PETRON CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

CTA Form No.8 1111111111111111111111 11111111111111111111111111111 11111111111111111111111111111 20- 000465 -0062 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CASE NO. 10439 PETRON CORPORATION, NOTICE OF DECISION Petitioner, -versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legazpi Village Makati City ATTY. AYESHA HANLA B. GUILJNG-MATANOG ATTY. CLARISSA J. VIRTUDES-BABARAN Bureau of Intemal Revenue Room 703 , Litigation Division, BIR National Office Building Sen. Miriam P. Defensor Santiago Avenue Diliman, Quezon City DU-BALADAD & ASSOCIATES 20th Floor, Chatham House Building Rufino comer Valero Street, Salcedo Village Makati City GREETINGS: You are hereby notified by these presents that on April 15, 2025, a Decision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, April 21, 2025. AttyE. MxeacuritaivJeoCh-~ l~~;rthaIIn-Te

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION PETRON CORPORATION, CTA CASE NO. 10439 Petitioner, Members: -versus- DEL ROSARIO, P.J. , Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. )C- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -)C CUI-DAVID, J.: Before this Court is a Petition for Review filed on December 29, 2020, by petitioner Petron Corporation ("Petitioner") against respondent Commissioner of Internal Revenue ("CIR" or "respondent"). Petitioner seeks a refund of P1,499 ,409,664 .00, allegedly representing eJ<cise taJ<es paid from January 1, 2019, to December 31 , 2019, on imported and locally produced Jet A- 1 fuel subsequently sold and delivered to various international carriers and taJ<-eJ<empt entities. I THE PARTIES Petitioner Petron Corporation is a domestic corporation duly organized and eristing under Philippine law, with principal office address at SMC Head Office CompleJ<, 40 S'an Miguel Avenue, Mandaluyong City.2 Respondent CIR is sued in his official capacity, having been duly appointed and empowered to perform the duties of ~ his office, including, among others, the duty to act and approve - c,,.,_ ' Dook<t - Vol. II, p. 569, Pre-TdW Onl" d"ed 1"'Y27, 2022, I. S"mm�ry of tho 2 Docket - Vol. I, p. 6, Petition for Review, II. Parties; Docket- Vol. II, pp. 743- 762, Exhibits "P- I" and "P-2".

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X claims for refund as provided by law. He may be served with summons, notices, and other court processes at his office at the BIR National Office Building, Diliman, Quezon City.3 THE FACTS On December 17, 2020, petitioner filed two Applications for Tax Credits/Refunds (BIR Form No. 1914)4 with the Large Taxpayers Excise Audit Division II of the Bureau of Internal Revenue (BIR). These applications, accompanied by letters of the same date,5 sought a refund of excise taxes totaling f'1,499,409,664.00, allegedly paid on imported and locally manufactured Jet A-1 fuel from January 1 to December 31, 2019. The fuel was subsequently sold and delivered to various international carriers and tax-exempt entities. The total refund claim is as follows: P1,488,202,976.00 for imported Jet A-1 fuel and Pll,206,688.00 for locally manufactured Jet A-1 fuel. However, the BIR did not act on both administrative claims for refund, and since the two-year prescriptive period is about to lapse, petitioner was compelled to seek judicial redress. PROCEEDINGS BEFORE THE COURT As previously stated, petitioner filed the present Petitionfor Review on December 29, 2020.6 On March 10, 2021, respondent filed his Answer within the extended period granted by the Court.? On March 22, 2021, respondent filed a Manifestation, stating that the BIR Records for this case were on file with the Court's Second Division under CTA Case No. 10436.8 The Pre-Trial Conference was initially set for April 28, 2021,9 but was reset and held on July 5, 2021.10 Prior to this, the parties submitted their respective Pre-Trial Briefs, " Docket- Vol. I, p. 271, Joint Stipulation of Facts and Issues (JSFI), Admitted Facts, par. 1: Docket- Vol. II, p. 569-570, Pre-Trial Oder dated July 27, 2022, II. Statement of the Facts & Issues, A. Stipulation of Fact. Docket- Vol. II, p. 781, Exhibit "P-8"; 789, Exhibit "P-I 0". !d. at 782-788, Exhibit "P-7"; 790-796, Exhibit "P-9". Docket- Vol. I, pp. 6-43. !d. at 152-160. !d. at 162-164. /d. at 166- I67, Notice of Pre-Trial Conference dated March 12, 2021. 10 !d. at 168, Order dated May 27, 2021; 199-200. Minutes of the hearing held on, and Order dated, July 5, 2021.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x respondent on June 7, 2021,11 and petitioner on June 30, 2021. 12 On October 26, 2021, petitioner filed a Submission with Manifestation, 13 attaching the parties' Joint Stipulation of Facts and Issues, 14 which was admitted and approved in a Resolution dated July 27, 2022,15 thereby deeming the termination of the pre-trial. The Pre-Trial Order was issued on the same date. 16 During the trial, petitioner presented both testimonial and documentary evidence. It offered the testimonies of the following witnesses: (1) Atty. Ma. Clarissa C. Arguelles, 17 Tax Manager; (2) Mr. Michael F. Manzano, 1s Commercial Services Manager; (3) Ms. Marissa U. Viray, 19 Accounting Services Manager; (4) Mr. Francis Herthiel N. Carino,2o Area Sales Manager- Industrial South Luzon; (5) Mr. Leojun Antonio A. Gonzales,21 Area Sales Manager- National Accounts, Industrial Trade; (6) Mr. Emmanuel Victor T. Tatoy,22 Terminal Manager for the Joint Oil Companies Aviation Fuel Storage Plant/Ninoy Aquino International Airport (JOCASP / NAIA); (7) Mr. Elgo R. Lagyap,23 Limay Terminal Manager; and� (8) Ms. Katherine 0. Constantino,24 the Court-commissioned Independent Certified Public Accountant (ICPA).2s The ICPA Report and Supplemental Report were submitted on January 11, 2022 and February 3, 2022, respectively.26 On October 24, 2022, petitioner filed its Formal Offer of Evidence (With Motion To Set Additional Commissioner's Hearing),27 to which respondent filed his Comment (Re: Formal 11 /d. at 169-172. 12 /d. at 175-196. 13 !d. at 267-269. 14 !d. at 271-281. 15 Docket- Vol. II, p. 566. 16 !d. at 569-576. 17 Docket- Vol. I, pp. 77-100, Exhibit "P-29''; Docket- Vol. II, pp. 519-527, Exhibit ''P-90"; Docket- Vol. II, p. 511. Order dated November 8, 2021; Docket - Vol. II, pp. 580--582, Minutes of the hearing held on, and Order dated, September 22, 2022. 18 Docket- Vol. I, pp. 47-55, Exhibit �'P-31"; Docket- Vol. II. p. 511, Order dated November 8, 2021. 19 Docket- Vol. I, pp. 207-220, Exhibit "P-30''; Docket- Vol. II. p. 511, Order dated November 8, 2021. 20 Docket- Vol. I, pp. 136--I44, Exhibit "P-33"; Docket- Vol. II, p. 511, Order dated November 8. 2021. 21 Docket- Vol. I, pp. 125-132, Exhibit �'P-34"; Docket- Vol. II, p. 5 I2, Order dated February 7, 2022. 22 Docket- Vol. I, pp. 113-I21, Exhibit "P-35"; Docket- Vol. II, p. 512. Order dated February 7, 2022. 23 Docket- Vol. I, pp. !04-1 09, Exhibit �'P-36"; Docket- Vol. II. p. 512, Order dated February 7, 2022. " Docket- Vol. I. pp. 306--408, 420 to 503 and Docket- Vol. II, pp. 542-555, Exhibits ''P-77", �'P-78" and �'P-79'', respectively; Docket- VoL II, p. 512, Order dated february 7, 2022; Docket- Vol. II, pp. 557-558, Minutes of the hearing held on, and Order dated, May 16,2022. 25 Docket- Vol. II, p. 511, Order dated November 8, 2021. 26 Exhibits �'P-37" and "P-73'' (on separate binders). 27 Docket- Vol. II, pp. 583-741.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X Offer of Evidence) on October 25, 2022.28 On December 14, 2022, the Court resolved to grant petitioner's Motion to Set Additional Commissioner's Hearing and hold the resolution of its Formal Offer of Evidence in abeyance.29 On July 11, 2023, acting on petitioner's Formal Offer of Evidence, the Court admitted petitioner's offered exhibits, except Exhibits "P-6", "P-6-3915" to "P-6-3923", "P-6-3925" to p""PPa--g16e9-34-19",8096"P"" ''-2""P1P---22600-"37'97"99P1"-,"2"0tPo-3-2""P'1"--P62--0427008-1614"6","' "'"P"PP--2-632--039-9"221p4"a"'g'"eP"sP-2-4610--131-926980000"4,' """"22PPPP87------222214776700----341342""83340a718ton"""9''"dt""'"oPP"P"P--"-P222-P-7277-2-8-2-7434-70-584-2954223"6"5"6'"'1'",""""'PfP'Po-"-"-r2P22P77n-8-2--2o-34727t81-9-b27128e3""8"i7'3n'"t"""goP'P'-f""-"2o2PPP7u6----n222-39d77798---2i24"3n"41'6' 1t3"8"hP"""Pe'''--22"""r6e7PPP-c----63o22279r777d95---"s243".'427' 3""5850PP"""--''' On August 2, 2023, petitioner filed an Omnibus Motion for Reconsideration (Re: Resolution promulgated on July 11, 2023) (with Motion to Correct Description of Documentary Exhibits and Motion to Recall Petitioner's Witness and Independent Certified Public Accountant). 31 Respondent failed to file a comment. 32 In a Resolution dated November 15, 2023,33 the Court dispensed with petitioner's alternative request to recall its witnesses Ms. Arguelles and Ms. Constantino, the Court-commissioned ICPA, and admitted Exhibits "P-6" , "P-6-3915" to "P-6-3923" ' "P-6- 3925" to ""PP--260-"3,9"8P9-"2'0"-P3-"6, -"3P9-9210"-2to1"",P"-P6--2410-1142"8' 0"4P-p6-a3g9e244"",' "P- 6-3990, "P- "2P1--2270-727397""', ""PP--2217--2204718"6, ""'P"P2-72-32-495""p, a"gPe-s274-0214-86"0t0o' ""PP--2277--223561"",' "2P7--2378-72"8, 3""P'-"2P7--2379-23"6,8""P' -"2P7--2379-53"7,8""P' -"2P7-2-470-338" 0t"o' ""PP--2277--430894"",' "P- "P- 27-411" dtoen"iPe-d2t7h-e41a3d"m' i"sPs-i2o7n-4o2f E5"x'h"iPb-it2s7"-P43-119"-1an06d"", P"P-2-82-02-9186"",' but still "aPn-d26"P-1-3278-95"5' "P-27 -n4o4t2b"e' in"gP-f2o6u-n9d8"i'n "P-26-679" .' "P-28-1 04" 6", for the records On February 16, 2024, respondent filed a Manifestation,34 stating that he would not be presenting any witnesses. 28 Docket- Vol. III, pp. 1229-1231. 29 /d at 1234-1235, Resolution dated December 14, 2022. :w !d. at 1257-1301, Resolution dated July II. 2023. 31 /d at !303-1312. 32 !d. at 1318, Records Verification dated September 4, 2023 issued by the Judicial Records Division of this Court. n /d at 1325-1330. " /d. at 1333-1335.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x On March 5, 2024, respondent filed his Memorandum,35 while petitioner's Memorandum was submitted on March 26, 2024.36 The present case was deemed submitted for decision on April 19, 2024.37 THE ISSUE As stipulated by the parties, the 1ssue for this Court's resolution is: Whether Petitioner is entitled to the refund or issuance of a Tax Credit Certificate in the amount of One Billion Four Hundred Ninety-Nine Million Four Hundred Nine Thousand Six Hundred Sixty Four Pesos (f'1,499,409,664.00), representing excise taxes paid during the period January 1, 2019 to December 31, 2019 on Petitioner's locally produced and imported Jet A-1 fuel, which were subsequently sold and delivered to various international carriers and to tax-exempt entities. 38 Petitioner's arguments: In its Petition for Review and Memorandum, petitioner asserts that both its administrative and judicial claims for refund or tax credit were timely filed; that the imported and locally produced tax-paid Jet A-1 fuel sold and delivered to various international carriers and tax-exempt entities are exempt from excise tax, and any excise tax paid on their removal was erroneously paid as: (i) the imported and � locally manufactured Jet A-1 fuels were sourced from importations and local productions covering the period January 1, 20 19 to December 31, 2019, (ii) petitioner paid the corresponding excise taxes on imported and locally produced Jet A-1 fuels from importations covering the said period, and (iii) the imported and locally produced Jet A-1 fuels of petitioner were sold and delivered to various air carriers of Philippine or foreign registry for the latter's use or consumption outside the Philippines and to tax-exempt entities; and that petitioner is entitled to a refund or credit in the amount of P1,499,409,664.00, representing excise taxes erroneously paid on petroleum. 35 ld. at 1339-1347. 36 /d. at 1349-1393. 37 !d at 1395, Notice of Resolution dated Aprill9, 2024. 38 Docket- Vol. I, pp. 271-272, JSFI, Statement of Issue; Docket- Vol. IL p.570, Pre-Trial Order, Stipulation of Issue.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Respondent's counter-arguments: In his Answer and Memorandum, respondent counters that petitioner is not entitled to a refund of the excise taxes allegedly paid from January 1, 2019 to December 31, 2019, on its sales and deliveries of Jet A-1 fuel to international carriers and tax-exempt entities in the amount f'1,499,409,664.00; and that a claim for a refund of excise taxes is only authorized under Section 130(D) of the National Internal Revenue Code (NIRC) of 1997, as amended. THE COURT'S RULING The present Petition for Review is partly meritorious. Governing provisions on refund claims. Sections 204(C) and 229 of the NIRC of 1997, as amended, provide the legal basis for tax refunds: 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 fUes 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.... (Emphasis supplied) SEC. 229. Recovery of Tax Erroneously or fllegally 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

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x 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.... (Emphasis supplied) The afore quoted provisions explicitly require that a claimant must first file an administrative claim with the BIR within two years from the date of payment of tax before pursuing a judicial claim. Both administrative and judicial claims must be filed within the two-year reglementary period, which is mandatory and jurisdictional. Thus, the Court cannot take cognizance of a judicial claim for a refund that is either premature or filed out of time. It is worthy to stress that as for the judicial claim, tax law even explicitly provides that it be filed within two years from payment of the tax "regardless of any supervening cause that may arise after payment."39 Moreover, these provisions allow the recovery of taxes erroneously or illegally collected. An "erroneous or illegal tax" is defined as one levied without statutory authority, or upon property not subject to taxation, or by some officer having no authority to levy the tax, or one which is some other similar aspect is illegaJ.40 In other words, what can be refunded or credited is a tax that is erroneously, illegally, excessively, or in any manner wrongfully collected. In short, there must be a wrongful payment because what is paid, or part of it, is not legally due.41 Thus, for the present refund claim to prosper, petitioner must not only establish the timely filing of its administrative and judicial claims but also substantiate that the excise tax paid was erroneous, illegal, or wrongfully collected. . ~ Commissioner ofInternal Revenue v. San lvfiguel Corporation, et seq.. G.R. Nos. 180740 & 180910, November II, 2019 [Per 1. llcrnando, Second Division}. Commissioner ofInternal Revenue v. Pi/ipinas Sheff Petroleum C01poration, G.R. No. 188497, April25, 2012 [Per 1. Villarama, Jr., J.] citing the definition provided in Black's Law Dictionary, 5th Edition, p. 486. 41 Commissioner ofInternal Revenue v. San Roque Power Corporation, et seq., G.R. Nos. 187485, 1961 I 3 & I97I 56, February 12, 2013 [Per J. Carpio. En Bane]

