PILIPINAS SHELL PETROLEUM CORPORATION, v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS Quezon City Svecia/ Third Division ~ PILIPINAS SHELL PETROLEUM CTA CASE NO. 10279 CORPORATION, Members: Petitio ner, -versus- RINGPIS-LIBAN, Chairperson MODESTO-SAN PEDRO, and FERRER-FLORES, JJ. COMMISSIONER OF INTERNAL REVENUE, Respo ndent. P'drAomNu!uga8tedz:024 / x----------------------------------------------------------------Q?t~'.0-.3- juJ_-~-~---.-/-\-/-"-------------x DECISION RINGPIS-LIBAN, J : The Case T he Petition for Review flied on June 09, 2020 prays for the refund and/ or issuance of tax credit certificate in the amount of Php29,252,140.00, allegedly representing petitioner's excise taxes paid on Jet A- 1 fuel sold to tax-exempt international air carriers during the period April to May 2018. 1 The Facts Petitioner Pilipinas Shell Petroleum Corporation is a corporation organized and existing under the laws of the Philippines with principal office at the 41 sr Floor, The Finance Center, 26th Street corner 9th Avenue, Bonifacio Global City, Taguig City 16 34.~ Docket, Pre-Trial Order dated February 23, 2021, Summary of the case, p. 583. 2 !d., Joint Stipulation of Facts and Issues (JSFI), Stipulation of Facts, Par. 1, p. 572.

DECISION CTA CASE NO. 10279 Respondent is the duly appointed Commissioner of Internal Revenue who holds office at the Bureau oflnternal Revenue ("BIR") National Office Building, located at Agham Road, Diliman, Quezon City where he may be served with summons and other legal process.3 On March 10, 2020, petitioner ftled a formal claim for refund or tax credit with the Excise Large Taxpayers Audit Division II of the BIR, seeking the recovery of excise taxes paid in April2018 on importations of Jet A-1 fuel sold to tax-exempt international air carriers for the period April to May 2018, in the aggregate amount of Php29,252,140.00.4 Petitioner ftled the present Petition for Review on June 09, 20205 The case was initially raffled to this Court's Second Division. Respondent posted his Answer on September 14, 2020,6 interposing the following special and affirmative defenses: (1) Section 135 of the Tax Code does not automatically exempt from excise tax petroleum products sold to international carriers and exempt entities and agencies; (2) there is no provision in the Tax Code which provides that petitioner is entitled to a refund or the issuance of tax credit certificate for excise taxes paid on imported Jet A-1 fuel sold to international air carriers; and (3) petitioner is clearly asking for a refund or issuance of a tax credit certificate which the law itself does not clearly provide. The Pre-Trial Conference, which was initially set on November 23,2020,7 was cancelled, and reset to,8 and held on January 20, 2021.9 Prior thereto, the Pre-Trial Bniffor Petitioner was filed on January 05, 2021,10 while Respondent's Pre- Trial Briefwas submitted on January 13, 2021l1 On February 18, 2021, the parties submitted their Joint Stipulation ofFacts and Issues,12 which was approved and adopted by the Court in the Pre-Trial Order dated February 23, 2021,13 thereby deeming the termination of the Pre-Trial. /!""' 3 !d., JSFI, Stipulation of Facts, Par. 2, p. 572. 4 !d., JSFI, Stipulation of Facts, Par. 3, pp. 572 to 573; Exhibits "P-8" and "P-9", pp. 758 to 761. 5 Id., pp. 14 to 25. 6 !d., pp. 67 to 73. 7 !d., Notice of Pre-trial Conference dated September 28, 2020, pp. 76 to 77. 8 !d., Notice of Resetting dated November 09, 2020, p. 78. 9 !d., Minutes of the hearing held on, and Order dated, January 20, 2021, pp. 552 to 553. 10 Id., pp. 536 to 546. 11 Id., pp. 548 to 550. 12 Id., pp. 572 to 581. 13 !d., pp. 583 to 588.

DECISION CTA CASE NO. 10279 Trial ensued, with the parties presented their respective testimonial and documentary evidence. Petitioner offered the testimonies of the following individuals, namely: (1) Mr. Matias D. Aquiatan, Jr.,14 Country Operations Manager for Shell Aviation Philippines of petitioner; (2) Ms. Farida Nimfa Guyala-Dimailig,15 Country Tax Manager of petitioner; (3) Mr. Rommel F. Guevarra, 16 Tenninal Operations Supervisor at the Tabango Depot of petitioner; (4) Ms. Berenice Angelique L. Flores,17 Tax Advisor for petitioner; (5) Ms. Carla Angelica T. Peralta,18 former Import and Export Scheduler for Trading and Supply of petitioner; (6) Atty. Walter L. Abela, Jr.,19 the Court-commissioned Independent Certified Public Accountant ("ICPA") 20 The Report of the ICPA was submitted on May 21, 2021.21 Petitioner filed its Formal O.ffir of Evidence with Manifestation on March 25, 2022.22 Respondent submitted his Comment (on Petitioner's Formal O.ffir ofEvidence) on March 29, 2022.23 In the Resolution dated May 02, 2022,24 the Court admitted petitioner's exhibits. For his part, respondent offered the testimony of Revenue Officer Ma. Cecilia Tan25 On June 28, 2022, respondent transmitted the entire BIR Records for this case, consisting of 1085 pages, contained in one (1) folder~ 14 Id., Exhibit "P-51", pp. 82 to 95; Minutes of the hearing held on, and Order dated, March 17, 2021, pp. 607 to 608. 15 Id., Exhibit "P-53", pp. 205 to 212; Minutes of the hearing held on, and Order dated, June 21, 2011, pp. 632 to 633. 16 Id., Exhibit" P-54", pp. 429 to 434; Minutes of the hearing held on, and Order dated, June 21, 2021, pp. 632 to 633. 17 Id., Exhibit "P-49", pp. 443 to 455; Minutes of the hearing held on, and Order dated, March 17, 2021, pp. 607 to 608. 18 Id., Exhibit "P-50", pp. 492 to 506; Minutes of the hearing held on, and Order dated, March 17, 2021, pp. 607 to 608. 19 Id., Exhibit "P-55", pp. 626 to 630; Minutes of the hearing held on, and Order dated, June 21, 2021, pp. 632 to 633. 20 Id., Oath of Commission dated March 17, 2021, p. 609; Minutes of the hearing held on, and Order dated, March 17, 2021, pp. 607 to 628. 21 Id., pp. 619 to 622. 22 Id., pp. 683 to 733. 23 Id., pp. 1093 to 1095. 24 Id., pp. 1098 to 1101. 25 Id., Exhibit "R-9", pp. 1109 to 1116; Minutes of the hearing held on, and Order dated, September 08, 2022, pp. 1127 to 1129. 26 Id., pp. 1118 to 1120.

DECISION CTA CASE NO. 10279 On September 21, 2022, respondent flied his Formal Offer of EvidenceY Petitioner then flied its Comment [on Respondent's Formal Offer of Evidence dated September 21, 2022] on October 03, 2022.28 In the Resolution dated October 25, 2022,29 the Court admitted all of respondent's offered evidence. Respondent filed his Memorandum on December 09, 2022, 30 while the Memorandum for Petitioner was submitted on December 22, 2022.31 The present case was submitted for decision on January 16, 2023.32 The Issue The sole issue for this Court's resolution is as follows, viz.: "Whether or not petitioner is entided to the recovery of excise taxes paid for the period April 2018 on Jet A-1 fuel sold to tax-exempt international air carriers in the amount of P h p 2 9 ,252,140. 00. " 33 Petitioner's arguments: Petitioner argues that it timely filed its administrative and judicial claims for refund pursuant to Section 229 of the National Internal Revenue Code ("NIRC") of 1997, as amended; that it is the statutory taxpayer under Section 135 of the Tax Code; that its sale ofJet A-1 fuel to international carriers is exempt from excise tax; that petitioner previously paid excise taxes on the Jet A-1 fuel sold to international carriers; that it sold the excise tax-paid Jet A-1 fuel to international air carriers free of excise tax; and that it is clearly entided to a refund or the issuance of tax credit certificate for excise taxes paid on Jet A-1 fuel sold to international air carriers. Respondent's counter-arguments: Respondent contends that petitioner is not entided to the refund claimed; that Section 135 of the Tax Code does not automatically exempt from excise tax ,IV' 27 Id., pp. 1132 to 1137. 28 Id., 1140 to 1142. 29 Id., pp. 1148 to 1149. 3o Id., pp. 1150 to 1160. 31 Id., pp. 1163 to 1187. 32 Id., Resolution dated January 16, 2023, p. 1190. 33 Id., JSFI, Stipulation of Issues, p. 573.

