229�78 P6z,ss9,291.4o "P-s8", p. 9 Total t In fine, petitioner sufficiently proved that excise tax amounting to P18,9o8a7o.oo397 paid on a total volume of 3,151,395398 liters of imported ADO subsequently sold to SPEX, a tax-exempt entity, )89 Annex T, id. 390 See !CPA Report dated 20 October 2023, Exhibit "P-67", supra at note 57, pp. 772-774. 391 Annex R, USB (Exhibit "P-67-2"). 392 Annex U, id. 393 Supra at note 185. 394 USB (Exhibit "P-67-2"). 395 !d. ~96 !d. 397 3,151,395 liters (98% of 3,215,709 liters of ADO) multiplied by 1'6.00 excise tax rate. 398 98% of 3,215,709 liters of ADO.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X constituted an erroneous payment and is refundable pursuant to Sections 204(C)399 and 2294oo of the NIRC of1997, as amended. WHEREFORE, in light of the foregoing considerations, the present Petition for Review, filed by petitioner Pilipinas Shell Petroleum Corporation on 12 July 2022, is GRANTED. Accordingly, respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the amount of PI8,9o8,J70.oo, representing petitioner's excise taxes erroneously paid on petroleum products sold to Shell Philippines Exploration, B.V. (SPEX), an entity exempt from excise tax, covering the period from July to November 2020. SO ORDERED. ~~ JEAN MAI@A. BACORRO-VILLENA Associate Justice I CONCUR: kwnttn~ LANEE s. CUI-DAVID Associate Justice 399 Supraatp. 15. 400 Supra at pp. 15-16.

CTA Case No. 10914 Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue DECISION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X ATTESTATION I attest that the conclusions in the above Decision were reached m consultation before the case was assigned to the writer of the opinion of the Court's Division. - l;3.n..l\L A. BACORRO-VILLENA ssociate Justice Special I ivision Acting Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Special 1st 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. L.~ MA. BELEN M. RINGPIS-LIBAN Presiding Justice