PACIFIC EAST ASIA CARGO AIRLINES INC., AND PETRON CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAl FIRST DIVISION ******** **** ** ** ** PACIFIC EAST ASIA CARGO AIRLINES, C.T.A. CASE NO. 7716 INC. and PETRON CORPORATION, Petitioners, Members: - versus - ACOSTA, Chairperson BAUTISTA, and CASANOVA, JJ COMMISSIONER OF INTERNAL Promulgated : REVENUE , Respondent. APR 2 9 2010 ; 3:1r,r''" x -- -- ------- ---- -- -- - ---- - --------- --~ -x DECISION BAUTISTA, J. : This is a Petition for Revi ew fi led by petition ers Pacific East Asia Cargo Airlin es, Inc. (''PEAC" fo r brevity) and Petron Corporation ("Petron" for brevity) to seek the refund or tax credit of excise ta xes on Jet A-1 aviation turbo j et fu el they al legedly erron eou sly paid to respondent Bureau of Internal Revenue in th e total amount of P6,705,695.55, arising from th e sale of Jet A- 1 fu el by petitioner Petron to petition er PEAC for th e period coverin g January 5, 2006 to July 7, 2006. Petition er PEAC is a corporation org anized and existing under Philippine laws, with principal office at the 2nd Floor International Cargo Terminal Bui lding, 6 45

DECISION C.T.A. Case No. 7716 NAIA Complex, Pasay City. 1 It is engaged in the business of international aircraft carriage. Petitioner Petron is a corporation organized and existing under Philippine laws, with principal office at Petron Megaplaza Building, 358 Sen. Gil Puyat Ave., Makati City. 2 It is engaged in the manufacture and sale of petroleum products. Respondent, on the other hand, is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR) empowered to perform the duties of said office including, among others, the power to decide, approve, and grant refunds or tax credits of erroneously or excessively paid ta xes. He holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. Petitioner PEAC has international cargo flights from Laoag City to Taipei and Pudong, Shanghai. In connection with the said flights, it purchased Jet A-1 fuel 3 solely from petitioner Petron in Laoag, which was sourced from Pandacan, Metro Manila. The excise taxes for said fuels withdrawn from Petron Pandacan for delivery to Petron Laoag were paid by petitioner Petron, together with the excise taxes for other petroleum products withdrawn on that particular day. From January 5, 2006 to July 7, 2006, petitioner Petron sold and delivered to petitioner PEAC 1,827,165 liters of Jet A-1 fuel. Pursuant to Section 130(A)(2) of the National Internal Revenue Code (NIRC) of 1997, petitioner Petron paid to respondent excise taxes in the amount of P6,705,695.55 for the Jet A-1 petroleum products it sold to petitioner PEAC. On August 9, 2007, petitioner PEAC filed a written claim for refund of the amount of P10,842,075.48 with the BIR Revenue District Office (RDO) No. 51. 1 Par. 2, Stipulation of Facts, Joint Stipulation of Facts and I ssues, (J SFI), docket, p. 829 2 Par. 3, Stipulation of Facts, JSFI, docket, p. 829 3 A kind of aviation turbo j et fuel and a petroleum product

DECISION C.T.A. Case No. 7716 The said amount included the amount of this claim, viz., P6,705,695.55. The claim was based on the allegation that petitioner PEAC erroneously paid taxes to petitioner Petron since the latter's sale of petroleum products to the former is exempt from excise ta xes, pursuant to Section 135(a) of the NIRC of 1997. On the same date, petitioner Petron filed its written claim for tax refund of the excise ta xes it had paid on the petroleum products it had sold to petitioner PEAC. The claim was filed with BIR RDO No. 121 or the Excise Large Ta xpayers Office. In order to stop the running of the two-year prescriptive period granted by law for the filing of refund claims, petitioners filed before this Court the instant Petition for Review on January 3, 2008. In his Answer filed on February 29, 2008, respondent raised the following Special and Affirmative Defenses 4 : "1. Excise ta x is an indirect tax, hence it becomes the direct liability of the manufacturers which, in the above entitled case, is Petron Corporation. The incidence of ta xation falls on Petron Corporation though the impact of taxation, or the burden of taxation, falls on another person, Pacific East Asia Cargo Airlines, Inc. (hereafter PEAC) in this case. The excise ta x on petroleum products is the direct liability of the manufacturer/producer, and when added to the cost of goods sold to the buyer, it is no longer a tax but part of the price which the buyer has to pay to obtain the article (PHILIPPINE ACETYLENE vs. COMMISSIONER OF INTERNAL REVENUE, 20 SCRA 1056). In the instant case, the excise ta x imposable under Section 148 of the NIRC of 1997 is a direct liability of Petron Corporation and PEAC merely paid the added cost of Jet A-1 fuel, not the excise tax, the entity being subject thereto being Petron Corporation (CEBU PORTLAND CEMENT CO. vs. COLLECTOR OF INTERNAL REVENUE, 25 SCRA 789) . 4 Docket, pp . 100-108 64 7

'' ' DECISION C.T.A. Case No. 77 16 2. PEAC's reliance on Section 135(a) of the NIRC of 1997 is misplaced. It is only the manufacturer of the petroleum products sold, being the ta xpayer, which has the legal personality to claim for the refund of excise ta xes paid on petroleum products sold to international carriers. This is based on Section 130 (A)(2) and 204 (C) of the NI RC of 1997 in relation to Section 135(a) of the same code which provides that petroleum (sic) products sold to international carriers are exempt from excise tax. Said Sections 130(A)(2) and 204 (C) of the NIRC of 1997 are quoted hereunder, to wit: 'Section 130. Filing of Return and Payment of Excise Ta x on Domestic Products. - (A) Persons Liable to File a Return, Filing of Return on Removal and Payment of Tax. - (1) Persons Liable to File a Return, Filing of Return on Removal and Payment of Tax. - Every person liable to pay excise ta x imposed under this Title shall file a separate return for each place of production setting forth, among others, the description and quantity or volume of products to be removed, the applicable tax base and the amount of ta x due thereon: provided, however, That in the case of indigenous petroleum, natural gas or natural liquefied natural gas, the excise tax shall be paid by the first buyer, purchaser or transferee for local sale, barter or transfer, while the excise tax on exported products shall be paid by the owner, lessee, concessionaire or operator of the mining claim. Should domestic products be removed from the place of production without the payment of the ta x, the owner or person having possession thereof shall be liable for the ta x due thereon . (2) Time for Filing of Return and Payment of the Ta x. - 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 , I

DECISION C.T.A. Case No. 7716 That the excise ta x on locally manufactured petroleum gas products and indigenous petroleum levied under Sections 148 and 15 (A)(4), respectively, 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 removal of such products for the period from July 1, 1998 to December 31, 1998; and before removal from the place of production of such products from January 1, 1999 and thereafter; Provided, further, That the excise tax on nonmetallic mineral or mineral products, or quarry resources shall be due and payable upon removal of such products from the locality where mined or extracted, but with respect to the excise tax on locally produced or extracted metall ic mineral or mineral products, the person liable shall file a return and pay the tax within fifteen (15) days after the end of the calendar quarter when such products were removed subject to such conditions as may be prescribed by the rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. For this purpose, the ta xpayer shall file a bond in an amount which approximates the amount of excise tax due on the removals for the said quarter. The foregoing ru les notwithstanding, for imported mineral or mineral products, whether metallic or non-metallic, the excise ta x due thereon shall be paid before their removal from customs custody (emphasis supplied).' 'Section 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Ta xes. - (C) Credit or refund ta xes 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 destructi ~