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Petitioner timely filed its administrative and judicial claims for refund. a. Excise tax on importation of Jet A-1 fuel: Under Section 131(A) of the NIRC of 1997, as amended, excise taxes on imported articles, in general, must be paid by the owner or importer upon importation and prior to removal thereof from the customshouse, to wit: SEC. 131. Payment of Excise Taxes on Imported Articles.- (A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customshouse, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. (Emphasis and underscoring supplied) In line with the foregoing, the two-year prescriptive period under Sections 204(C) and 229 of the NIRC of 1997, as amended, must be reckoned from the date of actual payment of the excise taxes. In this case, 26 import shipments of Jet A-1 fuels were made during the calendar year (CY) 2019. 42 The earliest importation of Jet A-1 fuel occurred on March 4, 2019, and the corresponding taxes were paid on March 1, 2019,43 as evidenced by the Single Administrative Document (SAD) with Customs Reference No. C-37,44 the Statement of Settlement ofDuties and Taxes (SSDT),45 and the Customs Payment Receipt, all dated March 1, 2019.46 From the said date, petitioner had until March 1, 2021 to file its administrative and judicial claims for refund. Considering that petitioner filed its administrative claim on December 17, 2020,47 and its judicial claim on December 29, 2020,48 petitioner timely filed both claims within two years " Docket- Vol. I. p. 321. Exhibit ��P-77"" (Q&A No. 22). � 43 !d. at 82-83. Exhibit ��P-29"" (Q&A No. 24). 44 Exhibit "P-19-1'�. USB. 45 Exhibit �'P-44-26"". USB. 46 Exhibit �'P-19-5"". USB. " Docket- Vol. II. pp. 781-789. Exhibits �'P-7"" to "'P-8"". 48 Docket- Vol. I. pp. 6-43.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X from the date of payment of the excise taxes in accordance with Sections 204 (C) and 229 of the NIRC of 1997, as amended. b. Excise tax on locally produced Jet A-1 fuel: On the other hand, excise taxes on locally produced or manufactured petroleum products are generally paid by the manufacturer or producer before the removal of the domestic products from the place of production, pursuant to Section 130 (A)(2) of the NIRC of 1997, as amended, to wit: SEC. 130. Filing of Return and Payment of Excise Tax on Domestic Products. - (A) Persons Liable to File a Return, Filing of Return on Removal and Payment of Tax. - (2) Time for Filing of Return and Payment of the Tax. Unless otherwise specifically allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production: ... (Emphasis and underscoring supplied) Thus, pursuant to Sections 204(C) and 229 of the NIRC of 1997, as amended, in relation to the above-quoted Section 130(A)(2), petitioner's administrative and judicial claims must be filed within two years from the earliest date of removal of the locally produced Jet A-1 fuel from the place of production. Petitioner employs two modes of paying excise tax on each removal of locally manufactured Jet A-1 fuel from the Petron Bataan Refinery (PBR): 1. Through the BIR's Electronic Filing and Payment System (eFPS), as evidenced by Excise Tax Returns (BIR Form No. 2200-P) with an attached Summary of Removals; 2. Through the Product Replenishment Scheme. 49 Records reveal that the earliest removal of petitioner's V' locally produced Jet-A1 fuel occurred on January 1, 2019, with the corresponding excise tax paid on the same date.so Thus, 49 Docket- Vol. III, p. 1370, petitioner's }vfemorandum, par. 64; Docket- Vol. I, pp. 83-84. Exhibit "P-29'' (Q&A No. 25). 50 Exhibit "P-6-1 ".USB; See also Annex I.!.. Supplemental ICPA Report (Exhibit ''P-73'').

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X petitioner had two years from January 1, 2019, or until January 1, 2021, to file both claims. Considering that petitioner filed its administrative claim on December 17, 2020,51 and its judicial claim on December 29, 2020,52 both were timely filed within the two-year prescriptive period under Sections 204(C) and 229, in relation to Section 130(A)(2) of the NIRC of 1997. Petitioner timely filed its administrative and judicial claims for a tax credit or refund of excise taxes paid on imported and locally produced or manufactured Jet A-1 fuel, in full compliance with the two-year prescriptive period under the NIRC of 1997, as amended. Excise taxes paid on imported and locally manufactured or produced Jet A-1 fuel sold to international air carriers and tax-exempt entities are erroneously or illegally collected. Respondent argues that under Section 129 of the NIRC of 1997, as amended, petitioner, as a manufacturer of.petroleum products sold to international carriers of Philippine or foreign registry and tax-exempt entities, is liable for excise taxes due thereon. The only instance that petitioner may invoke a claim for refund is the erroneous payment of excise taxes. However, respondent maintains that the excise tax paid by petitioner was legally and validly collected, as it is liable to pay such tax. Respondent further argues that here, petitioner sold fuel to international carriers and tax-exempt entities. Applying Section 135 of the NIRC of 1997, as amended, it should mean that the transaction of buying fuel is exempt from excise tax. As such, the buyer of the fuel is not liable to pay the excise tax due thereon or, in other words, the excise tax due on the said transaction cannot be included in the purchase price as the buyers are already exempt entities. 51 Docket- Vol. II, pp. 789-796, Exhibits ''P-9'' to �'P-10''. 52 Docket- Vol. I, pp. 6-43.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Respondent also claims that Section 135, on its face, does not grant tax exemption to sellers but merely enumerates transactions where petroleum products, when sold to international carriers and tax-exempt entities, are exempt from excise tax. Petitioner was anchoring its claim for refund on Section 135. However, respondent contends that Section 135 cannot be a source for petitioner's claim for refund and cannot be invoked by the sellers like herein petitioner, but only by the buyers who are exempt entities. In the case at hand, the petroleum product sold is subject to excise tax, for it is a fact that the buyers, as enumerated in Section 135, are exempt entities. Thus, respondent asserts that petitioner cannot invoke the exemption granted to these exempt entities as a ground for claiming a refund of excise taxes paid. Petitioner counters that this issue has already been settled by the Supreme Court in Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation (20 14 Pilipinas Shell), 53 and in Chevron Philippines, Inc. v. Commissioner ofInternal Revenue (20 15 Chevron). 54 In these cases, the Supreme Court ruled that the local manufacturerI seller of petroleum products, as the statutory taxpayer, is entitled to a refund or credit of excise taxes paid on petroleum products sold to international carriers and tax-exempt entities. The Court disagrees with respondent. The present claim for refund is governed by Sections 129 and 135 of the NIRC of 1997, as amended, which provide: SEC. 129. Goods Subject to Excise Taxes. - Excise taxes apply to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported. The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV.... (Emphasis supplied) 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 53 G.R. No. 188497, February 19. 2014 [Per J. Villararna, Jr., J., First Division}. 54 G.R. No. 210836, September 1, 2015 [Per J. Bersamin, En Bane].

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x 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 and underscoring supplied) A plain reading of the foregoing provision reveals that the words "petroleum products" were never qualified. The law does not distinguish whether the petroleum products sold were locally manufactured or imported. Thus, the exemption under Section 135 applies regardless of the origin of the Jet A-1 fuel, provided the conditions for exemption are complied with by the claimant. Where the law does not distinguish, courts should not distinguish. 55 Indeed, in the 2014 Pilipinas Shell case, the Supreme Court categorically declared that the local manufacturer/seller, as the statutory taxpayer, who paid the excise taxes on petroleum products sold to international carriers, is entitled to a refund or credit of excise taxes paid pursuant to Section 135 of the NIRC, as amended, to wit: We therefore hold that respondent, as the statutory taxpayer who is directly liable to pay the excise tax on its petroleum products, is entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers, the latter having been granted exemption from the payment of said excise tax under Sec. 135 (a) of the NIRC. (Emphasis supplied) Similarly, in the 2015 Chevron case, the Supreme Court clarified that excise tax is a tax on property, meaning that the exemption under Section 135 applies to the petroleum product itself. Thus, any excise tax paid on exempt petroleum products is erroneously or illegally collected and should be refunded under Section 204 of the NIRC: 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 55 ,\1anila International Airport Authority v. Court ofAppeals, eta!., G.R. No. 155650, Ju!y 20, 2006 [Per J. Carp1o. En Bane].

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x 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 NIRC must be construed in favor of the property itself, that is, the petroleum products. (Emphasis supplied) Although the exemption in 2015 Chevron case was premised on Section 135(c), while the 2014 Pilipinas Shell case relied on Section 135(a), the Supreme Court ruled in the 2015 Chevron case that "[n]otwithstanding that the claims for refund or credit of excise taxes were premised on different subsections of Section 135 of the NIRC, the basic tax principle applicable was the same in both cases - that excise tax is a tax on property; hence, the exemption from the excise tax expressly granted under Section 135 of the NIRC must be construed in favor of the petroleum products on which the excise tax was initially imposed." Furthermore, in the 2014 Pilipinas Shell case, the Supreme Court held that "exemption from payment of excise tax is conferred on international carriers who purchased the petroleum products of respondent." In contrast, the Supreme Court held in the 2015 Chevron case that "Section 135 (c) should thus be construed as an exemption in favor of the petroleum products on which the excise tax was levied in the first place." The Supreme Court reinforced this principle in the more recent case of Pilipinas Shell Petroleum Corporation v. Commissioner ofInternal Revenue (2021 Pilipinas Shell),56 where it clarified that Section 135 confers an impersonal tax exemption, meaning it applies to the tax liability itself, not just to a specific taxpayer. This ruling effectively refutes respondent's claim that only buyers can invoke the exemption under Section 135. Instead, the tax exemption must benefit the statutory taxpayer liable for the excise tax-i.e., the importer or manufacturer of the fuel sold to international carriers and tax- exempt entitieso " 56 G.R. No. 211303, June 15,2021 [Per J. Perlas-Bernabe, En Bane].

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x II By its nature, an excise tax under the Philippine taxation system pertains to the tax levied on certain goods, whether at a specific rate or ad valorem. As case law characterizes, an excise tax is not a tax on the exercise of a privilege, but rather a levy on certain articles which are manufactured or imported for domestic consumption. It is equally settled that the accrual or liability to pay the same arises immediately upon importation or as soon as the goods come into existence when manufactured. Furthermore, excise taxes are indirect taxes, as opposed to direct taxes. Pertinently, these types of taxes relate to the statutory taxpayer who is obligated to pay taxes to the government. In this relation, one must understand the concepts of tax incidence (or the actual liability to pay the tax) and tax burden (the economic burden of the tax incident). On the one hand, direct taxes are 'those that are exacted from the very person who, it is intended or desired, should pay them; they are impositions for which a taxpayer is directly liable on the transaction or business he is engaged in,' which means, the tax incidence and tax burden fall upon the same person. On the other, indirect taxes are 'those that are demanded, in the first instance, from, or are paid by, one person in the expectation and intention that he can shift the burden to someone else. Stated elsewise, indirect taxes are taxes wherein the liability for the payment of the tax falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. When the seller passes on the tax to his buyer, he, in effect, shifts the tax burden, not the liability to pay it, to the purchaser as part of the price of goods sold or services rendered.' As jurisprudence explains, 'this shifting process, otherwise known as 'passing on,' is largely a contractual affair between the parties. Meaning, even if the purchaser effectively pays the value of the tax, the manufacturer [or] producer (in case of goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition) or the owner or importer (in case of imported goods) [is] still regarded as the statutory [taxpayer] under the law. To this end, the purchaser does not really pay the tax; rather, he only pays the seller more for the goods because of the latter's obligation to the government as the statutory taxpayer.'

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Thus, when it comes to indirect taxes, the statutory taxpayer remains to be the manufacturer or importer of the articles. Despite being able to pass the burden of the tax to the buyer as an inherent component of the total price of the article, the onus to actually pay the excise tax and to remit the returns incidental thereto remains with the statutory taxpayer, who must correspondingly benefit from any tax exemption. In effect, upon the sale of the goods, the portion of the price corresponding to the excise tax originally paid by the manufacturer or importer is not per se the excise tax liability imposed under Section 129 of the Tax Code. The price passed on, and assumed by the buyer of the goods, is therefore no different from any other component cost in arriving at the price of the article sold, such as raw material cost or distributed overhead expenses. In a similar situation, the Court held that '[e]ven if the consumers or purchasers ultimately pay for the tax, they are not considered the taxpayers. The fact that [statutory taxpayer/importer], on whom the excise tax is imposed, can shift the tax burden to its purchasers does not make the latter the taxpayers and the former the withholding agent. [The purchaserI end-consumer] ultimately bears the tax burden, but this does not transform [its] status into a statutory taxpayer.' This distinction between statutory taxpayer and the purchaser who assumes the tax burden when the costs of the taxes are passed on to it as part of the purchase price is material to understand the 'exemption' granted under Section 135 governing excise taxes. III. At its core, the purpose of a grant of tax exemption is 'some public benefit or interest, which the law-making body considers sufficient to offset the monetary loss entailed in the grant of the exemption.' However, the object of the grant of tax exemption is not necessarily a natural person similar to how 'the objects of taxation are either persons, property[,] and property rights within the jurisdiction of the taxing authority.' As such, generally speaking, the object of tax exemptions may either be personal or impersonal. Personal exemptions conceptually pertain to those 'granted directly in favor of such persons as are within the contemplation of the law granting the exemption.' On the other hand, an impersonal exemption may be said to exist when a tax exemption is 'granted directly in favor of a certain class of property.' If the tax exemption is impersonal in nature, then, regardless of who transacts with the property, the exemption should still apply. This framework of personal and impersonal tax exemptions underpins the exemption granted under Section 135 on excisable articles.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Notably, the Court, in the 2014 Pilipinas Shell Resolution, stated that the 'exemption from payment of excise tax' under Section 135 is 'conferred on international carriers who purchased the petroleum products of respondent'; thus, in said case, the tax exemption under Section 135 covering said products was characterized as a grant of a personal tax exemption. However, in the subsequent case of 2015 Chevron, the Court effectively abandoned the foregoing characterization, and instead, correctly categorized that the tax exemption under Section 135 is 'in favor of the petroleum products on which the excise tax was levied in the first place.' As such, the Court, in 2015 Chevron, validated the nature of Section 135 as a provision conferring an impersonal tax exemption, which, in fact, cogently squares with the nature of excise taxes being a tax on property, rather than a tax on persons. Being an impersonal tax exemption, Section 135 cannot be therefore interpreted as an exemption primarily conferred to the buyers because 'they are not under any legal duty to pay the excise tax.' To reiterate, upon the buyers' purchase of the articles, the 'excise tax' they pay, if any, is, in reality, a mere passed-on cost that forms part of the purchase price. Hence, while purchasers bear the economic burden, they do not, by the mere fact of assuming the passed-on costs, become legally regarded as statutory taxpayers. In this regard, Associate Justice Henri Jean Paul B. Inting aptly observed that 'a tax immunity would lose its meaning if we insist that it is available only to a person who, in the first place, has no obligation to pay the tax due on the subject article/transaction. It can only be enjoyed in its truest sense by the person who is liable for the tax and wishes to be immune from therefrom.' The impersonal nature of the tax exemption 1s also expressed in the wording itself of Section 135: As worded, the object of Section 135 itself is not the enumerated persons but rather, the 'petroleum products sold.' Palpably, based on Section 135's phraseology, the enumerated persons are merely descriptive of the petroleum products, i.e., the persons to which the products are sold to. As such, the wording of Section 135 hews more closely with the character of impersonal tax exemptions, which is, in turn, consistent with the nature of excise taxes as taxes not on persons but on the goods/articles. As equally observed by Associate Justice Alfredo Benjamin S. Caguioa, '[t]he succeeding paragraphs (a), (b), and (c) do not confer nor refer to the tax exemption. Paragraphs (a), (b)[,] and (c) simply enumerate

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x and describe the entities to whom petroleum products must be sold to make the excise tax exemption operative.' IV. At this juncture, it is likewise relevant to mention that since an excise tax is in the nature of a property tax, it is thus erroneous to consider the operation of a tax exemption thereto in the same way as a transactional tax, wherein every purchaser and seller may be considered as a statutory taxpayer for every succeeding transaction, only ending with the final consumer. Rather, the exemption under Section 135 must be reconciled with the idea that liability for the tax attaches to the articles as soon as they come into existence or immediately upon importation. The Court, in the 2015 Chevron, had already settled that the true status of the goods, whether ultimately taxable or tax-exempt, is actually conditional or subject to confirmation upon the sale of the articles to any of the entities enumerated under Section 135. This conditional taxability can actually be seen in another related provision in the Tax Code, i.e., Section 131 thereof: Section 131. Payment of Excise Taxes on Imported Articles. - (A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customs house, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. In the case of tax-free articles brought or imported into the Philippines by persons, entities, or agencies exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-exempt oersons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation. xxx xxx xxx (Emphasis and underscoring supplied) As may be gleaned from Section 131 as above-cited, although certain articles may be free from excise taxes upon importation, they may subsequently become subject to the

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x same depending on the subsequent buyer. This is essentially the same principle of subsequent confirmation espoused by the 2015 Chevron, and is also a necessary consequence of excise tax being a property tax, and not a tax on persons. Considering that the status of the petroleum products as tax-exempt solidifies upon the sale to any of the entities enumerated under Section 135, any excise taxes which were previously paid thereon would then be considered as 'erroneously or illegally collected,' and therefore, subject to refund. In turn, the petroleum products become exempt from excise taxes once it is determined that they are to be sold to, among others, international carriers. This reflects Section 135's wording, i.e., that the petroleum products are considered as tax-exempt once they are 'sold to [inter alia] x x x [i]nternational carriers.' Based on (a) the nature of excise taxes as a property tax and an indirect tax, and (b) the principle that a buyer, when shouldering the tax burden, does not become the statutory taxpayer, it is thus clear that the purchaser of local products (such as international carriers) cannot be deemed to have been conferred a tax exemption when it has not been imposed a tax liability. In the ordinary course of things, international carriers do not manufacture or import petroleum products and hence, are not statutory taxpayers to which the exemption under Section 135 could pertain. If anything, international carriers merely bear the tax burden when the costs therefor are passed on to them by the actual manufacturers or importers. However, as earlier discussed, the 'passing on' of the tax burden is largely a contractual affair between the parties and should not determine the tax incidence imposed by law unless the contrary is provided. As such, the tax exemption under Section 135 must correspondingly benefit the one who actually bears the liability to pay the same (i.e, the importers/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). (Emphasis on the original; Citations omitted) Correspondingly, in Commissioner of Internal Revenue v. Petron Corporation, 57 the Court of Tax Appeals (CTA) En Bane ruled that petroleum manufacturers and importers are entitled to excise tax exemptions on fuel sold to international carriers and tax-exempt entities, citing the 2021 Pilipinas Shell case. The CTA En Bane emphasized that the status of the petroleum product as tax-exempt solidifies upon its sale to an exempt buyer, making any excise tax previously paid erroneous 57 CTA EB Case No. 2828 (CTA Case Nos. 9738 & 9741 ). February 28. 2025 [Per J. Reyes-Fajardo. En Bane].

