(AMENDED) CHEVRON PHILIPPINES INC. (FORMERLY CALTEX PHILIPPINES INC.) v. COMMISSIONER OF INTERNAL REVENUE

• REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CHEVRON PHILIPPINES, INC. CT A CASE No. 7358 (Formerly: Caltex Philippines, Inc .) , Petitioner, Members -versus- Acosta, Chairperson Bautista, and Casanova,JJ. COMMISSIONER OF INTERNAL REVENUE, Promulgated: Respondent. JUL 112 2010,·2: 93,0,., x-------------------------------------------------------------------------~-------x DECISION ACOSTA , PJ This is a Petition for Review seeking a refund or credit in the amount of ONE HUNDRED THIRTY ONE MILLION , ONE HUNDRED SEVENTY FIVE THOUSAND FOUR HUNDRED EIGHTY PESOS AND 18/100 (P 131 , 175,480 18), alleged ly representing erroneously paid excise taxes on imported finished petroleum products for the month of November 2003 THE FACTS As found by the Court, the facts are as follows 9 9 ~-

IJU '/,)'J()N CT-1 Case No. 7358 fJnge 2 Petitioner is a corporation organized and existing under and by virtue of the laws of the Republic of the Philippines Respondent is the public officer duly appointed and vested with authority to decide , approve and grant tax credits and/or refund of national internal 1 revenue taxes On October 7, 2004, petitioner filed an administrative claim for refund or credit with the Bureau of Internal Revenue under Claim No . 2004 -XP - 11 /03 2 in the amount of P131, 175,480 18 representing alleged overpayment of excise taxes on imported finished unleaded premium gasoline and diesel fuel withdrawn from its refinery in San Pascual , Batangas for the month of November 2003. The amounts claimed as computed were as follows Product Unleaded premium gasoline --+---o_u•nii!Y-~~t;,':~ 1 r•:7:: -- - -- - · - - - - - - - Excise Tax Paid p 64 ,178 ,33835 Diesel Fuel 41 ,102,541 I _ P__ 1 63 p 66 ,997,14 1 83 TOTAL 56 ,280 ,848 p 131,175,480.18 ------------ ---- - - ----·-- - - -- - Without any action by the respondent on petitioner's administrative claim , petitioner, on October 28 , 2005, filed this instant Petition for Review 3 praying that judgment be rend ered directing the respondent to refund or credit the exc1se taxes it allegedly erroneously paid for the month of November 2003 in the amount of P131 , 175,480 18 4 The respondent posited 1n his January 12 , 2006 Answer a special and affirmative defense . to wit Petitioner has no ca use of action against respondent because , as admitted by petitioner 1tself, the exc1se ta x on pe troleum IS due before the removal thereof from the place of production pursuant to the provisions of Section 130 of the National Internal Revenue Code (N IRC) of 1997 thus its payment of excise ta x on each remova l of petroleum produc ts from its refinery at San Pascual , Batangas does not constitut e erroneo us payment of ta x that may be claimed for refund under Secti on 204 of th e NIRC of 1997 1 Jomt St1pulat1on of Facts and Issues , Rollo. p 353. 2 Exhibit "FFFFFFFFFF" 3 Rollo, pp 4-296 4 Rollo , pp 196-206 992

ULC'/.'liON C f I ( '(/se No. 7 Jj8 l)uge 3 Respondent and petitioner filed their Pre-trial Briefs 5 on January 26 , 2006 and February 10 , 2006 , respectively . On March 23 , 2009 , the Joint Stipulation of Facts and Issues (JSF I)6 was filed by th e parties A corresponding Resolution 7 promulgated on April 12, 2006 approved said JSFI and thereafter terminated the pre-trial. During trial , only the petitioner presented testimonial and documentary evidence in support of its pos1tion The respondent waived its right to present evidence. On Septembe r 25 , 2009 , the case was submitted for decision after petitioner and respondent subm itted their Memoranda 8 on September 18, 2009 and September 22 , 2009 , respectively . THE ISSUES By agreement of the parties in the JSF1 9 , the lone issue to be tried and reso lved in this case is whether peti tioner overpaid exc1se taxes for the month of November 2003 and is , therefore, entitled to the instant claim for refund THE ARG UMENTS OF THE PARTIES Petitioner's Arguments Peti tioner anchors its claim for refund of 1ts alleged excess payment of excise tax on its withdrawa ls of imported finished unleaded premium gasoline and diese l fue l which it allegedly erroneously recorded as loca ll y-manu factured refined unleaded gasoline and diesel fuel. It avers that although its vo lumes of loca ll y-manufactured refined petro leum products did not increase and were progress ive ly depleted begi nning November 2003 due to the comp lete shutdown of its refi nery operations , there rema ined sufficient inventory to support withd rawa ls from the loca ll y-manufactured refined products because the ~ Rollo, pp . 32 1-3 32 6 Rollo. pp 353-354 7 Rollo , p 24 7. 8 Rollo , pp . 94 5-986 ~l Rollo p 353 9 ( 1 ') ~,J