DECISION C.T.A. Case No. 7716 No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty; Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund . A Tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal revenue ta x, excluding withholding taxes, for which the taxpayer is directly liable. Any request for conversion into refund of unutilized (sic) tax credits may be allowed, subject to the provisions of Section 230 of this Code; Provided, That the original copy of the Ta x Credit Certificate showing a creditable balance is surrendered to the appropriate revenue officer for verification and cancellation: Provided, further, That in no case shall a tax refund be given resulting from availment of incentives granted pursuant to special laws for which no actual payment was made.' (Emphasis supplied) 3. It is clear therefore, that the person or entity liable to pay the excise tax is Petron Corporation and the excise tax imposable under Section 148 of the NIRC of 1997 is a direct liability of Petron Corporation and, as emphasized earlier, PEAC merely paid the added cost of Jet A-1 fuel, not the excise ta x. 4. The instant Petition for Review filed by petitioners PEAC and Petron Corporation is an inofficious filing of a claim for refund there being failure on their part to exhaust administrative remedies. The evaluation by respondent of said claim for refund/ta x credit is still in progress. As the jurisdiction of this Honorable is merely appellate, there is yet no action on the part of the Commissioner which is the proper subject of judicial review. Hence, this Honorable Court is wont of jurisdiction to entertain the instant Petition. 5. In an action for refund/ta x credit, the burden of proof is on the ta xpayer to establish its right to refund/tax credit and the failure to sustain the burden is fatal to its claim. It is well settled in this jurisdiction that claims for refund/tax credit are construed in strictissimi juris against the claimant for the ! b50

·' DECISION C.T.A. Case No. 7716 same partakes the nature of exemption from ta xation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and as such, they are looked upon the disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 1211). In the language of the Supreme Court, 'the power of ta xation is a high prerogative of sovereignty, the relinquishment is never presumed and every reduction or diminution thereof with respect to its mode or its rate must be strictly construed, and the sam e must be couched in clear and unmistakable terms so that it may be applied.' (luzon Stevedoring Corporation vs. Court of Ta x Appeals, 163 SCRA 647). 6. Petitioners must likewise show that it has complied with the provisions of Section 205 (C) and 229 of the NIRC of 1997 on the prescriptive period for filing and/or claiming tax refund/credit. 7. A refund, if any, erroneously paid ta xes shall only be granted to the taxpayer. The determination of who is the taxpayer plays a pivotal role in claims for refund because Section 204 (C) of the NIRC of 1997 provides that it is only the ta xpayer who has the legal personality to ask for a refund in case of erroneous payment of ta xes, in this case, Petron Corporation. The excise tax imposed on the manufacturers upon the removal of petroleum products by the oil companies is an indirect tax. The Supreme Court in Philippines Acetylen e Co., Inc. vs. Commissioner of Internal Revenue, G.R. No. L-19707, August 7, 1967 (20 SCRA 1056) explained that although the burden of an indirect tax can be shifted or passed on to the purchaser of goods, nevertheless, the liability for the indirect tax still remains with the manufacturer, Petron Corporation, thus: 'It may indeed be that the economic burden of the tax finally falls on the purchaser, when it does the ta x becomes a part of the price which the purchaser must pay. It does not matter that an additional amount is billed as tax to the purchaser. The method of listing the price and the tax separately and defining ta xable gross receipts as ·the amount received less the amount of the tax added, merely avoids payment by the seller of a ta x on the amount of the tax. The effect is still the same, namely, that the purchaser does not pay the tax. He pays or may pay the seller more for the goods because of seller's

DECISION C.T.A. Case No. 771 6 obligation, but that is all and the amount added because of the tax is paid to get the goods and for nothing else.' (Emphasis supplied) 8. The aforecited ruling has been reiterated by the Supreme Court in the cases of Contex Corporation vs. Honorable Commissioner on I nternal Revenue, G.R. No. 151135, July 2, 2004 (433 SCRA 377) and in Commissioner of Internal Revenue vs. Philippi ne Long Distance Telephone Company, G.R. No. 140230, December 15, 2005 (478 SCRA 61), thus: 'Further, in indirect ta xation, there is need to distinguish between the liability for the tax and the burden of the ta x. As earlier pointed out, the amount of ta x paid may be shifted or passed on by the seller to the buyer. What is transferred in such instances is not the liability for the tax, but the ta x bu rden. In adding or including the VAT due to the sel ling price, the seller remains the person primarily and legally liable for the payment of the tax. What is shifted only to the intermediate buyer and ultimately to the final purchaser is the burden of the tax. Stated differently, a seller who is directly and legally liable for payment of an indirect tax, such as the VAT on goods and services, is not necessari ly the person who ultimately bears the burden of the same ta x. It (sic) is the final purchaser or consumer of such goods or services who, although not directly and legally liable for the payment thereof, ultimately bears the burden of the tax.' (Emphasis supplied) 'On the other hand, indirect taxes are those that are demanded, in the first instance, from, or are paid by, one person in the expectation and intention that he can shift the burden to someone else. Stated otherwise, indirect ta xes are ta xes wherein the liability for the payment of the tax falls on one person but the burden thereof can be shifted or passed on to another person, such as when the ta x is imposed upon goods before reaching the consumer who ultimately pays for it. When the seller passes on the I ... ,.. '1 b J ...

DECISION C.T.A. Case No. 77 16 tax to his buyer, he, in effect, shifts the tax burden, not th e li ability to pay it, to the purchaser as part of the price of goods sold or servi ces rendered .' (Emphasis supplied) 9. As explained in the aforecited rulings, the manufacturer has the option whether or not to shift the burden of the ta x to the purchaser. Thus, when shifted, the amount added by the manufacturer becomes a part of the price, therefore, the purchaser does not really pay the ta x per se but only the price of the commodity. 10. PEAC is not entitled to claim for the refund/ta x credit of the subject excise ta xes. Even though the burden of an indirect ta x, such as the excise tax in the present case, is shifted to the purchaser PEAC by Petron Corporation, still, the liability for the indirect ta x remains with the manufacturer as the t axpayer. Necessarily, a refund of erroneously paid or illegally received internal revenue ta x can only be made in favor of the ta xpayer pursuant to Section 204 (C) of the 1997 NIRC, which provides that 'no credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for cr~dit or refund within two (2) year after the payment of the tax or penalty.' Section 204 C applies to both direct and indirect ta xes. 11. Neither is Petron Corporation entitled to claim for tax refund/ta x credit. It may be a party in interest in the instant case but it has miserably failed to state a cause of action. Section 2, Rule 3 of the 1997 Revised Rules of Procedure defines parties in interest, thus, 'A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.' A cause of action, upon the other hand, is 'the delict or wrong by which the defendant violates the right or rights of the plaintiff' (Ma-ao Sugar Central vs. Barrios, 76 Phil. 666). Its essence is based upon the existence of a legal right in favor of petitioner, the correlative duty of respondent to respect such right, and an act or omission of respondent in violation of such right. That facts alleged, therefore, in the Petition fails to state of a cause of action which negates a right of action in favor of Petron Corporation to obtain the relief sought. The excise ta xes paid by Petron Corporation to the BIR was in accordance with the provisions of the NIRC of 1997, hence, there was neither a violation of its rights nor a wrong committed by respondent. Section 130 I

