SL HARBOR BULK TERMINAL CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC SL HARBOR BULK TE RMINAL E B CASE NO. 2928 CORPORAT ION, (CTA Case N o. 10289) Petitionet~ P resent: Ringpis-Liban, At"ting P.J., -versus- Manahan, Bacorro-Villen a, M od esto-San P edro, Reyes-F ajardo, Cui-David, Ferrer-Flores, and Angeles, ]]. COMMISSIONER O F INTERNAL Promulgated : REVEN UE, Respondent, X------------------------------------------------------------------------------------ DECISION RINGPIS-LIBAN, J.: Before this Court is the Petition for Review filed by petitioner on June 7, 20241 assailing the D ecision2 dated ovember 15, 2023, and Resolution3 dated 1vfay 15, 2024, promulgated by the Court ofTax A ppeals Special Seco nd Division (Court in Division) in the case entitled "SL Harbo1� Bulk Terminal Corporation vs. CommissionerofinterttaiRevemte," docketed as CTA Case o. 10289. The dispositive portion of the Decision reads: "WHE REFORE, in light of the foregoing considerations, the instant PetitioN for Review is DENIED for lack of merit. r SO ORDE RED." 'Rollo, CT:\ EB . 'o. 2928, pp. l-34. 2 Ibid., pp. 39-69. 3 Ibid., pp. 71-77_\.

DEC!S!O~ CT~\ EB 0<0. 2928 (CT\ C\SE NO. 1(1289) The dispositive portion of the Resolution reads: "WHEREFORE, premises considered, petitioner's J\!Iotion for Reron.rideration (Re: Decision dated 15 November 2023) is DENIED for lack of merit. SO ORDERED." THE PARTIES Petitioner SL Harbor Bulk Terminal Co11Joration is a domestic corporation organized and existing under and by virtue of Philippine laws, duly registered with the Bureau of Internal ("BIR") Revenue District Office ("RDO") No. 29, and with principal office at Block 4, Lots 10 and 11, Manila Harbor Center, North Harbor, Barangay 128, Zone 10, Tondo, 1vianila4 Respondent is the duly appointed Commissioner of Internal Revenue vested under appropriate laws the authority to carry out its functions, duties, and responsibilities of his office, including the authority to refund and/ or credit taxes under Section 204 of the l"ational Internal Revenue Code of 1997, as amended. as amended 5 THE FACTS Records show that petitioner allegedly paid excise taxes in the amount of Php25,164,902.50 to the Bureau of Customs (BOC) on May 15 and 18, 2018, and June 7 and 8, 2018, relative to its importation of bunker fuel and diesel on various dates in May and June 20186 On June 26, 2020, petitioner filed its administrative claim for tax credit with Revenue District Officer (RCO) Teresita R~ Yumang ofRDO No. 29 of the BIR. 7 The administrative claim was filed due to the erroneous payment of excise taxes on imported bunker fuel and diesel sold to tax-exempt entities registered with the Board of Investments (BOI), Subic Bay Metropolitan Authority (SMBA), and the Philippine Economic Zone Authority (PEZA), for the period covering April1 to June 30, 201/v' ~Joint Stipulation of Facts and bsues, Docket, CL-\ Case -:\'o. 10289, p. 1318. 5 Ibid., pp. 1318-1319. r, Exhibits "P-36-l.l.B", "P-3CJ-1.2", "P-36-1.3", "P-36-1.-1", P-36-1.5", "P-36-2.1 _\", "P-36-2.2", "P-36-2.3", "P-36-2.+", and "P-36.2.5", "P-36-3.1", "P-:)6-3.2", "P-36-3.+", and "P-36-3..)", "P-36-.:1-.1 .-\", "P-36--!.2", "P- 36-+.3", "P-36-+.+" and "!'~36~ 1.5". 'Joint Stipulation of Facts and Issue, Docket, p. 1319.