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x illegally collected and thus refundable under Sections 204(C) and 229 ofthe NIRC, as amended, viz.: At first instance, petroleum manufacturers/importers are liable to pay excise taxes when they take out the fuel from their refineries or from the customs house, as the case may be. However, this liability is qualified by Section 135 of the Tax Code, such that the tax-paid petroleum products become exempt from excise taxes when established that these are sold subsequently to any one of the following: (1) international carriers of Philippine or foreign registry on their use or consumption outside the Philippines (international carriers); (2) exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption (tax-exempt entities by treaty); or (3) entities which are by law exempt from direct and indirect taxes (tax- exempt entities by law). When it is shown that the tax-paid petroleum products have become tax-exempt within the context of Section 135 of the Tax Code, the excise taxes which were previously paid thereon shall then be regarded as "erroneously or illegally collected," and, thus, subject to refund pursuant to Section 229 of the Tax Code. In these lights, a claim of refund or credit based on Sections 229 and 135 of the Tax Code shall be granted only upon proof of the following: First, the excise taxes sought to be refunded were paid upon removal/release of the petroleum products from the refinery or customs house, as the case may be (First Requisite). Second, the petroleum products have become tax-exempt, e.g., these have been sold subsequently to any of the above-enumerated groups (Second Requisite). As a recap, Petron Corporation has demonstrated its entitlement to the excise tax exemption under Section 135 of the Tax Code. The benefit under Section 135 retroacts to the moment the excise tax liability attached to the articles/ goods and erases the tax effect thereon. "Considering that the status of the petroleum products as tax-exempt solidifies upon the sale to any of the entities enumerated under Section 135, any excise taxes which were previously paid thereon would then be considered as 'erroneously or illegally collected,' and therefore, subject to refund." (Emphasis on the original; Citations omitted) Applying the foregoing principles, petitioner's sale of imported and locally manufactured Jet A-1 fuel to various international air carriers and tax-exempt entities rendered the~

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x excise taxes it previously paid on the said imported and locally manufactured Jet A-1 fuel erroneously or illegally collected. As such, these taxes are a proper subject of a claim for tax credit or refund under Sections 204(C) and 229 of the NIRC of 1997, as amended. First Requisite: Petitioner has established that the excise taxes due on the imported and locally produced Jet A-1 fuel subject of the present claim were duly paid, but only to the extent of P1,114,513,804.00. In its Petition for Review, petitioner claims that it operates the PBR, where crude oil is processed into a full range of petroleum products, including Jet A-1 fuetss Petitioner resorts to importing finished Jet A-1 fuel in certain instances, such as when the projected local production of Jet A-1 fuel is insufficient to meet the projected demand. 59 Petitioner allegedly paid the excise taxes on locally produced Jet A-1 fuel before their removal from the PBR. These fuels were then withdrawn from the PBR and delivered either to customers or to various depots for eventual sale and delivery to customers, including international carriers and tax-exempt entities.6o Likewise, petitioner claims to have paid excise taxes on imported Jet A-1 fuel upon importation and before their removal or release from the custody of the Bureau of Customs (BOC) at Port Limay, Bataan. After importation, the imported Jet A-1 fuel was stored at the PBR, after which it will be withdrawn and delivered to petitioner's custbmers or petitioner's various depots for eventual sale and delivery to various customers, including international carriers and tax- exempt entities.61 Petitioner further avers that the sales of petroleum products to international carriers and tax-exempt entities are exempt from excise taxes under Section 135 of the NIRC of 1997, as amended. Thus, the excise taxes it paid from January 58 Docket- Vol. I, p. 8. Petition/or Review, par. 7. 59 !d. 60 !d. at 8, Petition for Review, pars. 8-9. 61 !d. at 8-9, Petition for Review, pars. I0-11.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x 1, 2019, to December 31, 2019, on both locally produced and imported Jet A-1 fuel were allegedly erroneous or illegal.52 Of the total excise taxes paid for Jet A-1 fuel, 374,852,416 liters were allegedly sold to various international carriers and tax-exempt entities. Thus, petitioner claims a refund of its alleged erroneously paid excise tax in the aggregate amount of 1'1,499,409,664.00,63 broken down as follows: Jet A-1 Fuel Volume Excise Tax (in Liters)_ Locally produced f' 11,206,688.00 Imported 2,801,672 1,488,202,976.00 Total 372,050,744 374,852,416 P1,499,409,664.00 For a refund claim to prosper, the claimant must provide proof of payment of the subject taxes because even if the tax collection is deemed illegal or erroneous, a refund cannot be granted for amounts that were not actually paid or remitted to the government. a. Excise tax on imported Jet A-1 fuel: In his Judicial Affidavit, Mr. Manzano, petitioner's Commercial Services Manager, explained the importation process for Jet A-1 fuel.6 4 He stated that before a vessel's arrival, petitioner files with the BOC a SAD and a copy of the Loadport Survey Report and then pays the applicable taxes and duties under tentative liquidation. Mr. Manzano noted that the payment under tentative liquidation and the SAD is based on the Bill of Lading (BL) figures and the estimated pnce of the commodity at the time of payment. Further, the petroleum product prices are based on formula pricing such as five (5) days, ten (10) days, or a full month average of the BL date. At the point of payment under tentative liquidation, the imported tax-paid Jet A-1 fuel is released from BOC's custody and delivered to the PBR for storage. Petitioner hires an independent surveyor who measures the volume of imported tax-paid Jet A-1 fuel upon arrival at the port and storage at the v refinery. After determining the final price and receiving the 62 !d. at 10, Petition for Review, pars. 17-18. 63 !d. at 9, Petition for Review, pars. 14--15. 64 !d at 49-50, Exhibit "P-31" (Q&A No.9).

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x commercial invoice, petitioner files the application for an Authority to Release Imported Goods (ATRIG) and submits the BL, the commercial invoice, and the Certificate of Independent Survey (CIS) or a Surveyor's Report to the BOC for final assessment. Further, the excise tax due is computed based on the higher volume indicated in either the BL/SAD or the CIS (shore receipts). If shore receipts exceed the BL/SAD volume, petitioner pays additional taxes or duties through the BOC's e2M system. In the present case, Ms. Viray, petitioner's Accounting Services Manager, confirmed that the PBR received a total volume of 448,928,059 liters of imported Jet A-1 fuel from January 1, 2019 to December 31, 2019,65 for which petitioner paid excise taxes amounting to '1'1,798,455,948.00.66 The importations of Jet A-1 fuel are supported by various importation documents, which were reviewed by Ms. Constantino, the Court-commissioned ICPA, to wit: a. SA0;67 b. Invoices issued by Petron Singapore Trading Pte. Ltd.;68 c. SSDT;69 d. BL;?O e. BOC Certifications;71 f. CIS or Surveyor's Report;72 g. ATRIG;73 h. Official Receipts issued by BOC;74 and " /d. at212, Exhibit"P-30"(Q&A No. 16). 66 ICPA Report (Exhibit ''P-37"), Annex 7. 67 Exhibits �'P-19-1", "P-19-10'", "P-19-19", "P-19-28". "P-19-37", "P-19-46", "P-19-55"'. "P-19-64'", �'P-19-73'", "P- 19-82", "P-19-91", "'P-19-1 00", "P-19-1 08", '�P-19-117", "P-19-126'", �'P-19-135", �'P-45", "'P-19-144", "P-19- 153'", "P-19-162", "P-19-171", "P-19-180", "P-19-189", "P-19-198", "'P-19-206'", and �'P-19-214", USB. 68 Exhibits "P-19-2", "P-19-11 ", "P-19-20'", "P-19-30", "P-19-38'". "'P-19-47", '�P-19-56'", "P-19-65'", "P-19-74", "P- 19-83'", �'P-19-92"", "P-19-1 0 1", "P-19-1 09", "P-19-118". �'P-19-127", "P-19-136'", "P-19-145", �'P-19-154", �'P-19- 163", �'P-19-172", "P-19-181", "P-19-190". �'P-19-199", �'P-19-207", and "P-19-215". 69 Exhibits "P-44" to '�P-44-35". 70 Exhibits �'P-19-3", '�P-19-12", "P-19-21", �'P-19-30", "P-19-39". "P-19-48", "P-19-57", "P-19-66", "P-19-75'", "P- 19-84", �'P-19-93'", "P-19-102", "P-19-110", "P-19-119", "P-19-128", "'P-19-137", �'P-47", "P-19-146", ""P-19- 155", "P-19-164", �'P-19-173'", "P-19-182", "'P-19-191", "P-19-200", "P-19-208'", "P-19-216". 71 Exhibits "P-19-4", "P-19-13"", �'P-19-22'", �'P-19-31", "P-19-40", "P-19-49", �'P-19-58'", '�P-19-67", �'P-19-76'", "P- 19-85", "P-19-48-1", "P-19-103", "P-19-111", "P-19-120", "P-19-129", �'P-19-138", "P-19-48". "P-19-147", "P- 19-156", "P-19-165'", "P-19-175", �'P-19-183"", "P-19-192'", "P-19-201", "P-19-209", and "P-19-217.". 72 Exhibits "P-19-8", "P-19-17". �'P-19-26". "P-19-35'", �'P-19-44", "P-19-53'", "'P-19-62", "P-19-71'", "P-19-80'", "P- 19-89", "'P-19-98'", "'P-52-1'", "P-19-116'". "P-19-124'". "P-19-133", �'P-19-142'", "P-52'", "P-19-151'", "P-19-160", "P-19-169'", "P-19-178'", "P-19-188'", "P-19-196". �'P-19-204", "P-19-212"', and "P-19-221 '". 73 Exhibits "P-19-9'", "P-19-18'", "P-19-27", �'P-19-36", "P-19-45", "P-19-54'", �'P-19-63", "P-19-72'", "P-19-81 '", "P- 19-90", "P-19-99". "P-19-1 07", "P-19-115", "P-19-125'", "P-19-134", "P-19-143"", "P-53"", "P-19-152"", "P-19- 161'", �'P-19-170'", "P-19-179", "P-19-187", �'P-19-197", "1'-19-205'", "P-19-213"', and "P-19-222'". 74 Exhibits "P-19-7", "P-19-16", "P-19-25", '�P-19-34", '�P-19-43", �'P-19-52'", �'P-19-61", "P-19-70'", "P-19-79'", "P- 19-88'", "P-19-114'", "P-19-123", ��P-19-132'", "P-19-141 ��, "P-19-150", "P-19-159", "P-19-168", "P-19-174'", ��p. 19-185", "P-19-195", �'P-19-220'", �'P-51", �'P-51-1" and "P-51-2'".