DECISION C.T.A. Case No. 7716 (A) of the NIRC of 1997 imposes the excise tax on the manufacturer or producer before removal of the petroleum products from the place of production. The excise ta x imposed on the manufacturers upon the removal of petroleum products is an indirect ta x and, such being the case, the liability therefore remains with the manufacturer, Petron. Respondent therefore maintains that Petron Corporation cannot ask, nor be entitled to claim, for tax refund/ta x credit for excise ta xes paid since it is the entity statutorily liable to pay the ta x, hence, no erroneous payment of the tax to speak of. Neither was .there a violation of the exemption from payment of excise ta xes provided under Section 135 (a) of the NIRC of 1997 for international carriers. At the point of sale, the international carries are free to invoke the exemption from excise ta xes of the petroleum products sold to them. Thus, as the petition fails to state a cause of action in the part of Petron Corporation, as plainly none (sic) exists under the law, the petition as regards Petron should also be dismissed. 12. Finally, the ruling of the Supreme Court in the case of Citibank N.A. vs. Court of Appeals, G.R. No. 107434, October 10, 1997, 280 SCRA 459, 475 invoking the principle of solutio indebiti as cited by petitioners cannot be made to apply. There was no wrongly held excise taxes since Petron Corporation (sic) is the one statutorily liable for the payment of the excise ta x pursuant to Section 130 (A) (2) of the NIRC of 1997. The principle of solutio indebiti is based on the provisions of the Civil Code which is a general law and the case involves excise ta xes which are covered by the NIRC of 1997, a special that was created especially for internal revenue ta xes, hence, the latter being a special law prevails over the former. It is well settled that a special law shall prevail over a general law (The Commissioner of Internal Revenue vs. !lagan Electric and Ice Plant Inc., 29 SCRA 634; The Guagua Electric Light Co., Inc. vs. CIR, 19 SCRA 790)." In order to counter respondent's arguments, petitioners filed their Reply 5 on March 12, 2008, stating among others their legal personality to file the instant claim for refund. I 5 Docket, pp . 115-125

DECISION C.T.A. Ca se No. 7716 After trial on the merits, this case was submitted for decision on May 6, 2009, taking into consideration petitioners' Memorandum filed on April 1, 2009 and respondent's Memorandum filed on April 30, 2009. 6 The sole issue for this Court's resolution is as follows: "Whether or not petitioners are entitled to a refund or ta x credit of erroneously paid excise ta xes on Jet A-1 fuels sold and delivered by petitioner Petron to petitioner PEAC for the latter's international air cargo flights from Laoag City to Taipei and Pudong, Shanghai from January 5, 2006 to July 7, 2006 in the amount of P6,705,695.55." Section 229 of the NIRC of 1997, as amended, lays down the requisites for refund of tax erroneously collected, to wit: "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue ta x hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully 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 ta x, 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: Prov1de~ 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." This is congruent with the authority of respondent to refund erroneously collected taxes as stated in Section 204(C) of the NIRC of 1997, which reads: 6 Docket, p. 1113 I

DECISION C.T.A. Case No. 771 6 "SEC. 204. Authority of the Commissioner to Compromise/ Abate and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX (C) Credit or refund ta xes 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 ta xes 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 ta x or penalty: Provided; however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund." Based on the afore-quoted provisions, a tax erroneously paid or illegally collected may be a proper subject of a claim for ta x refund. However, the Court must first determine who the "taxpayer" is in this case. The Supreme Court made the following decla rations in the case of Silkair (Singapore) Pte. Ltd. vs. Commissioner of Internal Revenue 7 : "The person entitled to claim a ta x refund is the statutory taxpayer. Section 22(N) of the NIRC defines a ta xpayer as 'any person subject to tax.' In Commissioner of Internal Revenue v. Procter and Gamble Phil. Mfg. Corp., the Court ruled that: A 'person liable for tax' has been held to be a 'person subject to ta x' and properly considered a 'taxpayer'. The terms 'liable for ta x' and 'subject to tax' both connote a legal obligation or duty to pay a ta x." In the instant case, both petitioners PEAC and Petron seek the refund of the excise ta xes the latter paid to respondent. Pursuant to Section 129 of the NIRC of 1997, excise taxes refer to taxes imposed on specified goods manufactured or produced in .the Philippines for .>; 7 G.R. Nos. 171383 and 172379, November 14, 2008 65 G

DECISION C.T.A. Case No. 7716 domestic sale or consumption or for any other disposition and to things imported. The said excise taxes are collected from manufacturers or producers before removal of the domestic products from the place of production. The subject of the Petition is the excise ta x on the Jet A-1 fuel that petitioner Petron sold to petitioner PEAC, and imposed pursuant to Section 148(g) of the NIRC. Petitioner Petron, as the manufacturer or producer of the Jet A-1 fuel, was liable for the payment of excise ta xes before the removal of said fuels from the place of production in Pandacan. Accordingly, petitioner Petron is the ta xpayer as contemplated in Section 22(N) of the NIRC of 1997; the one that has legal obligation or duty to pay a tax and the proper person to seek ta x refund in case of an erroneous payment. Petitioner PEAC's purported payment of excise ta xes on the Jet A-1 fuels it purchased from petitioner Petron and its reliance on its exemption as provided in Section 135 of the NIRC of 1997 cannot serve as basis of ta x refund, since it was not the "taxpayer" or the one legally obligated to pay the said excise taxes. Petitioner PEAC should have invoked its ta x exemption under Section 135 of the NIRC before buying the Jet A-1 fuels from petitioner Petron. Since petitioner PEAC failed to do so, petitioner Petron passed on the burden of paying its excise ta xes to petitioner PEAC. This exercise of petitioner Petron of passing on the burden of paying the excise tax to its purchasers is valid. The subject excise tax, as ruled by the High Court in Maceda vs. Macaraig Jr., et a/. 8 is in the nature of indirect tax, wherein it is paid by persons who can shift the burden upon someone else. For example, the excise and ad valorem taxes that oil companies pay to the Bureau of Internal Revenue upon removal of petroleum 8 I G.R. No. 88291, May 31, 1991 657

DECISION C.T.A. Case No. 771 6 products from their refinery can be shifted to their buyers, who in this case is petitioner PEAC, by adding them to the cash and/ or selling price . What petitioner PEAC paid to petitioner Petron was treated by the latter as part of the cost of the Jet A-1 fuels and tacked it on to th e selling price. From the foregoing, it is cl ear that petitioner PEAC did not go to the proper forum to seek refund or reimbursem ent. Since the impact of the excise ta xes fell on petitioner PEAC, it should claim reimbursement from petitioner Petron rather than fil e a claim for refund with respondent. Having determined that petitioner Petron is the proper party to a refund claim anchored on Section 229 of the NIRC of 1997, this Court will now determine if petitioner Petron actually sold and delivered Jet A-1 fuels to petitioner PEAC and paid the corresponding excise taxes thereof. In order to meet its Jet A-1 fuel requirements, petitioner PEAC entered into a supply agreement9 with petitioner Petron on August 4, 2005, effective August 10, 2005. Based on th e Aviation Delivery Receipts 10 , petitioner Petron delivered a total of 1,827,165 liters of Jet A-1 fuel to petitioner PEAC for its international flights from Laoag to Pudong, Shanghai and Taipei from January 5, 2006 to July 7, 2006. Such delivery was corroborated by the judicial affidavit 11 of petitioners' witness Reizer V. Vi zconde, who personally supervised and monitored the actual refueling by petitioner Petron of petitioner PEAC's aircraft in Laoag bound for Taipei or Pudong, Shanghai. In addition thereto, petitioners presented Withdrawal Certificates12 stating th erein th e exact quantities of Jet A-1 fuel 9 Exhibit " L" 10 Exhibits "J" to "J- 169" 11 Exhibit "Y" 12 Exhibits " E" to " E-75"