DECISION CTA CASE NO. 10279 petroleum products sold to international carriers and exempt enuues and agencies; that there is no provision in the Tax Code which provides that petitioner is entided to a refund or the issuance of a tax credit certificate for excise taxes paid on imported Jet A-1 fuel sold to international air carriers; and that petitioner is asking for a refund or issuance of a tax credit certificate which the law itself does not clearly provide. Discussion/Ruling The present Petition for Review is pardy meritorious. Govemingprovisions for refund claims. Sections 204(C) and 229 of the NIRC of 1997, as amended, read: "SEC. 204. Authority of the Commissioner to Compromise/Abate and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, that a return filed showing an overpayment shall be considered as a written claim for credit or refund." (Emphasis added) "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly ftled with the Commissioner; but such suit or proceeding may by

DECISION CTA CASE NO. 10279 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." (Emphases supplied) The afore-quoted provisions are clear: within two (2) years from the date of payment of tax, the claimant must first file an administrative claim with respondent before filing its judicial claim with this Court. Both claims must be flied within a two (2)-year reglementary period. Timeliness of the filing of the claim is mandatory and jurisdictional, and thus the Court cannot take cognizance of a judicial claim for refund filed either prematurely or out of time. It is worthy to stress that as for the judicial claim, tax law even explicidy provides that it be filed within two (2) years from payment of the tax "regardless of any supervening cause that may arise after payment."34 Furthermore, the above-quoted 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 illegal.35 Thus, for the present claim for refund or tax credit certificate to prosper, petitioner must not only establish that it has timely filed its refund claim, it must likewise prove that the subject thereof is an "erroneous or illegal tax". Petitioner timely filed its administrative and judicial claims. For excise tax on imported articles, in general, the same is paid by the owner or importer upon importation and prior to removal thereof from ~ 34 Commissioner ofInternal Revenue v. San Miguel Corporation, G.R. Nos. 180740 and 180910, November 11, 2019. 35 Commissioner ofInternal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, April 2S, 2012, citing the definition provided in BLACK'S LAW DICTIONARY, Fifth Edition, p. 486.

DECISION CTA CASE NO. 10279 customshouse as provided in Sections 129 and 131 of the NIRC of 1997, as amended, to wit: "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. XXX XXX xxx." (Emphasis and underscoring added) "SEC. 131. Payment ofExcise Taxes on Imported Articles.- (A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, 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. XXX XXX xxx." (Emphasis and underscoring added) Thus, from the foregoing, the two-year period prescribed in Sections 204(C) and 229 of the NIRC of 1997, as amended, should be reckoned from the date of actual payment of excise taxes. In relation thereto, Section 131 (A) of the NIRC of 1997, as amended, provides that 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. Thus, the reckoning point of the two (2) year prescriptive period should be the date when the imported Jet A-1 fuel was released from the Bureau of Customs ("BOC"), which in this case was on April 26, 2018, as evidenced by Authority to Release Imported Goods ("ATRIG")36 and Statement of Settlement of Duties and Taxes ("SSDT") 37 Counting two (2) years from April 26, 2018, petitioner had until April 26, 2020, to file its administrative and judicial claims for refund. Consequently, petitioner's administrative claim was timely filed on March 10, 2020/ 36 Docket, Exhibit "P-42", p. 1081. 37 Id., Exhibit "P-45", p. 1088. 38 Id., JSFI, Stipulation of Facts, Par. 3, pp. 572 to 573; Exhibits "P-8" and "P-9", pp. 758 to 761.

DECISION CTA CASE NO. 10279 As for petitioner's judicial claim for refund, the Court notes that within the period allowed by law to ftle the instant Petition for Review, the Supreme Court issued the following administrative circulars ordering the physical closure of courts and extending the filing of petitions and appeals, complaints, motions, pleadings, and court submissions in the National Capital Judicial Region and nearby provinces due to surge of Covid-19 cases, vi::::: Administrative Date Subject Matter/Content Circular (AC) Issued Re: Rising Cases of Covid-19 Infection No. 16 March AC No. 31-2020 2020 "The filing of pennons and appeals, complaints, motions, pleadings, and other AC No. 34-2020 court submissions that fall due during the period from 15 March 2020 until 15 April 2020 is EXTENDED for THIRTY (30) calendar days counted from 16 April 2020." I 8 April 2020 Re: Extension of Enhanced Community Quarantine Over Luzon Until 30 April 2020 "The filing of pennons and appeals, complaints, motions, pleadings, and other court submissions that fall due up to 3 April 2020 is extended for 30 calendar days, counted from 1 May 2020, xxx." AC No. 35-2020 27 April Re: Extension of the Enhanced 2020 Community Quarantine in Certain Areas Unti115 May 2020 "The filing of pet1t1ons and appeals, complaints, motions, pleadings, and other court submissions that fall due up to 15 May 2020 in the ECQ areas is extended for 30 calendar days, counted from 16 May 2020,xxx" /

DECISION CfA CASE NO. 10279 AC No. 39-2020 I 14 May 2020 Re: Modified Enhance Community Quarantine in Certain Areas Unti131 May 2020 "The filing of pet1t10ns and appeals, complaints, motions, pleadings, and other court submissions that fall due up to 31 May 2020 before the courts in areas under MECQ areas is extended for 30 calendar days, counted from 1 June 2020, xxx." It can, thus, be inferred from AC No. 39-2020 that petitioner has thirty (30) days from June 01,2020, or until July 01,2020, within which to file its judicial claim before this Court. Thus, the filing of the present Petition for Review on June 90, 202039 was likewise timely made within the two-year prescriptive period. Correspondingly, in this case, petitioner timely filed its administrative and judicial claims. The excise taxes paid on imported Jet A-1 fuel sold to international air carriers are erroneously or illegally collected. Respondent stresses that Section 135 of the NIRC of 1997, as amended, exempts from the payment of excise tax international air carriers and other exempt entities or agencies, but definitely not petitioner.40 He further argues that the Resolution of the Supreme Court dated February 19, 2014 in the case of Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, cited by the petitioner to support its claim for refund or issuance of tax credit certificate for the excise taxes paid on the imported Jet A-1 fuel does not fall squarely with the present claim for refund or issuance of a tax credit certificate, considering that the controversy in the above cited case involved locally-manufactured Jet A-1 fuel, and not imported Jet A-1 fuel. 41 The Court disagrees. Section 135 of the NIRC of 1997, as amended, ready 39 Id., Petition for Review, pp. 14 to 25. 40 Id., Answer, Par. 9, p. 69; Respondent's Memorandum, p. 1155. 41 Id., Answer, Pars. 15 to 17, p. 70; Respondent's Memorandum, pp. 1156 to 1157.

DECISION CTA CASE NO. 10279 "SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; (b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and (c) Entities which are by law exempt from direct and indirect taxes." (Emphases and underscoring added) A plain reading of the foregoing provision reveals that the words "petroleum products"were never qualified. The law did not distinguish whether the petroleum products sold were locally-manufactured or were imported, in order for there to be an excise tax exemption. Where the law does not distinguish, courts should not distinguish. 42 Thus, the exemption given under Section 135 of the NIRC of 1997 may be resorted regardless of whether the subject Jet A-1 fuel was locally- manufactured or imported, so long as the conditions therein are complied with by the refund-claimant. Moreover, in Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Cmporation ("2014 Pilipinas Shell case"):3 which involved the same parties, the Supreme Court categorically declared that petitioner, as the statutory taxpayer, who paid the excise taxes on petroleum products sold to international carriers, is entided to a refund or credit of the excise taxes paid pursuant to Section 135 of the NIRC, to wit: "xxx We therefore hold that respondent, as the statutory taxpayer who is directly liable to pay the excise tax on it~ 42 Manila International Airport Authority v. Court of Appeals, eta!., G.R. No. 155650, July 20, 2006. 43 G.R. No. 188497 (Resolution), February 19, 2014.

DECISION CTA CASE NO. 10279 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 added) Moreover, in Chevron Philippines, Inc. v. Commissionerofinternal Revenue (''2015 Chevron case"),44 the exemption granted in Section 135 of the NIRC of 1997, as amended, was discussed as follows: "Excise tax on petroleum products is essentially a tax on property, the direct liability for which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any excise tax paid by the statutory taxpayer on petroleum products sold to any of the entities or agencies named in Section 135 of the National Intemal 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." (Emphases added) Although the exemption in 2015 Chevron case was premised on Section 135(C) of the NIRC of 1997, while the 2014 Pilipinas Shell case was premised on Section 135(A) of the same law, the Supreme Court held in 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 therein 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 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." Notably, in Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue,45 the Supreme Court elucidated on certain conceptual distinctions in t h / 44 G.R. No. 210836, September 01, 2015. 45 G.R. No. 211303, June 15, 2021.

