PILIPINAS SHELL PETROLEUM CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION PILIPINAS SHELL PETROLEUM CTA CASE NO. 10891 CORPORATION, Petitioner, Members: -versus- MANAHAN, Chairperson, REYES-FAJARDO, and ANGELES, JJ. COMMISSIONER OF INTERNAL Promulgated : REVENUE, _ Respondent. "tJI fJ I ?02~ X - - - - - - - - - - - - - - - - - - - - - - - - - ~- - Cf ~~': ~-� '!'--� - - - X DECISION MANAHAN, J.: THE CASE Before this Court is a Petition for Review praying for the refund of, or issuance of a tax credit certificate, in the total amount of P90,732,000.00, allegedly representing excise taxes paid by petitioner Pilipinas Shell Petroleum Corporation on its fuel importations from June to November 2020, which were sold and delivered from July to December 2020 to Pioneer Float Glass Manufacturing, Inc. (PFGMI), a tax-exempt .Philippine Economic Zone Authority (PEZA)-registered enterprise.1 THE PARTIES Petitioner Pilipinas Shell Petroleum Corporation is a corporation organized and existing under the laws of the Philippines with office address at 41st Floor, The Finance Center, 26th Street corner gth Avenue, Bonifacio Global City, Brgy. Fort Bonifacio, Taguig City, Metro Manila, 1635.2 1 Prayer, Petition for Review, Docket- Vol. I, p. 24. 2 Exhibit " P-27", Docket - Vol. 3, pp. 1082 to 1097. ~

DECISION CTA CASE NO. 10891 Respondent is the duly appointed Commissioner of Internal Revenue, vested by law to enforce and implement the provisions of the National Internal Revenue Code (NIRC) of the Philippines, as amended, as well as related statutes and their implementing rules and regulations. He holds office at the Bureau of Internal Revenue (SIR) National Office Suilding.3 ANTECEDENTS (ADMINISTRATIVE LEVEL) On May 27, 20214 and July 23, 2021,5 petitioner respectively filed two (2) separate administrative claims for refund or issuance of a tax credit certificate, together with the corresponding Applications for Tax Credits/Refunds (SIR Form No. 1914)6 with the Excise Large Taxpayers Audit Division II of the BIR, seeking for the recovery of alleged excise taxes paid on fuel oil (FO) sold to PFGMI from July to December 2020 in the aggregate amount of P90,732,000.00, computed as follows: Period Covered Product Volume in Excise Specific Tax July to September 2020 FO Liters Tax Rate Amount October to December 2020 FO 7 562 000 P6.00 P45 372 000.00 TOTAL 7 560,000 P6.00 45,360,000.00 P90,732,000.00 PROCEEDINGS BEFORE THIS COURT On June 14, 2022, petitioner filed the present Petition for Review.? The case was initially raffled to this Court's First Division. On July 21, 2022,8 respondent filed his Answer, where he raised the following special and affirmative defenses: (1) petitioner is not entitled to refund of excise taxes allegedly paid for the period June to November 2020; and (2) claims for refund of excise taxes paid is authorized only by Section 130(D) of the NIRC of 1997, as amended. 3 Par. 1, Stipulation of Facts, Joint Stipulation ofFacts and Issues (JSFl), Docket- Vol. I, p. 480. 4 Exhibit "P-25", Docket- Vol. 3, pp. 1065 to 1066. 5 Exhibit "P-26", Docket- Vol. 3, pp. 1070 to 1071. 6 Exhibits "P-25-1" and "P-26-1", Docket- Vol. 3, pp. 1067 and 1072, respectively. 7 Docket- Vol. I, pp. 6 to 32. 8 Docket- Vol. I, pp. 406 to 414. ~

DECISION CIA CASE NO. 10891 On August 16, 2022, respondent transmitted the BIR Records of the case, consisting of 924 pages in one (1) folder. 9 The Pre-Trial Conference was set and held on September 8, 2022,10 wherein respondent's counsel manifested that, there being no report yet from the Revenue Officer (RO) who conducted the audit on the administrative claim for refund, he will state in his comment to petitioner's formal offer of evidence whether he will be presenting evidence in this case. Prior thereto, Respondent's Pre-Trial Briefwas filed on August 4, 2022,11 while the Pre-Trial Brief for Petitioner was submitted on September 5, 2022. 12 On October 6, 2022, the parties submitted their Joint Stipulation of Facts and Issues,13 which was approved by the Court in the Resolution dated October 24, 2022,14 thereby deeming the termination of the Pre-Trial. The Pre-Trial Order dated December 28, 2022 was then issued by the Court. 15 As trial ensued, petitioner presented its documentary and testimonial evidence. It offered the testimonies of the following individuals, namely: (1) Ms. Anna Beatriz Vergel de Dios/6 petitioner's Import/Additives Scheduler; (2) Mr. Jonathan Juanillo/7 petitioner's Terminal Operations Manager at the Tabangao Depot until May 31, 2022; (3) Ms. Berenice Angelique L. Flores/8 petitioner's Tax Advisor; (4) Atty. Farida Nimfa G. Dimailig/9 petitioner's Country Tax Manager; and (5) Mr. Edward D. Roguel/0 the Court-Commissioned Independent Certified Public Accountant (ICPA). 21 9 Compliance dated August 15, 2022, Docket- Vol. I, pp. 427 to 429. 10 Notice of Pre-Trial Conference dated July 29, 2022, Docket- Vol. I, pp. 417 to 417-B; Order dated September 8, 2022, Docket- Vol. I, pp. 450 to 452. 11 Docket- Vol. I, pp. 418 to 421. 12 Docket- Vol. I, pp. 435 to 448. 13 Docket- Vol. I, pp. 480 to 494. 14 Docket- Vol. I, p. 510. 15 Docket- Vol. II, pp. 533 to 555. 16 Exhibit "P-28", Docket - Vol. I, pp. 111 to 130; Minutes of the hearing held on, and Order dated, February 2, 2023, Docket- Vol. II, pp. 556 to 559 and 561 to 563, respectively. 17 Exhibit "P-29", Docket - Vol. I, pp. 261 to 267; Minutes of the hearing held on, and Order dated, February 2, 2023, Docket- Vol. II, pp. 556 to 559 and 561 to 563, respectively. 18 Exhibits "P-31" and "P-1509", Docket- Vol. I, pp. 282 to 299 and Docket- Vol. II, pp. 675 to 682, respectively; Order dated April 27, 2023, Docket- Vol. II, pp. 796 to 798. 19 Exhibit "P-32", Docket- Vol. I, pp. 377 to 381; Order dated April 27, 2023, Docket- Vol. II, pp. 796 to 798. 20 Exhibit "P-1507", Docket- Vol. II, pp. 664 to 670; Order dated April 27, 2023, Docket- Vol. II, pp. 796 to 798. 21 Oath of Commission dated February 2, 2023, Docket- Vol. II, p. 560; Minutes of the hearing held on, and Order dated, February 2, 2023, Docket- Vol. II, pp. 556 to 559 and 561 to 563, respectively. c - -