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X 1. Customs Payment Receipts.75 The importation of 448,928,059 liters of Jet A-1 fuel for CY 20 19 is summarized as follows: SAD CIS ATRIG Annexed Exhibit Date Volume in Lite:riJ7' bh!b!t Volume in Excise Tax Due ...Ellhlblt Date Am.ount of Excise Additional to ICPA No. Liters7H (Higher vol. bet. Tax Paid under Excise Tax Report '"� Tentative Paid (A-BJ'6 (Exhibit SAD and CIS Liquidation "P-37") (Vol. per SAD P614,308.00 multiplied by N.OO 66,244.00 excise tax rate) multi;:>lied by P4.00 132,560.00 [A[ 39,960.00 excis:mr rate) 251,644.00 7.1 P-19-1 03/01/ 16,584,966 P-19- 16,738,543 P66,954, 172.00 P-19-9 03/13/ P66,339,864.00 89,636.00 7.2 2019 16, !68,800 8 16,185,361 64,741,444.00 P-19-18 2019 64,675,200.00 7.3 P-19-10 18,492,645 18,525,785 74,103,140.00 P-19-27 73,970,580.00 50,364.00 7.4 04j02/ 18,565,018 P-19- 18,521,999 74,260,072.00 P-19�36 04/16/ 74,260,072.00 7.5 P-19-19 2019 15,305,457 17 15,315,447 2019 61,221,828.00 413,104.00 7.6 16,267,690 16,243,119 61,261,788.00 P-19-18 65,070,760.00 7.7 P-19-28 04j26j 16,938,561 P-19- 17,001,472 05/14/ 67,754,244.00 181,004.00 7.8 2019 18,010,892 26 18,033,301 65,070,760.00 P-19-27 2019 72,043,568.00 7.9 P-19-37 18,579,321 18,530,520 68,005,888.00 P-19-36 74,317,284.00 7.10 04j30/ 18,545,840 P-19� 18,532,392 72,133,204.00 P-19�72 06/14/ 74,183,360.00 7.11 P-19-46 2019 15,325,371 35 15,337,962 74,317,284.00 P-19-81 2019 61,301,484.00 7.12 17,739,169 17,714,385 74,183,360.00 P-19-90 70,956,676.00 7.13 P-19-55 05/05/ 18,131,611 P-19- 18,126,231 04/16/ ?2,526,444.00 7.14 2019 18,369,345 44 18,366,722 61,351,848,00 P-19-99 2019 73,477,380.00 7.15 P-19-64 17,943,080 17,893,817 70,956,676.00 71,772,320.00 7.16 05J07! 16,151,920 P-19- 16,255,196 72,526,444.00 P-19� 05/14/ 64,607,680.00 7.17 P-19-73 2019 15,895,281 53 15,794,177 107 2019 63,581,124.00 7.18 18,463,918 18,435,389 73,477,380.00 73,855,672.00 7.19 P-19-82 05/14/ 17,730,149 P-19- 17,775,400 71,772,320.00 P-19- 06/14/ 70,920,596.00 7.20 2019 15,968,900 62 15,903,131 65,020,784.00 115 2019 63,875,600.00 7.21 P-19-91 17,110,789 17,078,643 68,443,156.00 7.22 05jl9/ 18,453,268 P-19- 18,401,442 P-19- 06/11/ 73,813,072.00 7.23 P-19- 2019 17,792,966 71 17,751,584 125 2019 71,171,864.00 7.24 100 18,321,975 18,258,949 73,287,900.00 7.25 P-19� 05/23/ 17,694,249 P-19- 17,683,392 P-19- 06/20/ 70,776,996.00 108 2019 134 2019 P-19- so 117 05/29/ P-19- 06/26/ P-19- 2019 P-19- 143 2019 126 89 P-19- 05/31/ 63,581,124.00 P-53 06/26/ 135 2019 P-19- 73,855,672.00 2019 98 71,101,600.00 P-19- P-45 06/06/ 152 06/26/ 2019 P-52- 63,875,600.00 2019 P-19- 1 68,443,156.00 P-19- 144 06,113/ 73,813,072.00 161 06/26/ 2019 P-19- 71' 171,864.00 2019 P-19- 116 73,287,900.00 P-19- 153 06/18/ 70,776,996.00 170 07/01/ P-19- 2019 P-19- 2019 162 124 P-19- P-19- 06/21/ 179 06/28/ 171 2019 P-19- 2019 P-19- 133 P-19- 180 06/27/ 187 07/05/ P-19� 2019 P-19- 2019 189 142 P-19- P-19- 07/01/ 197 07/08/ 198 2019 P-52 2019 P-19- P-19- 206 07/10/ P-19- 205 07/19/ 2019 151 2019 P-19� 07/ 15/ P-19- 213 07/23/ 2019 160 2019 07/19/ P-19- 07/26/ 2019 169 2019 07/30/ P-19- 08/0 II 2019 178 2019 08;06/ P-19- 2019 188 08/13/ 2019 08/14/ P-19� 2019 196 08/20/ 2019 08/28/ P-19- 2019 204 09/05/ 2019 12/04/ P-19- 2019 212 12/11/ 2019 75 Exhibits "'P-I 9-5", "P-I 9-6'', "P-I 9- I4", �'P-I 9- I 5'', "P-I 9-23", "P-I 9-24", �'P-I 9-32", �'P-I 9-33", �'P-I 9-4 I", ''P- I9-42", �'P-I 9-50", "P-I 9-51'', �'P-I 9-59", "P-I 9-60", "P-I 9-68'', "P-I 9-69", "P-I 9-77", �'P-I 9-78", "P-I 9-86", "P- 19-87", "P-19-104", "P-19-105", "P-19-1 12'', "P-19-1 13", "P-19-121", "P-19-122", "P-19-130", �'P-19-131", "P- I9-139", "P-I 9- I40'', "P-I 9- I48", "P-I 9- I49'', "P-I 9- I 57", �'P-I 9- I58", ''P-I 9- I66", �'P-I 9- I67", �'P-I 9- I76", "P- 19-177". "P-19-184". "P-19-186", "P-19-193", "P-19-194", "P-19-202", "P-19-203", "P-19-211", "1'-19-218", "P- I9-2 I9", "P-49", "P-49- I". ''P-50'', and �'P-50- I��. " Refer to ICPA Report (Exhibit �'P-37"), Annex 8. 77 Kiloliter@ air per SAD was converted to Liters using the conversion rate of 1 kiloliter@ air= 1,000 liters. 78 Kiloliter @ air per CIS was converted to Liters using the conversion rate of 1 kiloliter@ air= I,000 Iiters.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x 7.26 P-19- 12j20/ 14,603,100 P-19- 14,523,700 58,412,400.00 P-19- 12/23/ 58,412,400.00 214 2019 221 222 2019 TOTAL 449,154,281 448,928,059 Pl,798,455,948.00 P1,796,617,124.00 !'1,838,824.00 As shown in the table above, the final volume of 448,928,059liters per CIS, is recognized as the actual and final volume of imported Jet A-I fuel. The BOC uses this volume as the basis for its final tax assessments. As a result, there is a discrepancy of PI ,838,824.00 between the PI,798,455,948.00 excise tax paid (calculated based on the higher volume per liter recorded in the SAD/BL and the CIS) and the PI, 796,6I7, I24.00 excise tax initially paid under tentative liquidation. This difference represents an additional excise tax payment made by petitioner, as evidenced by Official Receipts issued by the BOC,79 and summarized in Annex 8 of the ICPA Report. so On the other hand, petitioner absorbed a loss due to the overpayment of taxes amounting to P2,743,7I2.00.81 However, as noted by the ICPA, the overpayment assumed by petitioner does not affect the present claim for refund.82 Thus, the excise taxes on the importation of 448,928,059 liters of Jet A-I fuel were duly paid before their release from the BOC. However, of the total372,050,744liters of imported Jet A- I fuel allegedly sold to international carriers and tax-exempt entities, corresponding to an excise tax amount of !'1,488,202,976.00, the ICPA disallowed 94,467,09lliters, with a corresponding excise tax of P377,868,364.00. The disallowance was due to the !CPA's inability to trace excise tax payments resulting from pending multiple-entry resolutions at .J. the time of verification and the unavailability of original documents, as follow" 79 Exhibits"P-19-7'", "P-19-16", "P-19-25", "P-19-43", "P-19-61", "P-19-70", "P-51-1", �'P-19-141", and �'P-19-159", USB. 80 Exhibit ��P-37". 81 Refer to Table 17, !CPA Report (Exhibit "P-37"); I' I, 795,712,236.00 (computed by multiplying 448,928,059 liters per CIS by P4.00 excise tax rate) less P1,798,455,948.00 (as shO\vn in the table above). "' !CPA Report (Exhibit "P-37'"), p. 31.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X Imported Jet A-1 Fuel EXCEPTIONS NOTED BY THE !CPA (vol. in liters\ ADRs wherein ADRS wherein TOTAL excise tax excise tax EXCEPTIONS payments were payments were NOTED BY TOTAL not yet traced not yet traced THEICPA CLAIM (vol. due to pending due to Excise Tax at in liters) P4.00 LOCATION Exhibit resolutions of unavailability of "P-41" petitioner for original the multiple documents {i.e., entries needed ADRs, for tracing at Liquidation the time of Statement, verification COCs, C!Cs, and WCsl JOCASP 292,198,383 75,838,76083 6,402,66584 82,241,425 1'328, 965,700.00 MACTAN 39,654,760 6,816, 92785 1,081,22986 7,898,156 31,592,624.00 ILOILO 712,254 - 86,30587 86,305 345,220.00 KALIBO 28,611,355 11,637,952.00 - 2,909,48888 2,909,488 DAVAO 2,746,029 398,97889 - 398,978 1,595,912.00 TAGBILARAN 189,117 - 79,34190 79,341 . 317,364.00 DMIA 5,355,828 - 277,67991 277,679 1,110,716.00 2,023,018 PALAWAN - 575,71992 575,719 2,302,876.00 PETRON BATAAN 560,000 - - - - REFINERY 372,050,744 Total 83,054,665 11,412,426 94,467,091 1'377,868,364.00 The disallowances listed in Annexes 16.1-B, 16.1-C, 16.2- B, and 16.2-C of the ICPA Report (Exhibit "P-37") were applied, as the disallowances in the Supplemental !CPA Report (Exhibit "P-73") could not be ascertained. In sum, only the amount of P1,110,334,612.00 representing petitioner's excise taxes on the 277,583,653 liters of imported Jet A-1 fuel, as traced by the ICPA, will be considered in the present claim for refund. The computation of the said amount is as follows: SJ !CPA Report (Exhibit ""P-37"), Annex 16.1-B. 84 !CPA Report (Exhibit "'P-37"), Annex 16.1-C. 85 !CPA Report (Exhibit �'P-37"), Annex 16.2-B. 86 ICPA Report (Exhibit ""P-37"), Annex 16.2-C. 87 Supplemental ICPA Report (Exhibit "P-73"), Annex 16.3-D. 88 Supplemental ICPA Report (Exhibit "P-73"), Annex 16.4-E. 89 Supplemental ICPA Report (Exhibit �'P-73"). Annex 16.5-B. 90 Supplemental ICPA Report (Exhibit "'P-73"). Annex 16.6-C. 9! Supplemental ICPA Report (Exhibit ..P-73"), Annex 16.7-C. Supplementai!CPA Report (Exhibit "P-73"), Annex 16.8-C.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x IMPORTED PARTICULARS Volume in Excise Tax at Total Claim for Refund Liters P4.00 Less: Excise Tax Payments not verified by the ICPA Total Excise Tax Payment Traced/Verified by 372,050,744 Pl ,488,202,976.00 the ICPA 94,467,091 377,868,364.00 277,583,653 Pl,110,334,612.00 b. Excise tax on locally produced Jet A-1 fuel: Ms. Arguelles, petitioner's Tax Manager, explained that excise taxes on locally manufactured Jet A-1 fuel are paid by petitioner daily upon removal from the PBR. Since petitioner uses the BIR's eFPS, its excise tax returns are filed electronically through the system, and payments are made through either of the following methods: (1) product replenishment scheme or (2) payment through eFPS by filing of BIR Form No. 2200-P. Ms. Arguelles further explained that a product replenishment scheme is used when what is to be removed from the PBR is a Jet A-1 fuel, which is to be sourced from locally manufactured stocks and delivered to depots where most sales and deliveries are made to international air carriers. On the other hand, eFPS payment via BIR Form No. 2200-P is used when the locally produced petroleum products to be removed from the PBR are not Jet A-1 fuels and are not to be delivered to locations with high sales to international carriers. Petitioner estimates the daily volume of fuel products to be removed from the PBR and prepares a summary of estimated daily volume of fuel requirements for the next two to three days. Based on this summary, petitioner calculates the excise tax payable for its petroleum products for the next two to three days, with an additional allowance of approximately P5 million per day. Petitioner then files an application for the payment of excise tax through the BIR eFPS, based on actual removals from the PBR. The estimated computation is compared against the "Balance Carried Over from Previous Return" in the Excise Tax Return (ETR) to ensure that there are sufficient excess payments to cover the tax due for the next two to three days. According to Ms. Arguelles, petitioner makes an advance deposit to the BIR through the eFPS if the actual balance of excess payments is insufficient. The ETR, along with the attached Summary of "

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Removals and eFPS payment details, serves as proof of excise tax payments for the locally manufactured Jet A-1 fuel,93 Ms. Viray reported that the PBR produced 760,198,240 liters of locally manufactured Jet A-1 fuel from January 1, 2019 to December 31, 2019. 94 On the other hand, during the same period, a total of 778,933,911 liters oflocally manufactured Jet A-1 fuel were removed from the PBR95 with an equivalent excise tax of !'3,115,735,644.00. For easy reference, an excerpt of Table 19 of the ICPA ReporfJ6 is reproduced below: Per Manual ORB for Jet A-1 (Exhibit P-17-1 to P-17-12) Annexed to Removals Excise Tax Payments"'** ICPA Exhibit No. Month Production Taxable Total Tax Due** Through Cash Report Reference 100,034,077 Paid in Cash* (d = ax !"4.00) Payment/ 2200 (Exhibit "P- Through PRDM "P-17 I" I January (in Liters) _id=e +_f)_ fel 10 37") "P-17-2" February _M_ P51,97!,224.00 11.1 "P-17-3" 97,535,408 1'390, 141,632.00 P338, 170,408.00 11.2 "P-17-4" March 70,663,568.00 11.3 "P-17-5" April 96,759,103 102,285,743 409' 142,972.00 338,479,404.00 56,195,112.00 11.4 "P-17-6" May 91,043,583 90,668,895 362,675,580.00 306,480,468.00 69,528,700.00 11.5 "P-17-7" June 68,782,724 85,323.877 341,295,508.00 271,766,808.00 11.6 "P-17-8" July 22,613,488.00 11.7 "P-17-9" August 3,720,662 7,960,390 31,841,560.00 9,228.072.00 - 11.8 "P-17-11" September 209,376 - - 11.9 "P 17-J2H November - - - 11.11 December (57,412) - 5,835,092.00 11.12 "P-17-10" Subtotal - 42,868,760.00 October 67,017,720.00 11.10 40,944,888 25,125,628 100,502,512.00 94,667,420.00 75,450,132.00 Grand Total 462,143,796.00 80,678,030 64,261,599 257,046,396.00 214,177,636.00 67,310,508.00 105,853,732 111,892,651 447,570,604.00 380,552,884.00 P529,454,304.00 71,214,427 91,370,265 365,481,060.00 290,030,928.00 659,183,190 676,424,456 2, 705,697,824.00 2,243,554,028.00 102,509,455 410,037,820.00 342,727,312.00 101,015.050 760,198,240 778,933,911 P3,115,735,644.00 P2,586,281,340.00 *Paid in Cash pertains to removals from locally-produced Jet A-1 fuel. **Pertains only to removals from locally-produced Jet A-1 fuel as the excise tax related to imported Jet A-1 fuel were already paid upon importation. "**Other than importation. The table above shows that the total excise tax due in the amount of !'3, 115,735,644.00 was settled as follows: � !'2,586,281,340.00 paid through the Product Replenishment Certificate (PRC) via the Product Replenishment Debit Memo (PRDM); and � !'529,454,304.00- paid in cash via eFPS. The ICPA confirmed a total amount off'2,586,834,912.0097 utilized PRC through PRDM, which is higher by !'553,572.00 compared to the amount reported in the Manual Official Register Books (ORB). However, the ICPA noted that this discrepancy would not affect the current refund claim. Docket- Vol. I, pp. 83-84, Exhibit "P-29'" (Q&A No. 25); Corroborated by the testimony of Ms. Marissa U. Viray, petitioner's Accounting Services Manager. Docket- Vol. I. pp. 214-215, Exhibit �'P-30" (Q&A No. 23). 94 Docket- Vol. I, pp. 21 l-212, Exhibit �'P-30'" (Q&A No. 15). 05 /d. at 215-216, Exhibit �'P-30"" (Q&A No. 24). 90 !CPA Report (Exhibit ""1'�37""), p. 44. 97 /d. at 37-39, Table 18.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x A comparison of the total excise tax payment through cash ofP529,454,304.00 reported in the Manual ORB with the excise tax due, excluding removals unrelated to Jet A-1 fuel, based on the Schedule 1 - "Summary ofRemovals and Excise Tax Due on Petroleum Products Chargeable Against Payments"9B of the ETRs, which amounts to P552,214,319.88,99 revealed a var1ance of P22,760,015.88. The computation thereof is as follows: Exhibit No. Month Through Cash Cash Payment based Difference Reference January Payment/ 2200 on Schedule 1 of the (-c=a-b) February per Manual ORB ETRs for Jet A-1 Fuel "P-17-1" for Jet A-1 Fuel P77,104.00 "P-17-2" March 1 (Annex ~, :~rA (446 ,240.00\ "P-17-3" April (a) Report b "P-17-4" Mav 1'51,971,224.00 1'51,894,120.00 146,352.001 "P-17-5" June (490,372.00) "P-17 -6" July 70,663,568.00 71,109,808.00 112,689,500.45 "P-17-7" August 56,195,112.00 56,241,464.00 (2,519,864.00 "P-17-8" September 69,528,700.00 70,019,072.00 818,812.00 "P-17-9" October 22,613,488.00 35,302,988.44 (5,692,532.00 "P-17-10" November 1665,972.001 "P-17-11" December - 2,519,864.00 1329,155.441 "P-17 12" - 818,812.00 12,140,388.001 5,835,092.00 3,002,068.00 42,868,760.00 11,527,624.00 (1'22,760,015.88) 67,310,508.00 67,017,720.00 43,534,732.00 75,450,132.00 67,639,663.44 1'529 ,454,304.00 69,158,108.00 72,448,064.00100 1'552,214,319.88 Nevertheless, the cash payment made based on Schedule 1, which was paid and filed with the BIR, is higher than the amount reported in the Manual ORB. Moreover, the ICPA verified that the total advance payments for CY 2019 amounted to P22,840,201,039.50. 101 This sum is more than sufficient to cover the total excise tax due on the removal of all fuel products, which stood at P22,423,391,464.39, as detailed below: Advance Excise Tax Payments and Excise Taxes Due per Excise Tax Returns (BIR Form No. 2200-P) for all Place of Removal for All Fuel Products Filed throu1=h EFPS for the period from January 1, 2019 to December 31, 2019 Month Annex Balance of Excise tax Excise Tax Balance of Deposits January Reference Deposits Carried payments/ Advance Due/ AP1>lied to be Carried Over to February Annex 1.1 IP2,839,213,649 .411 Next Return (per ~~R March Annex 1.2 Over from De11osits 2,423,660,248.68 April Annex 1.3 Previous Return P2,965,000,000.00 3,028,880,094.97 Form No. 2200-P Annex 1.4 2,589,424,396.12 1'438,075,993.78 M"J Annex 1.5 P732,366,74 7.19 2,410,000,000.00 858,075,993.78 2,775,000,000.00 (814,565,463.66) 384,830,132.05 844,830,132.05 2,295,000,000.00 669,582,301.57 669,582,301.57 375,157,905.45 775 000,000.00 375,157,905.45 225,226,830.58 98 A supplementary schedule attached to the Excise Tax Returns which bears the ATC Code, description, unit ofV' measure, and applicable rate with information on whether taxable or tax-paid/exempt and conditional tax-free for all locally produced petroleum product removals, ICPA Report (Exhibit "P-37"). p. 17. 99 Supplemental !CPA Report (Exhibit "P-73"), Table Nos. 8 and 9, pp. 7-8. 100 Upon examination, the total volume of Jet A-1 fuel should be 18,112,0161itcrs, not 13,574,822 (as indicated in the Supplemental ICPA Report) resulting in a difference of 4,537,194 liters with excise tax equivalent to 1'18, 148,775.99 (1'534,065,543.89 less 1'552,214,319.88). 101 Supplemental !CPA Report (Exhibit "P-73"), Table I, p. 3; See also Supplemental !CPA Report (Exhibit "P-73"), Annex I.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Advance Excise Tax Payments and Excise Taxes Due per Excise Tax Returns (BIR Form No. 2200-P) for all Place of Removal for All Fuel Products Filed through EFPS for the period from January 1, 2019 to December 31, 2019 Month Annex Balance of Excise tax Excise Tax Balance of Deposits June Reference Deposits Carried payments/ Advance Due/ Applied to be Carried Over to July Next Return (per BIR August Annex 1.6 Over from Deposits (110,348,811.21 September Annex 1.7 Previous Return [35,466,335.40 Form No. 2200-P) October Annex 1.8 - (89,910,672.74 November Annex 1.9 335,575,641.79 - 225,226,830.58 December Annex 1.10 225,226,830.58 (1,898,310,803.69 189,649,742.48 Total Annex 1.11 189,649,742.48 98,201,039.50 2,847,226,499.33 197,797,159.24 Annex 1.12 197,797,159.24 2,295,000,000.00 3,415,784,201.21 593,830,531.46 593,830,531.46 2,330,600,287.97 926,243 ,290.54 926,243,290.54 3,180,000,000.00 . (P22,423,391,464.39 769,090,616.75 782,302,649.15 3,319,000,000.00 557,153,916.77 2,728,000,000.00 P22,840,201,039.50 However, out of the total 2,801,672 liters of locally produced Jet A-1 fuel sold to various international air carriers and tax-exempt entities with equivalent excise tax payment of P11,206,688.00, the ICPA disallowed 1,756,874 liters, with a corresponding excise tax of P7,027,496.00, due to the !CPA's inability to trace excise tax payments at the time of verification, pending resolutions of multiple entries and the unavailability of original documents, to wit: Locally Produced Jet A-1 Fuel EXCEPTIONS NOTED BY THE ICPA (vol. in liters) LOCATION TOTAL ADRs wherein ADRS wherein TOTAL Excise Tax at CLAIM (vol. excise tax excise tax EXCEPTIONS 1'4.00 payments in liters) payments were NOTED BY 1'87,156.00 Exhibit "P- not yet traced were not yet THEICPA 2,221,448.00 due to pending traced due to 41" resolutions of unavailability 81,000.00 petitioner for 1,895,068.00 the multiple of original entries needed documents 520,244.00 for tracing at (i.e., ADRs, 782,580.00 Liquidation the time of Statement, 1,440,000.00 verification COCs, CICs, 1'7,027,496.00 and WCsj_ DAVAO 53,643 - 21,789102 21,789 555,362 133,065>03 555,362 DMIA 422,297 104 ILOILO 20,250 20,250105 - 20,250 JOCASP 584,289 374,85]106 98,916107 473,767 KALIBO 178,650 130,06]108 - 130,061 MACTAN 209,478 195,645109 - 195,645 PETRON BATAAN 1,200,000 40,000110 3 2 0 , 0 0 0 111 360,000 REFINERY TOTAL 2,801,672 893,872 863,002 1,756,874 102 Supplemental !CPA Report (Exhibit "P-73"), Annex 16.9-C. 103 Supplemental ICPA Report (Exhibit '�P-73"), Annex 16.10-B. 104 Supplemental !CPA Report (Exhibit �'P-73"), Annex 16. 10-C. 105 Supplemental !CPA Report (Exhibit "P-73"), Annex 16.11-B. 106 SupplementallCPA Report (Exhibit "P-73"), Annex 16.12-B. 107 Supplemental ICPA Report (Exhibit "P-73''), Annex 16.12-C. 108 Supplemental !CPA Report (Exhibit "P-73"), Annex 16.13-B. 109 Supplemental !CPA Report (Exhibit "P-73"), Annex 16.14-B. 110 Supplemental !CPA Report (Exhibit "P-73"), Annex !5.2-b. 111 Supplemental !CPA Report (Exhibit "P-73''), Annex 15.2.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X In sum, the ICPA verified that only 1,044,798 liters of locally produced Jet A-1 fuel sold to international carriers and tax-exempt entities, with an equivalent excise tax of P4, 179,192.00, were properly filed and paid. Consequently, only this amount will be considered in the present refund claim, calculated as follows: LOCALLY PRODUCED PARTICULARS Volume in Excise Tax at Total Claim for Refund Liters P4.00 Less: Excise Tax Payril_ents not verified by_the !CPA Total Excise Tax Payment Traced/Verified by the 2,801,672 1"11,206,688.00 !CPA I ,756,874 7,027,496.00 1,044,798 P4,179,192.00 Thus, petitioner has sufficiently established payment of excise taxes on both imported and locally produced Jet A-1 fuel under the present claim, but only to the extent of P1,114,513,804.00, summarized as follows: IMPORTED LOCALLY PRODUCED PARTICULARS Volume in Excise Tax at Volume in Excise Tax at , TOTAL AMOUNT Liters 1'4.00 Liters 1'4.00 OF EXCISE TAX Total Claim for Refund 372,050,744 1'1,488,202,976.00 2,801,672 1'11,206,688.00 1'1,499,409,664.00 Less: Excise Tax Payments not 94,467,091 377,868,364.00 1,756,874 7,027,496.00 384,895,860.00 verified by the !CPA 277,583,653 1'1, 110,334,612.00 1,044,798 1'4,179,192.00 1'1, 114,513,804.00 Total Excise Tax Payment traced or verified by the !CPA Second Requisite: Petitioner likewise established that the imported and locally produced Jet A-1 fuels were sold to international carriers, with certain exceptions, but failed to substantiate sales made to entities that are by law exempt from direct and indirect taxes. Petitioner claims that during the period from January 1, 2019 to December 31, 2019, it sold 2,801,672 liters of locally produced Jet A-1 fuel, for which it paid excise taxes amounting to P11,206,688.00, and 372,050,744 liters of imported Jet A-1 fuel, with corresponding excise taxes of P1,488,202,976.00. These fuel sales were made to: (1) various international carriers, i