DECISION CTA CASE NO. 10279 2014 Pilipinas Shell case vis-a-vis the Court's subsequent pronouncements in the 2015 Chevron case, holding that Section 135 confers an impersonal tax exemption, to wit: "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 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. Pertinendy, 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 direcdy 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 oth/

DECISION CTA CASE NO. 10279 disposition) or the owner or importer (in case of imported goods) [is] still regarded as the statutory [taxpayer] under the law. To this end, the purchaser does not really pay the tax; rather, he only pays the seller more for the goods because of the latter's obligation to the government as the statutory taxpayer.' Thus, when it comes to indirect taxes, the statutory taxpayer remains to be the manufacturer or importer of the articles. Despite being able to pass the burden of the tax to the buyer as an inherent component of the total price of the article, the onus to actually pay the excise tax and to remit the returns incidental thereto remains with 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 purchaser/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 direcdy in favor of such persons as a~

DECISION CTA CASE NO. 10279 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 direcdy in favor of a certain class of property.' If the tax exemption is impersonal in nature, then, regardless of who transacts with the property, the exemption should still apply. This framework of personal and impersonal tax exemptions underpins the exemption granted under Section 135 on excisable articles. Notably, the Court, in the 2014 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, correcdy 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, cogendy 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 apdy observed that 'a tax immunity would lose its meaning if we insist that it is available only to a person who, in the first place, has no obligation to pay the tax due on the subject article/transaction. It can only be enjoyed in its truest sense by the person who is liable for the tax and wishes to be immune from therefrom.' The impersonal nature of the tax exemption is also expressed in the wording itself of Section 135: XXX XXX XXX/

DEOSION CTA CASE NO. 10279 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 tum, 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 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 setded 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 ofExcise Taxes on Imported Articles.- (A) Persons Lab/e. -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 ,._/

DECISION CTA CASE NO. 10279 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 persons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation. xxx xxx xxx (Emphasis and underscoring supplied) As may be gleaned from Section 131 as above-cited, although certain articles may be free from excise taxes upon importation, they may subsequently become subject to the same depending on the subsequent buyer. This is essentially the same principle of subsequent confirmation espoused by the 2015 Chevron, and is also a necessary consequence of excise tax being a property tax, and not a tax on 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 __./

DECISION CTA CASE NO. 10279 Page 17 of41 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 ofpetroleum 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)." Thus, contrary to respondent's argument, the tax exemption under Section 135 of the NIRC of 1997, as amended, applies regardless of whether the Jet A-1 fuel was manufactured or produced or imported by the statutory taxpayer (i.e., manufacturer or producer or owner or importer) but the status of the petroleum products as exempt from excise taxes would be confirmed only upon their sale to any of the entities enumerated under Section 135 of the NIRC of 1997, as amended. Applying the foregoing, upon petitioner's sale of its imported Jet A-1 fuel to various international air carriers, the status of the said sold petroleum product as tax-exempt solidifies. Consequently, the excise taxes it previously paid on the importation of said petroleum products became erroneously or illegally collected taxes that are proper subject of a claim for refund or credit under Sections 204 and 229 of the NIRC of 1997. The excise taxes due on the importedJet A-1 fuel, subject of the present claim, were duly paid by petitioner. Petitioner's witness, Ms. Peralta, testified that prior to 2017, petitioner produced Jet A-1 fuel from its own refinery. However, in 2017, when petitioner operated its Tabangao product storage tanks as a Customs Bonded Warehouse ("CBW") from the date of approval by the BOC in July 201546 until its closure in September 2018!7 petitioner was not allowed to locally produce Jet A-1 fuel. Thus, all Jet A-1 fuel stored in its Tabangao product storage tanks were imported from abroad./ 46 Docket, Exhibit "P-33", pp. 1069 to 1071. 47 !d., Exhibit "P-34", p. 1072. 48 !d., Exhibit "P-50", Q&A No. 10, p. 495.

DECISION CIA CASE NO. 10279 She further testified that during the CBW period, these storage tanks contain only purely imported and tax-free Jet A-1 fuel. But when the CBW was terminated sometime in September 2018, all remaining imported and tax-free Jet A-1 fuel was accounted for and reported to the BOC. The converted Jet A-1 fuel were declared with the BOC, and the corresponding excise and value-added taxes were paid therefor. Thus, all Jet A-1 fuel withdrawn from the Tabangao product storage tanks after the conversion from bonded tanks to non-bonded tanks became tax-paid fuel. 49 Ms. Peralta likewise provided a walk-through of petitioner's process and documentation flow of the importation of petitioner's Jet A-1 fuel, which she simplified in three (3) stages: (1) requisition of goods and importation; (2) arrival and discharge of imported goods; and (3) payment of taxes and import duties. 5� She explained that the process of importation starts upon determination of the total volume of Jet A-1 fuel which petitioner intends to import. Once petitioner and its supplier agree on the price ofJet A-1 fuel, petitioner will place an order for the purchase of Jet A-1, which is then delivered from the country of origin to the CBW in Tabangao, Batangas.51 Following the receipt of Import Advice and prior to the arrival of the imported Jet A-1 fuel, petitioner will then apply for the Special Permit to Discharge52 with the District Collector of BOC submitting, among others, the Bill of Lading, Load Port Survey Report, and Proforma InvoiceY Thereafter, petitioner will present the Special Permit to Discharge to the port authorities to allow the discharge of the imported Jet A-1 fuel to the tanks in Tabangao. Upon full discharge of the products from the vessel, petitioner will execute a Certificate of Quantity Received, which indicates the quantity of the products received and their last discharge to petitioner's storage tanks in Tabangao. 54 After which, petitioner will then generate the Single Administrative Document ("SAD"),55 which contains all the information encoded through the _../ 49 !d., Exhibit "P-50", Q&A No. 12, p. 495. 50 !d., Exhibit "P-50", Q&A No. 14, p. 496. 51 !d., Exhibit "P-50", Q&A No.16, p. 496. 52 The Special Permit to Discharge is a permission from the BOC to discharge the imported Jet A- 1 fuel from the vessel to petitioner's storage tanks. 53 Docket, Exhibit "P-50", Q&A Nos. 18 and 21, pp. 496 to 497. 54 Id., Exhibit "P-50", Q&A No. 27, p. 498. 55 The SAD replaced the Import Entry and Internal Revenue Declaration (IEIRD) which was manually filed by the importer/broker prior to the implementation of the E2M System and contains the same information as the IEIRD pursuant to Customs Memorandum Order No. 29- 2015.

DECISION CTA CASE NO. 10279 Electronic-to-Mobile System ("E2M"), including the assessed amount of taxes and duties under tentative liquidation to be paid on the said importation.56 Upon payment of taxes and duties under its tentative liquidation through Security Bank, the BOC will generate the SSDT through the E2M. And, upon final liquidation by the BOC, additional duties and taxes are computed and, thereafter, paid by petitioner. This subsequent payment would then be reflected in the same SAD (annotated manually) and in another SSDT57 Thereafter, petitioner will apply for ATRIG with the BIR, which will serve as its permission from the BIR to withdraw the Jet A-1 fuel from its CBW after the settlement of taxes and duties due thereon. 58 But, in the event that there is a price and volume differential on which additional taxes and duties are due, petitioner undertakes a final liquidation of the importation through the filing of a Post-Modification of SAD, with attached Tax Invoice and Certificate of Quantity Received. 59 Such final payment of taxes and duties is evidenced by another SSDT.60 The details of petitioner's importation of finished grade Jet A-1 fuel and payment of excise taxes thereon are as follows: 61 Amount of Excise Volume in Taxes Paid at SSDT Date Arrival Date SAD No. Liters Php4.00 April25, April 12, 2018 2018 c 4618 7,313,036 Php29,252,144.00 Total 7,313,036 Php29,252,144.00 Moreover, the foregoing importation of 7,313,036 liters ofJet A-1 fuel is supported by the following documentary evidence, viZ;: a. Ocean Bill of Lading No. 3526102-1 0;62 b. Special Permit to Discharge dated April10, 2018;63 c. Load Port Survey Report No. 501-18-01306;64 / 56 Docket, Exhibit "P-SO", Q&A Nos. 31 and 32, p. 499. 57 Id., Exhibit "P-50", Q&A No. 34, pp. 499 to 500. 58 Id., Exhibit "P-50", Q&A Nos. 38 to 39, pp. 500 to 501. 59 Id., Exhibit "P-50", Q&A Nos. 44, p. 502. 60 Id., Exhibit "P-50", Q&A No. 46, p. 502. 61 Id., Petition for Review, Statement of the Facts, Par. 8, p. 15; Exhibit "P-50", Q&A No. 50, p. 503. 62 Id., Exhibit "P-35", p. 1073; Exhibit "P-61.1". 63 Id., Exhibit "P-36", p. 1074; Exhibit "P-61.6". 64 Id., Exhibit "P-37", p. 1075; Exhibit "P-61.6".