OU '/SIU\ ' ( '/:-! Cuse ,\ 'o 7 358 l)uge -1 company comm in gles its imported fm ished petroleum products with the processed dom estic fuel Petition er avers th at it paid th e correct amount of taxes on the volumes of imported fini shed unleaded prem1um gaso lin e and diesel fu el as well as the exci se ta xes on the withdrawals recorded as sourced from local ly manufactured re fined unl eaded prem ium gasoline and diesel fuel for the periods of October, November and Dece mber 2003 Petitioner all eges that per its records there existed a negative difference between the beginning balance of December 2003 and end ing balance in th e November 2003 loca lly-ma nufactured refined unl eaded premium gaso line and locally-manufa ctured refin ed diesel fuel , which accordi ng to 1t was a result of the petitioner's erron eous recordin g of imported unl eaded prem iu m gaso line and imported di ese l fuel as coming from loca ll y manufactured unleaded premium gasoline and loca lly manufactured diesel fuel Lastl y, petiti oner asserts that its case is not premised on a specific exemption granted und er the NIR C or oth er statues, thus , the general rule of requiring strict adheren ce to the law shall not apply but a mere preponderance of evidence is required . Respondent's Arguments On th e other hand , respo nd ent, for the firs t time , asse rts that the Court has no juri sdi ction ove r petitioner's cla1m for refund on the ground th at petitioner fai led to substantially prove by concrete ev idence that th e amount petitioner alleges to have been paid to th e Bureau of Customs (BOC) was actually transferred to respondent. In view th ereof, respo nd ent argues that petitioner sho uld have filed the spec ifi c ta x refund with the BOC. Also , respondent be li eves that petitioner failed to prove by co nvincing and substantial ev id ence its entitl eme nt to the claim for refund upon 1ts failure to present th e excise tax return s for taxable year 2003 and further stresses that it is petitioner's obligation to pay the excise tax on thE manufactured and imported petroleum products for domesti c sa le or consumption 9 9 ·l

IJU IS/(},\ ' (' r I Cuse \ o 358 7 1-'uge 5 THE DECISION OF THE COURT Taking into consideration that respondent raises an issue on jurisdiction , the Court deems to address said argument first The Court has jurisdiction. The respondent's argument on jurisdiction lacks merit Under the 1997 National Internal Revenue Code (NIRC), the Commissioner of Customs and his subordinates are the ones duly constituted as agents of the Commissioner of Internal Revenue for the collection of the national internal revenue tax on imported good . 1 ° Considering that the Commissioner of Customs is a mere agent of the respondent for the said purpose , th e filing of the claim for refund with the Commissioner of th e Bureau of Internal Revenue is proper as he is th e principal The Court, therefore , has jurisdiction The claim for refund was filed within the two (2) year prescriptive period. It is important for the Court to determine foremost if the claim for refund was timely filed On th e outset, th e time of payment of excise ta xes for finished petroleum products are reliant upon the1r sources , namely importation and local manufacturing of imported crude oil For excise taxes on imported gasoline and diesel fuel , the same are paid before the release of said imported articles from the customshouse , to wit: Section 131 . Payment of Exc1se Taxes on Imp orter Ar/lcles. - (A) Person s Liable . - Excise taxes on imported articles shall be paid by the own er or importer to th e Cust oms O ffi cers , co nformably w ith th e re gul ati ons of th e De partme nt of Finance and before the release of such articles from the customshouse, or by th e person w ho is found in possession o f article s whi ch are exe mpt fro m excise taxes o th er tha n th ose leg ally entitl ed to ex emption (Emphasis provided) 10 Secti on 12 (A) 99J