DECISIOK CT\ EB KO. 2928 (CT\ C.\SE "JO. 111289) On June 30, 2020, petitioner filed a Petition for Review8 before the Court in Division, praying that the Court give due course to the Petition for Review on account of the Commissioner's inaction to petitioner's administrative claim for tax credit; and after trial on the merits, the Court grants petitioner's claim for tax credit of erroneously paid excise tax in the amount of Twenty-Five Million One Hundred Sixty-Four Thousand Nine Hundred Two and 50/100Pesos (Php25,164,902.50). On August 14, 2020, respondent filed by registered mail his Answer9 on the Petition for Review. On September 15, 2020, petitioner flied a Motion for Leave to Admit Amended Petition for Review, with attached Amended Petition for Review. 10 In the Amended Petition for Review, the petitioner's claim for tax credi1 was reduced to Tenl\fillion Three Hundred Thirty-One Thousand Six Hundred Sixty-Two and 50/100 Pesos (Php10,331,662.50). On January 6, 2021, the Court granted the Motion for Leave to Admit Amended Petition for Review, and noted the Amended Petition for Review. 11 The Pre-Trial Conference was held on February 21, 2021 1 ' On February 22, 2021, the parties filed their Joint Stipulation of Facts and Issues. 13 In the Pre-Trial Order14 dated March 8, 2021, the Court approved and adopted the parties' Joint Stipulation of Facts and Issues. Trial thereafter ensued, wherein both parties presented their respective documentary and testimonial evidence. The case was submitted for Decision on February 1, 2024. On November 15, 2023, the Court in Division promulgated the assailed Decision15 denying the case for lack of merit. ;V H Docket, pp. '7-31, with ~\.nncxc~ . ., Ibid., pp. 886-896. '" Illld. pp. 990-929. 11 Ibid., p. 1291. 1.::> Ibid., 129-l-. 11 Jbid.,pp.l8!8-1320. "Ibid., pp. 1510-1516. IS Ibid., PP� 3363-3393.

DECISIOl' CL\ EB 0:0. 192~ (CT.\ C\SE 0:0. 10289) On December 15, 2023, petltloner filed through a private couner its Motion for Reconsideration (Re: Decision elated 15 November 2023), which was received by the Court on December 18, 2023. 16 On January 22, 2024, respondent filed his Comment (To Petitioner's J'viotion for Reconsideration dated December 15, 2023) 17 On i\Iay 15, 2024, the Court in Division issued the assailed Resolution denying for lack of merit the petitioner's Motion for Reconsicleration18 Aggrieved, petitioner filed the instant "Petition for Review" before this Court on June 7, 2024. On July 26, 2024, the Court En Bane ordered petitioners to submit the original or certified true copy of the Secretary's Certificate of Board Resolution relative to the filing of the Petition for Review, within five (5) days from notice. On August 6, 2024, the Court En Bane received petitioner's "Compliance (Re Notice dated 26 July 2024)" 19 On ,\ugust 8, 2024, the Court En Bane ordered petlt1oner to submit additional four (4) copies of its "Compliance" which was received by the Court on August 6, 2024.'0 On /mgust 20, 2024, the Court En Bane received petitioner's "Compliance (Re Notice dated 08 August 2024)."21 On August 27, 2024, the Court En Bane noted petitioner's "Compliance (Re Notice dated 08 ,\ugust 2024)."22 On October 21, 2024, the Court En Bane directed respondent to file Comment on the Petition for Review, within ten (10) days from notice. On November 4, 2024, the Court received respondent's "Comment (To Petitioner's Petition for Review dated June 4, 2024)."23 I' lr. Ibid., 339-~-3-113. ,. Ibid., pp. 3418-3434. 1 �~ Ibid., pp. 3-D9-3~45. " Rollo, pp. 80-82. 1o Ibid., p. 88. z1 Ibid., pp. 93-96. 22 Ibid., p. 99. 21 Ibid., pp. 101-102.