DECISION CIA CASE NO. 10279 d. Customs Invoice - Bulk Product dated April 6, 2018 issued by Shell International Eastern Trading Company (SIETCo);65 e. Certificate of Quantity Received dated April 23, 2018;66 f. SAD dated April25, 2018;67 g. Special Permit to Discharge dated April 25, 2018;68 h. Authority to Release Imported Goods dated April26, 2018;69 i. Tax Invoice dated May 1, 2018 issued by Shell International Eastern Trading Company;70 )� E2M Post Modification of SAD;71 k. Statement of Setdement of Duties and Taxes;72 I. BOC Official Receipt No. 01877067758;73 m. Customs Payment Receipt No. 2018 R 18034/4 and n. Memorandum for BOC re: Tentative Assessment received on April 26, 2018. 75 In the present case, petitioner paid excise tax under tentative liquidation amounting to Php29,158,296.00 for the total volume of 7,289,574 liters as evidenced by SAD No. P18CBW01 SA dated April 25, 2018 76 and SSDT. 77 However, it is to be noted that since the payment of taxes and duties under tentative liquidation was made on the basis of SAD which is based on the Customs Invoice - Bulk Product or the tentative invoice issued by SIETCo/8 such payment is finalized by way of payment of the taxes and duties on the price differential as indicated in the Tax Invoice or the final invoice issued by SIETCo (USD 85.814 per barrel) 79 and the volume differential as indicated in the Certificate of Quantity Received80 (45,357.29 barrels or 7,313,036liters) with an equivalent excise tax payment amounting to Php29,252,144.00.81 Petitioner paid the final payment of additional excise tax of Php93,848.00 82 and additional VAT of Php2,347,744.00, or in the aggrega~ 65 !d., Exhibit "P-38", p. 1076; Exhibit "P-61.6". 66 !d., Exhibit "P-39", p. 1077; Exhibit "P-61.3". 67 !d., Exhibit "P-40", pp. 1078 to 1079; Exhibit "P-61". 68 !d., Exhibit "P-41", p. 1080; Exhibit "P-61.6". 69 Id., Exhibit "P-42", p. 1081; Exhibit "P-61.4". 70 !d., Exhibit "P-43", pp. 1082 to 1084; Exhibit "P-61.2". 71 !d., Exhibit "P-44", pp. 1085 to 1087. 72 Id., Exhibits "P-45" and "P-46", pp. 1088 to1089; Exhibit "P-61.5". 73 !d., Exhibit "P-47", p. 1090. 74 !d., Exhibit "P-48", p. 1091. 75 Id., Exhibit "P-61.6". 76 !d., Exhibit "P-40", pp. 1078 to 1079; Exhibit "P-61". 77 Id., Exhibit "P-45", p. 1088; Exhibit "P-61.5". 78 !d., Exhibit "P-38", p. 1076. 79 !d., Exhibit "P-43", p. 1082. 80 Id., Exhibit "P-39", p. 1077; Exhibit "P-61.3". 81 7,313,036 liters multiplied by the excise tax rate of Php4.00. 82 Excise tax payment of Php 29,252,144.00 based on final invoice less excise tax payment of Php29,158,296.00 based on tentative invoice.

DECISION CTA CASE NO. 10279 amount of Php2,441 ,592.00, on October 30, 2018 as evidenced by Receipt No. 01877067758,83 Customs Payment Receipt No. 2018 R 18034,84 and another SSDT. 85 Based on the foregoing, the corresponding excise tax payment of Php29,252,144.0086 for petitioner's importations of Jet A-1 fuel of 7,313,03687 liters were duly paid before the release from the BOC. Petitioner sufJiciendy proved that it had erroneouslypaid excise taxes on imported Jet A-1 fuel sold to international air carriers but only in the amount ofPhp15,501, 712.00. For the period from April to May 2018, petitioner allegedly sold excise tax paid imported Jet A-1 to various international airlines for their use or consumption outside the Philippines, as follows: 88 Customers Total Volume in Air China Ltd. Liters Air Niugini Ltd. 116,526 Asiana Airlines, Inc. 93,466 Cebu Air, Inc. 143,422 China Airlines Ltd. 1,269,948 China Eastern Airlines Co., Ltd. 119,437 Federal Express Corp. 120,335 Japan Airlines International Co. Ltd. 342,368 Jetstar Asia Airways Pte. Ltd. 456,344 Tin Air Co. Ltd. 94,757 Korean Airlines Co. Ltd. 330,069 Philippine Airlines Inc. 354,299 Qantas Airways Ltd. 3,370,569 Shell Aircraft Limited 446,940 Thai Air Asia X Co. Ltd. 8,989 Total Aviation Sales (in Liters) 45,567 Excise Tax Rate 7,313,036 Php4.00/Liter / 83 Docket, Exhibit "P-47", p. 1090. 84 !d., Exhibit "P-48", p. 1091. 85 !d., Exhibit "P-46", p. 1089; Exhibit "P-61". 86 !d., Exhibit "P-45", p. 1088; Exhibit "P-61.5". 87 !d., Exhibit "P-39", p. 1077; Exhibit "P-61.3". 88 !d., Petition for Review, Statement of the Facts, Par. 9, p. 16.

DECISION CTA CASE NO. 10279 [Total Excise Tax Paid Php29,252,144.00 I Alleging that the international air carriers to which it sold imported Jet A- 1 fuel are exempt from excise taxes under Section 135(a) of NIRC of 1997,89 petitioner seeks the recovery of excise taxes paid thereon in the amount of Php29,252,140.0090 Por the sale of petroleum products to an international air carrier be exempted from excise tax under Section 135(a) of the NIRC of 1997, as amended, petitioner must present the following: 1. proof of foreign registry of the international air carriers, or in case of Philippine-registered air carriers, the latter's proof of authority to operate international flights; 2. proof that the imported Jet A-1 fuel were used or consumed outside the Philippines; and 3. proof that the imported Jet A-1 fuel sold to international air carriers were stored in a bonded storage tank, and had been disposed of in accordance with the rules and regulations. Petitioner complied with the first requirement. Petitioner adduced before this Court the Certification 91 issued by the Civil Aviation Authority of the Philippines ("CAAP") on October 26, 2020, which confirms the country of registry of each of the international air carriers enumerated therein, subject of the instant claim. With regard to petitioner's international air-carrier customers which are of Philippine registry, namely, Philippine Airlines, Inc. and Cebu Air, Inc., petitioner presented the Certification92 from the Civil Aeronautics Board ("CAB") dated August 28, 2020 which certifies that: a. Bulk Delivery Notes Bulk Delivery Notes "a. Cebu Air, Inc. has been granted a franchise permit through Republic Act No. 7151 (R.A. 7151), which was approved on August 30, 1991, from the date of effectivity ofRA. 7151 to present; and b. Philippine Airlines, Inc. has been granted a franchise permit through Presidential Decree No. 1590 from June 11, 1978 to presen~ 89 !d., Petition for Review, Discussion, Par. 22, p. 21. 90 With Php4.00 difference. 91 Docket, Exhibit "P-31", pp. 1062 to 1067; Exhibits "P-67" and "P-67.1". 92 !d., Exhibit "P-32", p. 1068; Exhibit "P-65".

