Court of Tax Appeals · Special First Division
0Petron Corporation vs. Commissioner of Internal Revenue
:.
REPUBLIC OF THE PHILIPPINES
COURT OFT AX APPEALS
QUEZON CITY
SPECIAL FIRST DIVISION
PETRON CORPORATION,
Petitioner,
CT A Case Nos. 9993 & 10015
Members:
- versus -
DEL ROSARIO, PJ, Chairperson,
MANAHAN, and
REYES-FAJARDO, lL
COMMISSIONER OF
INTERNAL REVENUE,
Promulgated:
Respondent.
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- ,r/AifH/H
DECISION
REYES-FAJARDO, L;_ Before the Court are consolidated Petitions for Review filed by Petron Corporation against respondent Commissioner of Internal Revenue (CIR), seeking the refund of an aggregate amount of P465,648,057.91, representing excise taxes paid between January 1, 2017 to December 31, 2017 relative to locally-produced and imported Jet A-1 fuel, which were sold and delivered subsequently to various international carriers and tax-exempt entities, viz.:
Docket
CTA Case No. 9993 CTA Case No. 10015
Total
Subject Jet A-1 Fuel
Locally-produced
Imported
FACTS
Amount
Pl 0,504,805. 46 455,143,252.45 P465,648,057.91 Petitioner Petron Corporation is a domestic corporation duly organized and existing under Philippine law, "to purchase or otherwise acquire, store, hold, transport, use, experiment with, market distribute exchange, sell, and otherwise dispose of, import, export, handle, trade and generally deal in, refine, treat, reduce, distill, manufacture and smelt any and all kinds of petroleum products, oil, CfA Case Nos. 9993 & 10015 gas,"1 with principal office address at SMC Head Office Complex 40 San Miguel Avenue, Mandaluyong City.2 It is represented by its counsel, Du-Baladad & Associates, with office address at the 20th Floor, Chatham House, Rufino corner Valero Sts., Salcedo Village, Makati City where it may be served with notices, pleadings and other processes of this Court. 3 Respondent is the head of the Bureau of Internal Revenue (BIR), empowered to perform the duties of the office, including acting upon and approving claims for refund or tax credit. Its office address is at the 5th Floor, BIR National Office Building, BIR Road, Diliman, Quezon City.4 Claims filed before the BIR The present controversy stems from Petron Corporation's two
(2) letter-applicationss filed on June 22, 2018 before the Bureau of Internal Revenue (BIR), requesting the refund or issuance of tax credit certificates of the aggregate amount of P465,648,057.91 (administrative claims), representing excise taxes paid between January 1, 2017 to December 31, 2017 relative to Jet A-1 fuel, which were sold and delivered subsequently to various international carriers and tax- exempt entities, viz.:
Exhibits
"P-8-L," "P-9-L" "P-19," "P-20"
Total
Subject Jet A-1 Fuel
Locally-produced
Imported
Amount
P10,504,805.46 455,143,252.45 P465,648,057.91 Petron Corporation claimed to be entitled to a refund or credit of excise taxes paid, pursuant to Section 135 of the National Internal Revenue Code of 1997, as amended (Tax Code). It alleged6 as follows: t Petitioner's Amended Articles of Incorporation, Exhibit "P-2-L," Docket- Vol. IV, p. 2009. 2 Par. 1, Admitted Facts, Joint Stipulation of Facts and Issue GSFI), Docket (Cf A Case No. 10015) - Vol. 3, p. 1141.
.
3 Par. 2, Admitted Facts, JSFI, Docket (CTA Case No. 9993) -Vol. III, p. 976; Par. 2, Admitted Facts, JSFI, Docket (CfA Case No. 10015) - Vol. III, p. 1141. .
4 Par. 2, Admitted Facts, JSFI, Docket (CTA Case No. 9993) - Vol. III, p. 976; Par. 2, Adm1tted Facts, JSFI, Docket (CT A Case No. 10015) - Vol. III, p. 1141. s Applications for Tax Credits/ Refunds (BIR Form No. 1914).
6 Exhibits "P-8-L," Docket- Vol. IV, pp. 2049-2050; Docket- Vol V., pp. 3000-3001.
First, it is a producer and importer of Jet A-1 and unleaded gasoline fuel. It operates the Petron Bataan Refinery (PBR) where it manufactures and processes crude oil into a full range of petroleum products, including Jet A-1 and unleaded gasoline fuel (i.e., locally- produced). On the other hand, it imports Jet A-1 fuel in the event that the projected local production is insufficient to supply the projected demand for Jet A-1 fuel (i.e., imported). Second, after manufacture or importation, as the case may be, Petron Corporation stores the fuel in PBR until these are withdrawn/removed for delivery to Petron Corporation's local depots, where, in turn, it will be kept until the same is sold/ delivered to various customers, including international carriers. Third, between January 1, 2017 and December 31, 2017, Petron Corporation paid excise taxes relative to locally-produced (i.e., upon removal from local depots) and imported fuel (i.e., upon importation) Jet A-1 fuel, pursuant to Sections 130(A)(2) and 131(A), in relation to Section 148(f) and (g), of the Tax Code. Fourth, said petroleum products removed from local depots, and upon which excise taxes had been paid were sold subsequently to (a) various international carriers of Philippine or foreign registry, for use and consumption outside the Philippines, (b) various international carriers of foreign registry, whose countries of registry exempt Philippine carries from similar taxes, and (c) tax-exempt entities or agencies covered by tax treaties, conventions, and other international agreements for their use or consumption, viz.:
Subject
Locally-produced fuel
Jet A-1
Unleaded premium gasoline Imported fuel
Total
Volume in liters
Excise Taxes Paid
838,200 P3,646,170.00 1,868,838 _ _ _:6~ ,8-=-- 58 :.:._ ,6 .:....::.3....:....
5._ 46_ 124,017,235 126,724,273 P10,504,805.46 455,143,252.45 P465,648,057.91 The CIR' s inaction on the above-discussed administrative claims prompted Petron Corporation to file the present petitions Qudicial claims) on December 21, 20187 and January 23, 2019,8 which were docketed as CTA Case Nos. 9993 and 10015, respectively. Proceedings before the Court The CIR filed separate Answers in CTA Case Nos. 9993 and 10015 on February 26, 20199 and March 4, 2019,10 respectively. Pre-trial was terminated upon the Court's approvaln of the parties' Joint Stipulation of Facts and Issues in each case.12 Thereafter, the Court issued separate Pre-Trial Orders for the cases.13 In the meantime, the CIR submitted the relevant BIR Records on March 6, 2019.14 Upon Petron Corporation's motion,15 the Court resolved to consolidate the instant petitions.16 During trial, the following persons testified for Petron Corporation: (1) Leojun Antonio A. Gonzales,17 former Area Sales Manager- Industrial North Luzon, Petron Corporation; (2) Ryan Kris B. Rebong,18 Stock and Depot Finance Supervisor, Petron Corporation; 7 Docket (CTA Case No. 9993)- Vol. I, pp. 10 to 36. 8 Docket (CTA Case No. 10015)- Vol. 1, pp. 12 to 41. 9 Docket (CfA Case No. 9993)- Vol. I, pp. 101 to 109. 10 Docket (CTA Case No. 10015)- Vol. 1, pp. 82 to 89. tl Resolution dated July 26,2019, Docket (CTA Case No. 9993) - Vol. III, p. 987; Resolution dated September 11, 2019, Docket (CTA Case No. 10015)- Vol. 3, p. 1151. 12 Docket (CTA Case No. 9993)- Vol. III, pp. 976 to 984.; Docket (CTA Case No. 10015)- Vol. 3, pp. 1141 to 1149.
13 Docket (CTA Case No. 10015) - Vol. 3, pp. 1215 to 1223; Docket (CTA Case No. 10015)- Vol. 3, pp. 1215 to 1223.
14 Respondent's Compliance dated March 6, 2019, Docket (CTA Case No. 10015)- Vol. 1, pp. 93 to 95.
15 Docket (CTA Case No. 9993) - Vol. III, pp. 1174 to 1182; Docket (CTA Case No. 10015)- Vol. 3, pp. 1253 to 1261.
16 Minutes of the hearing held on, and Order dated, December 3, 2019, Docket (CTA Case No. 9993)- Vol. III, pp. 1184 to 1186; Resolution dated February 11, 2020, Docket (CTA Case No. 10015) - Vol. 3, pp. 1283 to 1284. 17 Exhibit "P-193", Docket (CTA Case No. 9993) - Vol. I, pp. 210 to 221; Minutes of the hearing held on, and Order dated, December 3, 2019, Docket (CTA Case No. 9993) - Vol. ill, pp. 1184 to 1186.
18 Exhibit "P-194-L", Docket (CT A Case No. 9993) - Vol. I, pp. 263 to 277; Exhibit "P-194-I", Docket (CTA Case No. 10015) - Vol. 1, pp. 442 to 454; Minutes of the hearing held on, and Order dated, March 10,2020, Docket (CTA Case Nos. 9993 & 10015)- Vol. III, pp. 1250 to 1252.
.....
(3) Ma. Clarissa C. Arguelles,19 Tax Manager, Petron Corporation; (4) Conrado M. Briones,20 the Court-commissioned Independent Certified Public Accountant (ICP A);21 (5) Percival S. Paredes,22 former Account
and Sales Coordinator -
National Accounts (International and
Domestic Aviation), Petron Corporation; (6) Michael F. Manzano,23 Commercial Services Manager, Petron Corporation; and (7) Allan James T. Tenorio,24 former Terminal Manager for the Joint Oil Companies Aviation Fuel Storage Plant (JOCASP)/NAIA, Petron Corporation.