DECISIO~ CT~\ EB 0i0. 2928 (CT.\ C\SE ~0. 10289) On December 12, 2024, the Court noted respondent's "Comment (fo Petitioner's Petition for Review dated June 4, 2024)," and ordered the instant case submitted for decision. THE ISSUE " Whether or not the Court in Division erred in denying, for lack of merit, the petitioner's claim for tax credit." THE ARGUMENTS Petitioner alleged that the Court in Division erred in denying, for lack of merit, the Petition for Review. Petitioner insists that its claim for tax credit of erroneously or illegally paid excise tax is not barred by prescription. The Court in Division erred when it concluded that the prescriptive period for the claiming of tax credit in this case, starts on the date when the corresponding excise taxes were paid. Petitioner claims that at the time it paid the excise taxes, the same could not have been considered erroneous since the payments became erroneous only upon their sale to tax-exempt enUtles. Petitioner's sales of petroleum products to Johnson Controls-Hitachi Air Conditioning Philippines, Inc. Qohnson) during the 2"d quarter of 2018 are exempt from excise tax considering that Johnson is an SBi\L~\ registered enterprise and a tax-exempt business enterprise since 1997 by virtue of its Certificate of Registration and Tax Exemption (CRTE). Moreover, petitioner is entitled to a tax credit for the erroneously paid excise tax in the aggregate amount of Php10,331,662.50 covering the period of 01 },pril 2018 to 30 June 2018. Since the bunker fuel and diesel which it has imported was subsequently used to sell 4,132,665 L of BFO and SFO to SBi\L\ and PEZ.A registered entities. Conversely, respondent states that the Court has no jurisdiction over the original petition filed by petitioner for its claim for tax credit. Respondent maintains that it is not stated in Section 229 of the National Internal Revenue Code (NIRC) of 1997, as amended that the two (2)-year prescriptive period must reckon from the date of sale of petroleum products to tax-exempt entities. Thus, when petitioner filed its administrative claim for tax credit or refund of alleged erroneous payment on J unc 26, 2020, the same is already time-barred for being filed beyond the two-year prescriptive peri~

DECIS!Ol\: CB EB "JO. 2928 (CL\ C\SE 0:0. liJ289) Respondent agrees with the Court in Division that petitioner failed to prove that it is entitled to tax credit. The excise taxes on imported petroleum products shall be paid by the petitioner to the Customs Officers before the release of such products from the customs house. Hence, petitioner's payment cannot be considered as illegally or erroneously collected tax. Respondent asserts that there is no sufficient proof that Johnson is an SBl\L-\ registered entity since 1997. Thus, petitioner agrees with the Court in Division that the sale of petroleum products to Johnson prior to June 18,2018 is subject to excise tax. Furthermore, the documentary evidence which petitioner presented cannot determine whether the petroleum products sold to tax exempt entities came from importations. THE RULING OF THE COURT EN BANC Timeliness ofthe Petition for Review On November 30, 2023, the petitioner received the Decision of the Court in Division. On December 13, 2023, petitioner filed a Motion for Reconsideration of the said Decision. On May 15, 2023, the Court in Division issued the assailed Resolution denying petitioner's motion. Said Resolution was received by petitioner through its counsel on May 23, 2024. From receipt of the said Resolution on ~Iay 23, 2024, petitioner had until June 7, 2024 within which to file the Petition for Review before the Court E11 Bane. The "Petition for Review" was filed on June 7, 2024. Hence, this Petition for Review was timely filed. The 2-yearprescriptive period must be counted from the illegalpayment oftax After a careful evaluation of the facts, assigned errors and arguments raised by petitioner, the Court En Balle finds that the Petition for Review should be denied for lack of merit. Sections 204(C) and 229 of the NIRC of 1997, as amended, provide as r follows:

DECISIOK CT\ EB 1'-:0. 2928 (CT.\ C.\SE C<O. 10289) "SEC 204. At!!bmii)J of tbe CommiJJioner to Compromise, Abate and Rejimd 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, boweve1; That a return filed showing an overpayment shall be considered as a written claim for credit or refund." (Empbasis Jllppiied) "SEC. 229. Reroz>e!]' of Tax Envmol!JijJ or fllega!l]~ 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 flied with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may anse after payment: Provided, boweJJer, 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." (Empbasis Jllpp!iecU The Court in Division based the prescriptive period for the claiming of tax credit on the date when the corresponding taxes were paid as stated in the aforequoted provision. Petitioner questions ll1is interpretation and argues that the reckoning date of the prescriptive period should be from the sale of the products to the tax ~