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x both of Philippine and foreign registry, for their use and consumption outside the Philippines; (2) international carriers of foreign registry whose countries of registry exempt Philippine carriers from similar taxes; and (3) tax-exempt entities or agencies covered by tax treaties, conventions, and other international agreements for their use and consumption.ll2 Based on petitioner's Schedule of Sales, 113 the ICPA summarized petitioner's sales to international carriers and tax- exempt entities based on terminals for the period covering January 1, 2019 to December 31, 2019. Table 23 of the ICPA Report114 is reproduced below: Customers Ime;orted Locallx-Produced Total A Petron Bataan Refinery 560,000.00 1,200,000.00 1,760,000.00 Lubwell Co!:�Oration 560,000.00 1,200,000.00 1,760,000.00 Subtotal - Petron Bataan Refinery B. Davao 37,627.00 37,643.00 37,627.00 I Atlas Air-WFS 38,905.00 38,905.00 2 Cathay Dragon 735,817.00 16,000.00 735,817.00 554,774.00 53,643.00 554,774.00 3 Cebu Pacific (Inti) 104,632.00 104,632.00 41,590.00 66,001.00 41,590.00 4 Hongkong Dragon 679,140.00 5,670.00 679,140.00 129,466.00 4,500.00 167,109.00 5 Philippine Airlines (Inti) 6 Qatar Airline 4,855.00 72,650.00. 4,855.00 II ,886.00 7,630.00 II ,886.00 7 Qatar Airways 407,337.00 407,337.00 8 Silk Air 35,985.00 16,000.00 9 WFS/Garuda Indonesia 2,746,029.00 112,346.00 2,799,672.00 10 World Fuel 56,067.00 30,904.00 122,068.00 II Xiamen Airlines 218,370.00 5,670.00 12 RD Fishin 234,728.00 16,460.00 239,228.00 Subtotal - Davao 16,460.00 1,672,421.00 c. DMIA 1,745,071.00 513,837.00 7,630.00 I Alphaland Aviation 2,372,547.00 2 AEG/Pan Pacific Inti 549,822.00 26,733.00 2,484,893.00 3 Cathay Dragon 71,194.00 4 Cathay Pacific 384,551.00 26,733.00 102,098.00 5 Cebu Pacific (Inti) 602,92!.00 6 Dragon Air " 7 Jeju Airlines 8 Jin Air Inti 9 Pan Pacific Inti 10 Qatar airways II Royal Air Phils Inti 112 Docket- Vol. I, p. 9. Petition for Review, pars. 12-15. 113 Exhibit "P-4 I", USB. 114 Exhibit "P-37'". pp. 47-49; See also !CPA Report (Exhibit "P-37'"), Annex 12.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X Customers Im;eorted Locallr-Produced Total 12 UV Air-CRK-g1obaljet 7,290.00 1,306.00 7,290.00 13 SRD Aviation 1,306.00 5,355,828.00 555,362.00 Subtotal - DMIA 5,911,190.00 D. floilo 712,254.00 20,250.00 732,504.00 Cebu Pacific (Intl) 712,254.00 20,250,00 732 504.00 Subtotal - Iloilo 1,670,899.00 E. JOCASP 1,670,899.00 26,939.00 26,939.00 11,485.00 21,824.00 Air Hongkong 10,339.00 44,412.00 44,412.00 2 AEG/Rada Airlines 3 Air Incheon 3,915,356.00 49,589.00 3,915,356.00 4 Air India cjo wfs 79,052.00 770.00 79,052.00 2,128.00 2,128.00 5 Asiana airlines cjo AEG fuel 64,326.00 6 Aviastar tu 3,491 ,355.00 65,819.00' 3,491,355.00 7 Brunei Airlines cjo UAS 56,593,650.00 56,643,239.00 3,774.00 8 Cathay Pacific 3,343,470.00 59,144.00 3,343,470.00 158,284.00 159,054.00 9 Cebu Pacific (Inti) 126,648.00 50,099.00 190,974.00 10 Emirates Airlines 8,382,085.00 61,119.00 8,447,904.00 56,086.00 422,431.00 11 Ethiopian Airlines cjo wfs 418,657.00 9,792,466.00 4,260.00 9,851,610.00 12 Global Jet Luxembourg-uv air 1,637,711.00 1,637,711.00 3,240,146.00 3,240,146.00 13 Gulf Air 2,457,209.00 2,457,209.00 14 Hongkong Airlines cjo wfs 8,675.00 8,675.00 117,982.00 117,982.00 15 Japan Airlines cjo Cosmo oil 10,050,746.00 10,050,746.00 16 Jeju Airlines 14,615,239.00 14,665,338.00 17 Jet Star Asia 5,873,249.00 5,934,368.00 18 Jet Star Japan c/o Cosmo oil 137,541,722.00 137,597,808.00 19 K Mile Air Co. 7,109.00 7,109.00 20 KLM Royal Dutch 2,807,821.00 2,807,821.00 5,995,257.00 5,995,257.00 21 Korean Air 26,376.00 26,376.00 22 Kuwait Airways 255,906.00 255,906.00 23 Oman Air 49,543.00 49,543.00 9,802,084.00 9,802,084.00 24 Philippine Airlines (lntl] 1,868,474.00 1,868,474.00 25 Philippines Airasia Inc. 4,723,621.00 4,723,621.00 26 Qantas Airways 13,389.00 17,649.00 31,402.00 31,402.00 27 Qatar Airways 28 Qatar Executive cjo Qatar Airways 6,422.00 6,422.00 44,590.00 44,590.00 29 Royal Air Phils ilntl 30 Royal Brunei Airlines cjo UAS \1 31 Saudia Airlines 32 Scoot Tigerair Pte Ltd 33 Singapore Airlines 34 Tag Aviation cjo WFS 35 Volga Dnepr cjo world fuel 36 WFS/HK Air Cargo 37 WFS / KLM Royal

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Customers Im;eorted Locall;y;-Produced Total 3,125,788.00 38 Xiamen Airlines cLo World Fuel 3,039,321.00 86,467.00 292,782,672,00 Subtotal - JOCASP 292,198,383.00 584,289.00 185,629.00 646,621.00 F. Kalibo 160,683.00 24,946.00. 599,721.00 46,900.00 9,657.00 Aeg/ Air Busan Co. Ltd 82,053.00 5,519,479.00 9,657.00 2 AegjJuneyao Airlines 1,290.00 84,042.00 3 Aegj Loong Air 5,437,426.00 153,032.00 84,042.00 23,461.00 4 Aeg/Pan Pacific Intl 178,650.00 65,314.00 5 Aeg/Sichuan Airlines 129,571.00 21,776.00 65,314.00 18,155.00 6 AegjT'way Air 21,776.00 2,666,946.00 7 Aeg/Zhejiang Loong Air 18,155.00 1,319,360.00 8 Air Busan cjo Aeg Fuel 30,145.00 9 Air Philippines Corp. 2,666,946.00 9,958,702.00 1,319,360.00 2,207,014.00 10 Cebu Pacific (Inti) 136,501.00 30,145.00 100,010.00 11 Jin Air Inti 1,837,382.00 12 Pan Pacific Intl 9,958,702.00 54,201.00 1,562,408.00 13 Phil Air Asia Inti 2,207,014.00 7,000.00 14 Philippine Airlines (lntl) 135,211.00 56,863.00 100,010.00 1,394,320.00 15 Royal Air Phils lntl 1,837,382.00 245,426.00 16 Scoot Tigerair Pte Ltd 54,201.00 510,022.00 17 WFS/ Air Seoul 1,562,408.00 23,461.00 18 WFS/ Air Seoul 7,000.00 28,790,005.00 19 WFS I China Eastern 56,863.00 2,265,538.00 20 WFS(Eastern Air Transport 1,394,320.00 28,149.00 21 WFS /Far Eastern Air Transport 245,426.00 1,994,721.00 22 WFS I Okay airways 325,835.00 23 WFS /Tiger Air Taiwan Co. Ltd 510,022.00 4,067,984.00 24 WFS jXiamen Airlines 28,611,355.00 729,014.00 25 Zest Airwa:z:s 834,018.00 298,642.00 Subtotal -Kalibo 112,273.00 G. Mactan 2,250,610.00 14,928.00 5,734,896.00 1 Air Busan cjo Aeg fuel 28,149.00 8,410,688.00 2 Air Niugini cjo WFS 13,038.00 1,994,721.00 267,568.00 3 Asiana Airlines cjo Aeg fuel 325,835.00 8,610.00 4 Cathay Pacific 23,840.00 I 3,943,194.00 5 Cebu Pacific (Inti) 4,054,946.00 47,730.00 729,014.00 41,679.00 i 6 China Eastern cjo Aeg fuel 834,018.00 7 China Eastern c/o WFS 298,642.00 8 China Southern cjo Aeg fuel 103,663.00 9 Emirates Airlines 10 Jeju Airlines 5,711,056.00 II Jin Air Inti 8,362,958.00 12 Juneyao Airlines cjo Aeg fuel 13 Korean Air 267,568.00 3,901,515.00

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X Customers Imported Locally-Produced Total 14 Lucky air cjo Aeg fuel 663,665.00 10,462.00 674,127.00 31,354.00 15 Philippine Airlines (Inti) 5,972,386.00 5,427.00 6,003,740.00 16 Royal Air Phils Inti 645,985.00 645,985.00 17 Seair cIa WFS 12,497.00 12,410.00 12,497.00 18 South East Asian Airlines 209,478.00 5,427.00 19 Sichuan Airlines cjo Aeg fuel 1,266,924.00 20 Tiger Air Taiwan cjo Aeg fuel 2,487.00 1,266,924.00 21 Tiger Air Taiwan cjo WFS 2,487.00 22 T'way Air cjo Aeg fuel 205,732.00 23 Xiamen Airlines c/o world fuel 1,825,632.00 205,732.00 1,838,042.00 Subtotal - Mactan 196,757.00 39,654,760.00 196,757.00 39,864,238.00 H. Palawan 1,655,392.00 Eastar Jet 367,626.00 I ,655,392.00 367,626.00 2 Tiger Air c I o WFS 2,023,018.00 2,023,018.00 Subtotal - Palawan 91,125.00 I. Tagbilaran 91,125.00 79,341.00 1 Jeju Airlines 79,341.00 18,651.00 2 Philippine Airlines (Intl) 18,651.00 189,117.00 3 Roval Air Phils Int1 189,117.00 Subtotal - Tagbilaran Grand Total 372,050,744.00 2,801,672.00 374,852,416,00 372,050,744.00 2,801,672.00 374,852,416.00 Volume in Liters per Petition for Review Difference To reiterate, Section 135 of the NIRC of 1997, as amended, provides that the sale of petroleum products to the following entities is exempt from excise taxes, to wit: a. International carriers of Philippine or foreign registry; b. Exempt entities or agencies covered by tax treaties, conventions, and other international agreements; and c. Entities that are by law exempt from direct and indirect taxes. For the sale of petroleum products to international air carriers, whether of Philippine or foreign registry, to be exempt from excise taxes under Section 135(a) of the NIRC of 1997, as amended, petitioner must present the following: 1. Proof of foreign registry of the international air carriers, or in case of Philippine-registered air carriers, the latter's proof of authority to operate international flights;