The ICPA Report was submitted on December 4, 2020.25 Petron Corporation filed its Formal Offer of Evidence on May 21, 2021.26 After the CIR's submission of its Comment (on Petitioner's Formal Offer of Evidence with Manifestation) on June 9, 2021,27 the Court issued a Resolution dated June 1, 202228 admitting Petron Corporation's exhibits, but excluded those which were not identified by its witnesses, the originals thereof were not presented for comparison, and/ or which could not be found in the case records. For its part, the CIR manifested that it will no longer present any witness.29 19 Exhibit "P-190", Docket (CTA Case No. 9993)- Vol. II, pp. 345 to 376; Exhibit "P-191", Docket (CTA Case No. 9993)- Vol. III, pp. 1059 to 1066; Minutes of the hearing held on, and Order dated, October 15, 2019, Docket (CTA Case No. 9993) - Vol. III, pp. 1079 to 1084; Exhibit "P- 120", Docket (CTA Case No. 10015)- Vol. 2, pp. 551 to 572; Minutes of the hearing held on, and Order dated, November 7, 2019, Docket (CTA Case No. 10015)- Vol. 3, pp. 1244 to 1246. 2o Exhibit "P-195-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, pp. 1282 to 1288; Exhibit "P- 196", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 1729 to 1814; Minutes of the hearing held on, and Order dated, November 4, 2020, Docket (CTA Case Nos. 9993 & 10015)- Vol. III, pp. 1300 to 1303, and 1306 to 1308, respectively; Minutes of the hearing held on, and Order dated, January 27, 2021, Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 1824 to 1833. 21 Oath of Commission dated November 4, 2020, Docket (CTA Case Nos. 9993 & 10015) - Vol. III, p. 1305.
22 Exhibit "P-192", Docket (CTA Case No. 9993)- Vol. III, pp. 1136 to 1147; Minutes of the hearing held on, and Order dated, November 19,2019, Docket (CTA Case No. 9993)- Vol. III, pp. 1162 to 1164.
n Exhibit "P-198", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, pp. 1354 to 1370; Minutes of the hearing held on, and Order dated, January 27,2021, Docket (CTA Case Nos. 9993 & 10015) -Vol. IV, pp. 1824 to 1833.
2~ Exhibit "P-199", Docket (CTA Case No. 10015)- Vol. 1, pp. 486 to 495; Minutes of the hearing held on, and Order dated, January 27,2021, Docket (CTA Case Nos. 9993 & 10015) - Vol. IV, pp. 1828 to 1833.
25 Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, pp. 1610 to 1698.
26 Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 1911 to 2003.
27 Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 3065 to 3067.
28 Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 3088 to 3099. Also see Resolution dated October 19,2022, Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 3156 to 3168.
29 Comment (on Petitioner's Formal Offer of Evidence with Manifestation), Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 3065 to 3067.
Thereafter, the parties filed their respective Memoranda.3o The consolidated cases were submitted for decision December 5, 2022.31
Petron Corporation's Arguments
on Petitioner argues that its administrative and judicial claims for refund or tax credit were timely filed; that the imported and locally- produced tax-paid Jet A-1 and unleaded gasoline fuel sold and delivered to various international carriers and tax-exempt entities are exempt from excise tax, and any excise tax paid on their removal were erroneously paid; and that petitioner is entitled to a refund or issuance of tax credit certificate in the amount of P465,648,057.91, representing erroneous excise taxes paid on petroleum products exempt under Section 135 of the Tax Code.
The CIR's Arguments
The CIR counters that Petron Corporation is liable to pay excise taxes on its manufactured and imported Jet A-1 fuel and unleaded gasoline; that the excise taxes paid for the period from January 1, 2017 to December 31, 2017, in the amount of P10,504,805.46 and P455,143,252.45, were not erroneously /illegally paid; and that claims for refund of excise taxes paid are authorized only by Section 130(D) of the Tax Code and not by Section 135(C) thereof.
ISSUES
The Court is tasked to ascertain Petron Corporation's entitlement to a refund or credit of alleged erroneously I illegally paid excise taxes on locally-produced and imported fuel it sold subsequently to international carriers and tax-exempt entities. Resolution of this main issue turns upon the following questions: First, is Petron Corporation the proper party to request for a refund of excise taxes paid on its petroleum products sold to international carriers? 30 For respondent, Docket (CT A Case Nos. 9993 & 10015)- Vol. V, pp. 3100 to 3110; For petitioner, Docket (CTA Case Nos. 9993 & 10015) - Vol. V, pp. 3169 to 3230. 3I Minute Resolution dated December 5, 2022, Docket (CTA Case Nos. 9993 & 10015) - Vol. V, P· 3232.
L
Cf A Case Nos. 9993 & 10015
Second, did Petron Corporation file its administrative and judicial claims within the time allowed by the law? Third, is the payment of excise taxes paid on manufactured or imported petroleum products but sold subsequently to international carriers or tax-exempt entities erroneous/ illegal and, thus, subject to refund? Fourth, if the subject excise tax payments on petroleum products had been erroneous/ illegal, did Petron Corporation establish its entitlement to a refund thereof?
OUR RULING
The consolidated Petitions for Review are partially granted. For reasons set out below, We rule that Petron Corporation is the proper party to seek the refund subject of the instant cases, that its administrative and judicial claims had been timely filed, and that the subject excise tax payments had been erroneous/illegal. However, it proved/ substantiated its entitlement to a refund or credit only to the extent of P459,958,622.12.
Petron
Corporation, as the manufacturer/importer, is the proper party to request for a refund of excise taxes paid on its petroleum products sold to international carriers.
We recognize Petron Corporation's standing m lodging the instant claims for refund.
Section 135 of the Tax Code provides: SECTION 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall ~e stored in a bonded storage tank and may be disposed of only m 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.
In the recent case of Pilipinas Shell Petroleum Corporation vs. Commissioner of Internal Revenue,32 the Supreme Court discussed the nature of excise taxes. An excise tax pertains to a levy imposed on specific manufactured or imported goods intended for domestic consumption, rather than being a charge on the exercise of a privilege. As an indirect tax, its legal responsibility falls upon one entity, yet the economic tax burden can be transferred to another. In the context of Petron Corporation's manufacture of petroleum products sold to various entities, the tax liability or the fiscal responsibility for the payment of excise tax remains with Petron Corporation, notwithstanding its capacity to transfer the economic weight or the tax burden, to its consumers. Pertaining to Section 135 of the Tax Code, in instances where petroleum products are vended to tax-exempt entities, it is imperative that the benefit of such exemption aligns with the party actually bearing the tax liability. Consequently, the exemption should appropriately correspond to Petron Corporation, the entity shouldering the fiscal responsibility to settle the tax. In particular, the Supreme Court explained: Based on (a) the nature of excise taxes as a property tax and an indirect tax, and (b) the principle that a buyer, when shouldering the tax burden, does not become the statutory taxpayer, it is thus clear that the purchaser of local products (such as international carriers) cannot be deemed to have been conferred a tax exemption when it has not been imposed a tax liability. In the ordinary course of things, international carriers do not manufacture or import petroleum products and hence, are not statutory taxpayers to which the exemption under Section 135 could pertain. If anything, international carriers merely bear the tax burden when the costs therefor are passed on to them by the actual manufacturers or importers. However, as earlier discussed, the "passing on" of the tax burden is largely a contractual affair between the parties and should not determine the tax incidence imposed by law unless the contrary
32 G.R. No. 211303, June 15, 2021.
Cf A Case Nos. 9993 & 10015 is provided. As such, the tax exemption under Section 135 must correspondingly benefit the one who actually bears the liability to pay the same (i.e., the importers/ manufacturers 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). Petron Corporation's claims for refund were filed on time.
The basic rule allows the taxpayer seeking a refund or credit of erroneously/ illegally collected two (2) years to file a claim therefor, to be counted "from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment to."33 Applied to the present case, the two (2)-year prescriptive period shall be reckoned from the time Petron Corporation paid the subject excise taxes on its petroleum products. Verily, the statutory deadline for the payment of the excise taxes shall turn upon the manner by which the fuel was brought into existence:34 whether it was manufactured or imported.
For locally-produced fuel, under Section 130(A)(2) of the Tax Code,35 the payment of excise tax shall be due before removal thereof from the place of production (i.e., refinery). In the present case, the earliest removal of petitioner's locally-produced Jet-Al and unleaded gasoline fuel from its PBR, as per Withdrawal Certificate (WC),36 was made on January 1, 2017, and for which the corresponding excise tax was paid on even date.37 This allowed Petron Corporation until January 1, 2019 to file both its administrative and judicial claims for 33 Section 229, Tax Code.
3-1 Section 148 of the Tax Code provides, "[t]here shall be collected on refined and manufactured mineral oils and motor fuels, the following excise taxes which shall attach to the goods hereunder enumerated as soon as they are in existence as such ... " (Emphasis supplied) 35 SECTION 130. Filing of Return and Payment of Excise Tax on Domestic Products.- (A) Persons Liable to File a Return, Filing of Return on Removal and Payment of Tax.- (1) x x x (2} Time 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 locally manufactured petroleum products and indigenous petroleum levied under Sections 148 and 151(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 x x x 36 Exhibits "P-206" to "P-206-2", "P-208", "P-312" to "P-312-1", ICPA USB. 37 Exhibit "P-207", ICPA USB; as per Exhibit "P-8-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. V, p. 2049.