DEC!SIO'-i CT.\ EB 0:0. 2928 (CT.\ C.-ISE ::--:0. 10289) exempt entities pursuant to Section 135"" of the NIRC of 1997, as amended. It claims that its administrative and judicial claims for tax credit f!led on June 26, 2020 and June 30, 2020 have not prescribed counting 30 days from the lifting of the l\lodified Enhanced Community Quarantine (""IECQ) on june 1, 2020. Section 204 of the l"IRC: of 1997, as amended talks about credit or refund of taxes erroneously or illegally received. 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 authmity to levy the tax, or one which is by some other similar respect illegal."' Excise taxes will only be deemed erroneously or illegally collected once the petroleum products are sold to tax exempt entities mentioned under Section 135 of the NIRC:, of 1997, as amended. It is only at this point when it could be ascertained that there has been erroneous or illegally collected excise taxes. In Cbevmtt Pbilippim.r Im: tJ. CommiJJiomr of Intema! Revenm,26 and Pi!ipina.r Sbel! Petro!mm C01poration ''� CommiJJiomr of fntemal Re,,emte,r it was held that the payment of excise taxes by the taxpayer upon its importation of petroleum products was deemed illegal and erroneous only upon the sale of the petroleum products to entities that are by law exempt from direct and indirect taxes. Thus, the reckoning point of the 2-year period must start not from the payment of tax per se but from the erroneous or illegal payment of tax. The phrase "two (2) years from the date of payment" of the second paragraph of Section 299 of the NIRC: of 1997, as amended, must be read in relation to the title of the same Section, i.e. "Recovery of Tax Erroneously or Illegally Collected." Hence, the reckoning point of the 2-year period must start not from the payment of tax per se but from the erroneous or illegal payment of tax. ~ 2-1 "SEC 135. Petroleum Products Sold to International Carricn and Exempt Enri1ics or _-\gencics. - Petroleum products sold to the following are e:-.:empt from c:-.:cisc tax: (a) International carriers of Philippine or foreign registry on their usc of consumption outside the Philippines: PrO\�idcd, That the petroleum products solO to these international carriers shall be stored in a bonded storage tank and may he disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; OJ) Exempt entities or agencies coYcred b~- tax rrea1ics, com�entions and orher international agreement for their use or consumption: Pro,�ided, hO\vever, That the country of said foreign international carrier or exempt entities or agencies from similar taxes petroleum products sold to Philippine carriers, entities or <lgene~es; and (c) Entities \\�hich are by law e:\empt from direct and indirect taxes." ~; Commissionc1: oflnrcrnal RcYcnue Y. Pilipinas Shell Pc1rolcum Corporation, C.R. ::\"o. 188--1-97, _-\pril25, 2012. 2(� G.R. No. 21083(1 (Resolution) 01 September 2015. T G.R. ~~o. 211303, 15 June 2021.

DECISIO'.; CL\ EB l\0. 2928 (CL\ C\SE l'-:0. 10289) Basic is the rule in statutory construction that laws should be given a sensible construction, so as to give effect to their rationale and intent and thus avoid an unjust or absurd interpretation.28 I11teJpretatio taEr in amhiguiJ� semperjrie111fa e.rt, ut evitatur illto/Jl)elliell.r et ahsurd11m. \'1/hen there is ambiguity, an interpretation that will avoid inconvenience and absurdity is to be adopted. 29 In other words, a rational interpretation must be effectuated. Too literal and strict application of the law would result in absurdity and injustice which is frowned upon by the Court. The following arc the significant dates relevant to petitioner's claim for tax credit: -- Last da,� of Date of filing ---c--,--------------� In,�oice Date of Sale Last day of Last day of Date of filing the extended of a judicial No. the two (2) the extended of an penod to file a claim for a judicial claitn tax credit \�ears to ftle a period to ftle adn1inistra ti,�c for,a tax credit pursuant to claim for tax an claitn for a sc credit adnUnistrati\r tax credit Adtninistrati\-e e claitn for a Circular No. 3 9-2020 tax credit July 1, 2020 June 30, 20211 pursuant to none Item 39 of RRNo. II- 28024 April7, ?018 April �7, 2020 - -2-02-0- - - - frme 14, 2020 June 26, 2020 - -2-8-2-0-4- ' - ~i!S, 201~-- ~r_i1_8,~02Q -- -� 28310 April27, 2018 April27, ?020 28344 April 30, 2018 April30, ___ 2020 ____, ------------ -- -----------� ------ 28878 ,-\pril30, 2018 April 30, 28879 ,-\pril30, 2018 20?0 �-�-- April30, ?020 ?8899 i\lav8, ?018 l\hv 8, 2020 29096 1\lav ?4, 2018 1\lav 24, ?_(g(J_ June 30, 2020 ?9294 Mav 31, 2Q18 ]\lav 31, 2020 29474 Mav 31,2018 l\lay31, 2020 none 29671 I\ lay 3l, 20l8 1\~'1)~}1~2020 ---- ------- - ---2-9- 825 )ut1<:_7, 2018 Jutlc 7, 202_0 29915 �Ju-n-e-2-2,-2018 __lrmc 2~ 202()__ L. 30190 June 30, 20_!_i!.._ LJ.une 3_(),__2_()20 \'Vhcther the reckoning point of the 2-year prescriptive period is the date when the excise taxes were paid or from the date of sale of the petroleum products to tax exempt entities, still the Court has jurisdiction only over a part of petitioner's claim for tax credJ'I' 28 Cosico Jr. Y. f'LRC, 338 Phil. 1080, Z\Iay 23, 199"7. 29 Conunissioncr of Internal RcYenue ,~. T.:.L"\. Sales, Inc., 20.5 SCl\___--\ 184, 18 7 ,Jamiar~�15, 1992.