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X 2. Proof that the locally produced and imported Jet A-1 fuel were used or consumed outside the Philippines; and 3. Proof that the locally produced and imported Jet A-1 fuel sold to international air carriers were stored in a bonded storage tank, and had been disposed of under the rules and regulations. I. International Carriers a. International carriers of Philippine or foreign registry: For the first requisite, petitioner presented the Civil Aeronautics Board (CAB) Certification with Routing No. 21- 2060, dated June 22, 2021. 115 This certification serves as proof that petitioner's customers include: (i) international air carriers of foreign registry that have been issued with Foreign Air Carrier's Permit (FACP, authorizing them to operate international flights between the Philippines and their country of registration; and (ii) Philippine-registered international carrier that have been issued a Certificate of Public Convenience and Necessity (CPCN) to operate domestic and international air transportation services during the period from January 1, 2019 to December 31, 2019. For easy reference, the list of international earners indicated in the CAB Certification is reproduced below: Name of Airline Country of Registration 1. Air Busan Co. Ltd. 2. Air Seoul Korea 3. Asiana Airlines 4. Jeju Air Co. Ltd. Hong Kong 5. Jin Air Co. Ltd. Papua New Guinea 6. Korean Airlines Macau 7. T'WAY AIR China 8. Air Hong Kong Limited 9. Cathay Pacific Air 10.Hong Kong Dragon Air (Cathay Dragon) 11. Air Niugini Limited 12.Air Macau Company Limited 13.China Eastern Airlines Co. Ltd. 14. China Southern Airlines 15.Juneyao Airlines (Shanghai) (permit started on 10/27/2019) 16.0KAY Airways (Beijing) 115 Docket- Vol. II, pp. 797-798, Exhibit �'P-15-1 ''.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X 17. Sichuan Airlines (Chengdu, Sichuan) 18.Xiamen Airlines 19. Delta Airlines United States of 20.Federal Express Corp. America 21. Gulf Air Bahrain 22.KLM Royal Dutch Airlines Netherlands 23.Kuwait Airways Kuwait 24.0man Air Oman 2 5. Emirates Airlines United Arab 26.Eithad Airways Emirates 27. Saudi Airlines I Saudi Arabian Airlines Saudi Arabia 28. Silk Air (Singapore) Pte. Ltd. 29. Singapore Airlines Singapore 30.Jetstar Asia Airways Pte. Ltd. 31.Tiger Airways Singapore Pte. Ltd. 32. Qatar Airways Qatar 33.EvaAir 34.Tigerair Taiwan Airlines Taiwan 3 5. China Airlines 36.Air Asia Berhad Malaysia 37.Vanilla Air (Narita) Japan 38.Japan Airlines 39.Qantas Airways Australia 40. Ethiopian Airlines Ethiopia 41. Cargolux Airlines International S.A. Luxembourg 42.Royal Brunei Brunei 43.Cebu Air, Inc. (Cebu Pacific Air) 44. Philippine Airlines, Inc. 45. Philippines AirAsia, Inc. 46.PAL Express (formerly Air Philippines Corporation I Airphil Express) 47.Zest Airways, Inc. (doing business as Philippines AirAsia Zest I Philippines AirAsia) 48.Astro Air International, Inc. (doing business as Pan Pacific Airlines) 49.Royal Air Charter Services, Inc. (Royal Air Philippines) b. International carriers of foreign registry covered by tax treaties, conventions, and other international agreements: Petitioner submitted the following documentary evidence to determine whether the country of registry of the international carriers of foreign registry grants similar exemptions from excise or other equivalent taxes to the locally produced and imported Jet A-1 fuels sold to international carriers of Philippine registry, viz:

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X a. Department of Foreign Affairs (DFA) Certifications116 to prove that the bilateral air services agreements and other agreements in effect in the years 2019 and 2020; and b. Certified True Copy of Air Services Agreements or Other Agreements between the Republic of the Philippines and the following Countries: 1. The Government of the Republic of Singapore; 117 2. The Government of the Kingdom of the Netherlands;1 18 3. The Government of the Republic of Korea;119 4. The Government of the Russian Federation; 120 5. The Government of Malaysia;121 6. The Government of the Sultanate of Oman;122 7. The Government of the State of Qatar;123 8. The Taipei Economic and Cultural Office in Manila; 124 9. The Government of the United Arab Emirates;125 10. The United States of America;126 11. The Government of the United States of America Regarding the Treatment of United States Armed Forces Visiting the Philippines; 127 12. The Government of the State of Bahrain;128 13. The Government of the People's Republic of China; 129 14. The Government of the Republic of Indonesia;130 15. The Government of Australia;131 16. The Government of the Hashemite Kingdom of Jordan;132 17. Asian Development Bank;133 18. State of Kuwait;134 19. The Government of Hong Kong;135 20. The Government of the Kingdom of Thailand; 136 21. Switzerland; 137 22. The Government of His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam;138 23. The Government of Japan;139 116 !d. at 799-803, Exhibits "P-15-2", �'P-15-3", "P-15-4". 117 !d. at805-817.Exhibit''P-16-I". ''" !d. at 818-830, Exhibit �'P-16-2". 119 /d. at831-855, Exhibit"P-16-3". ' 20 /d. at 856-872, Exhibit �'P-16-4". "' /d. at 873-888. Exhibit "P-16-5". 022 !d. at 889-900, Exhibit "P-16-6". 023 !d. at 901-913, Exhibit "P-16-7". 024 /d. at 914-927, Exhibit "P-16-8". 175 !d. at 928-941, Exhibit "P-16-9". 026 /d. at 942-947. Exhibit "P-16-10". m /d. at 948-957, Exhibit �'P-16-11". 128 /d. at 958-970, Exhibit "P-16-12'". 029 /d. at971-991, Exhibit''P-16-13". 130 !d. at 992-1003, Exhibit �'P-16-14". 131 !d. at 1004-1035, Exhibit "P-16-15". "' !d. at 1036-1059, Exhibit "P-16-16". m !d. at 1060-1074, Exhibit"P-16-17". 134 /d. at 1075-1091, Exhibit �'P-16-18". m !d. at 1092-1111, Exhibit "P-16-19"'. 176 Jd. at 1112-1130, Exhibit ''P-16-20". 177 !d. at 1131-1142, Exhibit "P-16-21 ". 138 /d. at 1143-1161, Exhibit "P-16-22". D9 /d. at 1162-1175. Exhibit "P-16-23".

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X 24. The Government of India;l40 25. The Government of the Grand Duchy of Luxembourg;l41 and 26. The Government of the Federal Democratic Republic of Ethiopia. 142 Records reveal that 74,839 liters of imported Jet A-1 fuel and 5,427 liters of locally produced Jet A-1 fuel, with equivalent paid excise taxes of P299,356.00 and P21, 708.00, respectively, were sold to the following customers without a valid FACP, CPCN, or Air Service Agreements. These sales must, therefore, be disallowed: Customer Country of Imported Jet Locally Total Registry A-1 fuel Produced Jet (volume in (volume in A-1 fuel liters) liters) 45,601 (volume in liters) 4,855 WFS/FAR EASTERN AIR TAIWAN 45,601 TRANSPORT WFS/GARUDA INDONESIA INDONESIA 4,855 SEAIR C/0 WFS/ SOUTH EAST ASIAN PHILIPPINES 12,497 5,427 17,924 AIRLINES WORLD FUEL UNITED 11,886 11,886 STATES Total 74,839 5,427 80,266.00 Multiplied by: Excise Tax Rate I' 4.00 I' 4.00 Disallowed p 299,356.00 p 21,708.00 p 321,064.00 For the second requisite, petitioner presented various Aviation Delivery Receipts (ADRs)1 43 to prove that the petroleum products sold were used or consumed outside the Philippines. Upon review of the ADRs, the Court finds that a total of 1,584,732 liters of Jet A-1 fuel with corresponding excise tax payments amounting to P6,338,928.00, were supported by: (1) ADRs that listed a local destination; (2) ADRs that did not indicate a destination; and (3) ADRs with unreadable details (such as customer name, date, and destination). The specifics are enumerated below: 140 !d. at 1176-1193, Exhibit ''P-16-24 ��. 141 /d. at 1194-1211, Exhibit "P-16-25". '" !d. at 1212-1227, Exhibit ��P-16-26". 143 Exhibit ..P-21'' and sub-markings: See ICPA Report (Exhibit �'P-37"), pp. 80-95.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x I. IMPORTED JET A-1 FUEL LOCATION EXHIBIT CUSTOMER ADRNUMBER VOLUME Excise Tax at NO. lin liters! P4.00 1. Sale of imported Jet A-1 fuel supported bv ADRs that listed a local destination DMIA P-21-15269 ROYAL AIR 1203236 7,220 P28,880.00 PHILS INTL DMIA P-21-15262 ROYAL AIR 1203219 4,990 19,960.00 PHILS INTL DMIA P-21-15263 ROYAL AIR 1203221 6,959 27,836.00 PHILS INTL DMIA P-21-15265 ROYAL AIR 1203228 5,800 23,200.00 PHILS INTL DMIA P-21-15264 ROYAL AIR 1203226 7,110 28,440.00 PHILS INTL DMIA P-21-15267 ROYAL AIR 1203235 6,084 24,336.00 PHILS INTL DMIA P-21-15385 ROYAL AIR 1203362 5,736 22,944.00 PHILS INTL DMIA P-57-124 ROYAL AIR 1203365 7,100 28,400.00 PHILS INTL DMIA P-21-15387 ROYAL AIR 1203347 6,587 26,348.00 PHILS INTL DMIA P-21-15388 ROYAL AIR 1203349 622 2,488.00 PHILS INTL DMIA P-21-15389 ROYAL AIR 1203355 6,067 24,268.00 PHILS INTL DMIA P-21-15390 ROYAL AIR 1203357 7,020 28,080.00 PHILS INTL DMIA P-21-15391 ROYAL AIR 1203369 7,553 30,212.00 PHILS INTL DMIA P-21-15393 ROYAL AIR 1203374 6,510 26,040.00 PHILS INTL DMIA P-21-15395 ROYAL AIR 1203380 6,820 27,280.00 PHILS INTL DMIA P-21-15396 ROYAL AIR 1203385 5,690 22,760.00 PHILS INTL DMIA P-21-15397 ROYAL AIR 1203387 6,771 27,084.00 PHILS INTL DMIA P-21-15399 ROYAL AIR 1203421 6,079 24,316.00 PHILS INTL DMIA P-21-15400 ROYAL AIR 1203422 6,840 27,360.00 PHILS INTL DMIA P-21-15402 ROYAL AIR 1203392 5,850 23,400.00 PHILS INTL DMIA P-21-15403 ROYAL AIR 1203395 6,980 27,920.00 PHILS INTL DMIA P-21-15404 ROYAL AIR 1203399 8,911 35,644.00 PHILS INTL DMIA P-21-15405 ROYAL AIR 1203403 6,890 27,560.00 PHILS INTL DMIA P-21-15407 ROYAL AIR 1203408 5,790 23,160.00 PHILS INTL DMIA P-21 15409 ROYAL AIR 1203415 3,170 12,680.00 PHILS INTL DMIA P-21-15411 ROYAL AIR 1203418 6,047 24,188.00 PHILS INTL DMIA P-21-15412 ROYAL AIR 1203420 6,760 27,040.00 PHILS INTL DMIA P-21-15415 ROYAL AIR 1203432 6,730 26,920.00 PHILS INTL DMIA P-21-15416 ROYAL AIR 1203445 5,860 23,440.00 PHILS INTL DMIA P-21-15417 ROYAL AIR 1203447 6,935 27,740.00 PHILS INTL DMIA P-21-20501 ROYAL AIR 1203570 5,010 20,040.00 PHILS INTL DMIA P-21-20500 ROYAL AIR 1203571 7,880 31,520.00 PHILS INTL DMIA P-21-20499 ROYAL AIR 1203584 6,370 25,480.00 PHILS INTL

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x DMIA P-21-20498 ROYAL AIR 1203582 6,362 25,448.00 DMIA P-21-20497 PHILS INTL 1203594 7,170 28,680.00 DMIA P-21-20496 1203593 6,080 24,320.00 DMIA P-21-20495 ROYAL AIR 1203604 7,687 30,748.00 DMIA P-21-20494 PHILS INTL 1203607 6,910 27,640.00 DMIA P-21-20493 ROYAL AIR 1203606 6,318 25,272.00 DMIA P-21-20738 PHILS INTL 1203658 5,970 23,880.00 JOCASP P-21-3094 ROYAL AIR 1281422 JOCASP P-21-3096 PHILS INTL 1281692 564 2,256.00 JOCASP P-21-3098 ROYAL AIR 1281858 1,244 4,976.00 JOCASP P-21-3108 PI-IlLS INTL 1282046 524 2,096.00 JOCASP P-21-3134 ROYAL AIR 1297576 330 1,320.00 JOCASP P-21-3140 PI-IlLS INTL 1297733 639 2,556.00 JOCASP P-21-3158 ROYAL AIR 1298082 7,473 29,892.00 JOCASP P-21-3196 PI-IlLS INTL 1298252 7,190 28,760.00 JOCASP P-21-5180 ROYAL AIR 1301436 6,927 27,708.00 JOCASP P-21-5185 PI-IlLS INTL 1302105 7,974 31,896.00 JOCASP P-21-5194 ROYAL AIR 1302381 7,918 31,672.00 JOCASP P-21-5198 PHILS INTL 1302530 9,022 36,088.00 JOCASP P-21-5204 ROYAL AIR 1302709 7,083 28,332.00 JOCASP P-21-5217 PI-IlLS INTL 1302855 7,005 28,020.00 JOCASP P-21-5225 ROYAL AIR 1303014 7,012 28,048.00 JOCASP P-21-5231 PHILS INTL 1303215 7,340 29,360.00 JOCASP ROYAL AIR 1303280 7,290 29,160.00 MACTAN P-21-5235 PI-IlLS INTL 1265103 7,270 29,080.00 MACTAN P-21-20059 ROYAL AIR 1265184 3,837 15,348.00 MACTAN P-21-20065 PHILS INTL 1265318 6,113 24,452.00 MACTAN P-21-20067 ROYAL AIR 1265259 6,943 27,772.00 MACTAN P-21-20071 PHILS INTL 1265404 5,449 21,796.00 MACTAN P-21-20027 ROYAL AIR 1265347 6,406 25,624.00 MACTAN P-21-20029 PHILS INTL 1265489 3,869 15,476.00 MACTAN P-21-20030 ROYAL AIR 1265442 6,712 26,848.00 MACTAN P-21-20031 PI-IlLS INTL 1265431 6,798 27,192.00 MACTAN P-21-20032 ROYAL AIR 1266071 5,950 23,800.00 MACTAN P-21-20033 PI-IlLS INTL 1266016 4,081 16,324.00 MACTAN P-21-20035 ROYAL AIR 1266091 4,218 16,872.00 MACTAN P-21-20038 PHILS INTL 1266185 4,694 18,776.00 P-21-20039 6,663 26,652.00 ROYAL AIR PI-IlLS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PHILS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PHILS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PHILS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PHILS INTL