DECISION C.T.A. Case No. 7716 actually withdrawn from Petron Pa_ndacan and delivered to Petron Laoag for the period covering January 5, 2006 to July 7, 2006. On various dates from January 3, 2006 to June 30, 2006, petitioner Petron made advance payments to the BIR on its petroleum products estimated to be removed from its Pandacan Terminal to ensure that the balance of already paid excise taxes will not be less than the excise taxes due for petroleum products actually removed. The details of the said payments are as follows: Advance Payment of Exhibit Date Excise Taxes UGII 1/3/2006 p 160,000.00 "G-1 " 1/5/2006 40 ,000.00 "G-2 " 1/6/2006 80,000 .00 "G-3" 1/9/2006 400 ,000 .00 "G-4" 1/10/2006 90,000.00 "G-5" 1/11/2006 220 ,000 .00 "G-6" 1/12/2006 90 ,000 .00 "G-7" 1/13/2006 449 ,000 .00 "G-8" 1/16/2006 230 ,000.00 "G-9" 1/17/2006 70 ,000.00 "G-10" 1/18/2006 30 ,000.00 "G-11 " 1/19/2006 150,000.00 "G-12 " 1/20/2006 400 ,000 .00 "G-13" 1/23/2006 410 ,000 .00 "G-14" 1/24/2006 130 ,000 .00 "G-15" 1/26/2006 60 ,000 .00 "G-16" 1/26/2006 260 ,000.00 "G-17" 1/27/2006 276 ,000 .00 "G-18 " 1/30/2006 2,540 ,000.00 "G- 19" 2/3/2006 120,000 .00 "G-20" 2/6/2006 90,000 .00 "G-21 " 2/7/2006 100,000.00 "G-22" 2/8/2006 130 ,000 .00 "G-23" 2/9/2006 150,000 .00 "G-24" 2/10/2006 490 ,000 .00 "G-25" 2/13/2006 30 ,000.00 "G-26 " 2/14/2006 170,000.00 "G-27" 2/15/2006 180,000 .00 "G-28 " 2/16/2006 250 ,000 .00 "G-29" 2/17/2006 380 ,000.00 "G-30" 2/20/2006 140,000.00 "G-31 " 2/21/2006 229,000 .00 65 9

DECISION C.T.A. Case No. 7716 "G-32 " 2/22/2006 380 ,000 .00 "G-33 " 2/23/2006 200 ,000 .00 "G-34 " 2/24/2006 190,000 .00 "G-35 " 2/27/2006 540 ,000 .00 "G-36 " 2/28/2006 200 ,000 .00 "G-37" 3/ 13/2006 290 ,000 .00 "G-38" 3/ 16/2006 180,000.00 "G- 39" 3/ 17/2006 330 ,000.00 "G-40" 3/20/2006 70 ,000 .00 "G-41 " 3/21/2006 220 ,000.00 "G-42" 3/22/2006 120,000.00 "G-43" 3/23/2006 260 ,000 .00 "G-44 " 3/24/2006 410 ,000 .00 "G-45 " 3/27/2006 210 ,000 .00 "G-46 " 3/28/2006 300 ,000.00 "G-4 7" 3/29/2006 200 ,000 .00 "G-48 " 3/30/2006 100,000 .00 "F-49-a" 2/28/2006 5,000 ,000 .00 "F-50-a" 3/31/2006 6,000 ,000 .00 "F-51-a" 4/28/2006 4,500 ,000 .00 "F-52-a" 5/31/2006 2,500 ,000.00 "F-53-a" 6/30/2006 2,300 ,000.00 Total p 33,044,000.00 Upon the withdrawal of petitioner Petron's petroleum products from its Pandacan Terminal, it filed excise ta x returns to liquidate the advance payments made, detailed as follows: Excise Tax Return EXCISE TAXES Date of Filing with the PAID Exhibit No. BIR (Year 2006) "H" Jan . 6 p 206,421.75 "H-1 " Jan . 9 271,795.32 "H-2" Jan. 11 220,290 .27 "H-3" Jan. 13 272,858 .68 "H-4" Jan . 16 108,477.92 "H-5" Jan. 16 237,656.36 "H-6" Jan. 18 142,536.58 "H-7" Jan . 19 110,640.22 "H-8" Jan. 20 297,998.94 "H-9" Jan. 23 275,984.00 "H- 10" Jan. 23 134,248.60 "H-11 " Jan. 24 167,427.00 "H -12" Jan. 26 190,762.98 "H-13" Jan. 27 105,851.78 "H-14" Jan. 30 147,080.90 I

DECISION C.T.A. Case No. 7716 "H-15" Feb. 6 95,619.86 "H-16" Feb. 10 232,071.77 "H-1 7" Feb. 15 218,736.28 "H-18" Feb. 16 242,627.37 "H-19" Feb. 17 325,879.90 "H-20" Feb. 20 110,114.26 "H-21" Feb. 22 243,020.05 "H-22" Feb. 23 227,976.73 "H-23" Feb. 27 374,797.92 "H-25" Feb. 27 252,646.47 "H-26" Mar. 1 228,098 .88 "H-27" Mar. 2 242,362.33 "H-28" Mar. 6 267,924.57 "H-29" Mar. 9 818,948.84 "H-30" Mar. 13 993,971.79 "H-31" Mar. 13 250,576.59 "H-32" Mar. 13 149,185.50 "H-33" Mar. 15 238,271.33 "H-34" Mar. 16 214,642.43 "H-35" Mar. 17 224,974.67 "H-36" Mar. 20 110,782.62 "H-37" Mar. 21 187,170.00 "H-38" Mar. 23 192,237.71 "H-39" Mar. 24 154,239.93 "H-40" Mar.27 165,861.02 "H-41" Mar. 27 200,243 .30 "H-42" Mar. 27 73,400 .00 "H-4 3" Mar. 28 300,051.86 "H-44" Mar. 31 233,962.50 "H-45" Apr. 3 390,307.07 "H-46" Apr. 4 106,452.33 "H-4 7" Apr. 10 93,588.04 "H-48" Apr. 10 73,400 .00 "H-49" Apr. 17 246,774.47 "H-50" Apr. 17 88,116.70 "H -51 " Apr. 17 143,508.01 "H-52" Apr. 19 252,893 .56 "H-53" Apr. 21 235,306.78 "H-54" Apr. 24 87,871.37 "H-55" Apr. 25 130,119.85 "H-56" Apr. 26 325,292.07 "H-57'' Apr. 27 132,934.74 "H-58" May 2 321,791.26 "H-59" May 8 87,026.71 "H-60" May 11 254,386.05 "H-61" May 15 73,400.00 "H-62" May 18 183,529.43 "H-63" May 22 154,767.57 "H -64" May 24 309,428.35 "H-65" May 25 266,254.41

DECISION C.T.A. Case No. 7716 "H-66 " June 2 219,956.80 "H-67" June 6 140,622.57 "H-68" June 13 234,333 .17 "H-69" June 14 129,125.28 "H-70" June 21 84,891.20 "H-71" June 26 216,008.86 "H-72"• June 28 152,481.16 "H-73" Jul y 5 231,898.80 "H-74" July 10 p 226,754.64 As shown in the summaries of removals attached to the returns, the said excise tax payments pertained to the following petroleum products locally manufactured and removed by petitioner Petron from its Pandacan Terminal starting January 5, 2006 to July 7, 2006: Removals Date Aviation Turbo Jet Unleaded Premium Total Exhibit Fuel Lubricatinq Oils Gasoline Withdrawn Excise Number Excise Tax Excise Tax Excise Tax (Year 2006) Taxes Paid No. of Paid No. of Paid No. of Paid liters (P3.67/Iiter) liters (P4.50/Iiter) liters (P4.35/Iiter) "H-a" Jan . 5 51 ,500 p 189,005 .00 3,870 p 17 ,416 .76 P206,421 .75 "H-1-a" Jan . 6 62 ,078 227,826 .26 660 2,970 .32 9,425 P40 ,998 .75 271,795 .32 "H-2-a" Jan . 10 58 ,767 215,674 .89 1,026 4,615 .38 220,290.27 '' H-3-a'' Jan . 12 74 ,272 272 ,578 .24 62 280.44 272 ,858 .68 "H-4-a" Jan . 13 27 ,206 99 ,846 02 1,918 8,631 .90 108,477.92 "H-5-a" Jan. 14 63 ,980 234 ,806 .60 633 2,849 .76 237,656 .36 "H-6-a" Jan. 17 38 ,818 142,462.06 17 74 .52 142,536 .58 "H-7-a" Jan . 18 30 ,000 110,100.00 120 540 .23 110,640 .22 "H-8-a" Jan . 19 80 ,339 294,844.13 701 3,154.82 297 ,998 .94 "H-9-a" Jan . 20 75,200 275,984 .00 275,984 .00 "H-10-a" Jan . 22 36 ,580 134,248.60 134,248.60 "H-11-a" Jan . 23 45 ,200 165,884 .00 343 1,543.01 167,427.00 "H- 12-a" Jan. 25 51 ,000 187,170.00 798 3,592 .98 190,762.98 "H-13-a" Jan. 26 27 ,313 100,238 .71 1,247 5,613 .08 105,851 .78 "H-14-a" Jan . 28 39 ,266 144,106.22 661 2,974 .68 147,080 .90 "H-15-a" Feb. 4 25 ,358 93,063.86 568 2,556 .00 95 ,619 .86 "H-16-a" Feb. 9 62,216 228 ,332 .72 831 3,739 05 232 ,071 .77 "H-17-a" Feb. 14 58,749 215 ,608 .83 695 3,127.46 218,736 .28 "H-18-a" Feb. 15 66 ,111 242 ,627 .37 242,627 .37 "H-1 9-a" Feb. 16 63,492 233 ,015 .64 4,32 4 64,458 .77 6,530 28,405 .50 325,879 .90 "H-20-a" Feb .18 30 ,000 110,100.00 3 14.27 110,114.26 "H-21-a" Feb. 21 63,561 233,268 .87 2,167 9,75 1.19 243,020 .05 "H-22-a" Feb . 22 62,119 227 ,976.73 227 ,976.73 "H-23-a" Feb . 24 102,117 37 4,769.39 6 28 .53 374,797 .92 "H-25-a" Feb . 25 68,841 252 ,646.47 252 ,646.47 "H-26-a" Fe.b. 28 57,402 210,665 .34 3,874 17,433.54 228,098 .88 I