DECISIO'-; CT\ EB ))0. 2928 (CL\ C\SE 0i0. 10289) After consideration of the evidence on record, the Court En Banr rules that the Court in Division has jurisdiction to the erroneous payments on l\Iay 8, 2018, I\Iay 24,2018, May 31,2018, and June 30,2018 only. The rest of the claims are already barred by prescription. In the assailed Decision,30 the Court in Division ruled as follows: Nonetheless, under IL-\ No. 11469, Section 2 of Revenue Regulations ("RR") No. 11-2020 extended to Tune 30, 2020, from the original period of two (2) years after the payment of the tax or penalty, the period to file application for tax credits/refunds for erroneous payrnents made from May 1 to 31, 2018. Thus, petitioner had until June 30, 2020 to file its administrative claim for the erroneous payments of excise taxes on May 15 and 18, 2018. In relation thereto, ,'\dministrative Circular No. 39-2020, issued on May 14, 2020, extended the filing of petitions and appeals that fall due up to J\Iay 31, 2020, for 30 calendar days counted from June 1, 2020, viz.: "Considering that the Inter-Agency Task Force for the Management of Emerging Infectious Diseases has placed certain areas in the counm�, i.e. National Capital Region xxx xxx xxx under the i\Iodified Enha nced cCoautrntslnuinnitth\'�eO' suaaidranarteinasc (l\IECQ) until 31 May 2020, all the under :\!ECQ shall operate as follows during the said period: XXX XXX XXX 7. The filing of petitions, appeals, con1plaints, 111otions, pleadings, and other submissions that fall due up to 31 :\lay 2020 before the courts in areas under :\!ECQ areas is extended for 30 calendar days, counted from 1 June 2020, but pleadings and other court submissions mav still be filed by the parties within the reglemcntary period on or before 31 l\lay 2020 through electronic means, if preferred and able. In the same 111anner, the periods for court actions with prescribed periods of courts in areas unckr I\H:�:CQ are likc\vise extended for 30 calendar days counted from 1 June 2020." ,1~mpba.ri.r a11d ;mr/o:~mJ'/;{g .mpplied."- Based on the foregoing discussions on the reckoning period of prescription and in view of the above-cited Administrative Circular, petitioner had thirty (30) days from June 1, 2020, or until July 1, 2020 to file its judicial claim for the erroneous payment of excise taxes on the sale of petroleum products on J\Iay 8, 2018, J\Iay 24,2018, May 31,2018 and .June 30, 20~ 11 Decision, pp. 8-lO. Citations omitted. '