DECISION CTA CASE NO. 10279 The Jaid airlines are authorized to operate and maintain air transport services in the Philippines and between the Philippines and other countries, and that RA. 7151 and P.D. 1590 authorized Cebu Air, Inc. and Philippine Airlines, Inc. to operate international flights from the date of effictivity of RA. 7151 and P.D. 1590 to present, including the years 2018-2019." In compliance with the second requirement, the CAB Certification dated August 28, 202093 shows that the international air carriers of foreign registry listed therein have been issued with Foreign Air Carrier's Permit ("FACP") which authorized them to operate international flights only for a period, covering, but not limited to, the years 2018 to 2019. Further, the Aviation Service Returns 94 submitted by petitioner, indicated the details of the Jet A-1 fuel deliveries made by petitioner to international air carriers, including the origin and destination of the international carriers. It can be seen from the Aviation Service Returns that the route of the international air carrier named therein (whether of foreign or Philippine registry) is only between the Philippines and other country, thereby proving that the sold imported Jet A-1 fuel was used or consumed outside the Philippines. The list of international air carriers which are authorized to operate international flights as indicated in the CAB Certification95 is shown below: International Aircraft Registration No.96 Country of Air Carrier BS175, B5328, BS167, Registration97 B5177, BS178, BS170 China 1. Air China Ltd. P2PXE, P2PXC Papua New 2. Air Niugini Ltd. Guinea HL7626, HL8293, HL7626, Republic of Korea 3. Asiana Airlines, Inc. HL7418, HL7746, HL7428, HL7747 China 4. China Airlines, Ltd. B18309, B18315, B18355, B18657, B18352, B18308, China 5. China Eastern B18307, B18657, B18709, Airlines Co., Ltd. B18301, B18305 / BS936, B5973, BS949, B6538, BS908, BS938, B8231 93 !d., Exhibit "P-32", p. 1068; Exhibit "P-65". 94 Exhibits "P-80.1" to "P-80.357". 95 Docket, Exhibit "P-32", p. 1068; Exhibit "P-65". 96 !d., Exhibit "P-31", pp. 1062 to 1067; Exhibits "P-67" and "P-67.1". 97 !d., Exhibit "P-31", pp. 1062 to 1067; Exhibits "P-67" and "P-67.1".

DECISION CTA CASE NO. 10279 N101FE, N103FE, N106FE, N108FE, 6. Federal Express Corp. N104FE, N112FE, United States of I N130FE, N592FE, America Japan N598FE, N601FE, Singapore Republic of Korea N616FE, N914FD Republic of Korea Australia JA02JJ, JA03JJ, JA04JJ, Philippines JAOSJJ,JA13JJ, JA16JJ, / 7. Japan Airlines JA17JJ, JA18JJ, JA19JJ, International Co., Ltd. JA20JJ, JA606J, JA607J, JA608J, JA616J, JA618J, JA619J, JA620J,JA621J 8. Jetstar Asia Airways 9VJSP, 9VJSV, 9VJSL, Pte., Ltd. 9VJSB, 9VJSR, 9VJSQ HL7556, HL7557, HL7558, HL7559, HL7561, HL7562, 9. Jin Air Co., Ltd. HL7564, HL7565, HL7789, HL7798, HL8012, HL8013, HL8014, HL8016, HL8224, HL8225 10. Korean Airlines Co., HL7460, HL7532, HL7534, Ltd. HL7573, HL7721 VHEBL, VHEBN, 11. Qantas Airways Ltd. VHEBR, VHEBO, VHEBP, VHEBM RP-C4111,RP-C4108,RP- C4107, RP-C4106, RP- C4105, RP-C4103, RP-C4102, RP-C4101, RP- C4100, RP-C3348, RP- C3347, RP-C3346, RP-C3345, RP-C3344, RP- C3343, RP-C3277, RP- 12. Cebu Air, Inc. C3276, RP-C3275, RP-C3274, RP-C3273, RP- C3272, RP-C3271, RP- C3269, RP-C3267, RP-C3266, RP-C3265, RP- C3264, RP-C3263, RP- C3262, RP-C3261, RP-C3260, RP-C3250, RP- C3244,RP-C3243,RP- C3242, RP-C3238 L_

DECISION CTA CASE NO. 10279 13. Philippine Airlines, RP-C3435,RP-C3438,RP- Inc. C3439, RP-C7772, RP- C7773, RP-C7775, RP-C7776, RP-C7777, RP- C7779, RP-C7781, RP- C7782, RP-C8612, RP-C8614, RP-C8616, RP- C8618, RP-C8760, RP- C8762, RP-C8763, RP-C8780, RP-C8781, RP- C8782, RP-C8783, RP- C8784, RP-C8785, RP-C8786, RP-C8789, RP- C9901, RP-C9902, RP- C9905, RP-C9906, RP-C9909, RP-C9918, RP- C9919 Thus, only the sale of imported Jet A-1 to the above enumerated airlines with valid FACP may qualify for the refund or issuance of a TCC of the erroneously paid excise taxes. However, the Court finds that the 54,556 liters of imported Jet A-1 fuel with corresponding excise tax payments of Php218,224.00 sold to the following international air carriers without a valid FACP should be disallowed, to wit: International Air Carrier Volume in Amount of Shell Aircraft Limited Liters Excise Taxes Thai Air Asia X Co Ltd. 8,989 Paid at Php4.00 Total 45,567 54,556 Php35,956.00 182,268.00 Ph�218,224.00 We then proceed to the third requirement, i.e., that the imported Jet A-1 fuel sold to international air carriers were stored in a bonded storage tank, and had been disposed of in accordance with the rules and regulations. Petitioner's witnesses: Ms. Peralta,98 Mr. Aquiatan, Jr.,99 Mr. Guevarra,100 and Ms. Flores 101 explained the process and documentation of the receipts and /""" 98 !d., Exhibit "P-50", pp. 492 to 506. 99 !d., Exhibit "P-51", pp. 82 to 94. 100 Id., Exhibit "P-54", pp. 429 to 433. 101 !d., Exhibit "P-49", pp. 443 to 454.

DECISION CTA CASE NO. 10279 withdrawals of imported Jet A-1 fuel at petitioner's storage tank in Tabangao Refinery through the Tabangao Depot, and its subsequent delivery to Joint Oil Company Aviation Storage Plant ("JOCASP") and Clark Aviation Service Inc. ("CASI") for eventual sale to international air carriers. Based from their testimony, upon withdrawal of the imported Jet A-1 fuel from the Tabangao Refinery through the Tabangao Depot, the Jet A-1 fuel is delivered direcdy to JOCASP located at Ninoy International Airport or CASI located at Clark International Airport via lorries or tank trucks for eventual sale and delivery to international air carriers. 102 The movement (receipts and withdrawals) of the Jet A-1 fuel from the Tabangao Refinery is monitored by petitioner through an Official Register Book signed by the Revenue Officer on Premises and by petitioner's authorized representative, which indicates the receipts and removals of the Jet A-1 fuel for a certain period and the running balance of stored Jet A-1 for that period.103 Aside from the Official Register Book, petitioner also maintains a Daily Product Deliveries Report, which shows the Jet A-1 fuel's date of removal, shipment reference number, withdrawal certificate 104 and/or Certificate of Quantity Delivered, and the amount of excise tax paid thereon. The removal of the imported Jet A-1 fuel from the Tabangao Refinery for delivery to JOCASP or CASI is supported by Bulk Delivery Notes 105 and Certificate of Quantity Delivered 106 . 107 Thereafter, the imported Jet A-1 fuel is stored in storage tanks located at JOCASP and CASI to await the sale and delivery to international air carriers. In JOCASP, petitioner engages its own Into Plane Operations team, while at CASI, petitioner engages the services of a third-party Into Plane Operator. These operators deliver the Jet A-1 fuel to both international and domestic air carriers via a specialized vehicle which pumps the Jet A-1 fuel direcdy into the tank of the air carriers. The specialized vehicle is equipped with a meter that determines the volume ofJet A-1 fuel pumped into the air carrier.108 The sales and deliveries of the Jet A-1 fuel to international air carrier through Into Plane Operators are supported by Aviation Service Returns and ~ 102 Id., Exhibit "P-51", Q&A No. 11, p. 84. 103 Id., Exhibit "P-50", Q&A No. 52, p. 504; Q&A No. 12, Exhibit "P-54", p. 431. 104 The Withdrawal Certificate shows the source of the Jet A-1 fuel, its destination, the date of its withdrawal, its volume at the time withdrawn, and the fact that the same is "tax-paid". 105 Exhibits "P-83.1" to "P-83.186". 106 Exhibits "P-81.1" to "P-81.19". 107 Docket, Q&A Nos. 12 to 13, Exhibit "P-54", pp. 431 to 432; Q&A No. 16, Exhibit "P-49", p. 447. 108 Id., Exhibit "P-51", Q&A 16, pp. 85 to 86; Q&A No. 23, Exhibit "P-49", p. 448.