DECISION CTA CASE NO. 10891 The Report of the ICPA was submitted on March 20, 2023.22 During the April 27, 2023 hearing/3 respondent's counsel manifested that there was still no report from the RO concerning the refund claim, thus, she is not presenting any witness. On May 22, 2023, petitioner filed its Formal Offer of Evidence with Manifestation I. On Offer of Exhibits P-1504 to P-1506, P-1373 to P-1412 and P-1414 to P-1455 as Originals under Sec. 4(b), Rule 130 of the Revised Rules of Court; and II. On Offer of Unreadable Bulk Delivery Notes as Secondary Evidence under Sec. 5, Rule 130 of the Revised Rules of Court, 24 to which respondent filed his Comment (Re: Formal Offer of Evidence with Manifestation) on May 29, 2023.25 In the Resolution dated July 6, 2023,26 the Court noted petitioner's Manifestation, and admitted petitioner's offered exhibits, except Exhibits "P-1373 to P-1412", "P-1414 to P-1455", "P-1504", "P-1505" and "P-1506", for failure to present the originals for comparison. In the meantime, the present case was transferred to the Third Division of this Court pursuant to the Notice of Resolution dated May 30, 2023.27 On July 27, 2023, petitioner then filed its Omnibus Motion I. For Reconsideration of the Resolution on Formal Offer of Evidence dated July 6, 2023; II. To Reopen Case for Presentation of Evidence; and III. Manifestation to Adopt Description of Exhibits,28 to which respondent filed his Opposition (Re: Omnibus Motion I. For Reconsideration of the Resolution on Formal Offer of Evidence dated July 6, 2023; II. To Reopen Case for Presentation of Evidence; and III. Manifestation to Adopt Description of Exhibits) on August 11, 2023.29 In the Resolution dated November 3, 2023,30 the Court: (1) denied petitioner's plea To Reopen Case for Presentation ofEvidence, and instead, directed the ICPA to examine, compare, and re- mark/mark Exhibits "P-1373 to P-1412", "P-1414 to P-1455" and "P- 34 to "P-39", and to submit a certification if he finds the said documents are faithful reproduction of the originals; (2) noted 22 Exhibit "P-1508", Docket- Vol. II, pp. 569 to 650. 23 Order dated April 27, 2023, Docket- Vol. II, pp. 796 to 798. 24 Docket- Vol. II, pp. 813 to 850. 25 Docket- Vol. III, pp. 1104 to 1110. 26 Docket- Vol. III, pp. 1115 to 1121. 27 Docket- Vol. III, p. 1112. 28 Docket- Vol. III, pp. 1137 to 1147. 29 Docket- Vol. III, pp. 1155 to 1161. 30 Docket- Vol. III, pp. 1165 to 1168. ~

DECISION erA CASE NO. 10891 petitioner's Manifestation to Adopt Description of Exhibits, and (3) held in abeyance the resolution of petitioner's Motion for Reconsideration of the Resolution on Formal Offer of Evidence dated July~ 2023. In compliance with the above-mentioned Resolution, the ICPA posted the Certification of Documents Identified by the Court on November 20, 2023,31 and submitted a Supplemental Certification of Documents Identified by the Court on November 30, 2023.32 Thereafter, on December 1, 2023, petitioner filed a Motion to Admit [Supplemental Certification of Edward D. Rogue/],33 while respondent failed to file his comment thereto.34 In the Resolution dated April 30, 2024,35 the Court granted petitioner's Motion to Admit [Supplemental Certification of Edward D. Rogue/] and, thus, admitted the said Supplemental Certification, and partially granted petitioner's Motion for Reconsideration of the Resolution on Formal Offer of Evidence dated July 6, 2023, thus admitting Exhibits "P-1373" to "P-1408", "P- 1410" to "P-1412"I "P-1414" to "P-1428"I "P-1430" to "P-1455"I but still denied Exhibits "P-1409", and "P-1429", for failure to present originals for comparison and for submitting documents with different content as that submitted in petitioner's Formal Offer of Evidence, and Exhibits "P-1504", "P-1505", and "P-1506", as these documents are neither duplicates under Section 4(b) and (c), Rule 130 of the Rules of Court, as amended, nor may be treated as secondary evidence under Section 5, Rule 130 of the same Rules. Petitioner then filed, on June 4, 2024, its Tender of Excluded Evidence}6 praying that Exhibits "P-1409", "P-1429", "P-1504" to "P- 1506", and six (6) Bulk Delivery Notes be made part of the case records, which was noted by the Court in the Minute Resolution dated July 4, 2024.37 Respondent filed his Memorandum on July 25, 2023,38 while the Memorandum for Petitioner was submitted on June 10, 2024.39 31 Docket- Vol. III, pp. 1196 to 1204. 32 Docket- Vol. III, pp. 1191 to 1194. 33 Docket- Vol. III, pp. 1207 to 1210. 34 Records Verification Report dated February 12, 2024 issued by the Judicial Records Division of this Court, Docket- Vol. III, p. 1217. 35 Docket - Vol. III, pp. 1220 to 1227. 36 Docket- Vol. III, pp. 1228 to 1231. 37 Docket- Vol. III, p. 1251. 38 Docket- Vol. III, pp. 1126 to 1134. 39 Docket- Vol. III, pp. 1232 to 1250. a - -