DECISIO:-' CT~-\ EB ::-.:0. 2928 (CT-\ C-\SE ~0. 10~89) Petitioner failed to prove that it is entitled to tax credit on the transactions that were not barred by prescription In a claim for tax refund or tax credit, the applicant must prove not only entitlement to the grant of the claim under substantive law. It must also show satisfaction of all the documentary and evidentiary requirements for an administrative claim for a refund or tax credit31 Tax refunds derogate the State's power of taxation; thus, they must be construed strictly against the taxpayer and liberally in favor of the State32 After due consideration of the arguments of the parties and based on the evidence on record, the Court En Ball( finds that petitioner failed to present documentary proof of the alleged erroneous payment of excise taxes on the petroleum products sold to tax exempt entities. Thus, the petitioner's claim for tax credit was correctly denied by the Court in Division. I\s aptly discussed in the assailed Decision:33 "As can be gleaned from the above provision and consistent with the earlier quoted Section 229 of the NIRC of 1997, as amended, it must be shown that (1) the entity to which petitioner sold the petroleum products is an entity exempt by law from indirect and direct taxes, and (2) petitioner paid the claimed excise taxes on the same petroleum products sold to the exempt entity. i\s held by the Supreme Court in Pifipi11a.r Sheff Petrofmm C01p. v. CommiJSioner of Intemcil Revellm, considering that the status of the petroleum products as tax-exempt solidifies upon the sale to any of the entities enumerated under the afore-quoted Section 135, any excise taxes that were previously paid thereon would then be considered as 'erroneously or illegally collected,' and therefore, subject to refund. XXX XXX XXX In this case, petitioner presented the Certifications issued by the SBMA and PEZA to prove that its customers, as enumerated below, are SBJ\L\ and PEZA-registered entities: c /" )I Pilipill<l.f Tolt~!Cm�. flh: !'Y. c()IJJ!IIi.uiolto'r~llii!C:mal f'-v'I'C:I//1(', C.R. No. 207112, December 8, 2015 . .>::: G!!//Air Compai!J'� PhilippiIIi! Hrcmth (Cf-<) !'.1�. Coti/JJII~I.doner q/ 111/enw/ ReNI!m, G.R. No. 182045, Septem.ber 19, 2012. '-'Decision, pp. 30-32. Citations omitred.

DECISIO'-: CL\ EB NO. 2928 (CL\ C.\SE NO. 10289) ~--,.-----��------�-�-------- - - - - - - - - - � � � � - - - - - � - - - - - - - � - - - - - - - - - - - - - - Customer Name SBfvL\/PEZ,\ Exhibit Certification No. Johnson Controls~ Hitachi 1\ir SB:VL\ CRTE No. 1997~ "P-41 ~ 1" Conditioning Philippines, Inc. 0022 JX Nippon !\lining & .\Ietals PEZ~\ .Amended "P~41 ~2" Philippines, Inc. Certificate of Registration No. 96~080 and PEZ"-\ Certification No. 2018~ 0596 Certificate of "P~41 ~3" - Philippine Sinter Corporation PEL\ Registration No. 11 ~04 and PEZA Certification No. 2018~0841 �-�---------------- -~ ,\ scrutiny of the above certifications shows that Exhibit "P~ 41~1" was valid from June 18,2018 to June 17,2021, while Exhibits "P-41~2 and "P~41~3 were valid for 2018. Civen that the SMK-\ issued the CRTE to Johnson Controls~ Hitachi "-\ir Conditioning Philippines, on June 18, 2018, the latter may only be considered as a business enterprise within the SSEZ, exempt from national and local taxes in the SSEZ, as of the said date. Thus, the sale of imported petroleum products between petitioner and Johnson Controls~ Hitachi "-'l.ir Conditioning Philippines, Inc. prior to the issuance of said CRTE on June 18, 2018, is subject to excise taxes. Furthermore, petitioner presented the following invoices to prove that it sold bunker fuel oil ("BFO") and special fuel oil ("SFO") to allegedly tax~exempt entities in April and June 2018: Date l n�\ '�o� �i �c-c� No. � Custon1er Quantitv (L).._ Johnson Controls-Hitachi Air 20,000.00 -~--~ ---- 280241 Conditioning Phils. Inc. 20,000.00 April 7, 2018 Johnson Controls-Hitachi _.-\ir 28204 20,000.00 April 18, 2018 Conditioning Phils. Inc. 28310 Johnson Controls-Hitachi 1\ir 360,000.00 r\pril27, 2018 265,948.00 28344 Conditioning Phils. Inc. 1,826,717.00 I\pril30, 2018 28878 JX Nippon I\ lining & l\letals !'hils. 20,000.00 1\pril 30, 2018 28879 April 30, 2018 28899 Philippine Sinter Corp. 20,000.00 i\lay 8, 2018 Philippine Sinter Corp. 29096 Johnson Controls-Hitachi 1\ir 80,000.00 l\lay 24, 2018 Conditioning Phils. Inc. 280,000.00 29294 Johnson Controls-Hitachi 1\ir 800,000.00 l\Iay 31, 2018 29474 Conditioning Phils. Inc. MaY 31,2019 2%71 JX Nippon :\lining & I\letals Phils. ~ l\lay 31,2018 JX Nippon Mining & Metals Phils. Philippine Sinter Corp.

Page 13 of17 DECISIO:\: CT_\ EB NO. 2928 (CL\ C~SE "'0. 10289) June 7, 2018 29825 Johnson Controls-Hitachi ,\ir 20,000.00 June 22, 201 ~ 29915 June 30, 2018 30190 Conditioning Phils. Inc. 20,000.00 Johnson Controls-Hitachi ,\ir 380 000.00 Conditioning Phils. Inc. 4.132,665,00 JX Nippon l\Iining & l\Ictals Phils. TOTAL Hence, petitioner's claim ofP10,33L662.50 is computed as 4,132,665 liters of fuel oil sold to tax-exempt entities multiplied by the excise tax rate paid of P2.50_ i\.s stated earlier, petitioner's sales to Johnson Controls- Hitachi Air Conditioning Philippines, Inc. prior to the issuance of the CRTE on June 18, 2018, arc subject to excise tax_ Consec1uently, the following sales to the said entity prior to June 19, 2018 should be disallowed: Invoice Date Invoice No. __ Quaf1tity_{l,-L .. - - - - - - - �----------��---- - - - - - - - - - - - - - - - - - - - - 20,000.00 20,000.00 April 7, 2018 28024 20,000.00 20,000.00 .\pril18, 2018 28204 20,000.00 20 000.00 April27,2018 28310 120,000,00 llla1� 8, 2018 28899 1\lay 24, 2018 29096 June 7, 2018 29825 TOTAL The ICPA on the other hand, reported the following findings: Sales to tax excn1pt custon1ers per petitioner declaration 4,132,665 L Sales to tax exen1pt custo1ners based on supported docun1ents 2 030 000 L Difference/lacking documents 2,102.665 L Notably, the above discrepancy was accounted for as follows: Lacking doctunents 1,092,665 L 1,000,000 L Cnsigned withdrmval certificates by BIR rcprcscntati,-es Discrepancy in the withdrawal certificate/sales im"oice 29474 10000L Total as accounted for 2, 102,665 L Such being the case, petitioner's total disallowed sales to tax-exetnpt entities are sun11narized as follows: Disallowed sales per !CPA report 2,102,665 L Disallowed sales to Johnson Controls-Hitachi Air Conditioning Phils. Inc. prior to _june 1~, 2018 120 000 L Total disallowed sales to tax-exempt entities 2,222,665 L tv

DEC!SIO'\ CT.\ EB l\:0. 2928 (CL\ C\SE '\0. 10289) For the excise tax on the remaming sales of fuel oil of 1,910,000 liters (4,132,665 less 2,222,665) to be refundable, however, it must be determined that the subject sales came from the importation with the excise tax paid on May 18, 2018. Thus, petitioner submitted, among others, the following documents, vi:;;: .. - Exhibit Documentary Evidence "P-31" List of Ending Inventory as of December - 31,2017 "P-31-1" - Validation of Inventory as of December - 31,2017 List of Ending Inventory as of December "P-31-2" �----- 31, 2017, duh� submitted to BIR --------~ "P-32'' Importation Schedule 2018_{First Quarter) -- "P-32-1.2" to Commercial Invoices, Bills of Lading, "P-32-4.5" "-\ssessments Notices, Import Entry Declarations, and Statements of Settlement of Duties and Taxes for f--�- - - - - - ' January to March 2018 - - - ' - --~- . "P-32-5" Summary of Local Purchases for 1" Quarter of 20 18 "P-33" Summary of Monthly Sales per Product for f---- the 1" Quarter of 2018 Validation of Inventory ,\ccounted VS. "P-34" Rq,~me_9_1_9_BIR as o_f]1 March 2018 �-- "P-34-1" Ending Inventory as of 31 l\Iarch 2018- 1---- "P-35" Certificates of Stock Inventory Comparative Invent01y as of 01 April2018 - - ------ - -1 -bpacst l.eUd. oonnc rf' sileIdmPpeotrittai ot ino "P-36" n Schedule for 2'"1 -----��---- ----- _Quart~ 2()18 ---�-------- ------�-�- - - - �---- "P-36-1.1.B" Commercial Invoices, bills of Lading, to "P-36-4.5'' Assessn1ent Notices, Import Entry Declarations, and Statements of Settlement of Duties and Taxes for April "P-37" - to june 2018 Summary of Monthly Sales per Product for ��- ----- ----- - _?"d_Quarter 201~--- ------- - .. - "P-38" Schedule of Sales to Excise Tax Exempt Entity for the period of 01 April 2018 to - - 30 J u ne - 201--�-8- --- - -- "P-38-1.1" to Sales Invoices, \'</ithdrawal Certificates, "P-38-20.4" Delivery Notes, and P- r-oof of Collection

DECISI00: CLI EB l'-:0. 2928 (CT.\ C\SE "0. !0289) -------------- ------- �------------ �- for the period 01 April 2018 to 30 June 2018 "P-39" Review of Subsec1uent Collection of Sales Subject for Tax Refund from 01 .April ___________2018 _to 30 June 2018 ---=--;--:c----j "P-46" Summary of Local Purchases (2nJ Quarter of 2018) "P-47" Ending Inventory as of June 30, 2018- _______ wit!-:_ Certificates__()_[ Stocl' Inventory From the foregoing, it cannot be determined with certainty that petitioner paid the excise taxes on the petroleum products sold to Johnson Controls-Hitachi Air Conditioning Philippines, Inc.; JX Nippon Mining & Metals Philippines, Inc.; and Philippine Sinter Corporation, considering that it failed to offer in evidence the supply or sales agreements with these entities. Details such as the dates of the sale, a complete description of all petroleum products associated with the transaction, the dates of performance of each contractual event, evidence of an agreement berween the tax-exempt entities and petitioner, and the purchase price, among others, would have been included in these supply or sales agreements, which petitioner did not submit. To be sure, the Summary of Monthly Sales per product for the znd Quarter of2018, the Schedule of Sales to Tax-Exempt Entities for April to June 2018, sales invoices, withdrawal certificates, delivery notes, and collection receipts, presented by petitioner are insufficient to establish that petitioner sold the imported petroleum products, as explicitly imported on May 15, 2018 or May 18, 2018, to these entities, and that petitioner paid the claimed excise taxes on these same petroleum products sold to them. Furthermore, even if petitioner provided the pertinent supply or sales agreements, the documentary evidence submitted is not enough to allow the Court to trace the movement of petitioner's fuel oil inventory using the first-in, first-out ("FIFO") method, which is the method of inventory valuation provided by its properly supported fuel oil inventory record and submitted the sales invoices and pertinent sales documents of all its sales for at least the 2nJ cluartcr of 2018 for the Court to properly determine that the fuel oil sold to tax-exempt entities came from the imported lot that petitioner paid for excise tax on May 15, 2018 or May 18, 2018. \'Vithout information on all its purchases and sales for the claim period, the Court finds it impossible to apply the FIFO method." (Empha.rzs Jl!pplied) I'

DECJS!O'-; CT~~ EB 0i0. 2928 (CL\ C~SE :\0. 10289) In view of the foregoing, the Court En Bane finds that petitioner has not sufficiently established its case. ACCORDINGLY, the Petition for Review is DENIED for lack of merit. SO ORDERED. fA,. 4t....... '] ...__ MA. BELEN M. RINGPIS-LIBAN Associate Justice WE CONCUR: c~�?-~ CATHERINE T. MANAHAN Associate Justice r. ~ 9m ~~,-FajAttdo MARIAN I~ F. RE~S-FAJARDO ,\ssociate Justice LA~C~VID Associate Justice (On Leave) HENRYS. ANGELES :\ssociate Justice

DEC!S!Ol\ CT.\ Ell l\0. 2928 (CT.-\ C.\SE NO. 10289) CERTIFICATION Pursuant to _'\rticlc 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. _, --- MA. BELEN M. RINGPIS-LIBAN Acting Presiding Justice