DECISION C.T.A. Case No. 7716 "H-27-a" Mar. 1 65 ,800 241,486 .00 195 876 .33 242 ,362 .33 "H-28-a" Mar.3 70 ,962 260,430 .54 1,665 7,494 .03 267 ,924 .57 "H-29-a" Mar. 8 220 ,000 807 ,400.00 2,566 11 ,548 .85 818,948 .84 "H-30-a" Mar. 10 270 ,837 993 ,971.79 993 ,971 .79 "H-31-a" Mar. 11 68 ,277 250,576 .59 250,576 .59 "H-32-a" Mar. 12 40,650 149,185.50 149,185.50 "H-33-a" Mar. 14 64 ,871 238 ,076 .57 43 194.76 238 ,271 .33 "H-34-a" Mar. 15 57 ,668 211 ,641 .56 667 3,000.87 214,642.43 "H-35-a" Mar. 16 61 ,301 224 ,974 .67 224 ,974 .67 "H-36-a" Mar. 18 30 ,186 110,782 .62 110,782 .62 "H-37-a" Mar. 20 51 ,000 187,170.00 187,170.00 "H-38-a" Mar. 22 51,500 189,005.00 718 3,232 .71 192,237.71 "H-39-a" Mar. 22 40 ,500 148,635 .00 1,246 5,604 .93 154,239 .93 "H-40-a" Mar.24 43 ,651 160,199.17 1,258 5,661 .86 165,861 .02 "H-41-a" Mar. 25 54,544 200,176.48 15 66 .83 200,243.30 "H-42-a" Mar. 26 20 ,000 73,400 .00 73,400 .00 "H-43-a" Mar. 27 81,758 300,051.86 300,051 .86 "H-44-a" Mar. 30 63 ,750 233,962 .50 233,962 .50 "H-45-a" Mar. 31 86,455 317,289 .85 4,295 19,329 .53 12,342 53 ,687.70 390,307 .07 "H-46-a" Apr. 3 25 ,271 92 ,744 .57 3,046 13,707 .77 106,452 .33 "H-48-a" Apr. 9 20 ,000 73,400.00 73 ,400.00 "H-49-a" Apr. 12 67,241 246,774.47 246,774.47 "H-50-a" Apr. 14 24 ,010 88 ,116.70 88,116.70 "H-51-a" Apr. 16 39,103 143,508.01 143,508 01 "H-52-a" Apr. 18 68 ,101 249,930.67 658 2,962.89 252,893 .56 "H-53-a" Apr. 20 61,500 225,705 .00 2,134 9,601.79 235,306.78 "H-54-a" Apr. 21 23 ,933 87,834 .11 8 37 .26 87 ,871 .37 "H-55-a" Apr. 23 35 ,455 130,119.85 130,119.85 "H-56-a" Apr 25 68,408 251,057.36 7,386 33 ,235 .97 9,425 40 ,998 .75 325,292 .07 "H-57-a" Apr. 26 36,222 132,934.74 132,934 .74 "H-58-a" Apr. 29 87 ,408 320,787 .36 223 1,003 .91 321 ,791.26 "H-59-a" May 7 23 ,713 87,026 .71 87 ,026.71 "H-60-a" May 10 69 ,315 254,386 .05 254 ,386 .05 "H-61-a" May 13 20,000 73,400 .00 73,400 .00 "H-62-a" May 17 50 ,000 183,500.00 7 29.43 183,529.43 "H-63-a" May 20 42,171 154,767 .57 154,767 .57 "H-64-a" May 23 67,477 247,640.59 7,882 35 ,470 .26 6,050 26,317 .50 309,428 .35 "H-65-a" May 24 72,545 266,240.15 3 14.27 266,254.41 "H-66-a" June 1 58 ,417 214 ,390 .39 1,237 5,566.41 219,956 .80 "H-67-a" June 5 37,098 136,149.66 994 4,472 .91 140,622 .57 "H-68-a" June 9 63 ,851 234,333.17 234 ,333 .17 "H-69-a" June 13 35 ,184 129,125.28 129,125.28 "H-70-a" June 20 20,000 73 ,400 .00 2,554 11,491 .20 84,891 .20 "H-71-a" June 23 58 ,858 216,008 .86 216,008 .86 "H-72-a" June 27 41 ,548 152,481 .16 152,481 .16 "H-73-a" July 4 57,604 211 ,406.68 8 34 .38 4,703 20,457 .75 231,898 .80 "H-74-a" July 7 56 ,880 208,749 .60 4,001 18,005 04 226,754 .64

DECISION C.T. A. Case No. 7716 A portion of the re mova ls of Jet A-1 fuel, fo r which excise taxes were already paid at P3.67 per liter, pertai ned to t he deliveries from Pet ron Pandacan to Petron Laoag, as evidenced by Withdrawal Certificates which all bear the rem ark "TAX PAID", detai led as fo ll ows: Date Withdrawal Certificate Volume Withdrawn Exhibit Number (in liters) (Year 2006) .. E'' Jan. 5 20,000 "E-1" Jan. 6 30,000 "E-2" Jan . 10 20,000 "E-3" Jan . 12 30,000 "E-4" Jan. 13 20,000 "E-5" Jan. 14 30,000 "E-6" Jan . 14 28,000 "E-7" Jan. 17 20,000 "E-8" Jan. 18 30,000 "E-9" Jan. 19 20,000 "E-10" Jan . 20 20,000 "E-11" Jan. 22 30,000 "E-12" Jan. 23 20,000 "E-13" Jan . 25 30,000 "E-14" Jan. 26 20,000 "E-15" Jan. 28 30,000 "E-16" Feb. 4 20,000 "E-17" Feb. 9 30,000 "E-18" Feb. 14 20,000 "E-19" Feb. 15 30,000 "E-20" Feb. 16 20,000 "E-21" Feb. 18 30,000 "E-22" Feb. 21 20,000 "E-23" Feb. 22 30,000 "E-24" Feb. 24 20,000 "E-25" Feb. 25 30,000 "E-26" Feb. 28 20,000 "E-27" Mar. 1 30,000 "E-28" Mar. 3 30,000 "E-29" Mar. 3 20,000 "E-30" Mar. 8 20,000 "E-31" Mar. 10 30,000 "E-32" Mar. 11 20,000 "E-33" Mar. 12 30,000 "E-34" Mar. 14 20,000 "E-35" Mar. 15 30,000 "E-36" Mar. 16 30,000 "E-37" Mar. 18 28,000 "E-38" Mar. 20 30,000 I