DECISION CTA CASE NO. 10891 The present case was submitted for decision on September 13, 2024.40 THE STIPULATED ISSUE The parties submit the following issue for this Court's resolution: WHETHER OR NOT PETITIONER IS ENTITLED TO THE REFUND OF EXCISE TAXES ALLEGEDLY PAID FOR THE PERIOD JUNE TO NOVEMBER 2020, ON ITS IMPORTED AND LOCALLY-PRODUCED BUNKER FUEL OIL WHICH WERE ALLEGEDLY SOLD DURING THE PERIOD JULY TO DECEMBER 2020 TO PIONEER FLOAT GLASS MANUFACTURING, INC.41 Petitioner's arguments: Petitioner argues that it timely filed its claim for refund or credit for excise taxes erroneously, wrongfully, illegally, or excessively collected from excises taxes paid from the period of June to November 2020, pursuant to Sections 204 and 229 of the NIRC of 1997, as amended; and that it is entitled to the recovery of excise taxes in the amount of P90,732,000.00 on imported and locally produced or manufactured fuel oil sold to PFGMI. Respondent's arguments: Respondent contends that petitioner is not entitled to the refund of excise taxes allegedly paid for the period June to November 2020, on its imported and locally-produced bunker fuel oil which were allegedly sold during the period July to December 2020 to PFGMI, an entity allegedly exempt from excise tax in the amount of P90,732,000.00; and that claims for refund of excise taxes paid is authorized only by Section 130(0) of the NIRC of 1997, as amended. THE COURT'S RULING The present Petition for Review is partly meritorious. 40 Minute Resolution dated September 13, 2024, Docket- Vol. III, p. 1252. 41 Par. 2. Stipulation of Issues, JSFI, Docket- Vol. I, pp. 480 to 481. c . -

DECISION CfA CASE NO. 10891 Governing prov1s1ons for refund claims. Sections 204(C) and 229 of the NIRC of 1997, as amended, respectively 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, howeve'"' 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 Il/ega//y Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. (Emphases added) Thus, 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 the courts of law. Both claims must~

DECISION CTA CASE NO. 10891 be filed 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 explicitly provides that it be filed within two (2) years from payment of the tax "regardless of any supervening cause that may arise after payment."42 Moreover, the foregoing 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.43 In other words, what can be refunded or credited is a tax that is erroneously, illegally, excessively or in any manner wrongfully collected. In short, there must be a wrongful payment because what is paid, or part of it, is not legally due.44 Thus, for the present claim for refund or issuance of tax credit certificate to prosper, petitioner must not only establish that it timely filed its refund claim, it must likewise prove that the subject excise taxes paid are "erroneous or illegal." Petitioner timely filed its administrative and judicial claims. Excise taxes on imported articles, in general, are paid by the owner or importer upon importation and prior to removal thereof from the customshouse as provided in Section 131(A) of the NIRC of 1997, as amended, to wit: SEC. 131. Payment of Excise Taxes on Imported Articles. (A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the 42 Commissioner of Internal Revenue vs. San Miguel Corporation, et seq., G.R. Nos. 180740 and 180910, November 11, 2019. 43 Commissioner ofInternal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, April 25, 2012, citing the definition provided in BLACK'S LAW DICITONARY, Fifth Edition, p. 486. 44 Commissioner of Internal Revenue vs. San Roque Power Corporation, et seq., G.R. Nos. 187485, 196113, and 197156, February 12, 2013. awt.-

DECISION CTA CASE NO. 10891 Department of Finance and before the release of such articles from the customs house, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. XXX XXX xxx. (Emphasis and underscoring added) Thus, from the foregoing, the two (2)-year period prescribed in Sections 204(C) and 229 of the NIRC of 1997, as amended, in relation to the afore-quoted provision of Section 131 of the same Code, should be reckoned from the date of actual payment of excise taxes. Records show that from June 2020 to November 2020, petitioner imported fuel oil through its Tabangao Refinery, and paid the corresponding excise taxes therefor, as follows: Vessel SAD45 No. SAD Date Volume in Amount of Payment Date Silver Entalina C1013921 46 liters Excise Tax Aris C101487048 June 16 2020 June 17, 202047 Aris C1014873 50 July 3 2020 38 576 929 231 461 574.00 July 6, 202049 Silver Entalina C101566752 July 3 2020 July 6, 202051 Yankul Silver C1017337 54 July 22 2020 12 159 518 72,957,108.00 July 24, 202053 August 27, 2020 August 28, 202055 Yankul Silver C101733957 35 711 720 214,270,320.00 October 29, 202056 Total Silver Orla C101857160 August 27, 2020 33 928 078 203,568,468.00 August 28, 202058 October 29, 202059 Total 16,192 817 97,156,902.00 September 22 2020 September 23, 202061 44 738 268 428.00 16 237 555 97 425 330.00 22 646 066 135 876 396.00 8 878 53 268.00 22 654 944 135 929 664.00 38 536 404 231,218 424.00 45 That is, "Single Administrative Document". 46 Exhibit "P-1-3", Docket- Vol. II, p. 854. 47 Exhibit "P-1-4", Docket- Vol. II, p. 855. 48 Exhibit "P-2-3", Docket- Vol. II, p. 866. 49 Exhibit "P-2-4", Docket- Vol. II, p. 867. 50 Exhibit "P-3-3", Docket - Vol. II, p. 878. 51 Exhibit "P-3-4", Docket- Vol. II, p. 879. 52 Exhibit "P-4-3", Docket- Vol. II, p. 889. 53 Exhibit "P-4-4", Docket- Vol. II, p. 890. 54 Exhibit "P-5-3", Docket- Vol. II, p. 902. 55 Exhibit "P-5-4", Docket- Vol. II, p. 903. 56 Exhibit "P-5-9", Docket- Vol. II, p. 910. 57 Exhibit "P-6-3", Docket- Vol. II, p. 915. 58 Exhibit "P-6-4", Docket- Vol. II, p. 916. 59 Exhibit "P-6-9", Docket - Vol. II, p. 922. 00 EXhibit "P-7-3", Docket- Vol. II, p. 927. 61 Exhibit "P-7-4", Docket- Vol. II, p. 928. o - .