DECISION CTA CASE NO. 10279 petitioner's Invoices. The Aviation Service Return is where the customer of international carrier acknowledges the receipt of the delivery of the corresponding volume of Jet A-1 fuel, while petitioner's Invoice indicates the quantity, unit price, any other charges, and the total amount due for the Jet A-1 fuel sold and delivered to the customer. 109 In support of the aforementioned Judicial Affidavits, petitioner proffered before this Court the following documentary evidence which were all examined by the ICPA, viz.: 1. Official Register Book;110 2. Certificates of Quantity Delivered;111 3. Bulk Delivery Notes112 4. Aviation Service Returns;113 5. Sales Invoices for International Sales ofJet A-1 fuel;114 6. ZF2 Display print outs;115 7. Sales of Jet A-1 fuel to International Carriers April17, 2018 to May 7, 2018 (Report generated thru SAP);116 8. Schedule on Stock Monitoring and Liquidation Report117 9. Daily Product Movement Report;118 10. Reconciliation of Official Register Book and Bulk Delivery Notes;119 and 11. Summary Table of Aviation Turbo Fuel Importations and Deliveries.120 In his supplemental report, the ICPA determined that out of the total amount of excise tax being claimed for refund or tax credit ofPhp29,252,140.00, the amount of Php640,000.00 121 was considered as an exception since this portion of the claim was passed on for local consumption of Jet A-1 fuel and was sold to its local distributor in the Philippines 122 Thus, only Php28,612,140.00 123 representing excise taxes paid on Jet A-1 fuel sold and delivered to international air carriers of Philippine or foreign registry for their use or consumption outside the Philippines for the period April 17, 2018 to May 7, 2018 was properly supported by relevant documents/�' 109 !d., Exhibit "P-49", Q&A No. 24, p. 449. 110 Exhibits "P-63" and "P-64". 111 Exhibits "P-81.1" to "P-81.19". 112 Exhibits "P-83.1" to "P-83.186". 113 Exhibits "P-80.1" to "P-80.357". 114 Exhibits "P-82.1" to "P-82.85". 115 Exhibits "P-78.1.1" to "P-78.85.1". 116 Docket, Exhibit "P-17", p. 845. 117 Exhibits "P-75" and "P-76". 118 Exhibit "P-77". 119 Exhibit "P-85". 120 Exhibit "P-86". 121 Sale to Varace Air Corporation, Exhibit "P-84.2". 122 C. Exceptions, !CPA Report, Exhibit "P-60", p. 11. 123 Php29,252,140.00 less Php640,000.00.

DECISION CTA CASE NO. 10279 However, an examination of the Daily Product Movement Report Subject to Excise Tax Claim124 in relation to the Summary of Aviation Turbo (Jet A-1) Fuel Deliveries,125 shows that there are discrepancies with regard to the date when the importation of the Jet A-1 fuel subject of the present case were made and the date of withdrawals from Tabangao and eventual sale and delivery thereof to international carriers. Notably, Ms. Peralta testified that Jet A-1 fuel cannot be withdrawn by petitioner without the ATRIG,126 to wit: "Q-39: Why does petitioner apply for an ATRIG? A-39: The ATRIG constitutes perrmsston from the BIR to withdraw the Jet A-1 fuel from the CBW in Tabangao after the settlement of the taxes and duties due thereon. The Jet A-1 fuel cannot be withdrawn by the PSPC without the ATRIG. If the article to be withdrawn from the CBW is subject to excise tax, the ATRIG shows the amount of excise taxes to be paid. Since Jet A- 1 fuel is an excisable article, the ATRIG for imported Jet A-1 fuel indicates the amount of excise taxes to be paid thereon." As per ATRIG127 and SSDT,128 the date of settlement of taxes and duties due was made on April 26, 2018. However, the Court notes that some of the Certificates of Quantity Delivered and Bulk Delivery Notes,129 which supports the date of movement of Jet A-1 fuel from the Tabangao depot to JOCASP or CASI, were made prior to April 26, 2018, the date of the ATRIG. Considering that the date of the ATRIG for the importation was on April 26,2018,130 any withdrawal from the Tabangao Refinery which is earlier than the said date is not covered by the importation, upon which the claimed deliveries to international air carriers, subject of the instant claim, were sourced. Consequently, petitioner's claimed excise taxes in the amount of Php11,132,948.00 supported by Certificates of Quantity Delivered dated earlier than April 26, 2018 shall be disallowed for failure to show that 2,783,237 lite~ 124 Exhibit "P-77". 125 Exhibit "P-85". 126 Docket, Exhibit "P-50", Q&A No. 39, pp. 500 to 501. 127 Id., Exhibit "P-42", p. 1081; Exhibit "P-61.4". 128 Id., Exhibit "P-45", p. 1088. 129 Exhibit "P-85". 130 Docket, Exhibit "P-42", p. 1081; Exhibit "P-61.4".

DECISION CTA CASE NO. 10279 ofJet 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: 131 CERTIFICATES OF QUANTITY DELIVERED (CQDs) AVIATION SERVICE RETURNS (ASRs) DATE EXH CQD VOLUM DATE EXHIB ASR AIRLIN VOLUME !BIT REF. E ITNO. NO. ES 04/16/201 NO. NO. 8 np_ 103,238 April17, ~ ~P- 42388 JIN AIR 10,620 W7517 2018 CO L'ID 11,740 81.1" 5 80.224" April17, ��p_ 04/17/201 np_ W7517 190,000 2018 42389 CEBU 8 81.2" 6 80.25" AIR INC 04/18/201 ��p_ W7517 300,000 April17, ��p_ 42390 JETSTA 2,530 8 81.3'' 2018 80.204" 42391 RASIA 6,165 7 42392 AIRWAY 14,690 April17, np_ S PTE 04/19/201 np_ W7517 190,000 2018 80.205" LTD 8 81.4" 8 April17, ''P- JETSTA 2018 80.147" RASIA 04/20/201 ''P- W7517 300,000 AIRWAY 8 81.5" 9 659,999 S PTE 520,000 LTD 360,000 FEDER 160,000 AL EXPRES SCORP 04/21/201 up_ W7518 April 18, ''P- 42393 JIN AIR 10,840 8 81.6" 0 2018 80.225" CO LTD 04/22/201 up_ W7518 April18, ''P- 42394 CEBU 12,050 8 81.7" 1 2018 80.26" 42395 AIR INC 1,899 42396 6,299 04/23/201 ''P- \V'7518 April 18, ''P- 42398 JETSTA 8 81.8" 2 2018 80.206" 45663 RASIA 15,820 45666 AIRWAY 6,650 04/24/201 ''P- W7518 April18, ''P- S PTE 8,964 8 81.9" 3 2018 80.27" LTD /'""' April 18. np_ CEBU 2018 80.148" AIR INC April 18, ��p_ FEDER 2018 80.13" AL EXPRES i\pril18, ��p_ SCORP 2018 80.174" ASIAN A AIRLIN ES INC JAPAN AIRLIN ES INTL CO LTD 131 Refer to Exhibits "P-77", "P-85" and "P-86".

DECISION CTA CASE NO. 10279 April 18, ~ ~P- 45968 ASIAN A 17,000 2018 108186 AIRLIN 20,035 80.14" ESINC 10,200 April 18, 2 JAPAN 2018 up_ 108268 AIRLIN 6,316 80.175" ES INTL 28,725 April 18, 7 CO LTD 2018 up_ 108268 JAPAN 5,348 80.176" AIRLIN 18,211 April18, 9 ES INTI, 11,210 2018 ''P- 108288 CO LTD 11,130 80.15" ASIAN A 10,120 April 18, 0 AIRLIN 2018 np_ 108288 ES INC 7,994 80.16" ASIAN A 6,350 April18, 2 AIRLIN 2018 ''P- 40811 ESINC 4,123 80.17" 42397 ASIAN A April 19, 42399 AIRLIN 16,420 2018 ''P- 42400 ESINC 10,316 80.177'' 42401 JAPAN 18,000 April19, AIRLIN 2018 ''P- 42402 ES INTL / 80.226" CO LTD April19, 42404 2018 np_ JIN AIR 80.227" 42405 CO LTD April19, 2018 ''P- 45610 JIN AIR 80.149" CO LTD April 19, 45620 2018 ""P- FEDER 80.28" AL April19, EXPRES 2018 ''P- SCORP 80.207" April19, CEBU 2018 ''P- AIR INC 80.208" April19, JETSTA 2018 up_ RASIA 80.150" AIRWAY April19, S PTE 2018 ''P- LTD 80.178" JETSTA April 19, RASIA 2018 ''P- AIRWAY 80.18" S PTE LTD FEDER AL EXPRES SCORP JAPAN AIRLIN ES INTL CO LTD ASIAN A AIRLIN ESINC