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x MACTAN P-21-20040 ROYAL AIR 1266177 6,025 24,100.00 MACTAN P-21-20041 PHILS INTL 1266303 2,983 11,932.00 MACTAN P-21-20042 ROYAL AIR 1266262 4,304 17,216.00 MACTAN P-21-20043 PHILS INTL 1266252 681 MACTAN P-21-20044 ROYAL AIR 1266374 6,970 2,724.00 MACTAN P-21-20045 PHILS INTL 1266352 7,188 27,880.00 MACTAN P-21-20046 ROYAL AIR 1266333 2,863 28,752.00 MACTAN P-21-20048 PHILS INTL 1266430 4,194 11,452.00 MACTAN P-21-20050 ROYAL AIR 1266400 3,430 16,776.00 MACTAN P-21-20051 PHILS INTL 1266516 7,086 13,720.00 MACTAN ROYAL AIR 1266503 3,240 28,344.00 MACTAN P-57-8 PHILS INTL 1266630 2,577 12,960.00 MACTAN P-21-20393 ROYAL AIR 1266707 2,957 10,308.00 MACTAN P-21-20396 PHILS INTL 1266653 2,677 11,828.00 MACTAN P-21-20398 ROYAL AIR 1266747 6,782 10,708.00 MACTAN P-21-20400 PHILS INTL 1266734 2,718 27,128.00 MACTAN P-21-20401 ROYAL AIR 1266903 6,746 10,872.00 MACTAN P-21-20406 PHILS INTL 1267094 4,220 26,984.00 MACTAN P-21-20408 ROYAL AIR 1267043 2,818 16,880.00 MACTAN P-21-20410 PHILS INTL 1267667 3,102 11,272.00 MACTAN P-21-20407 ROYAL AIR 1267135 3,963 12,408.00 MACTAN PHILS INTL 1267256 1,276 15,852.00 MACTAN P-57-126 1267252 MACTAN P-57-128 ROYAL AIR 1267220 978 5,104.00 MACTAN P-57-129 PHILS INTL 1267663 7,040 3,912.00 MACTAN P-57-131 ROYAL AIR 1267608 2,989 28,160.00 MACTAN P-57 -145 PH!LS INTL 1266768 1,907 11,956.00 MACTAN P-57-147 ROYAL AIR 1267741 1,542 7,628.00 MACTAN P-57-256 PHILS INTL 1267704 2,431 6,168.00 MACTAN P-21-20412 ROYAL AIR 1267809 4,303 9,724.00 MACTAN P-21-20413 PHILS INTL 1267779 2,372 17,212.00 MACTAN P-21-20414 ROYAL AIR 1267891 6,810 9,488.00 MACTAN P-57-149 PHILS INTL 1267837 2,848 27,240.00 MACTAN P-57-150 ROYAL AIR 1267833 1,990 11,392.00 MACTAN P-21-20419 PHILS INTL 1268048 2,699 7,960.00 MACTAN P-57-257 1268020 2,726 10,796.00 MACTAN P-21-20421 ROYAL AIR 1268000 6,912 10,904.00 P-21-20423 PHILS INTL 2,295 27,648.00 P-21-20424 ROYAL AIR 9,180.00 PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x MACTAN P-21-20425 ROYAL AIR 1268130 2,586 10,344.00 MACTAN P-21-20426 PHILS INTL 1268076 587 2,348.00 MACTAN P-21-20427 ROYAL AIR 1268204 2,751 MACTAN PH1LS INTL 1267251 1,839 11,004.00 MACTAN P-57-258 ROYAL AIR 1268226 254 7,356.00 MACTAN P-57-157 PHILS INTL 1268330 4,958 1,016.00 MACTAN P-57-159 ROYAL AIR 1268322 6,857 19,832.00 MACTAN P-57-160 PHILS INTL 1268305 1,816 27,428.00 MACTAN P-57-161 ROYAL AIR 1268434 3,900 7,264.00 MACTAN P-57-162 PHILS JNTL 1268393 6,983 15,600.00 MACTAN P-57-163 1271007 3,432 27,932.00 MACTAN P-57-165 ROYAL AIR 1268458 109 13,728.00 MACTAN P-57-166 PHILS INTL 1271085 2,337 MACTAN P-57-167 ROYAL AIR 1271078 864 436.00 MACTAN P-57-168 PHILS JNTL 1271052 9,348.00 MACTAN P-57-169 ROYAL AIR 1271039 ' 3,456.00 MACTAN P-57-170 PHILS INTL 1271114 7,995 31,980.00 MACTAN P-57-171 ROYAL AIR 1271240 1,822 7,288.00 MACTAN P-57-172 PHILS INTL 1271201 3,358 13,432.00 MACTAN P-57-173 ROYAL AIR 1271355 2,546 10,184.00 MACTAN P-57-176 PHILS INTL 1271344 6,934 27,736.00 MACTAN P-57-177 ROYAL AIR 1271391 7,463 29,852.00 MACTAN P-57-178 PHILS JNTL 1271462 !,548 6,192.00 MACTAN P-21-20475 ROYAL AIR 1271432 3,831 15,324.00 MACTAN P-21-20476 PHILS JNTL 1271417 3,311 13,244.00 MACTAN P-21-20477 ROYAL AIR 1271538 7,369 29,476.00 MACTAN P-21-20478 PHILS INTL 1271487 4,318 17,272.00 MACTAN P-2I-20479 ROYAL AIR 1271609 3,013 12,052.00 MACTAN P-21-20480 PHILS JNTL 1271574 2,887 11,548.00 MACTAN P-21-20481 ROYAL AIR 1271562 2,875 11,500.00 MACTAN P-21-20482 PHILS JNTL 1271632 5,860 23,440.00 MACTAN P-21-20484 ROYAL AIR 1271762 5,103 20,412.00 MACTAN P-21-20485 PHILS JNTL 1271706 3,170 12,680.00 MACTAN 12718!9 3,493 13,972.00 MACTAN P-57-55 ROYAL AIR 1271778 5,216 20,864.00 MACTAN P-21-20487 PHILS INTL 1271908 3,718 14,872.00 MACTAN P-21-20488 ROYAL AIR 1271859 2,998 11,992.00 P-21-20489 PHILS JNTL 3,779 15,116.00 P-21-20491 ROYAL AIR 1,342 5,368.00 PHILS JNTL ROYAL AIR PHILS JNTL ROYAL AIR PHILS INTL ROYAL AIR PHILS JNTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PI-IlLS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x~---------------------------------------------------------------------------x I I I Subtotal I 689,640 I 1'2,758,560.00 2. Sale of imported Jet A-1 fuel supported by ADRs that did not indicate a desth1ation JOCASP P-21-3106 GLOBAL JET 1282144 4,721 Pl8,884.00 JOCASP P-21-3104 LUXEMBOURG- JOCASP P-21-7598 1279617 8,071 32,284.00 JOCASP P-21-7621 UVAIR JOCASP P-21-7623 GLOBAL JET 1305727 9,913 39,652.00 JOCASP P-21-7625 LUXEMBOURG- 1306365 9,678 38,712.00 1306549 15,726 62,904.00 UV AIR 1306784 GLOBAL JET Subtotal 8,167 32,668.00 LUXEMBOURG- 56,276 1'225,104.00 UV AIR AVIASTAR TU GLOBAL JET LUXEMBOURG- UVAIR GLOBAL JET LUXEMBOURG- UV AIR 3. Sale of imported Jet A-1 fuel supported by ADRs with unreadable details DMIA P-21-15386 ROYAL AIR 1203345 8,160 32,640.00 PHILS INTL 23,184.00 20,040.00 DMIA P-21-15392 ROYAL AIR 1203372 5,796 21,608.00 PHILS INTL 28,568.00 28,400.00 DMIA P-21-15394 ROYAL AIR 1203379 5,010 PHILS INTL 6,356.00 34,188.00 DMIA P-21-15401 ROYAL AIR 1203390 5,402 PHILS INTL 2,960.00 40,372.00 DMIA P-21-15406 ROYAL AIR 1203404 7,142 45,708.00 PHILS INTL 52,424.00 71,524.00 DMIA P-21-15408 ROYAL AIR 1203410 7,100 PHILS INTL 520,600.00 DMIA P-21-15410 ROYAL AIR 1203416 1,589 449,748.00 PHILS INTL 51,744.00 DMIA P-21-15413 ROYAL AIR 1203427 8,547 PHILS INTL 29,768.00 DMIA P-21-15414 ROYAL AIR 1203430 740 12,824.00 PHILS INTL 1,104.00 JOCASP P-21-1239 CEBU PACIFIC 1276684 10,093 39,716.00 78,728.00 (INTLI JOCASP P-21-1244 CEBU PACIFIC 1276773 11,427 (INTLI JOCASP P-21-1270 CEBU PACIFIC 1277032 13,106 (INTL) PHILIPPINE JOCASP P-21-1476 AIRLINES 1278211 17,881 (INTLI PHILIPPINE JOCASP P-21-1495 AIRLINES 1278330 130,150 (INTLI PHILIPPINE JOCASP P-21-1496 AIRLINES 1278331 112,437 (INTLI PHILIPPINE JOCASP P-21-1501 AIRLINES 1278338 12,936 (INTLI PHILIPPINE JOCASP P-21-1557 AIRLINES 1278855 7,442 (INTL) PHILIPPINE JOCASP P-21-1557 AIRLINES 1278855 3,206 (INTL) ROYAL BRUNEI JOCASP P-21-1639 AIRLINES C /0 1279610 276 UAS JOCASP P-21-1659 CEBU PACIFIC 1279418 9,929 (INTL) PHILIPPINE JOCASP P-21-2302 AIRLINES 1279209 19,682 (INTL)

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x JOCASP P-21-2304 PHILIPPINE 1279358 30,792 123,168.00 AIRLINES JOCASP P-21-2309 1279450 27,333 109,332.00 (INTL) JOCASP P-21-2312 PHILIPPINE 1279476 10,764 43,056.00 AIRLINES JOCASP P-21-2332 1279582 69,856 279,424.00 (INTL) JOCASP P-21-2493 PHILIPPINE 1280455 11,496 45,984.00 AIRLINES JOCASP P-21-2498 1280520 17,928 71,712.00 (INTL) 1281753 15,240 JOCASP P-21-1808 PHILIPPINE 1235564 15,510 60,960.00 KALIBO P-21-14804 AIRLINES 1269965 12,498 62,040.00 KALIBO 1270905 1,908 49,992.00 KALIBO P-57-269 (INTL) 1270931 9,940 KALIBO P-21-16895 PHILIPPINE 1285284 2,830 7,632.00 KALIBO P-21-16896 AIRLINES 1285382 1,180 39,760.00 KALIBO P-21-16966 1265158 6,533 11,320.00 MACTAN P-21-16970 (INTL) 1265126 7,193 MACTAN P-21-20055 PHILIPPINE 1265237 6,496 4,720.00 MACTAN P-21-20057 AIRLINES 1265192 2,627 26,132.00 MACTAN P-21-20061 1265277 7,017 28,772.00 MACTAN (INTL) 1265355 4,257 25,984.00 MACTAN P-57 -3 CEBU PACIFIC 1266023 4,038 10,508.00 MACTAN P-21-20069 1266151 6,773 28,068.00 MACTAN P-21-20028 (INTL) 1266109 6,817 17,028.00 MACTAN P-21-20034 1266226 3,179 16,152.00 MACTAN P-21-20036 AEG/PAN 1266473 2,685 27,092.00 MACTAN P-21-20037 PACIFIC INTL 1266417 27,268.00 MACTAN P-21-20086 CEBU PACIFIC 1266594 750 12,716.00 MACTAN P-21-20047 1266576 4,941 10,740.00 MACTAN P-2!-20049 (INTL) 1266671 897 MACTAN P-21-20394 ROYAL AIR 1266780 7,038 3,000.00 MACTAN P-21-20395 PHILS INTL 1266860 2,793 19,764.00 MACTAN P-21-20397 ROYAL AIR 1266817 2,814 MACTAN P-21-20399 PHILS INTL 1266808 4,283 3,588.00 MACTAN P-21-20402 ROYAL AIR 1266938 28,152.00 MACTAN P-21-20403 PHILS INTL 1267057 519 11,172.00 MACTAN P-21-20404 ROYAL AIR 2,677 11,256.00 P-21-20405 PHILS INTL 6,909 17,132.00 P-21-20409 ROYAL AIR PHILS INTL 2,076.00 10,708.00 ROYAL AIR 27,636.00 PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x MACTAN P-57-125 ROYAL AIR 1267176 2,894 11,576.00 MACTAN P-57-127 PHILS INTL 1267128 3,551 14,204.00 MACTAN P-57-130 ROYAL AIR 1267229 5,113 20,452.00 MACTAN P-57-132 PHILS INTL 1267202 2,709 10,836.00 MACTAN P-57-146 ROYAL AIR 1267624 6,793 27,172.00 MACTAN P-57-151 PHILS INTL 1267853 6,887 27,548.00 MACTAN P-21-20422 ROYAL AIR 1268032 4,750 19,000.00 MACTAN P-21-20428 PHILS INTL 1268167 6,867 27,468.00 MACTAN P-2!-20429 ROYAL AIR 1268153 1,867 MACTAN P-57-156 PHILS INTL 1268280 2,512 7,468.00 MACTAN P-57-158 ROYAL AIR 1268352 2,800 10,048.00 MACTAN P-57-164 PHILS INTL 1268379 1,896 11,200.00 MACTAN P-57-174 ROYAL AIR 1271318 2,916 MACTAN P-57-175 PHILS INTL 1271270 7,584.00 MACTAN P-2!-20483 ROYAL AIR 1271686 309 II ,664.00 MACTAN P-21-20486 PHILS INTL 1271725 2,950 MACTAN P-21-20490 ROYAL AIR 1271865 5,786 1,236.00 PHILS INTL Subtotal 7,232 11,800.00 ROYAL AIR TOTAL 784,394 23,144.00 PHILS INTL 1,530,310 28,928.00 ROYAL AIR 1'3,137,576.00 PHILS INTL 1'6,121,240.00 ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL ROYAL AIR PHILS INTL II. LOCALLY-PRODUCED JET A-1 FUEL LOCATION EXHIBIT CUSTOMER ADRNUMBER VOLUME Excise Tax at NO. fin liters) 1'4.00 1. Sale of locally-produced Jet A-1 fuelsu JJlOrted bY ADRs that listed a local destination KAL!BO P-21-19263 AEG/PAN 1268588 3,590 P14,360.00 KALIBO P-21-19264 PACIFIC INTL 5,353 2I,412.00 1236906 8,943 AEG/PAN Subtotal 1'35 772.00 PACIFIC INTL 2. Sale of locally-produced Jet A-1 fuel supported by ADRs that did not indicate a destination GLOBAL JET JOCASP P-21-19154 LUXEMBOURG- 1272654 10,445 !'41,780.00 UV AIR GLOBAL JET JOCASP P-21-19181 LUXEMBOURG- 1242039 5,454 21,816.00 UV AIR GLOBAL JET JOCASP P-21-19183 LUXEMBOURG- 1243139 7,929 31,716.00 UV AIR GLOBAL JET JOCASP P-21-19277 LUXEMBOURG- 1278110 5,857 23,428.00 UVAIR GLOBAL JET JOCASP P-21-19279 LUXEMBOURG- 1278011 14,504 58,016.00 UV AIR Subtotal 44,189 1'176, 756.00 3. Sale of locally_:Produced Jet A-1 fuel su >.I!_Orted ~_ADRs with unreadable details KALIBO P-21-19116 ROYAL AIR 1234910 1,290 r5, !60.00 INTL

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x Subtotal 1,290 1'5,160.00 TOTAL 54,422 1'217 ,688.00 GRAND TOTAL 1,584,732 1'6,338,928.00 Moreover, as already noted, the date of settlement of taxes and duties due was, at the earliest, made on March 1, 2019, as supported by the SSDT. 144 However, considering that the ATRIG 145 date for the importation was March 13, 2019,146 any withdrawal from the PBR prior to this date is not covered by the importation upon which the claimed deliveries to international earners, which are the subject of the present claim, were sourced. Consequently, petitioner's claimed excise taxes amounting to 1'4,470,592.00, supported by ADRs dated earlier than March 13, 2019, shall be disallowed. This is due to the failure to demonstrate that the 1,117,648 liters of Jet A-1 fuel sold to international carriers were sourced from the imported Jet A-1 fuel, which is the subject of the present claim, as enumerated below: IMPORTED JET A-1 FUEL LOCATION EXHIBIT CUSTOMER ADR ADRDATE VOLUME Excise Tax at NO. NUMBER (in liters) 1'4.00 March 11, JOCASP "P-21-345" XIAMEN AIRLINES C/0 WORLD FUEL 1244650 2019 6,832 p 27,328.00 1244729 6,465 25,860.00 "P-21-346" XIAMEN AIRLINES C/0 WORLD FUEL 1244754 March 11, 10,276 41,104.00 1244790 2019 7,189 28,756.00 "P-21-347" XIAMEN AIRLINES C/0 WORLD FUEL 1244824 5,811 23,244.00 1244955 March 11, 5,519 22,076.00 "P-21-348" XIAMEN AIRLINES C/0 WORLD FUEL 1244951 39,556.00 1244803 2019 9,889 28,972.00 "P-21-349" XIAMEN AIRLINES C/0 WORLD FUEL 1244782 19,696.00 1244794 March 12, 7,243 32,380.00 "P-21-350" XIAMEN AIRLINES C/0 WORLD FUEL 1244795 2019 4,924 45,476.00 1244799 8,095 54,976.00 "P-21-352" PHILIPPINE AIRLINES (INTL) 1244801 March 12, 11,369 66,432.00 "P-21-726" QATAR EXECUTIVE C/0 QATAR 1244814 13,744 43,244.00 AIRWAYS 2019 16,608 "P-21-354" PHILIPPINE AIRLINES (INTL) March 12, 10,811 "P-21-355" PHILIPPINE AIRLINES (INTL) 2019 "P-21-356" PHILIPPINE AIRLINES (INTL) March 12, "P-21-357" PHILIPPINE AIRLINES (INTL) 2019 March 12, "P-21-359" PHILIPPINE AIRLINES (INTL) 2019 "P-21-360" PHILIPPINE AIRLINES (INTL) March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 144 Exhibits ��P-44-26'' and ''P-44". USB. 145 An ATRIG is an authority issued by the Bureau of Internal Revenue (BIR), addressed to the Commissioner of Customs (COC), allowing the release of imported goods from customs custody upon payment of applicable taxes, or proof of exemption from payment thereof, whichever is applicable. (See definition of ATRIG in Revenue Regulations No. 2-2016. Although the said regulations pertain to imported automobiles, the definition is generic and likewise applies to imported petroleum products.) 146 Exhibit �'P-I9-9", USB.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x "P-21-361" PHILIPPINE AIRLINES (INTL) 1244816 March 12, 13,472 53,888.00 "P-21-362" PHILIPPINE AIRLINES (JNTL) 1244818 2019 24,982 99,928.00 "P-21-363" PHILIPPINE AIRLINES (INTL) 1244819 77,404 309,616.00 "P-21-364" PHILIPPINE AIRLINES (JNTL) 1244821 March 12, 108,460 433,840.00 "P-21-365" PHILIPPINE AIRLINES (INTL) 1244822 2019 35,880.00 "P-21-366" PHILIPPINE AIRLINES (JNTL) 1244823 8,970 277,732.00 "P-21-367" PHILIPPINE AIRLINES (INTL) 1244825 March 12, 69,433 48,356.00 "P-21-368" PHILIPPINE AIRLINES (INTL) 1244826 2019 12,089 411,104.00 "P-57-118" PHILIPPINE AIRLINES (JNTL) 1244827 102,776 255,988.00 "P-21-369" PHILIPPINE AIRLINES (INTL) 1244828 March 12, 63,997 29,296.00 "P-21-358" PHILIPPINE AIRLINES (JNTL) 1244829 2019 415,904.00 "P-21-370" PHILIPPINE AIRLINES (INTL) 1244882 7,324 37,832.00 "P-21-371" PHILIPPINE AIRLINES (JNTL) 1244883 March 12, 103,976 12,056.00 "P-21-372" PHILIPPINE AIRLINES (INTL) 1244894 2019 40,488.00 "P-21-373" PHILIPPINE AIRLINES (JNTL) 1244895 9,458 60,180.00 "P-21-374" PHILIPPINE AIRLINES (1NTL) 1244896 March 12, 3,014 91,992.00 "P-21-375" PHILIPPINE AIRLINES (INTL) 1244897 2019 10,122 484,328.00 "P-21-376" PHILIPPINE AIRLINES (JNTL) 1244898 15,045 31,452.00 "P-21-377" PHILIPPINE AIRLINES (INTL) 1244899 March 12, 22,998 "P-21-378" PHILIPPINE AIRLINES (JNTL) 1244929 2019 121,082 1,260.00 "P-21-379" PHILIPPINE AIRLINES (INTL) 1244930 7,863 38,760.00 PHILIPPINE AIRLINES (JNTL) 1244931 March 12, 62,344.00 "P-21-380" PHILIPPINE AIRLINES (INTL) 1244932 2019 315 504,092.00 "P-21-381" PHILIPPINE AIRLINES (JNTL) 1244936 9,690 87,224.00 PHILIPPINE AIRLINES (INTL) 1244937 March 12, 15,586 55,364.00 "P-21-382" PHILIPPINE AIRLINES (INTL) 1244963 2019 126,023 36,024.00 "P-21-383" PHILIPPINE AIRLINES (JNTL) 1244978 21,806 28,976.00 "P-21-384" March 12, 13,841 27,588.00 "P-21-385" 2019 9,006 1'4,470,592.00 7,244 March 12, 6,897 2019 1,117,648 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 March 12, 2019 TOTAL Ms. Viray detailed petitioner's inventory movement to demonstrate compliance with the third requisite, which requires that petroleum products sold to international carriers be stored m a bonded storage tank and disposed of according to regulations. According to Ms. Viray, the locally produced Jet A-1 fuel is stored in the PBR in Limay, Bataan, and is commingled with imported Jet A-1 fuel under the commingling permit.l 47 As for 147 Docket- Vol. II, p. 780. Exhibit "'P-5'". ~

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x the imported Jet A-1 fuel, upon release from the BOC's custody, it is stored in the same PBR in Limay, Bataan, and commingled with locally produced Jet A-1 fuel under the commingling permit. Ms. Viray further explained that from the PBR, the locally produced and imported Jet A-1 fuel is transferred to petitioner's various depots, including those in Clark, Davao, Iloilo, JOCASP/NAIA, Kalibo, Mactan, Palawan, and Tagbilaran. As to locally manufactured and imported Jet A-1 fuel destined for Kalibo, the same is first transferred from the PBR to the Iloilo Depot and then to Kalibo. As to locally produced and imported Jet A-1 fuel destined for JOCASP/NAIA, the same is either first transferred from the PBR to the Manila Harbor TerminaljNavotasjRosario and then later withdrawn for delivery to JOCASP/NAIA or transferred directly from the PBR to JOCASP/NAIA. The locally produced and imported Jet A-1 fuel from those depots are delivered to tax-exempt entities and international carriers. 148 Further, the ICPA narrated in her Reportl49 the process flow15� from the removal of the locally produced and imported Jet A-1 fuel in the PBR to its subsequent sale to various international carriers and tax-exempt entities. Regarding Direct Sales, the ICPA explained that the PBR sells directly to customers via tank truck/vessel, wherein the PBR issues Sales Invoices (Sis) and Delivery Notes (DNs) to the customer. Upon removal of commingled imported and locally produced Jet A-1 fuel, petitioner will prepare a Withdrawal Certificate (WC), which indicates removals in liters as a unit of measurement. As to Sales through Terminals, fuel products from the PBR are transferred to terminals via vessel or tank trucks. Upon removal to the PBR, a WC is prepared in triplicate copies and V' distributed to the receiving consignee, the BIR, and the petitioner. 148 Docket- Vol. I, pp. 209-210, Exhibit �'P�30" (Q&A No.9). 1" !CPA Report (Exhibit ''P�37"), pp. 42-43. 150 !CPA Report (Exhibit �'P-37"), Annexes 10. I and 10.2.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X The PBR updates the SAP system using the WC and generates the Cargo Outtum Certificate (COC) report. Once the vessel or tank trucks arrive at the terminals, Jet A-1 fuel is transferred to storage tanks, and authorized terminal engineers measure the received Jet A-1 fuel and prepare the Cargo Intake Certificate (CIC). The receiving terminals will prepare a monthly internal Manual ORB for the PBR removals that they receive. The monthly internal Manual ORB will account for the movement of removals per terminal and should tally with the total monthly CICs. Upon the sale of Jet A-1 fuel products, terminals will issue SAP-generated Sis and ADRs to customers. II. Entities exempt by law from direct and indirect taxes An examination of petitioner's Schedule of Sales151 and Table 23 of the ICPA Report152 reveals that it sold 616,067liters of imported Jet A-1 fuel and 1,282,00 1liters of locally produced Jet A-1 fuel to alleged tax-exempt entities, to wit: Customer Imported Jet Locally Total Total Excise Produced Jet ALPHALAND AVIATION A-1 Fuel (volume in Tax LUBWELL A-1 Fuel liters) CORPORATION (volume in (volume in 122,068 I' 488,272.00 RD FISHING liters) Total Volume 56,067 liters) 1,760,000 7,040,000.00 Multiplied by: Excise 66,001 Tax Rate 560,000 16,000 64,000.00 Excise Taxes Due 1,200,000 1,898,068 - 16,000 1'4.00 616,067 1,282,001 1'7,592,272.00 1'7,592,272.00 1'4.00 1'4.00 1'2,464,268.00 1'5, 128,004.00 To prove that the entities listed above qualify as exempt entities or agencies, petitioner submitted the Certificates of Registration and Tax Exemption issued to both Alphaland Aviation- Pampanga, Inc. (a sub-lessee of Alphaland Aviation, y Inc.)1 53 and Lubwell Corporation. 154 151 Exhibit "P-41", USB. 152 Exhibit "P-37", pp. 47--49. 153 Exhibit �'P-14-1", USB. 1s4 Exhibit "P-14-2'', USB.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x However, the ICPA noted that these Certificates were mere photocopies. Thus, the excise tax payments for sales made to Alphaland Aviation and Lubwell Corporation shall be disallowed. On the other hand, the ICPA disallowed the excise tax payments for sales made to RD Fishing amounting to !'64,000.00,155 for failure to verify the excise tax payments. The Court agrees with the ICPA that the same should be disallowed, as no certificate or proof was submitted to establish that RD Fishing qualifies as a tax-exempt entity. It must be noted, however, that part thereof, or the total amount of !'1,772,200.00, as detailed below, was previously disallowed due to the failure to substantiate that the excise tax was paid. More specifically, said amount is already included in the earlier finding of !'384,895,860.00156 which was disallowed in relation to excise tax payments that could not be traced due to unresolved multiple entries during ICPA's verification and the unavailability of original documents, viz.: Customer Imported Jet Locally Total Total Excise Tax A-1 Fuel Produced Jet l' 268,200.00 ALPHALAND AVIATION (volume in LUBWELL CORPORATION (volume in A-1 Fuel liters) liters) 67,050 1,049157 (volume in liters) 360,000 1,440,000.00 - 66,00 ]!58 360,000159 155 16,000 liters at r4.00 excise tax rate under Annex 16.9-C, Supplemental !CPA Report (Exhibit ''P-73''). 156 The breakdown ofP384,895,860.00 is summarized as follO\vs: Volume in Liters Excise Tax at P'4.00 1'3 77,868,364.00 Imported 94,467.091.00 7,027,496.00 p 384,895,860.00 Locally produced 1,756,874.00 Total Excise Tax Payments not verified bv the ICPA 157 Refer to Exhibit ''P-21-15601'' which is among the ADRs \vherein excise tax payments were not yet traced due to unavailability of original documents (i.e.. ADRs, Liquidation Statement, COCs, C!Cs, and WCs): See also Supplemental !CPA Report (Exhibit �'P-73"). Annex 16. 7-C. 158 Refer to Exhibits "P-21- I9028", "P-2 I- I9020", "P-21- I90 I8", "P-21- I903 I", "P-2 I- I9037", "P-2 I- I9074", �'P-2 I- I 9104'', �'P-2 1-191 I9", P-2 1- I9124", "P-21-191 30", ''P-21 -1 9138", "P-21-19145", �'P-2 1-19148", �'P-2 I-191 50", ''P-2 I- I9 I58'', "P-2 I- I9 I6 I", "P-2 I- I9 I63", "P-2 I- I9 I67", �'P-2 I- I9 I76", "P-2 I- I9 I78", �'P-21- I92 I4'', "P-2 I- I9 I87", "P-2 I- I9205", "P-2 I- I9 I95", �'P-2 I- I92 I8'', "P-21- I9245", �'P-2 I- I9260", "P-2 I- I9376", ��P-2 I-19395", ''P-21-19397'', ''P-21-19403", "P-2 1-19422" which are among the ADRs wherein excise tax payments \vere not yet traced due to pending resolutions of petitioner for the multiple entries needed for tracing at the time of verification; See also Supplemental !CPA Report (Exhibit �'P-73''), Annex 16.10-B. 159 The total360,000 liters consists of 40,000 liters in relation to ADRs wherein excise tax payments were not yet traced due to pending resolutions of petitioner for the multiple entries needed for tracing at the time of verification while 320,000 liters thereof pertains to ADRs wherein excise tax payments were not yet traced due to unavailability of original documents (i.e., ADRs, Liquidation Statement, COCs, CICs, and WCs), referenced as follows:

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X RD FISHING - 16,000160 16,000 64,000.00 Total Volume 442,001 443,050 I' 1,772,200.00 Multiplied by: Excise Tax Rate 1,049 Excise Taxes Due 1'4.00 1'4.00 1'4.00 I' 4,196.00 1'1,768,004.00 1'1,772,200.00 Hence, only the additional excise tax on the 1,455,018 liters of Jet A-1 fuel with excise tax payment of P5,820,072.00, sold to Alphaland Aviation and Lubwell Corporation, shall be disallowed, viz.: Customer Imported Jet Locally Total Total Excise ALPHALAND AVIATION A-1 Fuel Produced Jet Tax (volume in (volume in A-1 Fuel liters) 1'220,072.00 liters) 55,018 (volume in 55,018 liters) - LUBWELL CORPORATION 560,000 840,000 1,400,000 5,600,000.00 Total Volume 615,018 840,000 1,455,018 1'5,820,072.00 Multiplied by: Excise Tax Rate 1'4.00 1'4.00 1'4.00 Excise Taxes Due 1'2,460,072.00 1'3,360,000.00 1'5,820,072.00 Petitioner has sufficiently proved that it erroneously paid excise taxes on imported and locally produced Jet A-1 fuel sold to international carriers, but only in the amount of Pl,097,563,148.00. To recapitulate, the Court finds that petitioner has duly substantiated excise tax payments in the total amount of P1,097,563,148.00 for its imported and locally produced Jet A- 1 fuel, as computed below: ~ Locally Produced Total Excise Reference Jet A-1 Fuel Tax at P4.00 (volume in liters) P160,000.00 Exhibit P-2 I-19315 vis-8.-vis Supplemental ICPA Report 40,000 1,280,000.00 (Exhibit ''P-73"), Annex 15.2-b. Exhibits "P-21-19062", "P-21-19082", �'P-21-19084", ��p_ 320,000 21-19090", "P-21-19092", "P-21-19094", "P-21-19096", ..P-21-19098" vis-8.-vis Supplemental ICPA Report (Exhibit '�P-73''), Annex 15.2. 360,000 PI,440,000.00 160 Refer to Exhibit ��P-21-19429" \Vhich is among the ADRs wherein excise tax payments \vcre not yet traced due to unavailability of original documents (i.e., ADRs. Liquidation Statement, COCs, CICs, and WCs): See also Supplemental ICPA Report (Exhibit "P-73"), Annex 16.9-C.

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue X----------------------------------------------------------------------------X IMPORTED LOCALLY PRODUCED PARTICULARS Volume in Excise Tax at Volume in Excise Tax at TOTAL AMOUNT Liters P4.00 Liters P4.00 OF EXCISE TAX Total Claim for Refund 372,050,744 P1,488,202,976.00 2,801,672 Pll,206,688.00 P1,499,409,664.00 Less: Excise Tax Payments not 94,467,091 377.868.364.00 1,756,874 7,027,496.00 384,895,860.00 verified by the !CPA 277,583,653 P1,110,334,612.00 1,044,798 p 4,179,192.00 P1, 114,513,804.00 Total Excise Tax Payment (74,839) (299,356.00) (5,427) (21.708.00) (321 ,064.00) traced or verified by the (1.530.310) (6,121,240.00) (54,422) (217,688.00) (6,338. 928.00) ICPA Less: I1, 117,648) (4,470,592.00) - - (4,470,592.00) EXCEPTIONS Noted by the (615,0 IS) (2,460,072.00) (840,000) (3,360,000.00) (5,820,072.00) Court (3,337,815) (13,351,260.00) (899,849) (3,599,396.00) (16,950,656.00) International Carriers without 274,245,838 P1,096,983,352.00 144,949 p 579,796.00 P1,097,563,148.00 valid FACP, CPCN. or Air Service Agreements ADRs with unreadable details, no destination, and with local destination ADRs dated prior to the ATRIG dated March 13,2019 Not valid tax- exemE_t entity_ Total Exceptions Noted Total Substantiated Excise Taxes WHEREFORE, in light of the foregoing considerations, the present Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner for the amount of Pl,097,563,148.00, representing excise taxes erroneously paid on its imported and locally-produced Jet A-1 fuel, subsequently sold and delivered to various international carriers from January 1, 2019 to December 31, 2019. SO ORDERED. ~df,t( LANEE S. CUI-DAVID Associate Justice

DECISION CTA Case No. 10439 Petron Corporation v. Commissioner of Internal Revenue x----------------------------------------------------------------------------x WE CONCUR: Presiding Justice ( ' CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, 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. Presiding Justice