DECISION CTA CASE NO. 10891 Silver Linda C1019851 63 Total 146 510 879 060.00 November 17, 202062 Enerqy Chancellor C102100265 October 19 2020 38 682 914 232 097 484.00 Energy Chancellor C102099767 November 13 2020 38 635 762 231 814 572.00 October 21, 202064 Enerqy Chancellor C102100069 November 13 2020 36 241 645 217 449 870.00 November 16, 202066 November 13 2020 4 059 744 November 16, 202068 24,358 464.00 November 17, 202070 7 961 214 47,767,284.00 Thus, the following are the pertinent dates relative to petitioner's claim for refund or tax credit, viz.: Date of Payment Two (2)-Year Date of Filing of Date of Filing of Prescriptive Administrative Judicial Claim June 17, 2020 July 6, 2020 Period Claim June 14, 202273 July 6 2020 June 17, 2022 July 24, 2020 July 6 2022 May 27, 202171 August 28, 2020 July 6 2022 and October 29 2020 July 24, 2022 August 28, 2020 August 28, 2022 July 23, 202172 October 29 2020 October 29 2022 September 23, 2020 August 28, 2022 November 17 2020 October 29 2022 October 21, 2020 September 23 2022 November 16, 2020 November 17 2022 November 16, 2020 October 21, 2022 November 17 2020 November 16, 2022 November 16, 2022 November 17, 2022 Based on the foregoing, petitioner timely filed its administrative and judicial claims for refund within two (2) years from date of payment of the excise taxes on imported fuel oil in accordance with Sections 204(C) and 229 of the NIRC of 1997, as amended. 62 Exhibit "P-7-9", Docket - Vol. II, p. 935; Although the Bureau of Customs Official Receipt reflected the total amount of !'3,818,053.28 as VAT portion, the same actually includes the excise tax portion of !'879,060.00 as seen in the updated SAD and SSDT (Exhibits "P-1488" and "P-1499", respectively, USB marked as Exhibit "P-1508-2"); Refer to !CPA Report (Exhibit "P- 1508"), Docket- Vol. II, p. 576. 63 Exhibit "P-8-3", Docket- Vol. II, p. 940. 64 Exhibit "P-8-4", Docket - Vol. II, p. 941. 6s Exhibit "P-9-3", Docket- Vol. II, p. 951. 66 Exhibit "P-9-4", Docket - Vol. II, p. 952. 67 Exhibit "P-10-3", Docket- Vol. II, p. 964. 68 Exhibit "P-10-4", Docket- Vol. II, p. 965. 69 Exhibit "P-11-3", Docket- Vol. II, p. 977. 70 Exhibit "P-11-4", Docket- Vol. II, p. 978. 71 Exhibits "P-25" and "P-25-1", Docket- Vol. Ill, pp. 1065 to 1067. 72 Exhibits "P-26" and "P-26-1", Docket- Vol. Ill, pp. 1070 to 1072. 73 Docket- Vol. I, pp. 6 to 32. ~

DECISION CTA CASE NO. 10891 The excise taxes paid on imported fuel oil sold to PFGMI, a PEZA-registered entity, are erroneously or illegally collected. Respondent avers that petitioner, being a manufacturer and importer of bunker fuel oil sold to an exempt entity, is liable to pay excise taxes due thereon. In other words, petitioner is liable to pay the excise tax upon the bunker fuel oil it manufactured as soon as they are in existence. Respondent claims that the only instance that petitioner may invoke a claim for refund is the erroneous payment of the excise tax. However, the excise tax paid by petitioner was legally and validly collected since it is indeed liable to pay such tax. Respondent further avers that petitioner sold fuel to a tax- exempt entity. Applying Section 135 of the NIRC of 1997, as amended, in this case, respondent argues that the transaction of buying fuel oil is exempt from excise tax. As such, the buyer of the fuel is not liable to pay the excise tax due thereon or, in other words, the excise tax due on the said transaction cannot be included in the purchase price as the buyer is already a tax-exempt entity. Respondent insists that Section 135 of the NIRC of 1997, as amended, does not grant exemption to sellers, rather it provides for an enumeration wherein petroleum products when sold to international carriers and entities enumerated therein are exempt from excise tax. Notably, petitioner was anchoring its claim for refund on Section 135 of the NIRC of 1997, as amended. However, respondent claims that Section 135 cannot be a source for petitioner's claim for refund and it cannot be invoked by the sellers like herein petitioner, but only by the buyers who are exempt entities. Thus, petitioner cannot invoke the exemption granted to this exempt entity as a ground to claim for refund of the excise tax paid. The Court disagrees. The present claim for refund or issuance of a tax credit certificate is governed by the following provisions of the NIRC of 1997, as amended, to wit: .:;:s ...

DECISION CTA CASE NO. 10891 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. 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: Provid~ 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) The foregoing provisions reveal that the words ''petroleum products" are unqualified. The law did not distinguish whether the petroleum products sold were locally-manufactured or imported, to be able to be exempt from excise tax. Where the law does not distinguish, courts should not distinguish.74 Thus, the exemption under Section 135 of the NIRC of 1997, as amended, may be resorted regardless of whether the subject fuel oil was locally manufactured or imported, as long as the conditions therein are complied with by the refund-claimant. In Chevron Philippines_ Inc. vs. Commissioner of Internal Revenue (Chevron)/5 the Supreme Court held that excise tax paid by the statutory taxpayer on petroleum products sold to any of the 74 Manila International Airport Authority vs. Court of Appeals, eta!., G.R. No. 155650, July 20, 2006. 75 G.R. No. 210836, September 1, 2015. ~

DECISION CTA CASE NO. 10891 entities or agencies named in Section 135 of the NIRC exempt from excise tax is deemed illegal or erroneous, to wit: Excise tax on petroleum products is essentially a tax on property, the direct liability for which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any excise tax paid by the statutory taxpayer on petroleum products sold to any of the entities or agencies named in Section 135 of the National Internal Revenue Code (NIRC) exempt from excise tax is deemed illegal or erroneous; and should be credited or refunded to the payor pursuant to Section 204 of the NIRC. This is because the exemption granted under Section 135 of the NIRC must be construed in favor of the property itself, that is, the petroleum products. (Emphasis and underscoring added) Also, as clarified by the Supreme Court in Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue/6 "[c]onsidering that the status of the petroleum products as tax- exempt solidifies upon the sale to any of the entities enumerated under Section 135, any excise taxes which were previously paid thereon would then be considered as 'erroneously or illegally collected,' and therefore, subject to refund." Moreover, "the tax exemption under Section 135 must correspondingly benefit the one who actually bears the liability to pay the same (i.e., the importers/manufacturers of petroleum products sold to international carriers, among others), and not the one who simply bears the economic burden thereof (i.e., the purchasers of the products, such as international carriers)." Pursuant to Section 135(c), petroleum products sold to entities that are by law exempt from direct and indirect taxes are exempt from excise tax. The phrase which are by law exempt from direct and indirect taxes describes the entities to whom the petroleum products must be sold in order to render the exemption operative. Section 135(c) should thus be construed as an exemption in favor of the petroleum products on which the excise tax was levied in the first place. The exemption cannot be granted to the buyers- that is, the entities that are by law exempt from direct and indirect taxes - because they are not under any legal duty to pay the excise tax.77 76 G.R. No. 211303, June 15, 2021. 77 Chevron Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 210836, September 1, 2015. - - -