CfA Case Nos. 9993 & 10015 refund relative to excise taxes paid on its locally produced fuel. Thus, its June 22, 201838 and December 21, 201839 filings of its claims for refund before the BIR and the Court, respectively, were on time. On the other hand, for imported fuel, under Section 131 of the Tax Code,40 the payment of excise tax shall be due before release of the importations from the customs house. Here, the earliest payment of the excise tax on imported fuel was made on January 23, 2017, as per Customs Payment Receipts (CPRs).41 Counting therefrom, Petron Corporation had until January 23, 2019 to file its administrative and judicial claims. Likewise, its administrative and judicial claims filed on June 22, 201842 and January 23,201943 were timely. Excise taxes paid on petroleum products sold to international carriers and tax-exempt entities are subject to refund.
At first instance, petroleum manufacturers/importers are liable to pay excise taxes when they take out the fuel from their refineries or from the customs house, as the case may be. However, this liability is qualified by Section 135 of the Tax Code, such that the tax-paid petroleum products become exempt from excise taxes when established that these are sold subsequently to any one of the following: (1) international carriers of Philippine or foreign registry on their use or consumption outside the Philippines (international carriers);
(2) exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption (tax- exempt entities by treaty); or (3) entities which are by law exempt from direct and indirect taxes (tax-exempt entities by law).44 38 Exhibit "P-9-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, p. 2055; and Exhibit "P-8-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 2048 to 2054. 39 Petition for Review, Docket (Cf A Case No. 9993)- Vol. IV, pp. 10 to 30. ~o SEC. 131. Payment of Excise Taxes on Imported Articles. - (A) Persons Liable. - Excise ~axes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customs house, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. 41 Exhibits "P-202", "P-202-12 (1/2)" to "P-202-12 (1/ 2)", ICPA USB. 42 Exhibit "P-20", Docket (CfA Case Nos. 9993 & 10015)- Vol. V, p. 3005; Exhibit "P-19", Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 2999 to 3004.
H
Petition for Review, Docket (CTA Case No. 10015)- Vol. 1, pp. 12 to 33. 4-1 See Pilipinas Shell Petroleum Corp. v. Commissioner of Internal Revenue, G.R. No. 211303, June 15, 2021.
When it is shown that the tax-paid petroleum products have become tax-exempt within the context of Section 135 of the Tax Code, the excise taxes which were previously paid thereon shall then be regarded as "erroneously or illegally collected," and, thus, subject to refund pursuant to Section 229 of the Tax Code. 45 In these lights, a claim of refund or credit based on Sections 229 and 135 of the Tax Code shall be granted only upon proof of the following: First, the excise taxes sought to be refunded were paid upon removal/release of the petroleum products from the refinery or customs house, as the case may be (First Requisite). Second, the petroleum products have become tax-exempt, e.g., these have been sold subsequently to any of the above-enumerated groups (Second Requisite).
In the present case, Petron Corporation alleges to have paid excise taxes in the aggregate amount of P465,648,057.91 relative to locally-manufactured and imported Jet A-1 and unleaded premium gasoline fuel in the aggregate volume of 126,724,273 liters, which, in turn, it sold subsequently to international carriers and tax-exempt entities, summarized46 as follows:
Volume
Excise
Docket
Particulars
Customer
(in Liters}
Tax Paid47
CTA
Locally-produced
Case
Jet A-1 fuel Various international air 1,868,838 P6,858,635.46 No.
carriers for use and 9993 consumption outside the Philippines, and tax-exempt entities Unleaded gasoline Tax-exem~t entities 838,200 3,646,170.00
Subtotal
P10,504,805.46
CTA
Imported Jet A-1 fuel Various international air 124,017,235 455,143,252.45
Case
carriers for use and No.
consumption outside the 10015 Philippines, and tax-exempt entities
Total
126,724,273 P465,648,057.91 Whether Petron Corporation met the first and second requisites above requires, foremost, an understanding of the movements of fuel ~s See Pilipinas Shell Petroleum Corp. v. Commissioner of Internal Revenue, G.R. No. 211303, June 15, 2021.
~6 Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015) - Vol. III, p. 1626. .
~7 Excise tax rate for Jet A-1 fuel and unleaded gasoline fuel is P3.67/ liter and P4.35/ liter, respectively.
inventories from source/ origin to the end-user and corresponding modes of excise tax payments. Petron Corporation's system of recording fuel movements and tax payment modes were regular and in accordance with prescribed procedure.
The manner of payment of excise taxes on locally-manufactured petroleum products differs from that made on imported fuel. On this matter, We summarize the testimonies of (a) Ma. Clarissa C. Arguelles, Tax Manager, Petron Corporation,48 (b) Michael F. Manzano, Commercial Services Manager, Petron Corporation, 49 and (c) Ryan Kris B. Rebong, Stock and Depot Finance Supervisor,50 in conjunction with the results of the !CPA's verification procedures.51 Movements of fuel inventories. In brief, the Jet A-1 and unleaded gasoline fuel is stored together with locally-produced fuels in the PBR, pursuant to Commingling Permit No. ELTRD (P) - 028-12-16-18918.52 Thereafter, the petroleum products are delivered/ transferred to Petron Corporation's depots, then to third-party storage facilities (e.g., other depots, into-plane facilities (ITPs), refuellers), for delivery to/ loading into the end- consumers: the international air carriers and/ or tax-exempt entities. All such movements of fuel are evidenced by the relevant supporting documents (e.g., Official Register Book (ORB) BIR Form No. 261)53 and recorded in petitioner's books of account (i.e., GL-SAP system). 48 Question & Answer No. 26, Exhibit "P-190", Docket (CT A Case Nos. 9993 & 10015) - Vol. II, pp. 350 to 351.
49 Question & Answer No. 9, Exhibit "P-198", Docket (CTA Case No. 10015)- Vol. 3, pp. 1356 to 1357.
50 Question & Answer No.9, Exhibit "P-194-L", Docket (CTA Case No. 9993)- Vol. I, pp. 263 to 278.
s1 Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, pp. 1629-1631. 52 Exhibit "P-5", Docket (CIA Case No. 9993)- VoL I, p. 307; See also Exhibit "P-343-1." 53 BIR Form No. 261, ORB, shows the movements (i.e. incoming and outgoing) of the stocks/petroleum products at the particular registered facilities or locations, which in the case of the Petitioner, are the PBR and the depots. Pursuant toRR No. 13-77 and RMC No. 024-12, oil companies are required to maintain ORBs and submit, on a regular basis, the transcript sheets thereof to the BIR.
Manner of payment of excise taxes on petroleum products.
Petron Corporation pays excise taxes on locally-produced fuel on a daily basis, before removal from its refinery (i.e., PBR) and on imported fuel prior to its release from the customs house. It computes the tax due on Jet A-1 fuel and unleaded gasoline at the rates of P3.67 per liter and P4.35 per liter, respectively. For locally-produced fuels, Petron Corporation estimates the daily volume of removals from the PBR. Based on this, it computes the amount of excise taxes thereon and provides an allowance of around PS million to ensure that excise tax payments that will fall due in the next two (2) to five (5) days shall be covered. It pays the corresponding excise tax by filing an Excise Tax Return on alcohol products (ETR)S4 and uses its Stock Accounting Section (SAS) to file an application for the payment of excise tax through the BIR Electronic Filing and Payment System (eFPS) in accordance with the actual product removals from the PBR. If it determines that the allowance will become insufficient, Petron Corporation makes an advance deposit to the BIR through eFPS.
For locally-produced Jet A-1 fuel which will be sold to international air carriers for their use and consumption outside the Philippines, Petron Corporation secures Product Replenishment Certificates (PRCs),55 whereby an outstanding balance of tax credits is set up, which may be applied against excise taxes due on succeeding removals of fuel destined to be sold to international carriers. Before removal, Petron Corporation applies for a Product Replenishment Debit Memo (PRDM)56 to apply the credits and allow the removal of fuel from the PBR without actual cash payment of excise taxes due. For imported fuel, Petron Corporation pays the duties and taxes thereon via the Bureau of Customs (BOC)'s e2m system. The importation and payment are evidenced by the Statement of Settlement Duties and Taxes, Single Administrative Documents (SADs), Bill of Lading, Commercial Invoices, CPRs, BOC Certifications for Entry j Certificate of Payment, Certificates of Independent Survey 5-I BIR Form No. 2200-P.
55 BIR Form No. 2298.
56 BIR Form No. 2331.
(CIS), Authority to Release Imported Goods (ATRIG), and Reports of Survey, among others.
Based on Our verification, the above accounts (i.e., on the movements of inventory and on the modes of payment of excise taxes) coincide with the procedures laid out in Revenue Regulations (RR) No. 13-77,57 RR No. 03-08,58 Revenue Memorandum Order (RMO) No. 35- 02,59 and Revenue Memorandum Circular (RMC) No. 024-12,60 and are consistent with those submitted in CTA Case Nos. 9738 & 9741,61 which similarly dealt with Petron Corporation's judicial claim for refund relative to excise taxes paid on locally-produced and imported fuel. Furthermore, there is nothing on the records that suggests non- compliance on the part of petitioner with the prescribed procedure. The excise taxes sought to be refunded were duly paid.
Proof of payment of the subject taxes is essential in refund cases because, while the collection of taxes may be found to be illegal or erroneous in theory, the claimant cannot be refunded amounts that it did not actually pay or remit to the government. For reasons set out below, We find that Petron Corporation presented sufficient proof relative to the first requisite: that the excise taxes it seeks to be refunded (P465,648,057.91) were duly paid. The subject excise taxes on locally- produced Jet
A -1
and Unleaded
Gasoline Fuel were duly paid. The ICP A verified that the excise taxes of the locally-produced Jet A-1 fuel and unleaded gasoline fuels from the PBR transferred to 57 SUBJECT: Petroleum Products Regulations, October 10,1977. ss SUBJECT: Amending Certain Provisions of Existing Revenue Regulations on the Granting of Outright Excise Tax Exemption on Removal of Excisable. -:-rticles In.tended for E~~ort or Sale/Delivery to International Carriers or to Tax-Exempt Entities/ Agencies and Prescnbmg the Provisions for Availing Claims for Product Replenishment, January 22, 2008. 59 SUBJECT: Prescribing the Guidelines and Procedures in the Processing and Issuance of Authority to Release Imported Goods (ATRIG) for Excise and Value-Added Tax Purposes, October 28, 2002.