DECISION C.T.A. Case No. 7716 "E-39" Mar. 22 20,000 "E-40" Mar. 23 30,000 "E-41" Mar. 24 20,000 "E-42" Mar. 25 30,000 "E-43" Mar. 26 20,000 "E-44" Mar. 27 30,000 "E-45" Mar. 30 20,000 "E-46" Mar. 31 30,000 "E-47" Apr. 3 20,000 "E-48" Apr. 9 20,000 "E-49" Apr. 12 30,000 "E-50" Apr. 14 20,000 "E-51" Apr. 16 30,000 "E-52" Apr. 18 20,000 "E-53" Apr. 20 30,000 "E-54" Apr. 21 20,000 "E-55" Apr. 23 30,000 "E-56" Apr. 25 20,000 "E-57'' Apr . 26 30,000 "E-58" Apr. 29 20,000 "E-59" Apr. 29 30,000 "E-60" May 7 20,000 "E-61" May 10 30,000 "E-62" May 13 20,000 "E-63" May 17 30,000 "E-64" May 20 30,000 "E-65" May 23 20,000 "E-66" May 24 30,000 "E-67" June 1 30,000 "E-68" June 5 20,000 "E-69" June 9 30,000 "E-70" June 13 30,000 "E-71" June 20 20,000 "E-72" June 23 30,000 "E-73" June 27 30,000 "E-74" July 4 20,000 "E-75" July 7 30,000 TOTAL 1,956,000 Subsequently, petitioner Petron, through Petron Laoag, sold and delivered a tota l of 1,827,165 liters of Jet A-1 fuel to petitioner PEAC for its international air cargo flights from Laoag to Pudong, Shanghai and Taipei, detailed as follows: Aviation Date Sales Excise Taxes Del ivery Delivered/ PEAC 's Fl ight Volu me Invoice Paid Rece ipt Sold to Destinati on (i n lite rs) Exh. No. (P3 .67 /liter) Exh . No. PEAC III II "J" 1/5/2006 Pudong, Shanghai 14 ,127 p 51,846.09 "I" "J-1" 1/6/2006 Pudong , Shanghai 16,620 60 995.40 (

DECISION C.T.A. Case No. 7716 IIIII "J-2" 1/6/2006 Taipei 12,181 44 704.27 IIIII "J-3" 1/7/2006 Pudong , Shanghai 18,506 67,917.02 "I -1" "J-4" 1/8/2006 Taipei 10,415 38 223.05 "I -1" "J-5" 1/11/2006 Pudong , Shanghai 17,516 64 283.72 "I -1" "J-6" 1/12/2006 Pudong , Shanghai 14,640 53 728.80 "I-1" "J-7" 1/12/2006 Taipei 16,305 59 839.35 "I -1'' "J-8" 1/13/2006 Pudong , Shanghai 17,993 66,034.31 "I-1 " "J-9" 1/14/2006 Pudong , Shanghai 18,365 67 399.55 "I-1" "J-1 0" 1/14/2006 Pudong , Shanqhai 10,231 37 547.77 "I-2" "J-11" 1/15/2006 Pudong , Shanghai 13,853 50 840.51 "I-2" "J-12" 1/17/2006 Pudong , Shanghai 18,511 67 935.37 "I-2" "J-13" 1/17/2006 Pudong , Shanghai 2,753 10 103.51 "I-2" "J-14" 1/17/2006 Taipei 6 609 24 255.03 "I-2" "J-15" 1/18/2006 Pudong , Shanghai 18,617 68 324.39 "I-2" "J-16" 1/18/2006 Pudonq , Shanqhai 3 079 11 299.93 "I-2" "J-17" 1/19/2006 Taipei 9,611 35,272.37 "I-2" "J-18" 1/19/2006 Pudong , Shanghai 18 654 68 460.18 "I-2" "J-19" 1/19/2006 Pudong , Shanghai 6,098 22,379.66 "I-3" "J-20" 1/20/2006 Pudonq , Shanghai 18,119 66 496.73 "I-3" "J-21" 1/20/2006 Pudong , Shanghai 4,563 16 746.21 "I- 3'' "J-22" 1/20/2006 Pudong , Shanghai 3,380 12,404.60 "I -3'' "J-23" 1/21/2006 Pudong , Shanghai 15 945 58 518.15 "I-4" "J-24" 1/22/2006 Taipei 11 978 43 959.26 "I-4" "J-25" 1/24/2006 Pudong , Shanghai 18,392 67 498.64 "I-4" "J-26" 1/24/2006 Pudong , Shanghai 2,002 7 347.34 "I-4" "J-27" 1/25/2006 Pudong, Shanghai 18,322 67 241.74 "I-4" "J-28" 1/25/2006 Pudong , Shanghai 3 103 11 388.01 "I-5" "J-29" 1/26/2006 Taipei 4,557 16,724.19 "I-5" "J-30" 1/26/2006 Pudong , Shanghai 12 928 47 445 .76 "I-5" "J-31" 1/26/2006 Pudong , Shanghai 3,934 14,437.78 "I-5" "J-32" 1/27/2006 Pudong , Shanghai 12 075 44 315.25 "I-6" "J-33" 2/9/2006 Pudong , Shanghai 16,662 61 149.54 "I-6" "J-34" 2/9/2006 Pudong , Shanghai 2 980 10 936 .60 "I-6" "J-35" 2/10/2006 Pudong , Shanghai 12,378 45 427.26 "I-7" "J-36" 2/12/2006 Pudonq , Shanqhai 2 859 10 492.53 "I-7" "J-37" 2/14/2006 Pudong , Shanghai 18,034 66 184.78 "I-7" "J-38" 2/14/2006 Pudong , Shanghai 2 694 9 886.98 "I-7'' "J-39" 2/15/2006 Pudong , Shanghai 18,017 66 122.39 "I-7'' "J-40" 2/16/2006 Pudong , Shanghai 18 229 66 900.43 "I-7'' "J -41 " 2/17/2006 Pudong , Shanghai 18,291 67 127.97 "I-7'' "J-42" 2/17/2006 Pudong , Shanghai 2,819 10 345 .73 "I-7'' "J-43" 2/18/2006 Pudonq , Shanqhai 15,444 56 679.48 "I-7'' "J-44" 2/18/2006 Pudong , Shanghai 6,119 22,456.73 "I-8" "J-45" 2/21/2006 Pudong , Shanghai 17,332 63,608.44 "I-8" "J-46" 2/21/2006 Pudonq , Shanqhai 2511 9 215.37 "I-8" "J-47" 2/22/2006 Pudong , Shanghai 16,453 60,382 .51 "I-8" "J-48" 2/22/2006 Pudong , Shanghai 3 365 12 349.55 "I-8" "J-49" 2/23/2006 Pudong , Shanghai 15,104 55 431.68 "I-8" "J-50" 2/23/2006 Pudong , Shanghai 4 058 14 892.86 "I-9" "J-51" 2/23/2006 Taipei 2,788 10 231.96 I

DECISION C.T.A. Case No. 7716 "I-9" "J-52" 2/24/2006 Pudon_g_, Shanghai 14 764 54 183.88 "I-9" "J-53" 2/25/2006 Pudong , Shanghai 15J89 57,945.63 "I-9" "J-54" 2/25/2006 Pudong , Shanghai 9073 33,297.91 "I-9" "J-55" 2/26/2006 Taipei 9,105 33,415.35 "I-9" "J-56" 2/26/2006 Taipei 2,353 8,635.51 "I-9" "J-57" 2/28/2006 Pudong , Shanghai 15,940 58,499.80 "I-9" "J-58" 2/28/2006 Pudong , Shanghai 6,013 22 067 .71 "I-ll" "J-59" 3/2/2006 Pudong , Shanghai 18,767 68,874.89 "I-ll" "J-60" 3/2/2006 Pudong , Shanghai 2 910 10,679.70 "I-12" "J-61" 3/3/2006 Pudong , Shanghai 18 510 67 931.70 "I-12" "J-62" 3/3/2006 Pudong , Shanghai 2,272 8 338.24 "I-12" "J-63" 3/4/2006 Pudong , Shanghai 16,164 59,321.88 "I-13" "J-64" 3/4/2006 Pudong , Shanghai 6 361 23 344.87 "I-13" "J-65" 3/7/2006 Pudon_g_, Shan_g_hai 17,528 64,327.76 "I-14" "J-66" 3/7/2006 Taipei 6,866 25 198.22 "I-14" "J-67" 3/8/2006 Pudong , Shanghai 18,370 67,417.90 "I-14" "J-68" 3/8/2006 Pudong, Shanghai 4 258 15 626.86 "I-14" "J-69" 3/9/2006 Taigei 4,983 18,287.61 "I-14" "J-70" 3/9/2006 Pudong, Shanghai 9 715 35 654.05 "I-14" "J-71" 3/10/2006 Pudong , Shanghai 14,244 52,275.48 "I-14" "J-72" 3/11/2006 Pudo~g. Shanghai 8,580 31 488.60 "I-14" "J-73" 3/11/2006 Pudong , Shangheli 14,604 53 596.68 "I-15" "J-74" 3/12/2006 Taipei 10 629 39 008.43 "I-16" "J-75" 3/14/2006 Pudong , Shanghai 18 514 67,946 .38 "I-16" "J-76" 3/15/2006 Taipei 8 370 30 717.90 "I-16" "J-77" 3/15/2006 Pudong , Shanghai 18,218 66 860 .06 "I-16" "J-78" 3/16/2006 Pudong , Shanghai 18,224 66,882 .08 "I-16" "J-79" 3/16/2006 Pudong , Shar1_ghai 5,544 20,346.48 "I-16" "J-80" 3/17/2006 Pudon_g_, Shanghai 18 307 67 186.69 "I-16" "J-81" 3/17/2006 Pudon_g_, Shanghai 2,622 9,622.74 "I-17'' "J-82" 3/18/2006 Pudon_g_, Shanghai 18 770 68,885 .90 "I-17" "J-83" 3/18/2006 Pudong , Shanghai 3,437 12,613.79 "I-17" "J-84" 3/19/2006 Taipei 8,105 29 745.35 "I-17" "J-85" 3/21/2006 Pudong , Shanghai 18,419 67,597.73 "I-17" "J-86" 3/21/2006 Pudong, Shanghai 4 102 15 054.34 "I-18" "J-87" 3/21/2006 Taipei 8522 31 275.74 "I-18" "J-88" 3/22/2006 Pudong , Shanghai 18,000 66 060.00 "I-18" "J-89" 3/22/2006 Pudong , Shanghai 1,175 4,312.25 "I-18" "J-90" 3/22/2006 Taipei 12 441 45 658.47 "I-18" "J-91" 3/23/2006 Pudong, Shanghai 12,347 45 313.49 "I-18" "J-92" 3/23/2006 Taipei 12,618 46 308.06 "I-18" "J-93" 3/24/2006 Pudong , Shanghai 13 232 48 561.44 "I-19" "J-94" 3/25/2006 Taipei 6 113 22 434.71 "I-19" "J-95" ' 3/25/2006 Pudon_g_, Shan_g_hai 10,837 39,771.79 "I-19" "J-96" 3/26/2006 Taigei 13 591 49 878.97 "I-19" "J-97'' 03/29/069 Pudong , Shanghai 18,881 69 293.27 "I-19" "J-98" 3/29/2006 Taipei 7 638 28 031.46 "I-19" "J-99" 3/30/2006 Pudong , Shanghai 8,781 32,226.27 "I-19" "J-1 00" 3/30/2006 Taipei 6,875 25 231.25 "I-20" "J-101" 4/1/2006 Pudong , Shanghai 18 857 69 205.19 t'. ,., ..., ·v b •

DECISION C.T.A. Case No .•77 16 "I-20" "J-1 02" 4/1 /2006 Pudong , Shanghai 2 253 8 268.51 "I-21" "J-1 05" 4/2/2006 Taipei 9,875 36,241.25 "I-21" "J-104" 4/5/2006 Pudong , Shanghai 18,426 67 623.42 "I-21" "J-103" 4/5/2006 Pudong , Shanghai 3,970 14 569 .90 "I-21 " "J-1 07" 4/8/2006 Pudong , Shanghai 14 482 53 148.94 "I-21 " "J-106" 4/8/2006 Pudong , Shanghai 6 936 25 455.12 "I-22" "J-108" 4/9/2006 Taipei 2 104 7 721.68 "I-22" "J-1 09" 4/11/2006 Pudong , Shanghai 3 107 11,402.69 "I-22" "J-110" 4/12/2006 Pudong , Shanghai 13 307 48 836.69 "I-22" "J-111" 4/12/2006 Pudong , Shanghai 11,692 42 909.64 "I-22" "J -112" 4/13/2006 Pudong , Shanghai 6 448 23 664.16 "I-23 " "J-114" 4/14/2006 Pudong , Shanghai 4,128 15,149.76 "I-23" "J-113" 4/14/2006 Pudong , Shanghai 18 035 66 188.45 "I-23" "J-115" 4/15/2006 Pudong , Shanghai 18,756 68,834.52 "I-23" "J-116" 4/15/2006 Pudong , Shanghai 3 502 12 852.34 "I-23" "J-117" 4/15/2006 Pudong , Shanghai 18,361 67,384 .87 "I-24" "J-118" 4/19/2006 Pudong , Shanghai 18 525 67 986.75 "I-24" "J-119" 4/19/2006 Pudong , Shanghai 1,004 3,684 .68 "I-24" "J-120" 4/20/2006 Pudong , Shanghai 17,179 63,046.93 "I-24" "J-1 2 1" 4/21/2006 Pudong , Shanghai 18 858 69 208.86 "I-24" "J-122" 4/21/2006 Pudong , Shanghai 2 017 7 402.39 "I-25" "J-123" 4/22/2006 Pudong , Shanghai 17 705 64,977.35 "I-25" "J-124" 4/23/2006 Taipei 3 018 11 076.06 "I-25" "J-125" 4/25/2006 Pudong , Shanghai 7 843 28,783.81 "I-25" "J-126" 4/25/2006 Taipei 7 760 28 479.20 "I-25" "J-127" 4/26/2006 Pudong , Shanghai 18 716 68 687.72 "I-26" "J-128" 4/26/2006 Taipei 1 533 5 626.11 "I-26" "J-129" 4/27/2006 Pudong , Shanghai 15,941 58,503.47 "I-26" "J-130" 4/27/2006 Pudong , Shanghai 5 613 20 599.71 "1-26" "J-131 " 4/28/2006 Pudong , Shanghai 12,828 47,078.76 "I-27" "J-132" 5/6/2006 Pudong , Shanghai 18 482 67 828.94 "I-27" "J-133" 5/6/2006 Pudong , Shanghai 2,406 8,830 .02 "I-27" "J-134" 5/9/2006 Taipei 2 192 8 044.64 "I-27" "J-135" 5/10/2006 Pudong , Shanghai 18,404 67,542.68 "I-27" "J-136" 5/10/2006 Pudong , Shanghai 1 677 6,154.59 "I-27" "J-137" 5/11/2006 Pudong , Shanghai 7 598 27 884.66 "I-28" "J-138" 5/13/2006 Pudong , Shanghai 21,903 80 384 .01 "I-28" "J-139" 5/1 3/2006 Pudong, Shanghai 1,457 5,347.19 "I-28" "J-140" 5/14/2006 Taipei 5 528 20,287.76 "I-28" "J-141 " 5/17/2006 Pudong , Shanghai 16,558 60,767.86 "I-28" "J-142" 5/18/2006 Pudong , Shanghai 14 348 52 657.16 "I-29" "J-143" 5/20/2006 Pudong , Shanghai · 17 313 63 538.71 "I-29" "J-144" 5/23/2006 Taipei 9 380 34 424.60 "I-29" "J-145" 5/24/2006 Pudong , Shanghai 10,210 37,470.70 "I-30" "J-146" 5/25/2006 Pudong , Shanghai 2 736 10 041.12 "I-30" "J-147" 5/27/2006 Pudong , Shanghai 18,177 66,709.59 "I-31" "J-148" 5/30/2006 Pudong , Shanghai 3 009 11 043 .03 "I-32" "J-149" 5/31/2006 Pudong , Shanghai 17,597 64,580.99 "I-32" "J-150" 5/31/2006 Pudong , Shanghai 3 900 14 313.00 "I-33" "J-151" 6/3/2006 Pudong , Shanghai 11 350 41,654.50 I

DECISION C.T.A. Case No. 7716 "I-33" "J-152" 6/7/2006 Pudong , Shanghai 6 047 22 192.49 "I-33" "J-153" 6/8/2006 Pudong , Shanghai 7,838 28 765.46 "I-34" "J-154" 6/11/2006 Taipei 11130 40 847.10 "I-34" "J-155" 6/14/2006 Taipei 2,428 8 910.76 "I-34" "J-156" 6/14/2006 Pudong , Shanghai 13 030 47 820.10 "I-35" "J-157" 6/17/2006 Pudong , Shanghai 6,811 24 996.37 "I-35" "J-158" 6/21/2006 Pudong , Shanghai 2 298 8 433.66 "I-35" "J-159" 6/22/2006 Pudong , Shanghai 12,804 . 46,990.68 "I-35" "J-160" 6/22/2006 Pudong , Shanghai 7 151 26 244.17 "I-36" "J-161" 6/24/2006 Pudong , Shanghai 14 944 54 844.48 "I-36" "J-162" 6/25/2006 Taipei 6 133 22 508 .11 "I-36" "J-163" 6/27/2006 Taipei 2,611 9,582.37 "I-37" "J-164" 6/30/2006 Pudong , Shanghai 12,441 45 658.47 "I-38" "J-165" 7/2/2006 Pudong , Shanghai 19,126 70, 192.42 "I-39" "J-166" 7/2/2006 Taipei 13,537 49 680 .79 "I-39" "J-167" 7/4/2006 Pudong , Shanghai 6,998 25,682.66 "I-39" "J-168" 7/5/2006 Pudong , Shanghai 8 876 32 574.92 "I-40" "J-169" 07/07/06 Pudong , Shanghai 14,358 52,693 .86 Total 1,827, 165 p 6,705,695 .55 Evidently, petitioner Petron sold and delivered Jet A-1 fuels to petitioner PEAC and paid the corresponding excise taxes thereon. The Court will now resolve whether or not there was an erroneous payment made by petitioner Petron on the said transactions. In U.S.T. Cooperative Store vs. The City of Ma nila, et a!Y/ the Supreme Court explained that "there is erroneous payment of taxes when a taxpayer pays under a mistake of fact, as for the instance in a case where he is not aware of an existing exemption in his favor at the time the payment was made." Such payment is held to be not voluntary and, therefore, can be recovered or refunded. 14 13 G.R. No. L-17133, December 31, 1965 14 The Commissioner of Internal Revenu e vs. Acesite (Philippines) Hotel Corporation, G.R. No. 14729~ ''"'"'" 16, 2007 I 66Q

' . DECISION C.T.A. Case No. 7716 The tax subject of this case is excise ta x on petroleum products. Section 135 of the NIRC of 1997 exempts the following entities from paying excise ta xes on petroleum products sold to them: 1. International carriers of Philippine or foreign registry on their use or consumption outside the Philippines, provided the petroleum products sold to these international carriers must 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 BIR Commissioner; 2. Exempt entities or agencies covered by tax treaties, conventions, and other international agreements for their use or consumption, provided the country of said foreign international carrier or exempt entities or agencies exempts from similar ta xes petroleum products sold to Philippine carriers, entities or agencies; and 3. Entities which are by law exempt from direct and indirect ta xes. Petitioner Petron is not among the above-mentioned exempt entities. Even though it is settled that petitioner Petron had sold and delivered petroleum products to petitioner PEAC, petitioner Petron's entitlement to ta x refund will depend on whether petitioner PEAC will qualify as one of the exempt entities referred to in Section 135 of the NIRC of 1997. The fact that petitioner PEAC is an international carrier with authorized international flights from Laoag to Taipei and Pudong, Shanghai are duly established by the following documents : 1. Letters from the Civil Aeronautics Board of the Philippines authorizing petitioner PEAC to operate its air cargo flights from Laoag to Taipei and Pudong, Shanghai effective October 31, 2005 to October 30, 2006/ 5 2. License of Operation issued by the Civil Aviation Administration "B<h;b;ts "M~:,~~~~a (CAAC) allowing petitioner PEAC to operate reg~ 670

DECISION C.T.A. Case No. 7716 round trip cargo flights between Laoag and Pudong, Shanghai/ 6 and 3. Civil Aeronautics Administration Ministry of Transportation and Communications Air Route Certificate issued by the Chinese Government authorizing petitioner PEAC to operate air service with route of Laoag to Taipei and vice versaY Clearly, petitioner PEAC is exempt from excise ta xes on the petroleum products sold to it by petitioner Petron, pursuant to Section 135 of the NIRC of 1997. The excise taxes paid by petitioner Petron on the Jet A-1 fuels sold and delivered to petitioner PEAC, an exempt entity, partake the nature of erroneously or illegally collected taxes. Hence, it is refundable pursuant to Section 229 of the NIRC of 1997, subject to the two-year prescriptive period reckoned from the date of payment of the excise ta x. Records show that the earliest withdrawal of Jet A-1 fuel covered by the instant case was made on January 5, 2006 18 . Petitioners PEAC 19 and Petron 20 filed their respective administrative claim for refund on August 9, 2007 and the instant Petition for Review on January 3, 2008. Ergo, the claims for refund were seasonably filed. In recapitulation, upon examination of the documentary evidence 21 presented, the Court finds that petitioner Petron has duly substantiated its refund claim and is therefore entitled to ta x refund in the total amount of P6,705,695.50 for its sale of Jet A-1 fuels to petitioner PEAC for the latter's international air 16 Exhibits "0 " to " 0-10" 17 Exhibits " P" to " P-2" 18 Exhibit "E" I 19 Exhibits "C" to "C-3 " 20 Exhibits " D" to " D-3" 21 Exhibits ''J'' to "J - 129" " P" to "P-2" " F" to "F-48" "F-49" to "F-53 " "G" to "G-48" " E" to "E-75 " and "H"to "H-74-a" ' ' ' ' '

DECISION C.T .A. Case No. 7716 cargo flights from Laoag City to Taipei and Pudong, Shanghai from January 5, 2006 to July 7, 2006. WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED . Petitioner PEAC is hereby declared not entitled to a ta x refund for not being t he "taxpayer" contem plated in Section 22(N) of the NIRC of 1997. While petitioner Petron is hereby found as the proper party to file a claim fo r refund and entitled to a refund of the excise ta xes it erroneously paid on the petroleum products sold to petitioner PEAC. Accordingly, respondent Commissioner of Internal Revenue is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner Petron in the amount of SIX MILLION SEVEN HUNDRED FIVE THOUSAND SIX HUNDRED NINETY- FIVE PESOS AND 55/100 (P6,705,695 .55), representing erroneously paid excise ta xes for the period coveri ng January 5, 2006 to July 7, 2006. SO ORDERED . TISTA WE CONCUR: Q_ ~ \9 - Q~ ERNESTO D. ACOSTA Presiding Justice CAE~ANOVA Associate Justice

DECISION C.T.A. Case No. 7716 CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ~...._::- t- - c~ ERNESTO D. ACOSTA Presiding Justice Chairperson, First Division