UU 'JSIU·\ ' ( T -1 C'use No.7 ])8 Fuge 6 On the other hand , for locally manufactured petroleum products , the excise taxes shall be paid before their removal from the place of production , to wit Section 130. Filing of Retum and Payment of Excise Tax on Domestic Products . - (A) Persons Liable to File a Return , Filing of Re turn on Remova l and Payment of Tax . - xxx (2) T1me for Filing of Return and Payment of the Tax . - Unless otherwise specifically allowed , the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production Provided , That the excise tax on lo ca lly manufactured petroleum products and indigenous petrol eum/levi ed under Sections 148 and 151 (A)(4) , respectiv ely , of this Title shall be paid within ten (10) days from the date of removal of such products for the period from January 1, 1998 to June 30, 1998 : within five (5) days from the date of remova l of such products for th e penod from July 1, 1998 to December 3 1, 1998 , and , before removal from th e place of produ cti on of such products from January 1, 1999 and th ereafter xxx (EmphCJ~is O urs) Petitioner, in this case , admits that its unleaded premium gasoline and diesel fuel sold to its dealers and commercial customers came from the aforementioned two sources , namely 1) from its imported finished products , and 2) from imported crude oil which it locally manufactured into refined petroleum products Section 229 of the 1997 Nl RC prescribes the requisite for a valid claim for refund, viz Section 229. Recovery of Tax Erroneou sly or Illegally Collected. - no suit or proceeding shall be maintain ed in any court for tr1e recov ery of any national 1nterna l revenue tax hereaft er alleged to have been erroneously or illegally assessed or collected , or of any penalty cla 1med to have been coll ected without authonty , or any sum alleged to have been excess ively or 111 any manner wrongfully collected without authority , or of any sum alleged to have been excessively or in any mann er wrongfully collected , until a claim for refund or credit has been duly filed with th e Commissioner : but such suit or proceeding may be mamtain ed, whether or not such tax , penalty , or sum has been pa1d 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: Prov1ded , however , That th e Commissioner may , even without a wn tt en cla1m th erefor, refund

UU '/SW /1' ! T -1 (·us e :\ ·u 7 358 Poge 7 or credit any tax , where on the face of the return upon wh 1ch payment was made , such payment appears clearly to have been erroneously paid (Emphasis Ours) This is congruent with th e authority of responden t to refund erroneously co llected ta xes as stated in Section 204 of the1997 NIRC , viz Sec tion 204 . Au/.'1 onty of t11 e Com111isstOner lo Compronuse , Aba te and f?e!uncl or Creclit Taxes - The Comm iSSioner may - xxx (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the va lu e of interna l revenue stamps when they are returned in good condi ti on by the purchaser , and , in his discretion , redeem or change unused stamps that have been rendered unfi t for use and refund th e1r value upon proof of destructi on No credit or refund of tax es 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 fil ed showing an overpaymen t shall be considered as a written claim for credi t or refund . (Emphasis Ours) Based on Secti ons 204 and 229 , in relation to Section 13 1(A) of the 1997 NIRC , the petition er has two (2) years from th e rele ase of th e imported finished petroleum produ cts from the customshouse within which to fil e its claim for refund Applying th e preceding in the case at bar , petitioner's earliest payment for the excise ta xes on imported finished unl eaded gasoline for the month of November 2003 was November 1, 2003 11 The earli est payment for the excise ta x on imported diesel fu el was made on November 20 , 2003 12 Petitioner filed its administrative claim for refund on its overpaid imported finished petroleum products with respondent on October 7, 20 04 13 and 1ts judicial claim for refund on October 28 , 2005 Co untin g from petitioner's earli est da te of payment, both the administrative and judi cial claims of petitioner for its overpaid excise ta xes on imported unlead ed premium gasoline and diesel fu e l fall within the two year prescriptive period 11 Exhibit "11111111 -2", p 12, Annex es J & 6 12 Exhibit "11111111 -2". pp 25-26. Annexes 21 & 24 13 Supra 997

I ; /ct 'ISIU\' ( 1.-1 ('ose ,\o 7 358 l'ug<! 8 The claim for refund on petitioner's overpaid excise taxes on imported petroleum products has basis. Proceeding to the main controversy raised in this case , the Court finds partial merit to petitioner's claim for refund It appears from the records that petitioner's Imported finished products 14 and local ly manufactured refined products were permitted by the BIR to be comming led and stored in the same storage facilities pursuant to Section 157 15 of the 1997 NIRC. Accordingly , petitioner posits that despite no increase in th e volume of its locally manufactured refin e d petroleum products and 1ts constant deplet ion which came as a result of the complete shutdown of its refinery operations in November 2003 , it appeared to still have su fficient inventory to support withdrawals from the locally manufactured refined products because of the comming ling of the imported finished petroleum products and of the locally manufactured petroleum products . From the commingling of both the imported finished products and locally 16 manufactured refined products and th e winding up of petitioner's refinery 17 operation by Novemb er 2003 , the controversy of excess payment of excise tax 11 ' Exh ibtt "PPP" "PPF'-1" "PPF'-2" 15 Section 157. 'Removai of Articles After the Payment of Ta x - Wl1 en the tax has been patd on art tcle s or rroducts subject to exctse tax . the same shal l not th erea fter be stored or permttl ed to rematn 111 lhe dtstillery , dtsttllery ware house , bonded warehouse . or other fa ctory or place where produced . However, upon pnor permtt from th e Commtsstoner, oil reftnenes and/or compantes may store or depostt tax-patd petroleum prod ucts and comm tngl e the same wtth tis own manufactured products not yet subjected to excise tax . Imported petrol eum products may be allowed to be wtlhdrawn from customs custody with out the prepayment of excise tax , whi ch products may be commingled wi th the tax - paid or bonded produ cts of th e tmporte r htmself after securing a pnor permt l fro m H1e Commtsstoner Prov tded , That wtthdrawals sha ll be taxed and accounted for on a 'ftrst -tn , first-out' basts 16 Exh ibit "MMMMMMMMM -1 to YYYYYYYYY-4" . "AAAAAAAAAA to AAAAAAAAAA -8". "1111111111 -1111111111 -2" Exhibits " RI~R RRI~" . "SSSSSS" , "TTTTTl ". "UUUUUU " 11 (Exhibi t "SSSSSSS") Judtctal Afftdavtt dated September 18, 2006, vtz 052 Why do you say th ai Callex dtd nol reftne crude oil tn lhe month of November 2003? A52 From th e ttm e lhat Caltex dectded to shu t down 1n reftnery ope ratt on tn March 2003 . lhe compan y was gradually de-commt ss tontng th e equtpment and m ac ~1mery that would process th e crude 011 tnto locally reftned petroleum By November 2003 , t11ese equtpment and machtnery had been completely sh ut down . Thu s. Caltex ceased producing loca l unl eaded premtum gasoline and dtesel fuel and merely co nsumed extsltng inventory. 053 . And do you have proof that Caltex shu t down its refinery operatton by November 2003? A53 Yes 054 What IS th1 s proal'? A54 We have an appltcalton to Cancel 1-'ermtt to Manufacture Crude Otl tnt o Refined Petrol eum F'roducts and App l1 ca t1on for Convers1on 111 !0 Term tn al (da ted Oc tober 15, 2003) . as well as sevetal lett ers to th e Bll'\ su bmttltng Caltex 's general plan for tis termmal pursuant to ti s appltcatton lot· co nverston tnt o tenntna l (da ted Apn l 6 , 2004) , requesttng for urgen t attenl1on to the pendtng appltcat ton for permtts . tn cludtng co nverston of the 99 3

I !U '/,\JON CT -1 Cuse .\'u. 7358 l'uge 9 on imported finished unleaded prem ium gasoline and d1esel fuel for the month of November 2003. in the amo unt of P131 , 175,480 .18, arose when the withdrawals from the locally manufactured refined unleaded gasoline and diesel fuel exceede d th e beginnmg balance of the loca ll y manufactured unleaded prem ium gaso lin e and diesel fue l reco rd ed for the month of November 2003 The amount of excise taxes paid for the end ing balance of the locally manufactured unleaded prem ium gaso lin e and diesel fuel , including that of the reprocessed petroleum products, are actually the amount of excise taxes claimed by petiti oner to have been overpa id on its imported fin1sh ed unleaded gasoline and diesel fuel The claim of overpayment is broken down as follows Unl eaded Premium Products Gasoline Diesel Beginni ng Balance (in liters) 24,914,902 00 28,400,366 .00 Less: Withdrawals 37,947,74 1 00 68,676,189 .00 Reprocessed Products 1 ,72 0 ,8 0~ , 0_9 __ - ~?_6 ,7 1~C QQ __ Ending Ba lance (in liters ) (14,753 ,6 41 00) (41 ,102 ,541 .00) Excise Tax Rate p 4 35 p 1.63 Excess Excise Tax Pa 1d p 64 ,178 ,33 8 35 p 66 ,997 ,141 .83 During trial , petitioner presented the BOC Im port Entry Declarations (IED) 18 and BOC Import Entry and Intern al Revenue Declarations (IEIRDs) 19 to prove th e payment of excise taxes on the im ported finished unleaded gaso lm e and dies el fuels ; Excise Tax Retu rn s 20 to prove the payment of excise taxes on 21 22 its loca l fu els ; Daily Volume of Removals (DVRs) , Withdrawal Certifi ca tes , Official Register Book-Oil Manufacturing Operations(ORBs) 23 and Genera l 24 Ledg er to prove the figures declared in the Excise Tax Returns and to 25 corrobo rate payment of excise taxes ; Stock Quality Ledger (SQLs) , Pump in g Records 26 , Meter Batch Reports 27 , Tank Batch Reports 2B, Product Transfer Batangas refinery into a world class term1nal (dated December 7. 2004) , and requestmg for resolut1on to sa1d application for perm1ts to convert (dated .i<tnual·l 1-1. 200 5). w Exhibits "A- 1 to G- 1", "VVVVVV to ZZZZZZ". 'FFFFFI~ F to 1111111 ", "NNNNNNN to 0000000" 1 H Exh1bits "A -G ", "AAAAAAA to EEEEEEE" . "JJJJJJJ to MMMMMMM ", "PF'PPPPP to QQQQQQQ" 20 Exh 1b1ts "H to Z", "LLLLLLLL to JJJJJJJJ ", "FFFFFFFF" 21 Exh1b1ts "H to Z", "QQQ to AAAAAA " 22 Exhibits "AA to MMM " ~ M n Exh1b1ts "NNN ", "000 ", "RRRRRim " ( 2 • Exhibit "ZZZZZZZZZ". 2 !> Exhibits"KKKKKKKKK ", "LLLLLLLLL ", "PPP -3" 2 " ExhibitS "UUUUULJU -1 to LJUULJLJLJU -30" 99 9

I!/: ( IS/ ( ) ,\ ' CT· / Case No. 7 358 Page I 0 30 Records 29 , Bulk Stock Transfer Receipts/Stock Transfer Receipts and Product Withdrawal & Tax Payments 3 1 to corroborate the figures declared in the DVRs and ORBs . Based on the documents presented and as confirmed by the Court- appo inted Independent Certifi ed Public Accountant (ICPA) , petitioner imported a total of 52 ,997 ,582 liters of unl eaded prern 1u rn gaso lin e and 64 ,529,403 liters of diesel fuel for the month of November 2003 . The petitioner , pursuant to Secti on 131 (A) of the 1997 NIRC , paid the corresponding excise taxes for the imported unleaded premium gaso line and diesel fuel in the amount of P230 ,539,481 00 and P1 05 ,182 ,927 00 respectively during the month of November 2003 The breakdown of which is as follows Unleaded Premium Gasoline Period Exhibit (lED & IEIRD) Vol (in liters) Excise lax Ra te Excise Tax 11 / 1/200 3 1\ l o 1\ 3 9 .629 ,832 4 35 p 41 ,889 ,769 00 11 /4/ 2003 B to l l 3 3,701.545 4 35 16, 10 1 ,72 t 00 11/4/2003 C to C -3 13,4 75,658 4 35 58, 619 ,112 .00 11 /25/200 3 0 to 0 -3 13,883,8 12 4 35 60 ,3 94 ,582 00 11 /25/200 3 E to L 3 12 ,306,735 4 35 ~3 . 5 3 4 .~92 QQ l::x h 11111111 2 (IC PA f<e port TOTAL p . 12. A nnexes 3 & G) 52 ,997 ,582 p 230 ,539 ,481 .00 D1escl Pe riod Exhib it (lED & IEIRD) Vol (in liters) Excise Tax Rate Excise Tax 11 /2 0/2 00 3 F to 1- 3 52.952 ,4 70 1 63 86,312.526 00 11 /25/200 3 G l oG-3 11 , 5 7 6 .~33 1 li3 __l~.87 Q__,~ Q 1 Q.Q_ E xl1 11111111 -2 (IC P A l'e port pp 25-26. A n11cxes 21 & TOTAL 24 ) 64 ,529,403 105,182,927.00 As to th e locally manufactured unleaded premium gaso lm e and diesel fuel , it appears from the records and as confirm ed by ICPA , petitioner withdrew 37,94 7,7 41 liters and 68 ,676 ,189 liters of locally manufactured unleaded premium gasoline and d1esel fuel respectively for the month of November 2003 and paid th e correspond ing excise taxes pursuant to Section 130 (A)(2) The same is broken down as follows 27 EXhibits "VVVVVVV- 1 to VVVVVVV- 13" 28 Exhibits "WWVVWWWW-1 lo WWVVWWWW-85 " 29 Exh1b1t s "XXXXXXX -1 to XXXXXXX -41 " 311 Exhibits" YYYYYY Y -1 to YY YYY YY -87" "IJ BI:3 BBBB BBB" "DDD DDD D DDD - 1' 1 :: Exhibits "AAAAAAAA-1 to AAAAAAAA -33" • /....... ,.. f} l tJuJ

,I /)/J IS/(J\ CT l ( 'use iV o . 735,')' ?uge II Withdrawal on locally manufactured refined products Vol (in liters) Excise Tax Rate Excise Tax Unl ea ded Premium Gasol ine 37.94 7,7 4 1 4 .35 165,072,673 35" Diesel Fuel 68 ,676 .1B9 1 63 111 ,942, 188 .00)3 Notably , th e ICPA venfied that th ere existed a beginning balance inventory of 24 ,914 ,902 liters 34 and 28,400 ,366 liters 35 for petitioner's locally manufactured refined unl eaded premium gasoline and diesel fuel for the month of November 2003 . At the same time , the !CPA verified that there was no increase in the inventory of petitioner's locally manufactured refined petroleum products since the month of November 2003 as evidenced by the zero figures in the beginning balances of the locally manufactured refin ed unleaded premium gasoline and diesel fuel for the month of December 2003 36 Considering that the volume of Withdrawals of the loca lly manufactured refined unleaded premium gasoline and diesel fuel for the month of November 2003, which is 37 ,947 ,741llters and 68,676 ,189 respectively , as outlined above , actually exceeded th e beginning inventory for locally manufactured refined unleaded premium gasoline and diesel fuel for the month of November 2003 , which is 24 ,914 ,9 02 liters and 28 ,400 ,366 liters respectively , there being no operations for the production of locally m anufactured petroleum products , 1t is concluded that th e excess volume of withdrawals pertain to the imported finished unleaded premium gasoline and diesel fuel which were comming led with the locally manufactured refined petroleum products The mathematical computation is as follows Unleaded Premium Products Gasoline Diesel Beginn ing Balance (in lil ers) 24,914 ,902 00 28 ,400 ,366 00 Less Withdrawals 3?_~~4?.2_~ 1 09 - -- - ~~676_,_1 ~9 00 Ending Balance (in liters) (1}, 032 ,? 3~ : 00) (40J.J§.l82~ :00L_ _ 37 Exhibit "11111111 -2". Annex 14 :n Exh1bit "11111111 -2", Annex 32 3 ~ Exhibits" NNN-17" and "PPP-3" 35 Exhibit "NNN-24" 36 Exhibit "11111111 -2" , pp 17-18 and 29-31 l OG:

I JU 'IS/( }!\ ('T-1 Case ,Vo 7J58 !'age 12 Consequently , since all the imported fini shed unleaded premium gasolin e 37 a nd diesel fuel imported for th e month of November 2003 were actually paid be fore th e 1r re lease from the c ustomshouse pursua nt to Sectio n 131 (A), as well as , all th e local ly manufactured refined unleaded gasoline and diese l fuel for th e month of November 2003 before removal from their place of produ ction o r th e 8 refinerl pursuant to Section 130(A)(2) , the excise ta xes paid for th e excess volume of withdrawals of the loca lly manufactured unleaded premium gasoline and diesel fuel , which a re actually imported finished unl eaded premium gasoline and diese l fuel , is actu ally a n overpayment cons id e nng th at the excise taxes on such imported finished unleaded prem ium gasoline and diesel fuel were already paid upon their release from the customshouse Interes tin g ly though, petitioner claims a refund even for reprocessed 39 40 products in the am ou nt of P2 ,852 ,811 00 and P826 ,718 00 for its unlead ed premium gasoline and d iesel fuel , respect ively . However, th e re ex ists no ev idence among the documents presented that shows that the excise taxes on the reprocessed unleaded premium gasol in e and diesel fue l were actuall y paid up In fact , according to petitioner's witness Mr A rm ando Casabal , in hi s 41 Judi c ial Affidavit dated September 18 , 2006 , petitioner only pays excise taxes afte r th e crude oi l has been processed in to loca ll y refined or finished petroleum products . Even th e ICPA failed to ment1on that petitioner paid the excise taxes on reprocess e d unl eaded prem ium gasoline and diesel fuel , viz "The Company pa1d exc1se tax on w1thdrwals of unleaded prem1um gasolme in excess of th e beg1nn1ng balance of the manufactured unleaded premium gasoline4 ~" and 17 Supra 3 ~ Supra. 39 Exhibits "11111111-2" , Annex 19 40 Exhibit "11111111 -2". Annexes 36 & 37 41 Exhibit "SSSSSSS" 010: Does Ca ltex pay exc1se taxes on crude 011upon importation? A10 No Caltex only pays exc1se taxes after Ihe crude oil has been processed 1nto locally ref1ned or f1n1 shed petroleum products 4 ; · Exhibit "1111 1111 -2" Annex 1, VII , No 2 pp 18 to 19

/!U'/SWN CT / Cose No 7 358 /'uge I 3 "The Company pa id exc1se tax on withdrawals of d1esel 1n excess of the 4 beginning balance of th e manufa ctured diesel .! .. Thus , the Court co nc lud es that petttioner did not pay the excise taxes on reprocessed un leaded premium gasoline and diesel tuel and th e same should not be included tn th e cla im for refund Therefore , th e Court finds petitioner's claim for refund on erroneous overpayment of excise ta xes on tmported finished unlead ed gasolin e and diesel fu el for the month of November 2003 JUStifi ed , but only tn th e amount of P1 08 ,585 ,162.95 , co mputed as follows Unleaded Premium Products Gasoline Diesel TOTAL Begi nnmg Ba lance (in liters) 24,9 14 ,902 00 28, 400 ,366.00 Add Reprocesse d Product 2,852,8 11 .00 826,7 18 .00 Less : Withdrawals _(3?_~~ 4 7,7 41 Q_O} _ {~~,67~'-l ~-9 00) End ing Balance (in liters) ( 10 ,180,028 .00) (39 ,449 , 105.00) Excise Ta x Rate p 4 .3 5 p 1.63 ·- - Excess Excise Tax Paid p 44,283 ,121.80 p 64,302,041 .15 p 108,585 ,162.95 WHEREFORE , th e Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respo nd ent is hereby ORDERED to refund to petitioner the reduced amount of ONE HUNDRED EIGHT MILLION FIVE HUNDRED EIGHTY FIVE THOUSAND ONE HUNDRED SIXTY TWO PESOS AND 95/100. (P1 08,585 ,162.95) SO ORDERED . ~~- \.2 - ~ ERNESTO D. ACOSTA Presiding Justice ( LOVELL flAUTIST A --Asso· tate Justi ce 43 Exhib1l "I 111111 -2" , An ne x 1 X IV , No 2 , p 36 l DGJ

I !U'!S/ CJ!\ ( f./ Cose ,\ 'u 7J58 1-' uge 1-1 ~ CAESAR A. CASANOVA Associate Justice CERTIFICATION Pursuant to Article VIII , Section 13 of the Constitution , it is hereby certified that the conclusions in the above Decision were reached in consul tation before the case was assigned to the writer of the opinion of the Court's Division . l ----- v-. \..~ ERNESTO D. ACOSTA Presiding Justice Cha irperson , First Division