DECISION erA CASE NO. 10279 Page 31 of41 April 19, ttp_ 109269 ASIAN A 6,695 2018 80.19" 2 AIRLIN 12,338 ES INC April 19, ttp_ 109279 JAPAN 15,204 2018 80.179" 5 AIRLIN ES INTI. 8,036 April19, ttp_ 109289 CO LTD 2018 80.180" 0 JAPAN 21,200 AIRLIN 13,380 April 19, ttp_ 109289 ES INTI. 10,272 2018 80.252" 2 CO LTD 4,070 KOREA 11,720 April19, ��p_ 109296 N 2018 80.20" 3 AIRLIN 5,957 ESCO 16,640 April 20, np_ 42403 LTD 2018 80.228" 42406 ASIAN A 16,709 AIRLIN 13,252 April20, "'P- 42407 ESINC 13,161 2018 12,516 80.229" 42408 ]IN AIR 16,192 April20, t�p_ 42409 CO LTD 2018 1,500 80.151" 42410 ]IN AIR April20, CO LTD ;A/ 2018 ''P- 45621 80.29" FEDER April20, 45622 AL 2018 ''P- 45627 EXPRES 80.30" 45628 SCORP April20, 2018 np_ 45635 CEBU 80.152" AIR INC April20, 45969 2018 ''P- CEBU 80.253" AIR INC April20, 2018 ''P- FEDER 80.31" AL April20, EXPRES 2018 up_ SCORP 80.32" KOREA April20, N 2018 ''P- AIRLIN 80.33" ESCO April20, LTD 2018 ''P- 80.342" CEBU April20, AIR INC 2018 np_ 80.254" CEBU AIR INC CEBU AIR INC QANTA s AIRWAY SLID KOREA N AIRLIN ESCO LTD

DECISION CTA CASE NO. 10279 April20, ''P- 45971 KOREA 1,103 2018 80.255" N 12,806 110187 AIRLIN 11,186 April20, ''P- 8 ESCO 13,000 2018 80.34" LTD 110187 CEBU 715 April 20, .. p_ 9 AIR INC 34,261 2018 80.35" 110269 CEBU 11,560 April20, ''P- 6 AIR INC Ill 2018 80.343" 110279 QANTA 10,635 April20, ''P- 7 11,760 2018 80.36" s 110280 5,380 April20, up_ I AIRWAY 520 2018 80.256" SLTD 110289 CEBU 7,190 April20, ''P- 6 AIR INC 10,970 2018 80.181" 110296 KOREA 6,691 April20, ''P- 9 N 12,703 2018 80.37" AIRLIN 63,391 42411 ESCO April21, ''P- 42412 LTD 60,649 2018 80.230" JAPAN 42413 AIRLIN N" April21, ''P- ES INTL 2018 80.38" 42414 CO LTD April21, ''P- 42415 CEBU 2018 80.209" AIR INC 42416 April21, ��p_ 45624 JIN AIR 2018 80.39" 45625 CO LTD April21, ''P- 45972 CEBU 2018 80.210" AIR INC 46136 April 21, ''P- JETSTA 2018 80.40" RASIA AIRWAY April21, ''P- SPTE 2018 80.41, LTD CEBU April 21, "'P- AIR INC 2018 80.42" JETSTA April21, ��p_ RASIA 2018 80.272" AIRWAY S PTE April21, ��p_ LTD 2018 80.273" CEBU AIR INC CEBU AIR INC CEBU AIR INC PHILIPP INE AIRLIN ESINC PHILIPP INE AIRLIN ESINC

DECISION CfA CASE NO. 10279 April 21, ~ ~P- 46136 PHILIPP 68,317 2018 INE 80.273" 111270 AIRLIN 14,173 April21, 1 ES INC 2018 ''P- PHILIPP 15,852 80.274" 111270 INE 12,902 April21, 2 AIRLIN 12,991 2018 ''P- ES INC 80.275" 111270 PHILIPP 9,833 April21, 3 INE 16,555 2018 ''P- AIRLIN 17,159 80.43" 111270 ES INC 12,210 April21, 4 15,538 2018 np_ CEBU 80.276" 111270 AIR INC 17,554 April21, 5 10,660 2018 up_ PHILIPP 11,010 80.44" 111297 INE 7,990 April 21, 6 AIRLIN 10,880 2018 ''P- ESINC 80.277" 111297 6,460 April21, 7 CEBU 63,346 2018 ''P- AIR INC 80.45" 111297 28,522 April21, 8 PHILIPP 2018 ''P- INE / 80.46" 40812 AIRLIN April22, ES INC 2018 ''P- 40813 80.278" CEBU April 22, 42417 AIR INC 2018 up_ 42418 80.279" CEBU April22, 42419 AIR INC 2018 ''P- 80.231" 42420 PHILIPP April22, 42421 INE 2018 ''P- AIRLIN 80.232" 46138 ESINC April22, PHILIPP 2018 ''P- 112188 INE 80.153" 7 AIRLIN April22, ES INC 2018 np_ 80.47'' JIN AIR April22, CO LTD 2018 np_ 80.48" JIN AIR April 22, 2018 "'P- co r.:rn 80.280" April22, FEDER 2018 ''P- AL 80.281, EXPRES SCORP CEBU AIR INC CEBU AIR INC PHILIPP INE AIRLIN ES INC PHILIPP INE AIRLIN ES INC

DECISION CTA CASE NO. 10279 April22, ''P- 112281 PHILIPP 23,542 2018 80.282" 5 INE 13,406 AIRLIN 12,990 April23, np_ 42422 ES INC 2018 80.233" 42423 2,690 JIN AIR 11,570 April23, ''P- 42424 CO LTD 6,100 2018 80.234" 24,170 42425 JIN AIR 12,888 April 23, "'P- 42426 CO LTD 17,900 2018 133,957 80.211, 42428 JETSTA April23, RASIA 17,460 2018 np_ 45626 AIRWAY 80.49" S PTE 11,383 April23, 45689 LTD 2018 ''P- 14,703 80.50" 113189 CEBU April23, 1 AIR INC 16,287 2018 ''P- 13,487 80.154" 113189 CEBU 20,385 April23, 2 AIR INC 16,700 2018 up_ 80.51, 113260 FEDER /"" April 23, 6 AL 2018 np_ EXPRES 80.21, 113271 SCORP April23, 3 2018 ''P- CEBU 80.283" 113271 AIR INC April23, 6 2018 up_ ASIAN A 80.155" 113271 AIRLIN April23, 7 ESINC 2018 ''P- PHILIPP 80.182" 113282 INE April23, 1 AIRLIN 2018 ''P- ESINC 80.140" 113282 FEDER April23, 3 AL 2018 np_ EXPRES 80.284" SCORP April23, JAPAN 2018 np_ AIRLIN 80.52" ES INTL April23, CO LTD 2018 ''P-80.1" CHINA EASTER April23, up_ N 2018 80.183" AIRLIN ESCO., LTD PHILIPP INE AIRLIN ES INC CEBU AIR INC AIR CHINA LTD JAPAN AIRLIN ES INTL CO LTD

DECISION CfA CASE NO. 10279 April23, np_ 113282 CHINA 6,975 2018 80.126" AIRLIN 4 16,050 April23, ''P- ESLTD 2018 80.257" 15,100 KOREA 7,727 April23, np_ 2018 80.184" 113282 N 20,241 5 AIRLIN April23, ''P- ESCO 27,400 2018 80.127" LTD 12,080 April 23, ''P-80.8" 26,896 2018 113282 JAPAN up_ 7 AIRLJN 8,053 April 23, 80.258" ES INTL 97,907 2018 113282 CO LTD np_ 8 CHINA 24,276 April23, 80.185" AJRLIN 2018 ESLTD 16,611 "'P- 5 April 23, 80.53" 113282 AIR 2018 9 NJUGJN 12,696 ''P- JLTD 12,832 April23, 80.22" 12,170 2018 KOREA 11,370 np_ April23, 80.285" 113283 N 3,310 2018 0 AIRLIN ''P- ESCO / April23, 80.344" LTD 2018 ''P- 113283 JAPAN April23, 80.286" 1 AJRLIN 2018 ES INTL ''P- CO LTD April23, 80.54" 2018 113299 CEBU ''P- 0 AIR INC April23, 80.55" 2018 113299 ASIAN A np_ AJRLIN April23, 80.56" 1 2018 ES INC np_ April 24, 80.235" PHILIPP 2018 ''P- 113299 INE April24, 80.57" 2 AIRLIN 2018 ES INC ''P- April24, 80.212" 113299 QANTA 2018 3 s AIRWAY SLID PHILIPP 113299 INE 4 AIRLIN ES INC 113299 CEBU 5 AIR INC 113320 CEBU 8 AIR INC 113320 CEBU 9 AIR INC 42427 JIN AIR CO LTD 42429 CEBU AIR INC JETSTA 42430 RASIA AIRWAY