60 SUBJECT: Clarifying the Issue on the Maintenance and Submission of O~~i~ial Register Books on Tax-Paid Petroleum Products Stored on Formerly Bonded Storage Facilities, May 2, 2012. 61 Petron Corporation v. Commissioner of Internal Revenue, August 1, 2023.
( various depots were paid before removals. It found that, out of the total available balance of 1,571,739,184liters62 of Jet A-1 fuel, the total excise taxes due on the removals of the 344,098,741liters of Jet A-1 fuel from the PBR to the depots were paid. He also noted that on the total production of 2,237,943,397 liters63 of unleaded gasoline fuel, the removals of 88,031,017liters of unleaded gasoline fuel from the PBR to the depots were likewise paid. The result of the aforementioned ICP A's verification64 is shown below for reference:
Withdrawal Certificate
Particulars
Total volume of removals from PBR
Jet A-1 Fuel66
Unleaded
Gasoline Fuel67
Total
per we (in Liters) 344,098,74168 88,031,017 Multip ly by: Equivalent Excise Tax
Rate per Liter
P3.67 P4.35 Amount of excise tax that should have been paid =P==::1,_26_2.;..,8_4....;2,_3 7_9= .4_ 7_~ P3=8....;
2';...93_4.;_ ,9_2_ 3 ._95 P1,645,777,303.42 Actual amount of excise tax due and paid on PBR removals per ETR 4,301,898,550.3869
Difference
(P2,656,121,246.96) The
ICP A
then accounted for the difference of P2,656,121,246.96,7° as follows: Removals of Petroleum Products with no Effect on the Claim71
Particulars
1. Removals of Jet A-1 fuel paid thru PRDM/PRC (marked as Exhibit No. P-209)
2. Payment of excise tax on unleaded gasoline fuel not related to the claim 62 Exhibit "P-205."
63 Exhibit "P-311."
Volume in Liters
(from Table 9) 336,402,002 (884,369,069)
Equivalent
Excise Tax
(from Table 10) P1,234,595,347.34 (3,864,748,302.55) (>.1 Table 10, Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, pp. 1640 to 1641. 65 Exhibit "P-208."
66 Exhibit "P-206."
67 Exhibit "P-312."
68 Consist of Locally Manufactured Jet A-1 fuel of 188,634,110 liters and Imported Jet A-1 fuel of 155,464,631liters; See Table 8, Exhibit "P-197", Docket (CT A Case Nos. 9993 & 10015)- Vol. III,
p. 1639.
69 Exhibit "P-208."
10 Tables 9 and 11, Exhibit "P-197", Docket (CfA Case Nos. 9993 & 10015) - Vol. III, pp. 1640 to 1641.
71 Table 11, Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, p. 1641.
Particulars
3. Payment of excise tax on other excisable petroleum products Total accounted difference
Volume in Liters
(from Table 9)
Equivalent
Excise Tax
(from Table 10) (91,037,241) (25,968,291.75) (639,004,308) (P2,656,121,246.96)
Stated
differently, P1,645,777,303.4272 out of the total P4,301,898,550.3873 pertains to excise tax payments related to the claim. Having regard to the ICP A's findings vis-a-vis Petron Corporation's compliance with the prescribed procedure on the payment of excise taxes, We find that the excise taxes on locally-produced fuel amounting to P10,504,805.46, subject of the present judicial claim, as forming part of the total amount of excise taxes verified to have been duly paid to the BIR.
The subject excise taxes due on importations of Jet A-1 Fuel were duly paid.
According to petitioner, it imported Jet A-1 fuel with a volume of 157,508,472 liters74 and paid equivalent excise taxes due thereon amounting to P579,750,656.02.75 In support thereof, Petron Corporation offered the following documents in evidence:
1. BOC SADs;76
2. CPRs;77
3. BOC Certifications;78
4. BIR ATRIGs;79 and
5. CISs.80 These were verified by the ICP A,B1 as summarized below: n Sum of P1,262,842,379.47 excise taxes due for Jet A-1 fuel and P382,934,923.95 excise taxes due for unleaded gasoline fuel.
73 Exhibits "P-207" and "P-208". 7~ Question & Answer No. 15, Exhibit "P-198", Docket (CTA Case No. 10015) -Vol. 3, p. 1363. 75 157,970,206 liters per SAD multiplied by excise tax rate of P3.67. 76 Exhibits "P-202-1" to "P-202-11." 77 Exhibits "P-202-12" to "P-202-33." 78 Exhibits "P-202-12" to "P-202-34." 79 Exhibits "P-202-45" to "P-202-55." so Exhibits "P-202-56" to "P-202-66." s1 Table 4, Exhibit "P-197", Docket (Cf A Case Nos. 9993 & 10015)- Vol. III, p. 1637.
,·
Summary of Excise Taxes Paid Based on Importation Documents82
BOC Single Administrative Document (SAD)
[Note: the Volume per BLand SAD are the same]
CISSJ
A TRIG
Exhibit
No.
Date
Reference No.
Volume in
Liters
Volume in
Liters
Exhibit
No.
Amount of
Date of
Excise Tax
Payment
Actually Paid84
"P-202-1"
20 Jan 2017 __
6WOA1700037
12,609,039 12,419,301 11,413,791 16,614,766 16,073,683 11,482,230 16,102,240 15,017,780 15,313,138 12,935,829 17,988,409 12,589,118 12,252,855 11,303,360 16,551,450 16,082,087 11,349,822 16,087,022 14,991,656 15,336,822 12,946,993 18,017,287
"P-202-45"
9 Feb 2017
P46,275,173.13
"P-202-2"
8 Feb 2017
6WOA1700060
"P-202-46"
13 Mar 2017
__!?,578,834.67
"P-202-3"
28 Mar 2017
6WOA1700153
"P-202-47"
3 Apr 2017
41,888,612.97
"P-202-4"
21 Apr 2017
6WOA1700195
"P-202-48"
11 May 2017
60,976,191.22
"P-202-5"
25 Apr 2017
6WOA1700207
"P-202-49"
9 Jun 2017
58,990,416.61
"P-202-6"
3 May 2017_
6WOA1700223
"P-202-50"
8 Jun 2017
42,139,784.10
"P-202-7" _ 11 May 2017
6WOA1700237
"P-202-51"
9 Jun 2017
59,095,220.80
~ P-20_~:~: _____ 22 May 2017
6WOA1700260
"P-202-52"
9 Jun 2017
55,115,252.60
"P-202-9"_
22 June 201~~0~1700339
"P-202-53" _ 1 ~ Aug 2017
56,199,216.46
"P-202-10"
25 Sep 2017 __
6WOA1700529
"P-202-54"
20 Oct 2017
47,474,492.43
"P-202-11"
26 Oct 2017
6WOA1700585
"P-202-55"
23 Nov 2017
66,017,461.03 TOTAL 157,970,206 157,508,472
TOTAL
P579,750,656.02 Notably, the final volume of 157,508,472liters per CIS as shown in the table above is considered as the actual and final volume of imported Jet A-1 fuel which will be used in computing the final tax assessments by the BOC.
The ICP A compared as the CIS as against the importation documents, viz.:
Per Importation
Per CIS
Documents - Final
(Actual Volume
Volume
Received)
Difference
US Barrels
Liters
US Barrels
Liters
US Barrels
Liters at 60°F at Air at 60°F at Air at 60°F at Air
(e)= (f)=
Vessel
(a) (b) (c) (d)
(a) - (c) (b)- (4)_
Aulae Conifer
79,031,280 12,609,039 78,590,340 12,589,118 440,940 19,921
Aulae Diamond
76,500,000 12,419,301 76,060,070 12,252,855 439,930 166,446
Aulae Fortune
70,414,000 11,413,791 69,964,830 11,303,360 449,170 110,431
Aulae Venus
103,094,000 16,614,766 102,608,600 16,551,450 485,400 63,316
Global Vika
99,908,000 16,073,683 99,579,440 16,082,087 328,560 (8,404)
Aulae Fortune
70,862,000 11,482,230 70,217,940 11,349,822 644,060 132,408
Global Vika
99,929,000 16)02,240 99,635,790 16,087,022 293,210 15,218
Global Vika
93,360,000 15,017,780 93,031,330 14,99t656 328,670 26,124
Maluku Palm
95,069,750 15,313,138 94,966,360 15,336,822 103,390 (23,684)
Rio Daytona
80,396,810 12,935,829 80,329,940 12,946,993 66,870 (11,164)
Flores Palm
111,856,000 17,988,409 111,861)70 18,017,287 (5)70} (28,878}
Total
980,420,840 157,970,206 976,845,810 157,508,472 3,575,030 461,734 sz Importation documents consist of SADs (marked as Exhibit Nos. P-202-1 to P-20~-~1), CPRs (marked as Exhibit Nos. P-202-12 to P-202-33), BOC Certifications (marked as Exhtbit Nos. P- 202-34 to P-202-44) and BIR A TRIG (marked as Exhibit Nos. P-202-45 to P-202-55) 83 Exhibits "P-202-56" to "P-202-66." s.t Based on Volume in Liters per SAD. 85 Table 5, Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, p. 1637.
1..
The difference of 461,734liters between 157,970,206 volume per liters reported in SAD, and the 157,508,472 volume per liters reported in CIS (as shown in the table above), represents overpayment which pertains to the net effect of the movement in volume of the imported Jet A-1 fuel.
In the present case, the volume per CIS is lower than the volume per SAD. Petitioner absorbs the equivalent losses for the overpayment of taxes, as this will not be reflected in the SAD, nor refunded by the BOC to the petitioner. As such, it has no effect on the petitioner's claim for refund.86 Based on the foregoing, We have confirmed that (a) the importations subject of the present claim were made between January 1, 2017 to December 31, 2017, and (b) the excise taxes due thereon were paid (i.e., P455,143,252.45). The tax-paid fuel subject of the present claim were sold subsequently to international carriers and tax-exempt entities. Movements of fuel inventory were properly supported and in accordance with prescribed procedure.
Further verification revealed that 188,634,110 liters and 88,031,017 liters of locally-produced Jet A-1 fuel and unleaded gasoline, respectively, were removed/withdrawn from the PBR and subsequently transferred to various depots; all such movements are in order and properly supported, as shown below: s6 Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015) - Vol. III, pp. 1637 to 1638.
CfA Case Nos. 9993 & 10015
WC vs. Removals per PBR-ORB signed by the ROOP, SAP-Generated PER- ORB, COC/ DN Volumes in Liters at Air .87
Jet A-1 Fuel
Unleaded Gasoline Fuel
Related
Other
Related
Particulars
Exh
Depots
Depots
Total
Exh
Depots
PerWC
P-206
344,098,741
P-312
88,031,017
Per PBR-ORB - Removals and COC/DN
Locally Manufactured
(CTA Case No. 9993)
P-205
P-311
Davao Depot
8,560,072 - 8,560,072 -
Iloilo Depot
5,476,350 - 5,476,350 -
SL Harbor Depot
30,645,043 - 30,645,043 49,429,638
Mactan Depot
79,893,010 - 79,893,010 -
Palawan Depot
2,034,819 - 2,034,819 -
DMIA/ Clark Depot
880,000 - 880,000 -
Zamboanga Depot
4,102,348 - 4,102,348 -
Poro Terminal
- - - 38,601,379
Others
- 57,042,468 57,042,468 - 131,591,642 57,042,468 188,634,110 88,031,017 Imported (CT A Case No.
10015)
P-205
-
Davao Depot
2,134,921 - 2,134,921 -
Iloilo Depot
8,069,483 - 8,069,483 -
Navotas Depot
32,202,467 - 32,202,467 -
Rosario Terminal
1,192,509 - 1,192,509 -
SL Harbor Depot
92,848,311 - 92,848,311 -
Mactan Depot
17,061,555 - 17,061,555 -
Palawan Depot
608,997 - 608,997 -
Others
- 1,346,388 1,346,388 - 154,118,243 1,346,388 155,464,631 - 344,098,741 88,031,017
Difference
- - The total removal/withdrawal of Jet A-1 fuel and unleaded gasoline fuel from the PBR corresponds to the total volume received by various depots, as shown below:
Depots
Davao
Iloilo
Navotas
COC/WC vs. Depot's l.S-Receipts and ORB-Receipts for Jet A-1 Fuel Volume in Liters).88
Per COC/WC -
Withdrawals from PBR
Per Depot's ORB-
(Exhibit No. P-205)
Per Depot's LS-Receipts
Receipts
Locally-
Produced
Imported
Gross
In-transit Net Volume
Volume
(CTA Case
(CTA Case
Volume
Gain
to be
Received by
No. 9993) No.10015)
Total
Exh
Received
(Loss)
Received
Exh
Depot
8,560,072 2,134,921 10,694,993 P-224 10,694,993 (94,534) 10,600,459 P-233 10,600,459 5,476,350 8,069,483 13,545,833 P-226 13,545,833 (90,096) 13,455,737 P-234 13,455,737 32,202,467 32,202,467 P-227 32,202,467 (108,389) 32,094,078 P-235 32,094,078 B7 Table 8, Exhibit "P-197", Docket (CfA Case No. 9993)- Vol. III, p. 1639. BB Table 13, Exhibit "P-197", Docket (CfA Case No. 9993)- Vol. III, p. 1643.
PerCOC/WC-
Withdrawals from PBR
Per Depot's ORB-
(Exhibit No. P-205)
Per Depot's LS-Receipts
Receipts
Locally-
Produced
Imported
Gross
In-transit Net Volume
Volume
(CTA Case
(CTA Case
Volume
Gain
to be
Received by
Depots
No. 9993) No.10015)
Total
Exh
Received
(Loss)
Received
Exh
Depot
Rosano
1,192,509 1,192,509 P-228 1,192,509 (2,521) 1,189,988 P-236 1,189,988
SL Harbor
30,645,043 92,848,311 123,493,354 P-229 123,493,354 (247,280) 123,246,074 P-237 123,246,074 Mac tan 79,893,010 17,061,555 96,954,565 P-230 96,954,565 (243,817) 96,710,748 P-238 96,710,748
Palawan
2,034,819 608,997 2,643,816 P-231 2,643,816 (75,716) 2,568,100 P-239 2,568,100
Zamboanga
4,102,348 4,102,348 P-232 4,102,348 (9,601} 4,092,747 P-240 4,092,747 130,711,642 154,118,243 284,829,885 284,829,885 (871,954} 283,957,931 283,957,931
DMIA/Ciark
880,000 880,000
- P-225
880,000
Total
131,591,642 154,118,243 285,709,885 284,829,885 (871,954) 283,957,931 284,837,931 COC/ WC vs. SRR-Receipts and SAP-PMMT-Receipts for Unleaded Gasoline Fuel (Volume in Liters).89
Per COC/
Per SRR-Receipts
WC-
Depot I Type of Withdrawals
Locally
from PBR
Gross
Manufactured
(Exhibit No.
Volume
In-transit
Unleaded
P-312)
Exhibit
Received
Gain (Loss)
Gasoline Fuel
(a) No.
(b) (c)
Poro Terminal
Unleaded
(Base)
Gasoline
Fuel
38,601,379
P-324
38,601,379 (130,024) SL Harbor De12ot
Unleaded
(Base)
Gasoline
Fuel
29,611,359
P-325
29,611,359 (109,955)
Unleaded
(Blaze)
Gasoline
Fuel
19,818,279
P-326
19,818,279 (50,229)
Total
88,031,017 88,031,017 (290,208) Sales and delivery of locally-produced and imported fuel to international carriers and tax-exempt entities had been established.
Per SAP-PMMT-
Receipts
Difference
Net
COC/
Volume
!wCvs. SRR vs.
to be
SRR
SAP-
Received
Volume
(f) =
PMMT
(d) = (b) + Exhibit
Received
(a) - (g)= (d) (c) No.
(e) (b) -(e)
P-322/
38,471,355
P-323
38,471,355 29,501,404
P-319
29,501,404
P-320/
19,768,050
P-321
19,768,050 87,740,809 87,740,809 As discussed above, the excise taxes paid on these petroleum products are refundable only upon proof that these were sold and s9 Table 14, Exhibit "P-197", Docket (CTA Case No. 9993)- Vol. III, p . 1646.
delivered subsequently to international carriers and tax-exempt entities, as provided under Section 135 of the Tax Code.9o In this regard, Petron Corporation alleged that it sold an aggregate volume of 126,724,273liters of locally-produced and imported Jet A-1 and unleaded gasoline fuel to various international air carriers and tax-exempt entities. The ICPA verified the volumes, as alleged by petitioner.
The sales of locally-produced Jet A-1 and unleaded gasoline fuel at volumes of 1,868,838 and 838,200 liters, respectively, are itemized as follows:91
Jet A-1 Fuel
Unleaded Gasoline Fuel
Customer
1. International Air Carriers Cebu Air, Inc.
China Eastern Airlines
China Southern Airlines
Donghai Jet Co. Ltd
Pal Express
Phil Air Asia
Philippine Airlines
Click Aviation/ Pan Pacific Air
Raya Airways Sdn. Bhd.
Silk Air
Thai Lion C/0 World Fuel
World Fuel
Zest Air
Subtotal
Amount of
Volume
Excise Taxes in Liters
21,151 242,860 35,051 3,834 928,167 1,203 8,829 170,158 16,645 9,349 14,419 18,530 6,150 1,476,346 Paid at P3.67 77,624.17 891,296.20 128,637.17 14,070.78 3,406,372.89 4,415.01 32,402.43 624,479.86 61,087.15 34,310.83 52,917.73 68,005.10 22,570.50 P5,418,189.82
Volume in Liters
Amount of
Excise Taxes
Paid at P4.35
1. Tax-exempt Entities or Agencies covered by Tax Treaties, Conventions, and
Other International Agreements
Asian Development Bank
DESC-Multi Service
Desc-Davao Inti Airport
Desc-Mactan Cebu Inti Airp
Desc-Multi Service-iloilo
Desc-Multi Service- Puerto Prinsesa
Subtotal
379,569 2,869 2,880 1,339 5,835 392,492 P1,393,018.23 10,529.23 10,569.60 4,914.13 21,414.45 660,000 P1,440,445.64 660,000
2. Entities which are by law exempt from direct or indirect taxes
Amilao Diosdado J
102,600 P2,871,000.00 P2,871,000.00 446,310.00
90 See Pilipinas Shell Petroleum Corp. v. Commissioner of Internal Revenue, G.R. No. 211303, June 15, 2021.
91 Exhibit "P-200."
'- CfA Case Nos. 9993 & 10015
Customer
Omni Aviation Coq:~.- La Union
Subtotal
TOTAL
Iet A-1 Fuel
Volume
Amount of in Liters
Excise Taxes
Paid at P3.67 1,868,838 P6,858,635.46
Unleaded Gasoline Fuel
Volume
Amount of in Liters
Excise Taxes
Paid at P4.35 75,600 328,860.00 178,200 P775,170.00 838,200 P3,646,170.00 In addition, the sales of imported Jet A-1 fuel with a volume of 124,017,235liters are itemized below:
Customer
Tax-exempt Entities
DESC-Mactan Cebu International Air92
DESC-Multi Service-Laoag93
DESC-Multi Service-Puerto Prinsesa9~
International Air Carriers
Aeg Fuel-T'way Air
Air Asia Berhad
Air Busan
Air Hongkong
Air Niugini C/0 Cosmo Oil
Air Philippines Corp.
Asiana Airlines
Cathay Pacific
Cebu Air, Inc.
Cebu Pacific
China Eastern Airlines
China Southern Airlines
Delta Airlines
Dragon Air
Emirates Air lines
Etihad Airways
Eva Air C/0 Cosmo Oil
Federal Express Corporation
Gulf Air
Hongkong Express C/0 World Fuel
Jeju Air
Jin Air
Juneyao Airlines C/0 Aeg Fuel
Kim Royal Dutch
Korean Air
Kuwait Airways
92 Exhibits "P-288-541" and "P-288-957." 93 Exhibits "P-284-32" and "P-284-35." 9~ Exhibit "P-289-2."
Subtotal
JET A-1 Fuel
Volume in
Liters
1,212 2,207 8,751 12,170 257,735 563,812 767,558 321,517 588,105 60,288 462,658 4,169,790 44,765 14,277,605 258,489 715,091 523,568 8,760 8,197,103 3,702,769 140,035 6,847 2,538,421 24,639 1,024,089 1,425,738 119,682 38,388 701,004 3,488,388
Amount of
Excise Taxes Paid
at P3.67 P4,448.04 8,099.69 32,116.17 P44,663.90 945,887.45 2,069,190.04 2,816,937.86 1,179,967.39 2,158,345.35 221,256.96 1,697,954.86 15,303,129.30 164,287.55 52,398,810.35 948,654.63 2,624,383.97 1,921,494.56 32,149.20 30,083,368.01 13,589,162.23 513,928.45 25,128.49 9,316,005.07 90,425.13 3,758,406.63 5,232,458.46 439,232.94 140,883.96 2,572,684.68 12,802,383.96 ''
Customer
Lucky Air C/0 Aeg Fuel
Myanmar National Airline C/0 World Fuel
Neptune Air Sdn Bhd
Okay Airways
Oman Air
Pal Express
Phil. Air Asia
Philippine Airlines
Pan Pacific Intl
Qatar Airways
Saudi Airlines
Scoot Tiger Air
Shenzhen Airlines C/0 World Fuel
Sichuan Airlines C/0 Aeg Fuel
Silk Air
Singapore Airlines
Special Flight Detachment - Russia
Tiger Airways
Vanilla Air C/0 Wfs
Xiamen Air C/ 0 Wfs
Zest Air
Subtotal
TOTAL
JET A-1 Fuel
Volume in
Liters
149,536 9,862 10,815 102,868 2,584,863 471,359 2,615,995 52,313,029 537,421 6,018,320 9,610,889 172,253 40,658 248,750 281,491 1,197,840 106,000 48,718 456,457 208,119 2,392,978 124,005,065 124,017,235
Amount of
Excise Taxes Paid
at P3.67 548,797.12 36,193.54 39,691.05 377,525.56 9,486,447.21 1,729,887.53 9,600,701.65 191,988,816.43 1,972,335.07 22,087,234.40 35,271,962.63 632,168.51 149,214.86 912,912.50 1,033,071.97 4,396,072.80 389,020.00 178,795.06 1,675,197.19 763,796.73 8,782,229.26 P455,098,588.55 P455,143,252.45 To engage the application of Section 135 of the Tax Code, the claimant must establish that the conditions for exemption spec(fic to each group have been met.
-
Sales to International Carriers
For sales to the international carriers, it must be shown that (a) vendees are the international carriers of Philippine or foreign registry,
(b) the fuel had been sold and delivered to such entities and will be used or consumed outside the Philippines, (c) the fuel were stored in a bonded storage tank, and (d) the fuel had been disposed of in accordance with the rules and regulations. In this regard, Petron Corporation presented the following documents:
(a) Civil Aeronautics Board (CAB) Certifications95 showing that its customers that are (i) international carriers of foreign 95 Exhibits "P-341-1 (1/ 4)" to "P-341-1 (4/ 4)."
a
96 97 98 99.
100 101 102 103 104 10) a registry have been issued a valid Foreign Air Carrier’s Permit (FACP) to operate international air transport services between the Philippines and their country of registration and (ii) Philippine-registered international carriers have been issued permit to operate domestic and international air transportation services;
(b) Aviation Delivery Receipts (ADR) and Delivery Notes (DN) showing that (i) the fuels were delivered to international air carriers or to tax-exempt entities! and (ii) the destination of these vendees is a foreign country; and
(c) Official Register Book (ORB),!° WC,! Cargo Out-Turn Certificate (COC),13 /STO - Delivery Note (STO-DN),% Product Movement by Movement Type (PMMT),% Cebu Air, Inc. (Cebu Pacific Air), Philippine Airlines, Philippines AirAsia, Inc. (formerly Zest Air, Inc./ Air Asia Zest), PAL Express (formerly Air Philippines Corporation/ Airphil Express), and Astro Air International, Inc. (doing business as Pan Pacific Airlines).
Exhibit “P-197”, Docket (CTA Case Nos. 9993 & 10015) - Vol. III, p. 1657.
Exhibits “P-280” to “P-289.”
prepared by petitioner’s representative in the depot (i.e., Poro Terminal and SL Harbor Depot) which records the direct delivery of unleaded gasoline fuel to tax-exempt entities, Exhibit “P- 197”, Docket (CTA Case Nos. 9993 & 10015) - Vol. III, p. 1635; Exhibits “P-333-1” to “P-333-33”, “P-334-1” to “P-334-29”, “P-335-1” to “P-335-36.”
Exhibit “P-197”, Docket (CTA Case Nos. 9993 & 10015) - Vol. III, p. 1642.
Exhibit “P-197”, Docket (CTA Case Nos. 9993 & 10015) - Vol. III, 1632; Question & Answer Nos. 11 to 13, Exhibit “P-194-L”, Docket (CTA Case No. 9993) - Vol. I, pp. 266 to 267; BIR Form No. 261, Exhibits “P-203-1” to “P-203-12;” Exhibits “P-205-1” to “P-205-13;” Exhibits “P- 225-1” to “P-225-3”, “P-233-1” to “P-233-8”, “P-234-1” to “P-234-8”, “P-235-1” to “P-235-6", “P- 236-1”, “P-237-1” to “P-237-11”, “P-238-1” to “P-238-11”, “P-239-1” to “P-239-6”, “P-240-1” to “P-240-4”, “P-250-1” to “P-250-5”, “P-253-1” to “P-253-3”, “P-254-1” to “P-254-3”, “P-256-1”, “P- 257-1” to “P-257-4", “P-258-1” to “P-258-9.”
BIR Form No. 2231, Exhibits “P-206-1” to “P-206-177”; “P-312-1” to “P-312-79.”
SAP-generated internal document prepared at the PBR which support the recording of removals of locally manufactured and imported Jet A-1 fuels and locally manufactured unleaded gasoline fuel in the petitioner’s SAP-generated ORB and General Ledger (GL)-SAP, Exhibits “P-205-14” to “P-205-149”, “P-205-164” to “P-205-166”, “P-205-171”, “P-205-173” to “P- 205-201”, “P-205-204”; “P-311-1” to “P-311-79;” Exhibit “P-197”, Docket (CTA Case Nos. 9993 & 10015) - Vol. IIL, pp. 1631 to 1632; Question & Answer No. 20, Exhibit “P-194-L”, Docket (CTA Case No. 9993) - Vol. I, pp. 269 to 270.
Exhibits “P-205-150” to “P-205-163”, “P-205-167” to “P-205-170", “P-205-172”, “P-205-202” to “P.205-203”, “P-271-1-1” to “P-271-1-134”, “P-271-2-1” to “P-271-2-987”, “P-271-3-1” to “P-271- 3-862”, “P-271-4-1" to “P-271-4-2007”, “P-271-5-1” to “P-271-5-454”, “P-271-6-1" to “P-271-6- 322”, “P-271-7-1" to “P-271-7-136”, “P-271-8-1” to “P-271-8-738”, “P-271-9-1” to “P-271-9-891.” Supports the recording in the GL-SAP System of locally manufactured Jet A-1 fuel and unleaded gasoline fuel and imported Jet A-1 fuel directly transferred from the PBR to various depots, Exhibit “P-197”, Docket (CTA Case Nos. 9993 & 10015) - Vol. III, p. 1631; Exhibits “P-213-1-1 to “P-213-1-15”, “P-214-1-1” to “P-214-1-372”, “P-215-1-1” to “P-215-1-495”, “P-216-1-1” to “P- 216-1-408”, “P-217-1-1” to “P-217-1-428”, “P-218-1-1” to “P-218-1-1036”, “P-219-1-1” to “P-219- 1-32”, “P-220-1-1” to “P-220-1-3392”, “P-221-1-1” to “P-221-1-973", “P-222-1-1” to “P-222-1-56", “P-223-1-1” to “P-223-1-169.”
Liquidation Statement (LS),106 Schedule of Receipts and Removals (SRR),1°7 Cargo Intake Certificate (CIC),108
Summary of Product Deliveries and Taxes Paid or
Applicable Thereon (SOPD),109 showing that subject fuel was stored, transferred, and disposed of, with all such movements accounted for, 1n accordance with the applicable regulations.
Sales to Tax-Exempt Entities
For sales to tax-exempt entities by treaty, the claimant must establish (a) the vendee's tax-exempt status under the applicable tax treaty, convention, or international agreement, (b) the sale and delivery of fuel to and for consumption of these entities, and (c) the vendee's home country's grant of similar tax exemption relative to sales of petroleum products to Philippine carriers. As to sales to the tax-exempt entities by law, it must be shown that the vendees enjoy exemption from direct and indirect taxes. For this purpose, petitioner submitted the following documents:
(a) Department of Foreign Mfairs (DFA) Certifications,no CAB Certifications,1n and Air Services Agreements 106 Prepared by the depot on a daily basis to account for the movement of every shipment or receipt of Jet A-1 fuel (inventories) and its corresponding deliveries to another facility (i.e., SL Harbor depot to Laoag Into-Plane (ITP) and JOCASP jNAIA depot, Rosario Terminal and Navotas depot to JOCASP /NAIA depot, Palawan and Mactan depots directly to customers, Iloilo depot to Kalibo ITP, Bacolod ITP and Iloilo ITP, and Zamboanga depot to Zamboanga refueiJer) or sales to international air carriers and to tax-exempt entities, Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015) - Vol. III, p. 1633; Exhibits "P-224-1" to "P-224-10", "P-242-1" to "P-242-3", "P-226-1" to "P-226-12", "P-227-1" to "P-227-23", "P-228-1", "P-229-1" to "P-229-85", "P-230-1" to "P-230-50", "P-231-1" to "P-231-7", "P-232-1" to "P-232-4", "P-242-1" to "P-242-3", "P-259-1" to "P-259-10", "P-260-1" to "P-260-7", "P-261-1" to "P-261-11", "P-262-1" to "P-262-23", "P-263- 1", "P-264-1" to "P-264-65","P-265-1" to "P-265-29", "P-266-1" to "P-266-4", "P-267-1" to "P- 267-41."
t07 Used to account for the movement of every shipment of unleaded (base) gasoline fuel by the Poro terminal and SL Harbor depot, Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, p. 1633; Exhibits "P-324-1" to "P-324-12", "P-325-1" to "P-325-12", "P-326-1" to "P-326- 12."
tos SAP-generated internal control document prepared at the PBR and supports the recording of the transaction in the PBR-ORB and in the GL, which records the movement of imported Jet A-
and/ or other Agreements between the Republic of the
Philippines and the
international carriers' home countries112 showing the existence of valid and effective bilateral agreements in 2017, which grants (i) the subject entities tax-exempt status and (ii) Philippine carriers, entities, or agencies a similar tax exemption; and
(b) ADRs113 showing that the subject fuel were delivered to said entities, for their consumption.
Observations
After verifying114 the above-enumerated documents, We have observed the following:
(1) Locally-produced Jet A-1 fuel with a volume of 53,428 liters and corresponding excise tax payments of P196,080.76 were sold to the following international carriers without a valid FACP,ns to wit:
International Air
Carrier
Donghai Jet Co. Ltd Raya Airways Sdn. Bhd.
Thai Lion C/0 World Fuel
World Fuel
Total
Volume in Liters
3,834 16,645 14,419 18,530 53,428
Amount of Excise
Taxes Paid at P3.67 P14,070.78 61,087.15 52,917.73 68,005.10 P196,080.76 112 Exhibits "P-91-L" and "P-91-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 2401 to 2413; Exhibits "P-92-L" and "P-92-A-L", Docket (CTA Case Nos. 9993 & 10015) - Vol. IV, pp. 2414 to 2426; Exhibits "P-93-L" and "P-93-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 2427 to 2446; Exhibits "P-94-L" and "P-94-A-L", Docket (CTA Case Nos. 9993 & 10015) -Vol. IV, pp. 2447 to 2458; Exhibits "P-95-L" and "P-95-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 2459 to 2483; Exhibits "P-96-L" and "P-96-A-L", Docket (CTA Case Nos. 9993 & 10015) -Vol. IV, pp. 2484 to 2499; Exhibits "P-97-L" and "P-97-A-L", Docket (Cf A Case Nos. 9993 & 10015)- Vol. IV, pp. 2500 to 2515; Exhibits "P-98-L" and "P-98-A-L", Docket (CTA Case Nos. 9993 & 10015}- Vol. IV, pp. 2516 to 2527; Exhibit "P-107-L" and "P-107-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 2618 to 2649; Exhibits "P-99-L" and "P-99-A-L", Docket (CTA Case Nos. 9993 & 10015}- Vol. IV, pp. 2528 to 2540; Exhibits "P-100-L" and "P- 100-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 2541 to 2553; Exhibits "P-101-L" and "P-101-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. IV, pp. 2554 to 2570; Exhibit "P- 102", Docket (CTA Case Nos. 9993 & 10015)- Vol. II, pp. 863 to 867; Exhibits "P-103-L" and "P- 103-A-L", Docket (CTA Case Nos. 9993 & 10015}- Vol. V, pp. 2572 to 2584; Exhibits "P-104-L" and "P-104-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 2585 to 2597; Exhibits "P- 105-L" and "P-105-A-L", Docket (CTA Case Nos. 9993 & 10015) - Vol. V, pp. 2598 to 2611; Exhibits "P-106-L" and "P-106-A-L", Docket (CTA Case Nos. 9993 & 10015)- Vol. V, pp. 2613 to 2617; Exhibits "P-108-L" and "P-108-A-L", Docket (CTA Case Nos. 9993 & 10015}- Vol. V, pp. 2650 to 2673.
113 See Note 98.
1 1~ ICPA verification procedures and the Court's independent verification. 115 Table 22: International Air Carriers not traced to CAB Certification, Exhibit "P-197," Docket (CTA Case Nos. 9993 & 10015)- Vol. III, p. 1658.
(
(2) Sales of locally-produced Jet A-1 fuel with a volume of 78,949liters and corresponding excise tax payments of P289,742.83 to Defense Energy Support Center (DESC), which petitioner regards as a tax-exempt entity, are supported by ADRs with unreadable details (i.e., customer name), to wit:
Exhibit No.
ADRNo.
Volume in
Amount of Excise
Liters
Taxes Paid at P3.67
" P-285-1"
969810 912 P3,347.04 ''P-285-7" 969839 2,121 7,784.07
"P-285-9"
969845 1,176 4,315.92 ''P-285-10" 969866 11,653 42,766.51 " p-285-11, 969870 1,755 6,440.85
"P-285-12"
969873 3,073 11,277.91 ''P-285-20" 969909 7,506 27,547.02 ''P-285-22" 969916 1,737 6,374.79 ''P-285-26" 969922 2,400 8,808.00 ''P-285-57" 1014148 2,200 8,074.00
" P-285-58"
1014137 1,049 3,849.83 ''P-285-59" 1014140 2,572 9,439.24
" P-285-72"
1014205 1,461 5,361.87
" P-285-73"
1014207 3,629 13,318.43
" P-285-74"
1014210 1,991 7,306.97
" P-285-77"
1014218 2,624 9,630.08
" P-285-81"
1014228 2,311 8,481.37 ' 'P-285-82" 1014227 1,940 7,119.80 ''P-285-86" 1014235 1,776 6,517.92 ' 'P-285-87" 1014240 889 3,262.63 ' 'p-285-88" 1014243 2,396 8,793.32 ''P-285-112" 1014308 965 3,541.55 ''P-285-115" 1014324 732 2,686.44
" P-285-123"
1014347 1,353 4,965.51
" P-285-147"
1014405 367 1,346.89
"P-285-191"
1064632 1,465 5,376.55 ''P-285-192" 1064650 1,396 5,123.32 ''P-285-193" 1064659 1,287 4,723.29 ''P-285-194" 1064664 423 1,552.41 ''P-285-197" 1064672 1,405 5,156.35 ''P-285-203" 1064721 1,790 6,569.30
" P-285-207"
1064735 931 3,416.77
" P-285-211"
1064750 1,350 4,954.50 ''P-285-213" 1064754 411 1,508.37 ''P-285-215" 1064762 1,334 4,895.78 ''P-285-218" 1064788 2,397 8,796.99 ''P-285-220" 1064819 1,869 6,859.23
" P-285-221"
1064818 446 1,636.82 77,092 P282,927.64
"P-288-542"
1061819 583 P2,139.61 ' 'p-288-543, 1062421 508 1,864.36
• 'P-288-854"
1076767 766 2,811.22 1,857 P6,815.19
Total
78,949 P289,742.83 (
CfA Case Nos. 9993 & 10015
(3) The tax-exempt status of Diosdado Amilao and Omni Aviation Corporation, to which sales of locally-produced unleaded gasoline with an aggregate volume of 178,200 liters and equivalent excise taxes amounting to P775,170.00 were made, was not established. (4) Imported Jet A-1 fuel with a volume of 671,833 liters and equivalent excise taxes of P2,465,627.11 were sold and delivered to the following international carriers without a valid FACP, to wit:
Volume
Amount of
International Air Carrier in Liters
Excise Taxes
Paid at P3.67 ICPA's findings
Lucky Air C/ 0 Aeg Fuel
149,536 P548,797.12
World Fuel
1. Hongkong Express C/0 World Fuel 6,331 23,234.77
2. Hongkong Express C/0 World Fuel 18,308 67,190.36
3. Myanmar National Airline C/0 World Fuel 9,862 36,193.54
4. Neptune Air Sdn Bhd 10,815 39,691.05
5. Shenzhen Airlines C/0 World Fuel 40,658 149,214.86 SJ2ecial Flight Detachment - Russia 106,000 389,020.00
Subtotal
341,510 P1,253,341.70 Per Court's inde12endent verification
Juneyao Airlines C/0 Aeg Fuel
119,682 P439,232.94
Klm Royal Dutch
38,388 140,883.96
Scoot Tiger Air
172,253 632,168.51
Subtotal
330,323 Pl,212,285.41
Total
671,833 P2,465,627.11 (5) Sales of imported Jet A -1 fu el with a volume of 260,144 liters and corresponding excise tax payments of P954,728.48 are supported by ADRs with unreadable details (i.e., destination), to wit:
Amount of
ADR
International
Destination
Volume
Excise
Exhibit No.
No.
Carrier
Taxes Paid
at P3.67 ''P-282-67"
1009236 PAL Express
csx 1,743 P6,396.81
" P-282-75"
1009256 Phil. Air Asia
HGH
11,021 40,447.07 ''P-282-103"
1009306 PAL
CTU
14,534 53,339.78
" P-282-150"
1035072 Phil. Air Asia
PUS
10,530 38,645.10
"P-282-161"
1035093 PAL
PUS
7,990 29,323.30
"P-282-165"
1035092 Phil. Air Asia
ICN
12,595 46,223.65
" P-282-185"
1035110 Cebu Pacific Air
PVG
15,380 56,444.60
" P-282-205"
1035132 Cebu Pacific Air
ICN
14,116 51,805.72 ''P-282-213"
1035157 PAL
ICN
7,018 25,756.06 ..
Amount of
Exhibit No.
ADR
International
Destination
Excise
No.
Carrier
Volume Taxes Paid
at P3.67 ''P-282-225"
1035159 Cebu Pacific Air
PVG
13,375 49,086.25 ''P-282-228"
1035168 PAL
PUS
5,770 21,175.90
" P-282-235"
1035188 Phil Air Asia Inti
PVG
5,970 21,909.90 ''P-282-237"
1035178 Cebu Pacific
PEK
18,010 66,096.70
" P-282-242"
1035184 PAL
ICN
6,710 24,625.70
" P-282-254"
1035198 PAL
ICN
13,972 51,277.24 ''P-282-261"
1035215 Phil Air Asia
ICN
2,190 8,037.30 ''P-282-276" 1035221
Phil Air Asia
PVG
9,637 35,367.79 ''P-282-282"
1035238 Cebu Pacific Air
ICN
9,914 36,384.38 ''P-282-283"
1035239 Cebu Pacific Air
ICN
4,020 14,753.40 ''P-282-299"
1035273 Phil Air Asia
HGH
405 1,486.35 ''P-282-326"
1035906 Cebu Pacific
PVG
13,340 48,957.80 ''P-282-490"
1070136 PAL Inti
PUS
7,855 28,827.85 ''P-282-595"
1070245 PAL Express Inti
CTU
1,296 4,756.32
" P-282-596"
1070247 PAL
ICN
9,740 35,745.80
" P-282-729"
1071851 Phil Air Asia
HGH
1,822 6,686.74
Sub-total
218,953 P803,557.51 ''P-283-793"
1044372 Cebu Pacific
Kuala Lumpur
13,859 50,862.53 ''P-283-2521"
1050005 Cebu Pacific
Hanoi
15,473 56,785.91
Sub-total
29,332 P107,648.44
" P-286-132"
1066764 PAL Express
11,859 43,522.53
Total
260,144 P954,728.48 (6) Imported Jet A-1 fuel with a volume of 269,725 liters and corresponding excise tax payments amounting to P989,890.75 were sold and in January 2018 and, thus, out-ofperiod:
Sales Invoices
Aviation Delivery Receipts
Amount of
ADR
Exh
SINo.
Customer
Vol.
Excise Taxes
Exh
No.
Vol.
Paid at P3.67
"P-292-85"
1009571089 P a n Pacific Inti 61,899 P227,169.33
"P-282-752"
1107846 4,762
"P-282-753"
1107851 14,150
"P-282-754"
1107852 520
"P-282-755"
1107855 1,280
"P-282-761"
1107864 11,907
"P-282-762"
1107878 15,261
"P-282-763"
1107879 14,019 61,899 P227,169.33 61,899
"P-292-86"
1009571119
Okay Airways
23,760 87,199.20
"P-282-756"
1107848 8,820
"P-282-764"
1107871 14,940 23,760 P87,199.20 23,760
"P-292-87"
1009573501 Jin Air Co., Ltd. 13,190 48,407.30
"P-282-765"
1107872 13,190 13,190 P48,407.30 13,190
"P-292-88"
1009571077
Cebu Pacific-
47,056 172,695.52
"P-282-766"
1107853 14,554
Inti
"P-282-767"
1107873 14,132
"P-282-768"
1107885 18,370 47,056 P172,695.52 47,056
"P-292-89"
1009571080
PAL Express
18,838 69,135.46
"P-282-757"
1107847 2,460
"P-282-758"
1107850 15,021
"P-282-769"
1107876 1,357 •
Sales Invoices
Exh
SINo.
Customer
"P-292-90"
1009571084
Philippine
Airlines
"P-292-91"
1009571094
Zest Air
"P-292-93"
1009573537
Air Asia Berhad
Total
Vol.
18,838 41,450 41,450 58,301 58,301 5,231 5,231 269,725
Aviation Delivery Receipts
Amount of
Excise Taxes
Exh
ADR
Vol.
Paid at P3.67 No.
P69,135.46 18,838 152,121.50
"P-282-759"
1107849 10,682
"P-282-760"
1107856 4,210
"P-282-770"
1107858 3,178
"P-282-771"
1107866 6,600
"P-282-772"
1107868 6,540
"P-282-773"
1107882 10,240 P152,121.50 41,450 213,964.67
"P-282-774"
1107857 13,830
"P-282-775"
1107859 11,510
"P-282-776"
1107863 10,501
"P-282-778"
1107870 10,720
"P-282-779"
1107883 11,740 P213,964.67 58,301 19,197.77
"P-282-781"
1107875 5,231 P19,197.77 5,231 P989,890.75
TOTAL
269,725 (7) Imported Jet A-1 fuel issued by SL Harbor to JOCASP /NAIA depot116 was overstated by a volume of 4,958liters with equivalent excise tax payments of Pl8,195.86.n7 For the foregoing reasons, the Court disallows Items 1 to 7 above from the present claim.
Summary
Thus, in sum, We find that Petron Corporation has substantiated its claim to the extent of P459,958,622.12, representing excise tax payments for petitioner's locally produced Jet A-1 fuel and unleaded gasoline, and excise taxes paid for its importations of Jet A-1 fuel, computed as follows:
Equivalent
Equivalent
Particulars
Vol.
Excise Tax
Vol.
Excise Tax
Total
Total Claim for Refund
2,707,038 PI 0,504,805.46 124,017,235 P455,143,252.45 P465,648,057.91
Less: Disallowances
International Carriers
without valid FACP 53,428 196,080.76 671,833 2,465,627.11 2,661,707.87 ADRs with unreadable details 260,144 954,728.48 954,728.48 116 Exhibit "P-264."
117 See Table 16: Depot IS-Issuances vs. SAP PMMT-Issuances and Depotj iTP / RefueUer IS- Receipts (Volume in Liters), Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015) - Vol. III,
p. 1649.
•
Equivalent
Equivalent
Particulars
Vol.
Excise Tax
Vol.
Excise Tax
Total
Sale to DESC supported
by ADRswith
unreadable details 78,949 289,742.83 289,742.83 Sale to taxable entities • Arnilao Diosdado J.
102,600 446,310.00 446,310.00 • Omni Aviation Corp.
75,600 328,860.00 328,860.00
Over-recording by
JOCASP/NAIA of
imported Jet A-1 fuel received from SL Harbor
Depot
4,958 18,195.86 18,195.86 Out-of-period sale of irrq~orted Jet A-1 fuel 269,725 989,890.75 989,890.75
Total Disallowances
310,577 Pl,260,993.59 1,206,660 P4,428,442.20 P5 ,689 ,435. 79
Total Substantiated
Excise Taxes Paid
1,588,261 P5,597 ,641.87 122,810,575 P450,714,810.25 P459,958,622.12
WHEREFORE, in light of the foregoing considerations, the consolidated Petitions for Review filed by Petron Corporation are PARTIALLY GRANTED. Respondent Commissioner of Internal Revenue is ORDERED to refund or issue a tax credit certificate in favor of petitioner in the reduced amount of P459,958,622.12 representing erroneously paid excise taxes on petroleum products sold to international carriers and tax-exempt entities between January 1, 2017 to December 31,2017.
SO ORDERED.
WE CONCUR:
~ ~ r: ~ -f4.f~ MARIAN 1VYl:t. REYEg-FAJA~DO
Associate Justice
Presiding Justice
(Inhibited)
CATHERINE T. MANAHAN
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 consultation before the consolidated cases were assigned to the writer of the opinion of the Court. ROMAN G. DE ROSARIO
Presiding Justice
Footnotes
- 1
fuel, Exhibit "P-197", Docket (CTA Case Nos. 9993 & 10015)- Vol. III, p. 1631; Exhibits "P- 204-1" to "P-204-11." to9 SAP-generated document where petitioner summarizes aU withdrawals made during the day, Exhibit "P-197", Docket (CIA Case Nos. 9993 & 10015)- Vol. III, p. 1632; Exhibits "P-208-1" to "P-208-173." tto Exhibits "P-341-2 (1/ 4)" to P-341-2 (4/ 4). ttt Exhibit "P-88", Docket (CTA Case Nos. 9993 & 10015)- Vol. II, pp. 689 to 692.