DECISION CfA CASE NO. 10891 Clearly, upon petitioner's sale of petroleum products to entities that are by law exempt from direct and indirect taxes, the status of the said sold petroleum product as tax-exempt solidifies. Consequently, the excise taxes it previously paid on the said petroleum products became erroneously or illegally collected taxes that are proper subject of a claim for refund or credit under Sections 204(C) and 229 of the NIRC of 1997, as amended. Thus, to be entitled for refund or issuance of a tax credit certificate, it must also be shown that: (1) the entity to which the petitioner sold the petroleum products is an entity exempt by law from indirect and direct taxes; and (2) petitioner, as the statutory taxpayer, paid the claimed excise taxes on the same petroleum products sold to the exempt entity. Relative thereto, Section 24 of Republic Act (RA) No. 7916/8 or "The Special Economic Zone Act of 1995," as amended by RA No. 8748/9 provides as follows: SEC. 24. Exemption from National and Local Taxes. - Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: (a) Three percent (3%) to the National Government; (b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located. Pursuant thereto, business establishments operating within the ECOZONE are exempt from national and local taxes. In lieu thereof, said enterprises shall pay 5% of its gross income to the national government and the municipality or city where it is located. 78 AN ACf PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE CREATION, OPERATION, ADMINISTRATION, AND COORDINATION OF SPECIAL ECONOMIC ZONES IN THE PHILIPPINES, CREATING FOR THIS PURPOSE, THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), AND FOR OTHER PURPOSES. 79 AN ACf AMENDING REPUBLIC ACf NO. 7916, OTHERWISE KNOWN AS THE "SPECIAL ECONOMIC ZONE ACf OF 1995". c:::o--

DECISION CTA CASE NO. 10891 In this case, petitioner presented the PEZA Certificate of Registration No. 18-143 of PFGMI as an Ecozone Export Enterprise at the Asahi Special Economic Zone (ASEZ) issued on November 22, 201880 to prove that its customer, PFGMI, is a PEZA-registered entity. As a PEZA-registered entity, PFGMI enjoys fiscal incentives pursuant to Section 23 of RA No. 7916, to wit: SEC. 23. Fiscal Incentives. - Business establishments operating within the ECOZONES shall be entitled to the fiscal incentives as provided for under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those provided under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987. (Emphasis added) Relative thereto, Section 1, Rule XV of the Rules and Regulations to Implement RA No. 7916 (IRR of RA No. 7916), Section 17 of the Presidential Decree No. 66, and Article 77(1), Book VI of Executive Order No. 226, state that merchandise or supplies brought into the ECOZONE are not subject to customs and internal revenue laws and regulations, to wit: Rule XV of the IRR of RA No. 7916 SECTION 1. Exemption from Duties and Taxes on Merchandise. - Merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description brought into the ECOZONE Restricted Area by an ECOZONE Export or Free Trade Enterprise to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded or otherwise processed, manipulated, manufacture, mixed with foreign or domestic merchandise whether directly or indirectly related in such activity, shall not be subject to customs and internal revenue laws and regulations of the Philippines nor to local tax ordinances. xxx (Emphasis added) Presidential Decree No. 66 Section 17. Tax Treatment of Merchandise in the Zone. - ( 1) Except as otherwise provided in this Decree, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the Zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manipulated, manufactured, mixed with so Exhibit "P-20", Docket- Vol. III, p. 1040. ~

DECISION CTA CASE NO. 10891 foreign or domestic merchandise or used whether directly or indirectly in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, the provisions of law to the contrary notwithstanding. (Emphasis added) Executive Order No. 226 Article 77. Tax Treatment of Merchandise in the Zone. - (1) Except as otherwise provided in this Code, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manipulated, manufactured, mixed with foreign or domestic merchandise whether directly or indirectly related in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, the provisions of law to the contrary notwithstanding. (Emphasis added) Petitioner likewise presented the following documents to support that the fuel oil purchased from petitioner were actually delivered to ASEZ, thereby evidencing that the imported fuel oil sold to PFGMI were used and consumed inside PEZA Zone for use in the latter's PEZA registered operations, particularly, the manufacture and production of float glass for export, viz.: Particulars Exhibit No. Application for Permit to Bring Goods from the Customs "P-1373" to "P- Territory into the Zone filed by PFGMI with PEZA to authorize delivery of Fuel Oil from petitioner 1455"81 "P-19"82 Supply Agreement entered into by petitioner and PFGMI "P-19-1 "83 Amendment to the Supply Agreement entered into by petitioner and PFGMI "P-21"84 and Certifications from PFGMI that purchases of fuel oil made "P-21-1"85 by Pioneer Float Glass Manufacturing Inc. from Pilipinas Shell Petroleum Corporation from July to September 2020 and October to December 2020 were used in the production of float glass to supply heat to furnace for melting of raw materials and cullet 81 USB marked as Exhibit "P-1508-2"; However, Exhibits "P-1409" and "P-1429" were denied admission, Refer to Resolution dated April 30, 2024, Docket- Vol. III, at p. 1223. 82 Docket- Vol. III, pp. 1008 to 1036. 83 Docket- Vol. Ill, pp. 1037 to 1039. 64 Docket- Vol. III, p. 1041. 85 Docket- Vol. Ill, p. 1042. CJi1'l-

DECISION CTA CASE NO. 10891 Based on the above pieces of evidence, petitioner duly proved that PFGMI is exempt by law from direct and indirect taxes. Thus, the excise taxes paid by petitioner to the Government, as the statutory taxpayer, on petroleum products sold to PFGMI are considered as erroneously or illegally collected, and may be refunded by petitioner. Petitioner sufficiently proved that it had erroneously paid excise taxes on imported fuel oil sold to PFGMI, a tax- exempt PEZA-registered enterprise, but only in the amountofPB~3o~ooaoa As earlier stated, petitioner filed two (2) separate administrative claims for refund or tax credit certificate, on May 27, 202186 and July 23, 2021,87 in the aggregate amount of P90,732,000.00, computed as follows: Period Covered Product Volume Excise Amount of in Liters Tax Rate Excise Tax July to September 2020 fuel oil I' 45,372,000.00 October to December 2020 fuel oil 7 562,000 1'6.00 7 560,000 1'6.00 45,360 000.00 TOTAL 15,122,000 P90,732,000.00 Records show that from June 2020 to November 2020, petitioner imported fuel oil through its Tabangao Refinery and paid the corresponding excise taxes in the amount of P1,709,100,138.00, as follows: Final Adjusted Final Adjusted Single Administrative Document (SAD) Statement of Settlement of (Exhibits "P-1482" to "P-1492")88 Duties and Taxes (SSDT) (Exhibits "P-1493" to "P-1503")89 Seq Volume in Assessment Excise Tax Paid No SAD No. Liters Excise Tax Paid Reference p 231,461,574.00 1 C1013921 38,576,929 p 231,461,574.00 L1015639 2 C1014870 12,159,518 72,957,108.00 L1016987 72,957,108.00 3 C1014873 35,711,720 214,270,320.00 L1016992 214,270,320.00 4 C1015667 33,928,078 203,568,468.00 L1018337 203,568,468.00 5 C1017337 16,237,555 97,425,330.00 L1020961 97,425,330.00 6 C1017339 22,654,944 135,929,664.00 L1020974 135,929,664.00 86 Exhibit "P-25", Docket- Vol. III, pp. 1065 to 1066. 87 Exhibit "P-26", Docket- Vol. III, pp. 1070 to 1071. 88 USB marked as Exhibit "P-1508-2". c - 89 USB marked as Exhibit "P-1508-2".

DECISION CfA CASE NO. 10891 7 Cl018571 38,682,914 232,097,484.00 L1022907 232,097,484.00 8 C1019851 38,635,762 231,814,572.00 L1024906 231,814,572.00 9 C1021002 36,241,645 217,449,870.00 L1026636 217,449,870.00 10 C1020997 L1026634 11 C1021000 4,059,744 24,358,464.00 L1026633 24,358,464.00 7,961,214 47,767,284.00 47,767,284.00 284,850,023 P1,709,100,138.00 P1 709,100,138.00 The foregoing importations of fuel oil are also supported by the following documents/exhibits:90 Ocean Load Proforma SAD SSDT ATRIG91 CQR92 Tax Assessment eoc93 Seq Bill of Port Invoice "P-1-3" "P-1-4" "P-1-5" "P-1-6" No. Lading Survey "P-2-6" Invoice Notice Receipt Report "P-1-2" "P-4-6" ''P-1-7" "P-1-8" "P-1-9" 1 ''P-1" "P-5-611 2 "P-211 "P-1-1" "P-7-6" 3 "P-3" "P-8-6" 4 "P-4" "P-2-1" "P-2-2" "P-2-3" "P-2-4" ''P-2-5" "P-9-6" "P-2-7" ''P-2-8" "P-2-9" 5 "P-5" 6 ''P-6u "P-3-1" "P-3-2" ''P-3-311 ''P-3-4" "P-3-5" "P-10-6" "P-3-7" "P-3-8" "P-3-9" 7 "P-7" 8 "P-8" "P-4-1" "P-4-2" "P-4-3" "P-4-4" "P-4-5" ''P-4-7" "P-4-8" "P-4-9" 9 "P-9" 10 "P-10" "P-5-1" "P-5-2" "P-5-3" ''P-5-4" "P-5-5" "P-5-711 "P-5-8" "P-5-9" 11 "P-11" "P-6-1" "P-6-2" "P-6-3" "P-6-4" "P-6-5" "P-6-7" "P-6-8" "P-6-9" "P-7-1" "P-7-2" "P-7-3" ''P-7-4" "P-7-5" ''P-7-711 ''P-7-8" "P-7-9" "P-8-7" "P-8-1" ''P-8-2" "P-8-3" "P-8-4" "P-8-5" - - "P-9-1" "P-9-211 ''P-9-3" "P-9-4" "P-9-5" ''P-9-7" "P-9-8" "P-9-9" "P-10-1" "P-10-2" "P-10-3" "P-10-4" "P-10-5" "P-10-7'' ''P-10-8" "P-10-911 "P-11-1" "P-11-2" "P-11-3" "P-11-4" ''P-11-5" "P-11-7" "P-11-8" "P-11-9" The Court-Commissioned ICPA, Mr. Edward D. Roguel of Punongbayan & Araullo, compared the fuel oil imported and discharged for each month of importation based on the volume per Bill of Lading and Certificate of Quantity Received (CQR), as follows: 94 Exhibit Bill of Lading95 Volume in Exhibit CQR96 Quantity Difference Cubic "P-1-6" Received 48 027 ''P-1 1 Date of Loading Date ' Completed Meters ''P-2-6" of Arrival (Net) June 13 2020 38,576,929 "P-4-6" June 18 2020 July 1, 2020 12,159,518 "P-5-6" July 7, 2020 38 528 902 July 1 2020 35 711 720 July 25, 2020 "P-211 July 19 2020 33,928,078 August 29, 2020 47,608,944 16 192 817 33 826 453 "P-3 1 August 24 2020 22 646 066 363,919 ' Auqust 24 2020 "P-4" "P-5" 38,892,499 (53,616) "P-6" 90 Docket- Vol. II, pp. 851 to 984; USB marked as Exhibit "P-1508-2". 91 That is, "Authority to Release Imported Goods'. 92 That is, "Certificate of Quantity Received'. 93 That is, "Bureau of Customs". 94 Par. B.l.a., p. 5, Exhibit "P-1508", Docket- Vol. II, p. 573; USB marked as Exhibit "P-1508-2". 95 Annex B, Exhibit "P-1508", Docket- Vol. II, p. 593; USB marked as Exhibit "P-1508-2". 96 Annex C, Exhibit "P-1508", Docket- Vol. II, p. 594; USB marked as Exhibit "P-1508-2". ~

DECISION CTA CASE NO. 10891 ''P-7" September 19 2020 38 536 404 ''P-7-6" September 25 2020 38 682 914 (146 510) 11 P-8" October 16, 2020 38 635 762 "P-8-6" October 21 2020 38 491L_699 144,063 ''P-9" November 10 2020 36 241 645 November 17 2020 36 178 748 "P-10" November 11 2020 ~~P-9-6" 67,471 "P-11" November 11 2020 4 059 744 November 17, 2020 12,016,384 Total 7 961 214 "P-10-6" 423 354 284,649 897 Total 284 226,543 Petitioner states that the volume of fuel oil reported in the Bill of Lading and CQR varies due to external factors that may affect the volume of fuel oil during its transport and transfer to the Refinery, resulting in an (increase/surplus) or decrease/loss in the volume of fuel oil. The final adjustment of volume of imported fuel oil from which the excise tax was paid by the petitioner for the period covered was recomputed as follows: 97 Particulars Exhibit Volume Volume per Bill of Ladinq98 "P-1" to "P-11" (in liters) ''P-1-4", ''P-2-4", "P-3-4", 284,649,897 Volume subjected to Excise tax "P-4-4", "P-5-4", "P-6-4", per SSDT "P-7-4", "P-8-4", "P-9-4", 284,850,023 "P-10-4", and "P-11-4" Difference (200,126) Accounted as follows: "P-1486" (Increase/surplus) in C1017337 "P-1487" (44,738) .(Increase/surplus) in C1017339 "P-1488" (Increase/surplus) in C1018571 Unaccounted Difference (8,87~ (146,510) -0- Upon discharge of the imported fuel oil to the Refinery, the fuel oil is stored in the Refinery. From the Refinery, the fuel oil is then withdrawn and delivered to intermediate storage facilities of petitioner or delivered to customers like PFGMI. Fuel oil destined for sale and delivery to PFGMI first passes through the Tabangao Terminal or Depot from the Refinery. The importations and withdrawals of fuel oil in the Refinery are traced in the Official Register Books (ORB), summarized as follows: 99 97 Par. B.l.a., pp. 4 and 5, Exhibit "P-1508", Docket- Vol. II, pp. 572 to 573; USB marked as Exhibit "P-1508-2". 98 Annex B, Exhibit "P-1508", Docket- Vol. II, p. 593; USB marked as Exhibit "P-1508-2". 99 Annex D and Par. 8.2., p. 11, Exhibit "P-1508", Docket- Vol. II, pp. 595 and 579, respectively; USB marked as Exhibit "P-1508-2". a..,.

DECISION CTA CASE NO. 10891 ORB of the Refine.y Importation Withdrawals Exhibit Month in volume in volume "P-33" June 2020 38 528 902 -0- "P-34" "P-35" July 2020 81,435 398 50,065 392 "P-36" August 2020 19,657 058 46,468 710 "P-37" September 2020 57,918,354 43,975,029 "P-38" "P-39" October 2020 38 491,699 43,113,351 November 2020 48 195 132 39,207,182 December 2020 -0- 40,245,844 Total 284,226,543 263,075,508 Further, the !CPA compared the volume of fuel oil discharged to the Refinery per CQR vis-a-vis the ORB of the Refinery and ascertained that the fuel oil stored in the Refinery pertains to the same excise tax paid on fuel oil imported by the petitioner for the period covered, as follows: 100 Particulars Exhibit Volume Fuel oil discharged to the Refinery per "P-1-6f "P-2-6"f "P-4-6"f (in liters) CQR101 "P-5-6"f "P-7-6"f "P-8-6"f 284,226,543 Importation per ORB of the "P-9-6" and "P-10-6" 284,226,543 Refinery102 "P-33" to "P-39" -0- Difference The receipts and removals of fuel oil coming from the Refinery are traced in the ORB of the Depot, summarized as follows: 103 ORB of the Depot Receipts from Removals from Depot Exhibit Refinery No. (in liters) Month (in liters) "P-222" 21,337 665 "P-223" July 2020 21,337 665 18 714 743 "P-224" 17,458,926 "P-225" Auqust 2020 18,714 743 18,452 831 "P-226" 18,100 832 "P-227" September 2020 17,458,926 16,360,927 110,425,924105 October 2020 18,452,831 November 2020 18,100,832 December 2020 16,360,927 Total 110,425,924104 100 Par. B.2.a., p. 12, Exhibit "P-1508", Docket- Vol. II, p. 580; USB marked as Exhibit "P-1508- 2". 101 Annex C, Exhibit "P-1508", Docket- Vol. II, p. 594; USB marked as Exhibit "P-1508-2". 102 Annex D, Exhibit "P-1508", Docket- Vol. II, p. 595; USB marked as Exhibit "P-1508-2". 103 Annex F, Exhibit "P-1508", Docket- Vol. II, p. 600; USB marked as Exhibit "P-1508-2". 104 Based on actual footing. 105 Based on actual footing. ~

DECISION CTA CASE NO. 10891 Moreover, the ICPA compared the withdrawals per ORB of the Refinery vis-a-vis the Liquidation Report of the Refinery to determine the portion of fuel oil that was sold directly to customers and those delivered to the Depot, as follows: 106 Particulars Exhibit Volume Withdrawal per ORB of the Refinery107 "P-33" to "P-39" (in liters) Less: Direct sale to customers per "P-17" and 263 075 508 Liquidation Report of Refinery "P-1474" 152,294,029 Delivered to the Depot per Liquidation Report of the Difference 110,406,259 Refinery Difference 375,220 Accounted as follows: Withdrawals of own-produced fuel oil (375,220) -0- Based on the Liquidation Report and Withdrawal Certificates of the Refinery, only 110,406,259 liters of imported fuel oil from which excise taxes were paid was transferred to the Depot, summarized as follows: 108 Particulars Exhibit Volume "P-17'' and (in liters) Fuel oil Delivered to the Depot per Liquidation "P-1474" Report of the Refinery 110,406,259 Withdrawal Certificates (WC) of the Refinery109 "P-40" to "P-221" 110,406,259 Difference -0- From the foregoing importations and withdrawals of bunker fuel oil, petitioner avers that it sold a total of 15,122,000 liters with excise tax payments of P90,732,000.00, to PFGMI from July to December 2020 for use in its PEZA-registered operations. As mentioned earlier, to prove that its customer, PFGMI, is a PEZA-registered entity exempt by law from direct and indirect taxes, petitioner presented the PEZA Certificate of Registration No. 18-143 106 Par. B.2.a., p. 12, Exhibit "P-1508", Docket- Vol. II, p. 580; USB marked as Exhibit "P-1508- 2". 107 Annex D, Exhibit "P-1508", Docket- Vol. II, p. 595; USB marked as Exhibit "P-1508-2". 108 Par. B.2.a., p. 13, Exhibit "P-1508", Docket- Vol. II, p. 581; USB marked as Exhibit "P-1508- 2". 109 Annex E, Exhibit "P-1508", Docket- Vol. II, pp. 596 to 599; USB marked as Exhibit "P-1508- 2".~

DECISION CTA CASE NO. 10891 of PFGMI as an Ecozone Export Enterprise at the ASEZ issued on November 22, 2018.11� Moreover, petitioner likewise presented various documents to support the claim that the fuel oil purchased from petitioner were actually delivered to ASEZ, thereby evidencing that the imported fuel oil sold to PFGMI were used and consumed inside the PEZA Zone for use in the latter's PEZA registered operations, particularly, the manufacture and production of float glass for export. Petitioner also presented, among others, the following documentary evidence related to Tabangao Depot, which were duly examined by the ICPA, to prove the sale and delivery of fuel oil to PFGMI, viz.: Description Exhibit111 Annex 112 1 ORB of the Depot "P-222" to "P-227" F 2 WCs "P-796" to "P-1372" 3 Bulk Delivery Notes (BDN) "P-228" to "P-795" Iandi-1 4 Sales Invoices "P-1456" to "P-1473" G and H "P-1456-1" to "P-1473-1" I 5 Printouts of petitioner's (ZF2) K "P-17-1" and "P-1474-1" K Display retrieved from the System Application Product System (SAP) - 6 Liquidation Report As ascertained by the ICPA, out of the total claim of P90,732,000.00, only the amount of P89,304,000.00, as summarized below, was properly substantiated by relevant documents: 113 Reference Findings and Observations Volume Excise Tax Liters Amount Annexes a. Without Exceptions Noted 14,884,000 P89,304,000.00 K and G114 -was sourced from imported fuel oil, 238,000 1,428,000.00 sold to PFGMI, no excise tax passed on to PFGMI, and supported with documents. Annexes b. With Exceptions Noted K and H115 -the ICPA cannot determine the 110 Exhibit "P-20", Docket- Vol. III, p. 1040. m USB marked as Exhibit "P-1508-2". 112 Exhibit "P-1508", Docket- Vol. II, pp. 600 to 625 and 638 to 647; USB marked as Exhibit "P- 1508-2". 113 Exhibit "P-1508", Docket- Vol. II, p. 588; USB marked as Exhibit "P-1508-2". 114 Exhibit "P-1508", Docket- Vol. II, pp. 638 to 647 and 601 to 609, respectively; USB marked as Exhibit "P-1508-2". -=---- 115 Exhibit "P-1508", Docket - Vol. II, pp. 638 to 647 and 610, respectively; USB marked as Exhibit "P-1508-2".

DECISION CTA CASE NO. 10891 source of the imported fuel oil and whether these fuel oils are delivered in ASEZ and ultimately used in ASEZ by PFGMI. Total oi.lt.s 15,122,000 P90,732,000.00 *Exctse tax rate applied for tmportatton of bunker fuel P6. 00� The disallowed amount of P1,428,000.00, consisting of 238,000 liters of bunker fuel oil, pertains to sales and deliveries to PFGMI supported by Bulk Delivery Notes which were denied admission by the Court in the Resolution dated July 6, 2023116 and April 30, 2024117, for being unreadable, for failure to present originals for comparison, or for failure to satisfy the requirements for duplicates or secondary evidence, to wit: 118 Exhibit No. Delivery Date Delivery Volume Number (in liters) "P-1506" July 22, 2020 December 6, 2020 712589672 20 000.00 - December 6, 2020 717132936 30 000.00 - December 6, 2020 717132922 30 000.00 - December 6, 2020 717132907 30,000.00 December 6 2020 717132954 20,000.00 "P-1504" December 6 2020 717132946 18,000.00 "P-1505" December 6, 2020 717132913 30,000.00 December 6, 2020 717132943 30,000.00 - 717134039 30,000.00 - 238,000.00 Total - In sum, petitioner sufficiently proved that the excise taxes it paid on the 14,884,000 liters of fuel oil that it imported and subsequently sold and delivered to PFGMI, a tax-exempt PEZA- registered entity, were erroneous, and thus, refundable, pursuant to Sections 204(C) and 229 of the NIRC of 1997, but in the reduced amount of P89,304,000.00. ACCORDINGLY, the present Petition for Review is PARTIALLY GRANTED. Respondent is ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of P89,304,000.00, representing excise taxes paid by petitioner on fuel oil sold and delivered to PFGMI, a tax-exempt 116 Docket- Vol. III, at pp. 1116 to 1119. 117 Docket- Vol. III, at pp. 122'1 to 1225. 118 Annex H, Exhibit "P-1508", Docket- Vol. II, p. 610; USB marked as Exhibit "P-1508-2". .,..,.._

DECISION CfA CASE NO. 10891 PEZA-registered enterprise, during the period from July to December 2020. SO ORDERED. (l:Jo/.2-/ ;:_,4.. '~'-- CATHERINE T. MANAHAN Associate Justice WE CONCUR: ~ ~ f. ~ -fajP-1tk MARIAN Im. REY~-FAfARDO Associate Justice HENRY ~!!ANGELES Associate Justice 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's Division. - - I ~ /. ~,. ~~'\_.- CATHERINET.MANAHAN Associate Justice Chairperson

DECISION CTA CASE NO. 10891 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's Division. Presiding Justice