DECISION CTA CASE NO. 10279 S PTE LTD April 24, up_ JETSTA 2018 80.213" RASIA April24, ''P- 42431 AIRWAY 6,310 2018 80.156" SPTE 15,940 April24, ''P- 15,428 2018 80.287" LTD 27,302 106,470 April 24, np_ FEDER 62,352 2018 80.58" 42432 AL 659 April24, ''P- EXPRES 7,294 2018 80.288" 18,550 SCORP 13,726 April24, ''P- 14,234 2018 80.289" PHILIPP 145,385 65,811 April24, np_ 45819 INE 11,567 2018 80.157" AIRLIN 7,524 14,820 April24, nP-80.2" ESINC 2018 / np_ 114189 CEBU April24, 80.290" 3 AIR INC 2018 np_ PHILIPP April24, 80.59" 114189 JNE 2018 ''P- 4 AJRLIN April24, 80.60" 2018 ESINC np_ April 24, 80.291" PHILIPP 2018 np_ 114189 INE April24, 80.292" 5 AIRLIN 2018 ESINC ''P- April24, 80.186" FEDER 2018 ''P- 114189 AL April24, 80.61" 6 EXPRES 2018 SCORP ''P- April24, 80.141" 114260 AIR 2018 7 CHINA LTD PHILIPP 114261 INE 0 AIRLIN ES INC 114272 CEBU 1 AIR INC 114272 CEBU 2 AIR INC PHILIPP 114272 INE 3 AIRLIN ESINC PHILIPP 114272 INE 4 AIRLIN ES INC 114283 JAPAN 2 AJRLIN ES INTL CO LTD 114290 CEBU 0 AIR INC 114299 CHINA 6 EASTER N

DEQSION CTA CASE NO. 10279 April24, ''P- 114299 AIRLIN 14,437 2018 80.293" 8 ESCO., 11,671 LTD 12,513 April24, ''P- 114299 PHILIPP 10,880 2018 80.62" 9 INE 15,680 AIRLIN 10,910 April24, ''P- 114321 ES INC 2018 80.63" 0 9,430 CEBU April24, np_ 114321 AIR INC 4,280 2018 80.64" 1 CEBU 11,760 April24, ''P- 114321 AIR INC 6,090 2018 80.65" 2 14,850 CEBU April25, ''P- 42433 AIR INC 15,089 2018 80.236" 11,776 42434 CEBU 62,080 April25, ''P- AIR INC 13,264 2018 80.158" 42435 12,090 JIN AIR 19,100 April25, ''P- 42436 CO LTD 2018 80.214" 42437 14,284 FEDER April25, up_ 42438 AL / 2018 80.66" EXPRES 45867 SCORP April25, ''P- JETSTA 2018 80.67" 45975 RASIA AIRWAY April 25, up_ 115180 S PTE 2018 80.159" 0 LTD CEBU April25, nP-80.9" 115180 AIR INC 2018 1 ''P- CEBU April25, 80.68" 115180 AIR INC 2018 2 FEDER up_ AL April25, 80.294" 115261 EXPRES 2018 3 SCORP up_ AIR April25, 80.69" 115272 N!UGIN 2018 6 !LTD ''P- April25, 80.70" CEBU 2018 AIR INC up_ PHILIPP April25, 80.295" INE 2018 AIRLIN ��p_ ESINC April 25, 80.296" CEBU 2018 AIR INC CEBU AIR INC PHILIPP INE AIRLIN ESINC PHILIPP INE AIRLIN ES INC

DECISION CTA CASE NO. 10279 PHILIPP April25, ''P- 115272 INE 12,778 2018 11,818 80.297'' 7 AIRLIN 12,235 April25, ES INC 2018 ��p_ 115272 34,321 80.71" 8 CEBU April 25, AIR INC 27,318 2018 up_ 115272 FEDER 6,600 April25, 80.160" 9 AL 28,801 2018 EXPRES S CORP 7,216 April25, 2,087 2018 ��p_ 115283 PHILIPP 2,783,237 80.298" 8 INE Php4.00 Apri125, AIRLIN Phpll,l32,948.00 2018 ES INC April 25, ��p_ 115283 PHILIPP 2018 80.299" 9 INE AIRLIN Apri125, ESINC 2018 ��p_ 115284 PHILIPP April 25, 80.300" I INE 2018 AIRLIN ES INC "'P- 115290 CEBU 80.72" 1 AIR INC PHILIPP ''P- 115290 INE 80.301, 3 AIRLIN ES INC ��p_ 115290 80.73" 5 CEBU AIR INC TOTAL 2,783,237 TOTAL Multiplied by: Excise Tax Rate Total Disallowed Excise Tax Moreover, upon careful examination of petitioner's supporting documents, the Court finds that the Aviation Service Returns supporting the following deliveries of 439,814liters Jet A-1 fuel are unreadable. Thus, the Court cannot ascertain the correctness of relevant details such as destination, customer name and volume. Accordingly, petitioner's claimed excise tax payment related thereto in the amount ofPhp1,759,256.00 shall be disallowed, detailed as follows: Airlines Exhibit ASR Destination Volume Amount of Air Nuigini Ltd. No. Port in I qp_ No. Moresby Cebu Air Inc. Sub-total Liters Excise Taxes 80.1 0" 1173220 Paid at Php4.00 19,377 19,377 Php 77,508.00 Php 77,508.00 I ��p_ 1181818 Kansai 10,128 Php 1182923 Narita 26,147 40,512.00 80.79" ''P- 1o4,588.oo 1 80.80" ,./

DECISION CTA CASE NO. 10279 ~ ~P- 1202941 Narita 23,540 94,160.00 80.89" 1202945 Shanghai 11,964 47,856.00 eep_ Sub-total 80.90" 71,779 Php 287,116.00 ' Philippine eep_ 1162910 Vancouver 46,914 Php 187,656.00 Airlines Inc. 1201826 Busan 80.302" 1201827 California 25,987 103,948.00 . Qantas Airways eep_ 1202940 Jeddah Ltd. 139,931 559,724.00 80.303" Sub-total eep_ 82,135 328,540.00 80.304" eep_ 80.309" 294,967 Php1,179,868.00 eep_ 1182927 Sydney 53,691 Php 80.347" Sub-total 53,691 214,764.00 Php 214,764.00 Total 439,814 Php1,759,256.00 In fine, petitioner sufficiendy proved that the excise taxes it paid on April 26, 2018132 for Jet A-1 fuel imported for the period April2018, and subsequendy sold to tax-exempt international air carriers during April to May 2018 were erroneous and refundable pursuant to Sections 204 and 229 of the NIRC of 1997, as amended, but in the reduced amount of Php15,501,712.00, computed as follows: Particulars JET A-lFUEL Volume/Amount of Excise Tax Claim per Amount of Petition for Review Volume Excise Taxes in Liters Paid at Php4.00 7,313,035 Php29,252,140.00 Less: Disallowances 160,000 Php 640,000.00 160,000 Php 640,000.00 I. Disaffowanm noted by the ICPA a. Was passed on for local consumption and was sold to its local distributor in the Philippines Sub-total II. DiJalfowanm found by the Court r/ 132 As discussed earlier, additional excise taxes were paid on October 30, 2018, refer to Docket, Exhibits "P-46" to "P-48", pp. 1089 to 1091; Exhibit "P-61".

DECISION CTA CASE NO. 10279 a. Without valid FACP 54,556 Php 218,224.00 b. Sales made to international carriers 2,783,237 11,132,948.00 prior to importation and payment of excise taxes 439,814 1, 7 59,256.00 c. With unreadable ASRs Php 13,110,428.00 Sub-total 3,277,607 Volume/Amount of Total Disallowances 3,437,607 Phpl3,750,428.00 Volume/Amount of Refundable Excise Taxes 3,875,428 Php15,501,712.00 WHEREFORE, in light of the foregoing considerations, the present Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND OR ISSUE TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of Php15,501,712.00, representing petitioner's erroneously paid excise taxes for its imported Jet A-1 fuel for the period covering April to May, 2018. SO ORDERED. ~. ~ -'I'--- I CONCUR: MA. BELEN M. RINGPIS-LIBAN Associate Justice MARIA PEDRO ""'� C~ O~NG. ,VA�.S Associate Justice

DECISION CTA CASE NO. 10279 ATTESTATION I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. gy, ~ ~\......_ MA. BELEN M. RINGPIS-LIBAN Associate Justice Chaiperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice