HALLIBURTON WORLDWIDE LIMITED - PHILIPPINE BRANCH v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL SECOND DIVISION HALLIBURTON CTA CASE NO. 10139 WORLDWIDE LIMITED - PHILIPPINE BRANCH, Members: Petitioner, . BACORRO-VILLENA, Acting Chairperson, and -versus- CUI-DAVID, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, JUL Z6 2023/ Respondent. y /!J-. , .�. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X DECISION CUI-DAVID, J.: Before this Court is a Petition for Review filed on July 26, 2019 by petitioner Halliburton Worldwide Limited- Philippine Branch 1 ("Petitioner"), against respondent Commissioner of Internal Revenue ("CIR" or "Respondent"), under Section 3(a), Rule 8,2 in relation to Section 3(a)(l), Rule 43 of the Revised Rules of the Court of Tax Appeals4 ("RRCTA"). Petitioner assails the alleged denial of its claim for refund of unutilized input value-added tax ("VAT") attributable to zero-rated sales based on the Letterf> dated June 26, 2019. ~ 1 Dated July 23, 2019, received by the Court on July 26, 2019; Docket- VoL I, pp, 12-23. 2 Section 3. Who May Appeal; Period to File Petition. - (a) A party adversely affected by a decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of internal revenue taxes. or by a decision or ruling of the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry. the Secretary of Agriculture, or a Regional Trial Court in the exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the Commissioner oflnternal Revenue on claims for refund of internal revenue taxes erroneously or illegally collected, the taxpayer must file a petition for review within the two-year period prescribed by Jaw from payment or collection of the taxes. 3 Section 3. Cases Within the Jurisdiction ofthe Court in Divisions. -The Court in Divisions shall exercise: (a) Exclusive original or appellate jurisdiction to review by appeal the following: ( 1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue. 4 A.M. No. 05-11-07-CTA. 5 Annex "F", Petition for Review.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x THE PARTIES Petitioner Halliburton Worldwide Limited - Philippine Branch is a corporation duly organized and existing under the laws of Cayman Islands. 6 Its primary purpose is "to engage in the business of providing oilfield services and products, such as well completion, drilling, cementing, logging, well testing, perforating, production testing and workover, stimulation services and licensing of software and consulting services, and importation and provision of oilfield equipment and technology to the oil and gas industries."7 It is registered with the Bureau of Internal Revenue ("BIR") as a VAT taxpayer with Tax Identification Number ("TIN") 266- 369-565.8 Its office is at Pearlbank Center, 146 Valero Street, Salcedo Village, Makati City.9 Respondent is the Commissioner of the BIR, the government agency in charge of, among others, the assessment and collection of all national internal revenue taxes, fees, and charges. 10 THE FACTS On March 29, 2019, petitioner filed with Revenue District Office ("RDO") No. 53B an Application for Tax Credits/Refund (BIR Form 1914), 11 requesting the refund of P12,237,833.00 representing its unutilized input VAT for the 1st to 4th quarters of calendar year ("CY") 20 17 attributable to zero-rated sales. The Notice to Comply dated April 14, 2019 was then issued to petitioner by the BIR through Mr. Ignacio T. Camba, Jr. ("RDO Camba, Jr."), Revenue District Officer of RDO No. 53B, requesting petitioner to submit certain documents to facilitate the verification and processing of its claims for VAT refund, subject to the limitations set forth under the law. 6 Exhibit"P-1", Docket, Vol. I, pp. 191-203. 7 Ibid. 8 Exhibit "P-2", Docket, Vol. I, p. 204. 9 Par. 2, Stipulated Facts, Joint Stipulation of Facts and Issues (JSFI), Docket- Vol. II, p. 477. 10 Joint Stipulation ofFacts and Issues, par. 3.; Docket, Vol. II, p. 478. 11 Exhibit "P-25", Docket, Vol. I, p. 466.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue X------------------------------------------------------------------------------------------X In response, petitioner filed on June 26, 2019 a Reply to the Bureau of Internal Revenue (BIR) - Notice to Comply dated April 14, 2019 to facilitate the Application for Value-Added Tax (VAT) Refund for Taxable Year (TY) 2017 dated June 25, 2019, 12 submitting certain documents to substantiate its claim. On June 28, 2019, petitioner received a Letter ("Denial Letter") signed by RDO Camba, Jr., 13 stating that petitioner's claim for refund was denied for non-compliance with the requirements enumerated in the Notice to Comply it received on April 14, 2019. The Letter, inter alia, states: "Please be informed that submission of one or more but not all of the requirements enumerated in the Notice to Comply, which was received by your representative on April 14, 2019 does not constitute compliance, thus your claim/ application is considered to have been NOT filed as provided for under Sec. 4.112-1 (d) par. 2 of Revenue Regulation No. 26-2018 ' Provided, That, the claim/ application is considered to have been filed only upon submission of the official receipts or invoices and other documents in support of the application as prescribed under pertinent revenue issuances.' and Section III item 1 of Revenue Memorandum Circular No. 17-2018 '... actual date of filing of the application with complete documents duly received by the processing office'. The result of verification and recommendation for the denial of your request by this District is subject to review by this Region. Nonetheless, you are not precluded from refiling the same request awaiting decision, however, such shall be regulated by Revenue Memorandum Circular No. 47-2019 datedApril16, 2019." Subsequently, Regional Director Glen A. Geraldina issued a letter dated July 2, 2019,1 4 denying petitioner's claim for VAT refund for failure to substantiate its claim as evidenced by its failure to comply with the Revised Checklist of Mandatory Requirements for Claims for VAT Refund, under Revenue Memorandum Circular ("RMC") No. 17-2018. "Exhibits "P-851" and "R-5", BIR Records, pp. 1162 to 1163. "Exhibit "P-26", id., p. 467. 14 Exhibit "'R�7". BIR Records, p. 1189.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner oflntemal Revenue x------------------------------------------------------------------------------------------x PROCEEDINGS BEFORE THE COURT Petitioner filed a Petition ofReview on July 26, 2019. 15 On August 6, 2019, petitioner filed an Ex-Parte Motion to Admit Duly Authenticated Verification, 16 which the Court granted in a Resolution dated August 13, 2019.17 On August 22, 2019, respondent filed his Motion for Extension of Time to File Answer, 18 which was granted in an Order dated August 27, 2019.19 On September 20, 2019, respondent filed another Motion for Extension of Time to File Answer,20 which the Court granted in an Order dated September 25, 2019.21 The Court received respondent's Answer on October 22, 2019. 22 On October 28, 2019, the Court issued a Notice ofPre-Trial Conference. 23 Respondent filed a Motionfor Resetting ofHearing on November 14, 2019,24 while petitioner filed an Urgent Motion to Defer Pre-Trial Conference on November 15, 2019,25 to which petitioner filed a Supplement to the Urgent Motion to Defer Pre- Trial Conference on November 18, 2019.26 In an Order dated November 18, 2019, the Court granted respondent's Motionfor Resetting ofHearing and petitioner's Urgent Motion to Defer Pre- Trial Conference.27 Respondent filed his Pre-Trial Brief on November 29, 2019,28 while petitioner filed its Pre-Trial Brief on December 2, 2019. 29 i 15 Supra at note I. 16 Docket, Vol. I, pp. 68-70. 17 /d., pp. 77-78. 18 /d., pp. 79-82. 19 /d., p. 83. 20 /d., pp. 84-87. 21 /d., p. 88. 22 /d., pp. 89-93. 2J /d., pp. 94-95 " /d., pp. 96-99. 2' /d., pp. 100-103. 26 /d., pp. 107-109. 27 /d., p. 106. 28 /d.,pp.lll-113. 29 /d., pp. 114-128.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x On December 20, 2019, petitioner filed a Motion to Commission an Independent Certified Public Accountant ("ICPA"). 30 Petitioner likewise filed a Submission with an attached Sworn Statement of Ms. Gurvinder Kaur Karnail Singh on December 23, 2019.31 After the Court granted 32 the parties' Joint Motion for Additional Time to File Joint Stipulation of Facts and Issues, 33 the parties filed their Joint Stipulation of Facts and Issues on January 14, 2020.34 The Court issued the Pre-Trial Order on January 24, 2020,35 setting the hearing on February 5, 2020, March 18, 2020, and May 11, 2020. At the February 5, 2020 hearing, the ICPA, Atty. Adan T. Delamide was ordered to submit his report within 45 days from the hearing date. Subsequently, petitioner's witness, Ms. Singh, completed her testimony. The continuation of petitioner's presentation of evidence was set on April22, 2020. The hearing previously set on March 18, 2020, was cancelled.36 On March 6, 2020, following the grant37 of his Motion for Extension of Time to Elevate BIR Records, 38 respondent elevated the BIR Records before the court, consisting of 16 folders, with the Court noting respondent's Compliance 39 in a Minute Resolution. 4 0 On June 8, 2020, the continuation of the presentation of petitioner's evidence was set anew on July 1, 2020.41 Petitioner filed a Motion for Postponement (of the hearing dated July 1, 2020},42 which was granted by the Court on July 1, 2020.43 30 fd., pp. 143-146. 31 /d.� pp. 169-189. 32 Order dated January 8. 2020; Docket, Vol. II, p. 472. 33 Filed on January 3, 2020; !d., pp. 469-471. "/d., pp. 477-489. J5 !d., pp. 492-497. 36 !d., pp. 506-507. J7 /d., p. 490. l8 /d., pp. 473-476. " !d., pp. 514-516. 40 Dated March 9, 2020; id., p. 519. 41 !d., p. 520. 42 !d., pp. 523-526. 43 !d., p. 529.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x On July 1, 2020, A Motion for Extension ofTime to File !CPA Report was filed by petitioner,44 which the Court granted in an Order dated July 10, 2020.45 Hence, the !CPA Report was filed on August 5, 2020.46 On August 28, 2020, petitioner filed its Submission with the attached Swam Statement of Atty. Isabel Assunta C. Caguioa. 47 At the September 2, 2020 hearing, counsel for petitioner presented two (2) witnesses, namely, Atty. Caguioa and Atty. Delamide. Atty. Caguioa testified on direct by way of Judicial Affidavit. The cross-examination of Atty. Caguioa was deferred upon motion of respondent's counsel. Atty. Delamide completed his testimony. 48 At the October 26, 2020 hearing, Atty. Caguioa completed her testimony.49 On November 9, 2020, the Commissioner's Report was issued in relation to the commissioner's hearing for petitioner.5� On the same date, respondent filed his Motion to Reset Commissioner's Hearing for the Respondent, 51 which was granted in an Order dated November 10, 2020. 52 On November 19, 2020, petitioner filed a Formal Offer of Evidence, 53 to which respondent failed to file his comment. 54 On January 18, 2021, the Commissioner's Report was issued m relation to the commissioner's hearing for respondent. 55 On January 19, 2021, respondent filed his Compliance with the attached Judicial Affidavit of Ms. Annie Rojas- Callao.56 ~ 44 /d., pp. 531-534. 45 /d., p. 537. 46 /d.� pp. 538-562. 47 /d., pp. 589-590. 48 /d., p. 616. 49 /d., p. 622. 50 /d., pp. 624-626. " /d., pp. 628�631. ' 2 /d., p. 632. 53 /d., pp. 634-659. 54 Records Verification Report dated January 18, 2021, id., p. 944. 55 /d., pp. 942-943. 56 /d., pp. 945-953.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x On January 27, 2021, the Court promulgated its Resolution admitting all petitioner's exhibits.57 At the March 10, 2021 hearing, respondent's lone witness, Ms. Callao, completed her testimony. 58 On March 19, 2021, petitioner filed its Urgent Motion to Reopen case for Trial and for Leave of Court to Present Additional Evidence, 59 to which respondent failed to file his comment60 despite the Court's Order61 for respondent to comment and despite the Court's Order62 granting his Motion for Extension of Time to File Comment (on the Urgent Motion to Reopen Case for Trial and for Leave of Court to Present Additional Evidence) dated June 30, 2021.63 Petitioner's Urgent Motion was thus granted in a Resolution dated December 1, 2021.64 Respondent filed his Formal Offer of Evidence on May 31, 2021.65 Respondent's exhibits were admitted in a Resolution dated December 1, 2021.66 Petitioner filed a Motion to Conduct Hearing via Videoconference on February 7, 2022,67 a Submission with an attached Swam Statement of Ms. Nadia Wahida Ab. Kadir on February 11, 2022,68 a Manifestation on February 11, 2022,69 and a Motion to Correct the Attachments to the Swam Statement on February 16, 2022.10 At the February 16, 2022 hearing, petitioner's witness, Ms. Kadir, completed her testimony.71 In relation thereto, petitioner filed its Submission with the attached Certificate of Authentication and Swam Statement of Ms. Kadir on February 23, 2022,72 which was noted in a Resolution dated March 2, 2022.73 ~ 57 /d., p. 957. 58 /d., p. 958. 59 /d., pp. 960-966. 60 Docket, Vol. III, p. 1005. 61 Docket, Vol. II, p. 978. 62 /d., p. 1004. 63 !d., pp. 999- I 002. 64 Docket. Vol. III, pp. 1007-1008. 65 Docket, Vol. II., pp. 979-983. 66 Docket, Vol. III, pp. 1007-1008. 67 /d., pp. 1009-101 I. 68 /d., pp. 1014-1015. 60 !d., pp. I 030- I 031. 70 /d., pp. 1032-1035. 71 /d., p. 1047. 72 /d., pp. 1049-1050. 73 /d., p. I 056.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Following the Commissioner's Report in relation to petitioner's additional evidence dated March 7, 2022, 74 a Supplemental Formal Offer ofEvidence was filed by petitioner on March 17, 2022, 75 to which respondent failed to file his comment. 76 The Court admitted all petitioner's exhibits in a Resolution dated May 18, 2022.77 Petitioner filed its Memorandum on June 20, 2022,78 while respondent failed to file his Memorandum. 79 The case was then submitted for decision on July 7, 2022.80 Hence, this Decision. THE ISSUE The parties submitted the following issue for this Court's resolution: 81 "Whether or not Petitioner is entitled to a refund or issuance of TCC in the aggregate amount of !'12,237,833.00 representing its excess or unutilized input VAT for the 1st to 4th quarters of CY 2017 attributable to zero-rated sales." PETITIONER'S ARGUMENTS Petitioner argues that it is entitled to the refund of its excess and unutilized input VAT attributable to its zero-rated and effectively zero-rated sales for the 1st to 4th quarters of CY 2017.82 Petitioner argues that it is a VAT-registered taxpayer83 and that it reported zero-rated sales in its quarterly VAT return. 84 Petitioner contends that its sales to renewable energy ("RE") developers are zero-rated under Section 15(g) of Republic Act ("RA") No. 9513, otherwise known as the Renewable Energy 74 /d., p. 1057. 75 /d., pp. I061-1064. 76 Records Verification Report dated Apri119, 2022, id., p. 1080. 77 /d., pp. 1082-1083. 78 /d., pp. 1084-1107. 79 /d., p. II 09. ""!d., p. II II. 81 Joint Stipulation of Facts and Issues; Docket, Vol. II, pp. 477-489. 82 Petitioner's Memorandum, par. 24, Docket, Vol. III, pp. 1084-1107. 83 /d., par. 27. 84 !d., par. 28.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner oflnternal Revenue x------------------------------------------------------------------------------------------x Act,ss as confirmed by BIR Ruling No. 078-10.86 According to petitioner, it rendered services to the Energy Development Corporation ("EDC"), which is registered with the Department of Energy ("DOE") as an RE Developer87 and is further registered with the Board of Investments ("BOI"). 88 It rendered services to EDC from the 1st to 4 1h quarters of CY 2017, amounting to P132,785,525.27B9 under a Contract for Directional Drilling Works. 9o Petitioner further states that the DOE's Renewable Energy Management Bureau ("REMB") wrote a letter endorsing to respondent the renewable energy projects of EDC for purposes of VAT zero-rating on its local purchases of goods, properties, and services needed m renewable energy operations.91 Petitioner likewise emphasizes respondent's Ruling No. VAT-0218-2020, which allegedly confirmed that EDC is a DOE- certified RE Developer entitled to VAT zero-rating on its local purchases of goods, properties, and services needed in renewable energy operations.92 Petitioner further posits that it issued VAT Official Receipts ("OR") to EDC for these sales, identifying the amounts as VAT zero-rated transactions,93 as confirmed by the ICPA. 94 Petitioner further alleges that it exported goods to its non- resident affiliates, i.e., Halliburton Energy Services (Malaysia), PT Halliburton Indonesia, and Halliburton Worldwide GMB.95 According to petitioner, these are non-resident foreign corporations ("NRFC") as evidenced by the Certificates of Non- Registration ofCompany issued by the Securities and Exchange Commission ("SEC"); 96 the sales to them are paid for in acceptable foreign currencies accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas ("BSP"), 97 and are therefore, zero-rated under Section 106(A)(2)(a)( 1) of the NIRC of 1997, as amended.98 85 !d., par. 29. 86 /d., par. 30. 87 /d., par. 34. "!d., par. 35. 89 !d., par. 31. 90 /d., par. 32. 91 !d., par. 36. 92 /d., par. 37. 93 /d., par. 38. 94 /d., par. 39. 95 !d., par. 41. 96 !d.. par. 42. 97 !d., par. 43. 98 !d., par. 44.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Petitioner also states that proof of offsetting arrangement, i.e., its In House Cash and Intercompany Settlement Agreement with its foreign affiliates,99 shall be sufficient to support a claim for refund of input VAT in accordance with RMC No. 42-2003 100 and the case of CIR vs. Cebu Toyo Corporation.1o1 Petitioner avers that it incurred input taxes for the four quarters of CY 2017, that such input taxes are not transitional,1o2 have not been applied against output taxes, 103 and are duly substantiated by invoices, ORs, 104 and import documents.1os According to petitioner, the VAT to non-residents has been withheld and remitted.106 Finally, petitioner alleges that it timely filed its administrative and judicial claims for a refund before respondent and the Court, respectively, in accordance with Section 112(C) of the NIRC of 1997, as amended.107 RESPONDENT'S ARGUMENTS Respondent states in his Answer that petitioner's claim for VAT refund has been denied due to their failure to comply with the requirements outlined in Section 112(C) of the NIRC of 1997, as amended, 1�8 and for failure to comply with the Revised Checklist ofMandatory Requirements for Claims for VAT Refund and Notice to Comply dated April14, 2019, under RMC No. 17- 2018.109 According to respondent, the burden of proof is upon petitioner to prove that it is entitled to the claim for refund or issuance of a tax credit certificate.11o 99 !d., par. 47. 100 ld., par. 45. 101 !d., par. 46. 102 /d., par. 59. 103 !d., par. 60. 104 /d., par. 50. 105 !d., par. 52. 10fi !d., par. 53. 107 ld., pars. 67-75. 108 Answer, par. 7. 109 !d., par. 8. 110 !d., par. 9.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x RULING OF THE COURT The instant Petition is partially impressed with merit. The Court hasjurisdiction over the instant Petition. Before going into the merits of the case, We shall first determine whether the Court has jurisdiction over the instant Petition. Section 7(a)(l) and (2), and Section 11 of RA No. 1125,111 as amended by RA No. 9282,112 confer jurisdiction to this Court relative to decisions and inactions of respondent and state the manner of appealing the same, to wit: "SEC. 7. Jurisdiction.- The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue; (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period for action, in which case the inaction shall be deemed a denial;" (Emphases added) "SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision, ruling, or inaction of the Commissioner of Internal Revenue...may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. AP\~tEo~L~S 111 AN ACT CREATING THE COURT OF TAX APPEALS. (CTA), ELEVATING ITS 112 AN ACT EXPANDING TilE JURISDICTION Of TilE COURT OF TAX RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OR REPUBLIC ACT NO. I I25, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue X------------------------------------------------------------------------------------------X ... [Emphasis and underscoring supplied.] Based on the foregoing, this Court has appellate jurisdiction over decisions, rulings, or inactions of respondent. The appeal must be filed within thirty (30) days from receipt of such decision or ruling or after the expiration of the period fixed by law for action. Anent decisions of respondent and the period fixed by law for actions involving claims for refund or tax credit, Section 112(C) of the NIRC of 1997, as amended by RA No. 10963, 113 provides: "SEC. 112. Refunds or Tax Credits of Input Tax. - (C) Period within which Refund of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application within the ninety (90)-day period shall be punishable under Section 269 of this Code." [Emphasis and underscoring supplied.] Indeed, the law vests the power to decide an application for refund of creditable input taxes to respondent, and the latter has ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application to act on it. In case of full or partial denial of the claim, the taxpayer affected may appeal the same with this Court within 30 days from receipt of the adverse decision. 113 AN ACT AMENDING SECTIONS 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107, 108, 109, I 10, I 12, I 14, 116, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174, 175, 177, 178, 179, 180, 181. 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197,232,236, 237,249,254,264,269, AND 288; CREATING NEW SECTIONS 51-A, 148-A, 150-A, 150�B, 237-A. 264-A, 264-B, AND 265-A; AND REPEALING SECTIONS 35, 62, AND 89; ALL UNDER REPUBLIC ACT 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Notably, under Section 7 of the NIRC of 1997, as amended, respondent may delegate the powers vested in him under the pertinent provisions of the Code. We quote: Section 7. Authority of the Commissioner to Delegate Power. - The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner: Provided, however, That the following powers of the Commissioner shall not be delegated: (a) The powers to recommend the promulgation of rules and regulations by the Secretary of Finance; (b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau; (c) The power to compromise or abate, under Sec. 204(A) and (B) of this Code, any tax liability: Provided, however, That assessments issued by the regional offices involving basic deficiency taxes of Five hundred thousand pesos (P500,000) or less, and minor criminal violations, as may be determined by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner, discovered by regional and district officials, may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman, the Assistant Regional Director, the heads of the Legal, Assessment, and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer, as members; and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept." [Emphasis and underscoring supplied.] It is axiomatic that one of the powers granted to respondent is to decide claims for refund under Section 112 of the same law. This power may be delegated to respondent's subordinate officials under RMC No. 17-2018,114 to wit: 114 Amending RMC No. 89-2017 and Certain Provisions ofRMC No. 54-2014 on Processing of Claims for Issuance of Tax Refund/TCC in Relation to Amendments Made in N!RC of 1997, as Amended by RA No. I0963. February 27, 2018.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner oflnterna1 Revenue x------------------------------------------------------------------------------------------x "I. Claims for value-added tax (VAT) refund A. General Policies 5. Any findings in the course of the verification/ review of the VAT claims that may lead to a deficiency in internal revenue taxes, other than VAT, shall be communicated by the processing/ reviewing office of the concerned investigating office having jurisdiction over the taxpayer-claimant. However, if the findings involve VAT, these may result to disallowance or denial of the claim, or if the case warrants, for possible assessment of VAT liability. Should the claim be for denial, such fact should be communicated in writing to the taxpayer within the 90-day period. The denial letter shall be signed by the Commissioner (CIR)/Deputy Commissioner - Operations Group (DCIR - OG)/ Assistant Commissioner (ACIR)/Regional Director, as the case may be. C. Claims for VAT refund by other zero-rated taxpayers, indirect exporters and claims filed in accordance with Sec. 112 (B) of Tax Code, as amended by R.A. No. 10963 1. All claims for VAT refund by other zero-rated taxpayers, indirect exporters and claims filed in accordance with Sec. 112 (B) of the Tax Code, as amended, shall be filed with and processed by the concerned Revenue District Office and LT Audit Division having jurisdiction over the taxpayer-claimant. 2. The docket with report on said claims shall be reviewed by the Assessment Division/Office of the Head Revenue Executive Assistant (HREA) and shall be subject to the approval/disapproval by the Regional DirectorI ACIR - LTS, as the case may be, irrespective of amount. III. Time frame to process claims for VAT claims under Sections 112 (A) and (B) of the Tax Code, as amended further by R.A. No. 10963

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x 1. The 90-day period prescribed under 112(C) of the Tax Code, as amended, shall start from the actual date of filing of the application with complete documents duly received by the processing office. 2. The 90-day period shall be applied prospectively, i.e., for claims filed upon the effectivity of R.A. No. 10963. 3. The following time frame shall be strictly adhered to by the processing, reviewing and approving offices: Time Frame to Verify/Process, Review, and Approve/Disapprove the Claim Regional Cases No. of Days from Receipt of Application Verification/processing RDOs) 60 Review (Assessment Division)) 20 Approval by Regional 10 Director Total No. of Days 90 4. The concerned revenue officers/officials shall act on the recommended claims in accordance with the abovementioned time frame, including VAT claims on importations." [Emphases and underscoring supplied.] Thus, for Regional cases, the Regional Director may approve or disapprove the claim within the 90-day time frame set forth in Section 112(C) of the NIRC of 1997, as amended. If the claim is disapproved or denied, the Regional Director may also sign the denial letter. Notably, the participation of an RDO after the filing of the claim 1s limited only to "verification/processing." In the present case, petitioner invokes the timeliness of the Petition as follows: "13. On June 28, 2019, Petitioner received a letter signed by Mr. Ignacio T. Camba, Jr., the Revenue District Officer of RDO No. 53B, stating that Petitioner's Administrative Claim for Refund is denied for non-compliance with the requirements enumerated in the 'Notice to Comply' received on April 14, 2019. Thus, pursuant to Section 112 (A) and (C), Tax Code in relation to Section 7(a)(1) and Section 11 of RA No. 1125 [An Act Creating the Court of ~

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner oflnternal Revenue X------------------------------------------------------------------------------------------X Tax Appeals (CTA)], Petitioner has thirty 1301 days therefrom, or until July 28, 2019, within which to file the present Petition for Review."! IS [Emphases supplied.] Petitioner reiterated the foregoing allegations m its Memorandum. 116 Thus, the subject of the present Petition for Review is the Denial Letter dated June 26, 2019 signed by RDO Camba, Jr. and received by petitioner on June 28, 2019.117 As discussed, under RMC No. 17-2018, the Regional Director, not the RDO, signs the denial letter. While claims for VAT refund are filed with the concerned RDO, the role of an RDO is limited only to the verification and processing of the claims. In the present case, records reveal that aside from the RDO, the Regional Director of Revenue Region No. 8, Glen A. Geraldina, also signed a letter dated July 2, 20 19,118 denying petitioner's claim for a VAT refund for failure to substantiate the same. However, there is no allegation or indication that the same was issued by the BIR Regional Director and received by petitioner in the Petitionfor Review, 119 in the Joint Stipulation of Facts and Issues,12o and petitioner's Memorandum.121 Such being the case, even if this Court would treat the present Petition for Review as an appeal to the Regional Director's denial letter dated July 2, 2019, there is no way for this Court to determine whether the same was timely filed, i.e., within the 30 days to appeal to this Court. Considering that the RDO is not authorized to sign the denial letter and there is no proof that petitioner has received the Regional Director's Denial Letter, this Court deems that there is no decision rendered on petitioner's application for refund or tax credit. Nonetheless, this Court treats this case as an appeal due to respondent's inaction, having received no "decision" after the lapse of the 90-day period. 115 Docket- Vol. I, pp. 16 to 17. 116 Pars. 12 and 13, petitioner's Memorandum, Docket- Vol. I, p. 1087. 117 Exhibits "P-26" and "R-6", BIR Records, p. 1177. Refer also to par. 13, Petition for Review, Docket- Vol. I, pp. 16 to 17. 118 Exhibit "R-7", BIR Records, p. 1189. 119 Supra at note 1. 120 Supra at note 34. 121 Supra at note 78.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Under Section 7(a)(2) of RA No. 1125122 as amended by RA No. 9282, 123 respondent's inaction shall be deemed a denial of the refund or tax credit claim, viz.: "SEC. 7. Jurisdiction. - The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (2) Inaction by the Commissioner of Internal Revenue in cases involving ... refunds of internal revenue taxes, fees, or other charges, penalties in relation thereto, ... , where the National Internal Revenue Code provides a specific period for action, in which case the inaction shall be deemed a denial;" [Emphases and underscoring supplied.] Moreover, in Rohm Apollo Semiconductor Philippines us. Commissioner of Internal Revenue, 124 the Supreme Court stated: A final note, the taxpayers are reminded that when the 120-day [now 90-day] period lapses and there is inaction on the part of the CIR, they must no longer wait for it to come up with a decision thereafter. The CIR's inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer must file an appeal within 30 days from the lapse of the 120-day [now 90-dayl waiting period. [Emphases and underscoring supplied.] Petitioner filed with RDO No. 53B its administrative claim for refund or tax credit on March 29, 2019. 125 Consistent with RMC No. 17-2018,126 respondent had 90 days, or until June 27, 20 19, to act on petitioner's claim. In case of inaction within the said 90-day period, petitioner had 30 days from June 27, 2019, or until July 27, 2019, to file an appeal before this Court. Petitioner timely filed its Petition ofReview on July 26, 2019. 127 122 Supra at note 111. 123 Supra at note 112. 124 G.R. No. 168950, January 14, 2015, see also Lapanday Foods Corporation vs. Commissioner ofInternal Revenue, G.R. No. 252821, September 2, 2020. "'Exhibit "P-25'', Application for Tax Credits/Refunds (BIR Form 1914), Docket, Vol. I, p. 466. 126 Amending RMC No. 89-2017 and Certain Provisions of RMC No. 54-2014 on Processing of Claims for Issuance of Tax Refund/TCC in Relation to Amendments Made in NIRC of 1997, as Amended by RA No. 10963, February 27, 2018. 127 Supra at note 1.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner oflntemal Revenue x------------------------------------------------------------------------------------------x Having settled that the Petition was timely filed, We likewise rule that We have jurisdiction over this case under Section 3(a)(2), Rule 412s of RRCTA. We shall now determine whether petitioner is entitled to the refund of its alleged unutilized input taxes attributable to zero-rated sales for CY 2017 in the amount ofP12,237,833.00. To reiterate, Section 112(A) and (C) of the NIRC of 1997, as amended, provides: Section 112. Refunds or Tax Credits of Input Tax. - (A) Zero-rated or Effectively Zero-rated Sales. -Any VAT- registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(l), (2) and (b) and Section 108 (B)(l) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales. Provided, finally, That for a person making sales that are zero-rated under Section 108(B) (6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. (B) ........ . 128 Section 3. Cases Within the Jurisdiction of the Court in Divisions.- The Court in Divisions shall exercise: (a) Exclusive original or appellate jurisdiction to review by appeal the following: (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other Jaws administered by the Bureau of Internal Revenue, where the National internal Revenue Code or other applicable law provides a specific period for action: Provided, that in case of disputed assessments, the inaction of the Commissioner of Internal Revenue within the one hundred eighty day-period under Section 228 of the National Internal Revenue Code shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the Court and does not necessarily constitute a formal decision of the Commissioner of Internal Revenue on the tax case; Provided, further, that should the taxpayer opt to await the final decision of the Commissioner oflntemal Revenue on the disputed assessments beyond the one hundred eighty day-period abovementioned, the taxpayer may appeal such final decision to the Court under Section 3(a), Rule 8 of these Rules; and Provided, still further. that in the case of claims for refund of taxes erroneously or illegally collected, the taxpayer must file a petition for review with the Court prior to the expiration of the two-year period under Section 229 of the National Internal Revenue Code.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x {C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application within ninety (90) days period shall be punishable under Section 269 of this Code. Comprehensively, as culled from jurisprudence, particularly Commissioner of Internal Revenue vs. Toledo Power Co., 129 the requisites for claiming unutilized or excess input VAT under Section 112 of the NIRC of 1997, as amended, are as follows: As to the timeliness of the filing of the administrative and judicial claims: 1. The claim is filed with the BIR within two (2) years after the close of the taxable quarter when the sales were made; 130 2. In case of full or partial denial of the refund claim, or the failure on the part of Respondent to act on the said claim within a period of ninety (90) days, the judicial claim must be filed with this Court, within thirty (30) days from receipt of the decision or after the expiration of the said 90-day period; Concerning the taxpayer's registration with the BIR: 3. The taxpayer is a VAT-registered person;131 In relation to the taxpayer's output VAT: 4. The taxpayer is engaged in zero-rated or effectively zero- rated sales; 132 129 G.R. Nos. 195175 & 199645, August 10,2015,766 SCRA 20-33. 130 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. vs. Commissioner oflnternal Revenue, G.R. No. 182364, August 3, 2010. 131 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra. 132 !d.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue x------------------------------------------------------------------------------------------x 5. For zero-rated sales under Sections 106(A)(2){a){1) and (3); and 108(8){1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with SSP rules and regulations; 133 As regards the taxpayer's input VAT being refunded: 6. The input taxes are not transitional;134 7. The input taxes are due or paid;135 8. The input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; 136 and 9. The input taxes have not been applied against output taxes during and in the succeeding quarters.137 Relative thereto, it must be emphasized that in cases filed before this Court, which are litigated de novo, party-litigants must prove every minute aspect of their case. 138 Thus, it behooves petitioner to comply with the foregoing requisites. As a corollary, the absence of any of the said requisites is a valid ground to deny the refund claim. First requisite: Petitioner timely filed its administrative claim before the BIR. The first requisite pertains to filing a claim for tax refund or tax credit of input VAT before the BIR within two (2) years from the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. IJJ Par. 2, Sec. 4.112-l.(a) ofRR No. 16-2005, as further amended by RR No. 13-2018. 134 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra. 135 ld. 136 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; and San Roque Power Corporation vs. Commissioner of Internal Revenue, supra. 137 Intel Technology Philippines, Inc. vs. Commissioner oflnternal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra. 138 Edison (Bataan) Cogeneration Corporation vs. Commissioner of Internal Revenue, et seq., G.R. Nos. 201665 and 201668, August 30, 2017; Commissioner of Internal Revenue vs. Philippine National Bank, G.R. No. 180290, September 29, 2014; Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc., G.R. No. 197515, July 2, 2014; Dizon vs. Court of Tax Appeals, et al., G.R. No. 140944, Apri130, 2008; Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, G.R. No. 145526, March 16, 2007; and Commissioner of Internal Revenue vs. Manila Mining Corporation, G.R. No. 153204, August 31, 2005.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner oflnternal Revenue x------------------------------------------------------------------------------------------x We quote anew Section 112(A) of the NIRC of 1997, as amended: Section 112. Refunds or Tax Credits of Input Tax. - {A) Zero-rated or Effectively Zero-rated Sales.- Any VAT- registered person, whose sales are zero-rated or effectively zero-rated may, within two 121 years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: ... [Emphasis and underscoring supplied.] Given the foregoing, the following are the pertinent deadlines for filing the administrative claim before the BIR. First quarter, 2017 Last day of the Last day of filing the Second quarter, 2017 quarter administrative claim Third quarter, 2017 Fourth quarter, 2017 March 31, 2017 March 31, 2019 June 30, 2017 June 30, 2019 September 30, 2017 September 30, 2019 December 31, 20 17 December 31, 2019 By filing its administrative claim with the concerned RDO on March 29, 2019, 139 petitioner has seasonably complied with the period provided by law. Hence, We rule that the first requisite has been complied with Second requisite: Petitioner timely filed its judicial claim before this Court. As thoroughly discussed above, petitioner was able to file its Petition for Review within the 90+30-day period. Hence, We rule that petitioner has complied with the second requisite. Third requisite: Petitioner is a VAT-registered taxpayer. In determining whether petitioner is a VAT-registered taxpayer, reference may be made to its Certificate of Registration (BIR Form No. 2303). 139 Exhibit ''P-25", Docket, Vol. I, p. 466.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X A perusal of the petitioner's Certificate of Registration140 reveals that it is a VAT-registered taxpayer. As this is undisputed, We rule that the third requisite has been complied with. Fourth and fifth requisites: Petitioner established that it had zero-rated or effectively zero-rated sales/ receipts during the 1st, :Jnd, 3rd, and 4th quarters of CY 2017 in the reduced amount of p 128,552,843.81. The fourth and fifth requisites require that the taxpayer is engaged in zero-rated or effectively zero-rated sales and for zero- rated sales under Section 106(A)(2)(a)(l), (2) and (b), and Section 108(B)( 1) and (2) of the NIRC of 1997, as amended, that the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the BSP rules and regulations. In its Amended Quarterly VAT Returns (BIR Form No. 2550Q) for the 1st, 2nd, 3rct, and 4th quarters of CY 2017, petitioner reported 1'135,033,263.42 total sales/receipts, consisting of zero-rated sales/receipts and exempt sales/receipts, detailed as follows: Exhibit CY 2017 Zero-Rated Exempt Total No. 1" Quarter Sales/Receipts Sales/Receipts Sales/Receipts 2nd Quarter "P-32" 3rd Quarter P43,598, 109.44 - P43,598,109.44 "P-33" 4th Quarter 28,185,027.36 - 28,185,027.36 "P-34" 28,727,928.37 30,440,061.00 "P-35" 32,810,065.62 P1 ,712,132.63 32,810,065.62 Total P133,321,130.79 - P135,033,263.42 P1, 712,132.63 The amount of 1'133,321, 130.79, which petitioner treated as zero-rated sales/receipts comprised of 1'132,785,525.27 sales of services to duly registered RE developer and 1'535,605.52 export sales to its non-resident affiliates doing business outside the Philippines, detailed as follows:t4t ~ 140 Exhibit ''P-2'', Docket, Vol. I, p. 204. 141 Pars. 7, 8, 17 and 20 Petition for Review, Docket- Vol. I, pp. 14, 15, 18 and 20, respectively; Pars. 7 to 8, 31 and 41, Docket- Vol. III, pp. 1086, 1092 and 1095 to 1096, respectively.

DECISION CTA Case No. 10139 Limited- Philippine Branch vs. Commissioner of Internal Revenue Halliburton Worldwide xP-a-g-e--2--3---o-f--5-1----------------------------------------------------------------------------x l�t Quarter 2Dd Quarter 3rd Quarter 4�� Quarter Total Sale of services toRE develooer 1'28,543,366.45 1'32,810 065.62 1'132 785 525.27 Energy 1'30 024.50 - 1'339 ,271.20 41,796.90 Development 1'43 387,093.41 1'28 044,999.79 - - 154,537.42 Corporation 154,537.42 - !'535,605.52 . E.>c.l>_ort Sales to non-resident forei~ n a,{f!Uates 1'184,561.92 1'133,321,130.79 1'28,727,928.37 - Halliburton 1'32 810,065.62 Energy Services 1'211,016.03 1'98,230.67 (Malaysia) PT Halliburton - 41,796.90 Indonesia Halliburton Worldwide - - GMB Total 1'211,016.03 1'140,027.57 Export Sales Total Zero-Rated Sales/Receipts 1'43,598,109.44 1'28,185,027.36 Sale of services to EDC, a duly registered RE developer. To prove its P132,785,525.27 sales of services to a duly registered RE developer, particularly to EDC, petitioner presented its Contract for Directional Drilling Works with EDC on November 29, 2011 where it undertook to provide the latter with directional drilling services in connection with the implementation of EDC's Drilling Operations Program, i.e., a program for the drilling or workover of geothermal wells, in the Philippines. 142 As such, petitioner invokes Section 15(g) of RA No. 9513, which grants certain tax incentives toRE developers such as EDC, viz: "CHAPTER VII GENERAL INCENTIVES Section 15. Incentives for Renewable Energy Projects and Activities. - RE developers of renewable energy facilities, including hybrid systems, in proportion to and to the extent of the RE component, for both power and non- power applications, as duly certified by the DOE, in consultation with the BOI, shall be entitled to the following incentives: XXX XXX XXX (g) Zero Percent Value-Added Tax Rate. - The sale of fuel or power generated from renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, ' i geothermal, ocean energy and other emerging energy sources 142 Par. 1.27, Definitions, Exhibit "P-22". Docket- Vol. II, pp. 859 to 913.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x using technologies such as fuel cells and hydrogen fuels, shall be subject to zero percent (0%) value-added tax (VAT), pursuant to the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337. All RE Developers shall be entitled to zero-rated value added tax on its purchases of local supply of goods, properties and services needed for the development, construction and installation of its plant facilities. This provision shall also apply to the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and/or contractors." [Emphasis and underscoring supplied.] Moreover, Part III, Rule 5, Section 13(G) of the Implementing Rules and Regulations ("IRR") of RA No. 9513 143 provides: "SEC. 13. Fiscal Incentives for Renewable Energy Projects and Activities DOE-certified existing and new RE Developers of RE facilities, including Hybrid Systems, in proportion to and to the extent of the RE component, for both Power and Non- Power Applications, shall be entitled to the following incentives: XXX XXX XXX G. Zero Percent Value-Added Tax Rate The following transactions/ activities shall be subject to zero percent (0%) value-added tax (VAT), pursuant to the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337: XXX XXX XXX (b) Purchase of local goods, properties and services needed for the development, construction, and installation of the plant facilities of RE Developers; and (c) Whole process of exploration and development of RE sources up to its conversion into power, including, but not limited to, the services performed by subcontractors and/ or contractors." [Emphasis supplied.} 143 Department Circular No. DC2009-05-0008 dated May 25. 2009 issued by the DOE.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Based on the foregoing provisions, all RE Developers are entitled to zero-rated VAT on its purchases of local supply of goods, properties and services needed for the development, construction and installation ofplant facilities. Furthermore, the law declares that the VAT zero-rating applies to the whole process of exploring and developing renewable energy sources up to their conversion into power, including but not limited to the services performed by subcontractors and/ or contractors. However, the same Part III, Rule 5 of the IRR ofRA No. 9513 further states the conditions for the availment of incentives and other privileges under the said law. Section 18(A), (B), and (C) thereof reads: "SEC. 18. Conditions for Availment of Incentives and Other Privileges - A. Registration/ Accreditation with the DOE For purposes of entitlement to the incentives and privileges under the Act, existing and new RE Developers, and manufacturers, fabricators, and suppliers of locally-produced RE equipment shall register with the DOE, through the Renewable Energy Management Bureau (REMB). The following certifications shall be issued: (1) DOE Certificate of Registration -issued to an RE Developer holding a valid RE Service/Operating Contract. For existing RE projects, the new RE Service/Operating Contract shall preterminate and replace the existing Service Contract that the RE Developer has executed with the DOE subject to the Transitory Provision in Rule 13, Section 39. The DOE Certificate of Registration shall be issued immediately upon award of an RE Service/Operating Contract covering an existing or new RE project or upon approval of additional investment. Any investment added to existing RE projects shall be subject to prior approval by the DOE. XXX XXX XXX B. Registration with the Board of Investments (BOI) The RE sector is hereby declared a priority investment sector that will regularly form part of the country's ~

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Investment Priority Plan (IPP) unless declared otherwise by law. To qualify for the availment of the incentives under Sections 13 and 15 of this IRR, RE Developers and manufacturers, fabricators, and suppliers of locally- produced RE equipment, shall register with the BOI. The registration with the BOI shall be carried out through an agreement and an administrative arrangement between the BOI and the DOE, with the end-view of facilitating the registration of qualified RE facilities. The applications for registration shall be favorably acted upon immediately by the BOI, on the basis of the certification issued by the DOE. ... [Emphases and underscoring supplied.] In addition, the DOE issued DC No. DC2021-12-0042, amending Section 18(C) ofthe IRR of RA No. 9513 to state that, as a rule, RE Developers are automatically qualified to avail of the incentives provided for in RA No. 9513 after securing a DOE Certificate of Registration, viz: SEC. 18. Conditions for Availment of Incentives and Other Privileges - C. DOE ENDORSEMENT FOR AVAILMENT OF INCENTIVES AND DUTY-FREE IMPORTATIONS OF MACHINERY, EQUIPMENT, AND MATERIALS RE Developers and manufacturers, fabricators, and suppliers of locally-produced RE equipment shall be AUTOMATICALLY qualified to avail of the incentives provided for in the Act, OTHER THAN THE INCENTIVE OF DUTY-FREE IMPORTATION OF QUALIFIED MACHINERY, EQUIPMENT, MATERIALS, PARTS AND COMPONENTS, after securing a Certificate of Registration from the DOE. RE DEVELOPERS THAT IMPORT RE EQUIPMENT, EQUIPMENT. MATERIALS. PARTS AND COMPONENTS SHALL SECURE A CERTIFICATE OF ENDORSEMENT FROM THE DOE, THROUGH THE REMB. ON A PER IMPORTATION BASIS. [Underscoring supplied.] Further, Section 3(B) of Revenue Regulations ("RR") No. 7- 2022, 144 which implements the tax provisions of the RE Act, states: ~ 144 Tax Incentives under the Renewable Energy Act of2008 and the Policies and Guidelines for the Availment Thereof, June 22, 2022.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X SECTION 3. Required Certifications/Accreditations from Appropriate Government Agencies for the Availment of the Tax Incentives. - RE developers and manufacturers, fabricators, and suppliers of locally-produced RE equipment shall secure the certifications/accreditations listed hereunder before any incentive provided for in the Act may be availed of. A. Registration/Accreditation with the DOE - Existing and new RE Developers and manufacturers, fabricators, and suppliers of locally-produced RE equipment shall register with the DOE through the Renewable Energy Management Bureau (REMB). The following certifications shall be secured and submitted to the BIR: Ill DOE Certificate of Registration - issued to an RE Developer holding a valid RE Service/Operating Contract. For existing RE projects, the new RE Service/Operating Contract shall pre-terminate and replace the existing Service Contract that the RE Developer has previously executed with the DOE. The DOE Certificate of Registration is issued immediately upon award of an RE Service/Operating Contract covering an existing or new RE project or upon approval of additional investment. Any investment added to existing RE projects is subject to prior approval by the DOE. (2) DOE Certificate of Accreditation - issued to RE manufacturers, fabricators, and suppliers of locally-produced RE equipment, upon submission of necessary requirements as determined by the DOE, in coordination with the DTI. B. Certificate of Endorsement by the DOE - ... C. Registration with the Board of Investments !BOll To qualify for incentives under the Act, RE developers, manufacturers, fabricators, and suppliers of locally-produced equipment shall register with the 801. D. Certificate of ITH Entitlement (CE) - ... [Emphases and underscoring supplied.] Thus, RE Developers must have secured a DOE Certificate of Registration and BOI Certificate of Registration to qualify for VAT zero-rating on their purchases as contemplated under RA No. 9513 and its IRR.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x To substantiate the foregoing, petitioner submitted the following documents for the consideration of the Court: EDC's DOE Certificate Registration with the BOI Projects of Registration DOE Certification dated January 9, Tongonan, Certificate 2019, issued by the 80!, listing Leyte of Registration the registered projects of EDC (80! Certification dated January Palinpinon, GRESC 9, 2019)145 Negros 2009-10-00 1 dated Certificate of Registration No. Oriental October 23, 2009146 2012-024, as per 80! Certification Bacon- GRESC dated January 9, 2019 Manito 2009-10-002 dated Certificate of Registration No. Sorsogonj October 23, 2009147 2011-202, as per 801 Certification A!bay GRESC dated January 9, 2019 2009-10-003 dated Certificate of Registration No. Kidapawan October 23, 2009148 2011-201, as per 801 Certification City, North dated January 9, 2019 Cotabato GRESC 2009-10-004 dated Certificate of Registration No. Northern October 23, 2009149 2012-025 (Mt. Apo Geothermal Negros, Project), as per 801 Certification Negros GRESC dated January 9, 2019 Occidental 2009-10-005 dated None October 23, 20091so Correspondingly, petitioner must also comply with the pertinent invoicing requirements, containing all the required information under Section 113(A) and (B) of the NIRC of 1997, as amended, to wit: "SEC. 113. Invoicing and Accounting Requirements for VAT-registered Persons.- (A) Invoicing Requirements. -A VAT-registered person shall issue: (1) A VAT invoice for every sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. i 145 Exhibit "P-853", Docket- Vol. JII, p. 1037. 1" Exhibit "P-11", Docket- Vol. II, p. 706. 147 Exhibit "P-12", id., p. 707. 148 Exhibit "P- 13", id., p. 708. 149 Exhibit �'P-14", id., p. 709. 150 Exhibit "P-15", id., p. 710.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue X------------------------------------------------------------------------------------------X (B) Information Contained in the VAT Invoice or VAT Official Receipt. -The following information shall be indicated in the VAT invoice or VAT official receipt: {1) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN); (2) The total amount which the purchaser pays or is obligated to pay to the se!Jer with the indication that such amount includes the value-added tax: Provided, That: (a) The amount of the tax shall be shown as a separate item in the invoice or receipt; (b) If the sale is exempt from value-added tax, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt; (c) If the sale is subject to zero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value- added tax on each portion of the sale shall be shown on the invoice or receipt: Provided, That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale. (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and (4) In the case of sales in the amount of One thousand pesos (P1,000) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer or client." These provisions of the NIRC of 1997, as amended, are further implemented by Section 4.113-1(A) and (B) of RR No. 16-2005,151 as amended, to wit: "SEC. 4.113-1. Invoicing Requirements. - i (A) A VAT-registered person shall issue:- 151 Consolidated Value-Added Tax Regulations of2005, September 1, 2005

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x (1) A VAT invoice for every sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a "VAT Invoice" or "VAT official receipt". All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoiceI official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt.- The following information shall be indicated in VAT invoice or VAT official receipt: (1) A statement that the seller 1s a VAT-registered person, followed by his TIN; (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That: (a) The amount of tax shall be shown as a separate item in the invoice or receipt; (b) If the sale is exempt from VAT, the term "VAT-exempt sale" shall be written or printed prominently on the invoice or receipt; (c) If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale. (3) In the case of sales in the amount of one thousand pesos (1"1,000.00) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, ~

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in (1) and (2) of this Section." Apart from the above requirements, the sales invoices ("SI") and ORs must be duly registered with the BIR as prescribed under Section 237, in relation to Section 238 of the NIRC of 1997, as amended, to wit: "SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. - All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sale or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: xxx XXX XXX XXX SEC. 238. Printing of Receipts or Sales or Commercial Invoices. - All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same. No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner." Summarized below are the alleged zero-rated receipts to EDC off'132,785,525.28 for the 1st to 4th quarters ofCY 2017, as lifted from petitioner's Schedule of Zero-rated Sales (Domestic), 152 ORs, 153 related invoices, 154 Certificates of Creditable Tax Withheld at Source (BIR Form No. 2307), and related schedules and documents,155 which were all examined by the Court-commissioned ICPA. 152 Annex H, Exhibit "P-29", Docket- Vol. II, p. 588. 153 Exhibits "P-774" to "P-781". 1" Exhibits "P-789" to "P-796" and "P-799" to "P-812". 155 Exhibits "P-813" to ''P-843".

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue X------------------------------------------------------------------------------------------X OR Invoice Invoice Amount EWT Net OR Exhibit Exhibit Amount BIDed Amount Amount Amount lin Php) p 4,309.76 I' 211,178.05 No. No. BIDed 55,516.17 2,720 292.56 I' 211,178.05 "P-774" lin USD) I' 215 487.81 259,792.05 12,729,810.53 2 720,292.56 "P-775" - $ 4,316.49 2 775,808.73 164,774.94 8,073,971.81 "P-776" 55,713.40 196,340.65 9,620,692.03 12,729,810.53 "P-777" - 260,579.00 12 989,602.58 158,463.28 7,764,700.93 25,459,364.76 165,125.00 8,238,746.75 28,545.01 1,398,705.65 "P-778" "P-789" 196,757.78 9,817,032.68 230,256.33 11,282,560.30 35 799 236.13 "P-790" 158,799.94 7,923 164.21 24,827.70 1,216,557.23 "P-779" "P-792" 28,347.15 1,427,250.66 264,541.52 12,962,534.25 22,453,631.69 "P-791" 229,590.52 11,512,816.63 41,274.45 2,022,448.01 14 594,627.94 "P-780" "P-793" 24,864.00 1,241,384.93 141,151.65 6,916 430.69 "P-794" 265,913.63 13,227,075.77 17,401.34 16,161,673.11 "P-781" 41,488.53 2,063,722.46 28,325.99 852,665.67 I' 130,129,814.77 Total - 139,646.26 7,057,582.34 242,668.79 1,387,973.34 17,140.80 129,867.43 11,890,770.71 "P-796" 27,936.00 870,067.01 11,452.13 6,363,504.20 "P-795" 239,374.99 1,416,299.33 28,521.70 "P-799" 127,196.31 12,133,439.50 29,118.56 561,154.51 "P-800" 11,280.00 6,493,371.63 21,203.96 1,397 563.26 "P-801" 28 094.40 247,527.03 1,437,820.56 "P-802" 28,756.80 572,606.64 26,367.02 1,042,788.05 "P-803" 20,857.72 1,426,084.96 28,709.27 12,114,019.33 "P-805" 242,326.70 1,466,939.12 249,080.01 1,291,984.03 "P-804" 25,608.00 1,063,992.01 25 673.76 1,406,754.15 "P-806" 27,936.00 12,361 546.36 12,204,920.69 "P-807" 244,483.72 1,318,351.05 1,258 014.24 "P-808" 25 200.00 1,435,463.42 1'130,129,814. 78 "P-809" 12,454,000.70 "P-810" 1,283,688.00 "P-811" 1'132, 785,525.27 "P-812" However, as presented below, some of the zero-rated receipts issued to EDC in the amount of f>4,232,681.47 show that the nature of the services rendered cannot be ascertained. Hence, f>4,232,681.47 of petitioner's zero-rated sales shall be disallowed for the failure of the ORs to state the nature of services as required under Section 113(B)(3) of the NIRC of 1997, as amended, viz.: OR Invoice Amount EWT OR I Net Exhibit Amount Billed (in Php) Amount Amount No. Billed f' 4,309.76 f' 211,178.05 11 P - 7 7 4 " (in USD) f' 215,487.81 "P-775" $ 4,316.49 2,775,808.73 55,516.17 2, 720,292.56 "P-778" 55,713.40 1,241,384.93 24,827.70 1,216,557.23156 24,864.00 P4,232,681.47 1"4, 148,027.84 Consequently, out of the zero-rated receipts to EDC of f>132,785,525.28, only the amount of f>128,552,843.81, 157 which are properly supported by VAT zero-rated ORs, qualify for VAT zem-mting unde< RA No. 9513 and DOE Ci<cular No~ 156 Part ofP35. 799,236.13. 157 Pl32,785,525.28less 1'4,232,681.47.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x DC2009-05-008, in relation to Section 113(A)(2), (B)(1), (2)(c), (3), and (4) of the NIRC of 1997, as amended. Export sales to non-resident foreign affiliates With reference to its P535,605.52 reported zero-rated export sales of goods to its non-resident foreign affiliates, namely: Halliburton Energy Services (Malaysia), PT Halliburton Indonesia, and Halliburton Worldwide GMB, petitioner claims that it was paid for in acceptable foreign currencies accounted for in accordance with the rules and regulations of the BSP and RMC No. 42-2003, via offsetting arrangements, invoking Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended, to wit: "SEC. 106. Value-Added Tax on Sale of Goods or Properties.- (A) Rate and Base of Tax.- xxx XXX XXX XXX (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales. -The term 'export sales' means: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)." Based on the foregoing, in order for a direct export sale to qualify as zero-rated, the following essential elements must be present: 1.) The sale was made by a VAT-registered person; 2.) There was sale and actual shipment of goods from the Philippines to a foreign country; and 3.) The sale was paid for in acceptable foreign currency accounted for in accordance with the rules and regulations of the BSP. i It is settled that petitioner is a VAT-registered person. Therefore, petitioner complied with the first essential element.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x As for the second essential element, any VAT-registered person claiming VAT zero-rated direct export sales must present, among others, the following documents: 1.) The SI as proof of the sale of goods; and 2.) The bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country. Corollary to the first document, said Sis must comply with the pertinent invoicing requirements, containing all the required information under Section 113(A)(1) and (B) of the NIRC of 1997, as amended. However, petitioner failed to submit invoices and bills of lading or airway bills to prove the sale of goods and the actual shipment from the Philippines to a foreign country; hence, this element was not established. More, petitioner failed to comply with the equally significant third essential element. The Court-commissioned ICPA noted in its Final Report that the sales to non-resident foreign affiliates were paid for in foreign currency (United States Dollar) through intercompany offsetting arrangements under Intercompany Balance Settlement. 158 In support thereof, petitioner submitted (1) In-House Cash and Intercompany Settlement Agreement, 159 (2) Forex Exchange Rate - USD vs PHP (January to December),16o and (3) journal entries showing payment through offsetting.161 However, We find the preceding documents insufficient. In RMC No. 42-2003, entitled "Clarifying Certain Issues Raised Relative to the Processing of Claims for Value-Added Tax (VAT Credit/Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duly Drawback Center, Department of Finance (OSS) by Direct Exporters, the documents required in an offsetting arrangement were enumerated, thus: Q-8: With the full liberalization of the BSP rules on foreign exchange and trade transactions (CB Circular No. 1389 dated April13, 1993 enunciated in RMC No. 57-97), the BIR requirement for full documentation of proofs of 158 Exhibit "P-847"; Par. 13, Exhibit "P-29", Docket- Vol. 11, p. 570. 159 Exhibit "P-23", Docket- Vol. 11, pp. 914 to 927. 160 Exhibit "P-846". 161 Exhibits "P-783" to "P-788".

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue X------------------------------------------------------------------------------------------X inward remittances of export proceeds should no longer be enforced. Accordingly, what should be the acceptable documentary requirements in the processing of claims for TCC/refund, specifically on offsetting arrangements? A-8: In the case of offsetting arrangements, the following documents should be required: a. Import documents which created liability accounts in favor of the foreign parent or affiliated company; b. Other contracts with the foreign or affiliated company that brought about the liabilities which were offset against receivables from export sales; c. Evidence of proceeds of loans, in case the claimant has received loans or advances from the foreign company; d. Documents or correspondence regarding offsetting arrangements; e. Confirmation of the offsetting arrangements by the heads of the business organizations involved; f. Documents to prove actual export of goods; g. Documents to prove that the sales are zero-rated sales. Petitioner should have submitted documents establishing the existence of its foreign currency payables to its non-resident foreign affiliates as those specified under letters "a" to "c" of RMC No. 42-2003, namely: a) import documents which created liability accounts in favor of the foreign parent or affiliated company; b) other contracts with the foreign or affiliated company that brought about the liabilities which were offset against receivables from export sales; and c) evidence of proceeds of loans, in case the claimant has received loans or advances from the foreign company. Likewise, petitioner should have submitted documents or correspondence regarding the offsetting and confirmation of the offsetting arrangements by the heads of both petitioner and non-resident foreign affiliates. Without clear and convincing proof showing how much of petitioner's export sales were offset against its payables to its non-resident foreign affiliates and how much thereof were inwardly remitted and accounted for in accordance with the BSP rules and regulations, petitioner's reported export sales to its non-resident foreign affiliates, i.e., Halliburton Energy Services (Malaysia), PT Halliburton Indonesia and Halliburton Worldwide GMB in the respective amounts of 1"339,271.20, 1"41,796.90 and 1"154,537.42 or in the aggregate amount of("

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x P535,605.52 for CY 2017 cannot qualify for VAT zero-rating under Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended. In sum, for purposes of the fourth requisite, We find that out of the total reported zero-rated sales/receipts of P133,321,130.79, only the zero-rated receipts derived by petitioner from services rendered to EDC, an RE Developer, amounting to P128,552,843.81, qualify for VAT zero-rating for the four quarters of CY 20 17. As for the fifth requisite, such requisite provides that petitioner must prove that the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations under Sections 106(A)(2)(a)(1), (2) and (B), and 108(B)( 1) and (2) of the NIRC of 1997, as amended. However, since the legal basis for petitioner's zero- rated receipts of P128,552,843.81 is Section 15(g) of RA No. 9513, petitioner need not comply with the fifth requisite. In this connection, while petitioner alleges that it has export sales to its non-resident affiliates, this Court need not determine whether there was compliance with the same fifth requisite since it was not duly proven, as shown above, that the said export sales of goods qualify for VAT zero-rating under Section 106(A)(2)(a)( 1) of the NIRC of 1997, as amended. Sixth requisite: Petitioner's input taxes do not appear to be transitional. The claimed input taxes do not appear to be transitional as understood under Section 111 (A) of the NIRC of 1997, as amended, to wit: "SEC. 111. Transitional/ Presumptive Input Tax Credits. - (A) Transitional Input Tax Credits.- A person who becomes liable to value-added tax or any person who elects to be a VAT- registered person shall, subject to the filing of an inventory according to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value- added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax."

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Parenthetically, transitional input tax credit operates to benefit newly VAT-registered persons, whether they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the transition period from non-VAT to VAT status, the transitional input tax credit alleviates the impact of the VAT on the taxpayer.162 Since there is no showing that the claimed input taxes are transitional, petitioner has complied with the sixth requisite for the grant of an input VAT refund. Seventh requisite: Not all of petitioner's input VAT being claimed are due or paid. Anent the seventh requisite in claiming a VAT refund, it is of vital importance for petitioner to provide supporting documents to prove that the input taxes claimed during the four quarters of CY 20 17 were actually due or paid in accordance with Section 11 O(A) of the NIRC of 1997, as amended, which provides that: "SEC. 110. Tax Credits.- (A) Creditable input Tax. - (1) Any input tax evidenced by a VAT invoice or official receipt issued in accordance with Section 113 hereof on the following transactions shall be creditable against the output tax: (a) Purchase or importation of goods: (i) For sale; or (ii) For conversion into or intended to form part of a finished product for sale including packaging materials; or (iii) For use as supplies in the course of business; or (iv) For use as materials supplied in the sale of service; or (v) For use in trade or business for which deduction for depreciation or amortization is allowed under this Code. ~ 162 Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue, G.R. Nos. 158885 and 170680, April 2, 2008.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner oflnternal Revenue X------------------------------------------------------------------------------------------X (b) Purchase of services on which a value-added tax has actually been paid. (2) The input tax on domestic purchase or importation of goods or properties by a VAT-registered person shall be creditable: (a) To the purchaser upon consummation of sale and on importation of goods or properties; and (b) To the importer upon payment of the value-added tax prior to the release of the goods from the custody of the Bureau of Customs. Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed under this Code shall be spread evenly over the month of acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds One million pesos (1"1,000,000): Provided, however, That if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes, then the input VAT shall be spread over such a shorter period: Provided, finally, That in the case of purchase of services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee." The above provisions are implemented by Sections 4.110- 1 to 4.110-3 of RR No. 16-2005, 163 as amended, which provide as follows: "SECTION 4.110-1. Credits For Input Tax.- "Input tax" means the VAT due on or paid by a VAT-registered person on importation of goods or local purchases of goods, properties, or services, including lease or use of properties, in the course of his trade or business. It shall also include the transitional input tax and the presumptive input tax determined in accordance with Sec. 111 of the Tax Code. It includes input taxes which can be directly attributed to transactions subject to the VAT plus a ratable portion of any input tax which cannot be directly attributed to either the taxable or exempt activity. Any input tax on the following transactions evidenced by a VAT invoice or official receipt issued by a VAT-registered person in accordance with Sees. 113 and 237 of the Tax Code shall be creditable against the output tax: 163 Supra at note 151.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue x------------------------------------------------------------------------------------------x (a) Purchase or importation of goods (1) For sale; or (2) For conversion into or intended to form part of a finished product for sale, including packaging materials; or (3) For use as supplies in the course of business; or (4) For use as raw materials supplied in the sale of services; or (5) For use m trade or business for which deduction for depreciation or amortization is allowed under the Tax Code, (b) Purchase of real properties for which a VAT has actually been paid; (c) Purchase of services in which a VAT has actually been paid; (d) Transactions "deemed sale" under Sec. 106 (B) of the Tax Code; (e) Transitional input tax allowed under Sec. 4.111 (a) of these Regulations; (f) Presumptive input tax allowed under Sec. 4.111 (b) of these Regulations; (g) Transitional input tax credits allowed under the transitory and other provisions of these Regulations. SECTION 4.110-2. Persons Who Can Avail of the Input Tax Credit. -The input tax credit on importation of goods or local purchases of goods, properties or services by a VAT- registered person shall be creditable: (a) To the importer upon payment of VAT prior to the release of goods from customs custody; (b) To the purchaser of the domestic goods or properties upon consummation of the sale; or (c) To the purchaser of services or the lessee or licensee upon payment of the compensation, rental, royalty or fee. SECTION 4.110-3. Claims for Input Tax on Depreciable Goods. - Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income ~

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x tax purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar month exceeds One Million pesos (1"1,000,000.00), regardless of the acquisition cost of each capital good, shall be claimed as credit against output tax in the following manner: {a) If the estimated useful life of a capital good is five (5) years or more - The input tax shall be spread evenly over a period of sixty (60) months and the claim for input tax credit will commence in the calendar month when the capital good is acquired. The total input taxes on purchases or importations of this type of capital goods shall be divided by 60 and the quotient will be the amount to be claimed monthly. (b) If the estimated useful life of a capital good is less than five (5) years - The input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number of months comprising the estimated useful life of the capital good. The claim for input tax credit shall commence in the calendar month that the capital goods were acquired. Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during any calendar month does not exceed one million pesos {Pl ,000,000.00), the total input taxes will be allowable as credit against output tax in the month of acquisition. Capital goods or properties refers to goods or properties with estimated useful life greater than one (1) year and which are treated as depreciable assets under Sec. 34(F) of the Tax Code, used directly or indirectly in the production or sale of taxable goods or services. The aggregate acquisition cost of depreciable assets in any calendar month refers to the total price, excluding the VAT, agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. Thus, an asset acquired on installment for an acquisition cost of more than Pl,OOO,OOO.OO, excluding the VAT, will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed Pl ,000,000.00. Construction in progress fCIPI is the cost of construction work which is not yet completed. CIP is not depreciated until the asset is placed in service. Normally, upon completion. a CIP item is reclassified and the reclassified asset is capitalized and depreciated.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x CIP is considered, for purposes of claiming input tax. as a purchase of service, the value of which shall be determined based on the progress billings. Until such time the construction has been completed, it will not qualify as capital goods as herein defined, in which case. input tax credit on such transaction can be recognized in the month the payment was made: Provided, that an official receipt of payment has been issued based on the progress billings. In case of contract for the sale of service where only the labor will be supplied by the contractor and the materials will be purchased by the contractee from other suppliers. input tax credit on the labor contracted shall still be recognized on the month the payment was made based on a progress billings while input tax on the purchase of materials shall be recognized at the time the materials were purchased. Once the input tax has already been claimed while the construction is still in progress. no additional input tax can be claimed upon completion of the asset when it has been reclassified as a depreciable capital asset and depreciated. [Emphasis and underscoring supplied.] Further, Section 4.110-8 of RR No. 16-2005164 provides for the substantiation requirements of input tax credits on the importation of goods, domestic purchases of goods, properties, and services payments made to non-residents, as follows: "SECTION 4.110-8. Substantiation of Input Tax Credits. (a) Input taxes for the importation of goods or the domestic purchase of goods, properties or services is made in the course of trade or business, whether such input taxes shall be credited against zero-rated sale, non-zero-rated sales, or subjected to the 5% Final Withholding VAT, must be substantiated and supported by the following documents, and must be reported in the information returns required to be submitted to the Bureau: (1) For the importation of goods- import entry or other equivalent document showing actual payment of VAT on the imported goods. (2) For the domestic purchase of goods and properties - invoice showing the information required under Sees. 113 and 237 of the Tax Code. 164 Supraatnote 151.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of internal Revenue X------------------------------------------------------------------------------------------X (3) For the purchase of real property - public instrument i.e., deed of absolute sale, deed of conditional sale, contract/ agreement to sell, etc., together with VAT invoice issued by the seller. (4) For the purchase of services- official receipt showing the information required under Sees. 113 and 237 of the Tax Code. A cash register machine tape issued to a registered buyer shall constitute valid proof of substantiation of tax credit only if it shows the information required under Sees. 113 and 237 of the Tax Code. (d) Input tax from payments made to non-residents (such as for services, rentals and royalties) shall be supported by a copy of the Monthly Remittance Return of Value Added Tax Withheld (BIR Form 1600) filed by the resident payor in behalf of the non-resident evidencing remittance of VAT due which was withheld by the payor." Thus, to prove entitlement to credits for input taxes due or paid, the same must be evidenced by VAT Sis (for domestic purchases of goods) or ORs (for domestic purchases of services) issued in accordance with Section 113 of the NIRC of 1997, as amended, as the case may be, as well as, the import entry or other equivalent documents showing actual payment of VAT (for importation of goods) and BIR Form 1600 with corresponding payment confirmation (for services rendered by non-residents). In its amended Quarterly VAT Returns for the 1st to 4th quarters of CY 2017, petitioner reported a total input VAT of P12,443,688.67 from its amortization of input VAT on purchases of capital goods exceeding f'1 Million, domestic purchases and importation of goods other than capital goods, domestic purchase of services and services rendered by non- residents, out of which the amount off'12,237,833.00,165 net of P205,855.75 input VAT allocable to exempt sales, is the subject of petitioner's claim for refund, as shown below: 165 Round up amount.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X Exhibit "P-32" ''P-33" "P-34" "P-35" Total 3�� Quarter 4th Quarter CY2017 Period 1�� Quarter 2Dd Quarter 1'75,451.77 1'59,841.06 1'52,035.71 1'254,974.96 Input Tax 1'67 ,646.42 Deferred on 67,646.42 52,035.70 44,230.35 223 753.53 Capital Goods 7,805.35 59,841.06 7,805.36 7,805.36 31,221.43 Exceeding 7,805.36 Pl Million from 127 863.09 54,733.53 250,057.59 Previous 40,359.18 3,323,441.00 Quarter 3,174,338.00 - - 2 232,804.27 6,606,164.38 Less: Input 767,017.57 657,796.36 516,017.27 1'12 443 688.67 Taxon 1,864 584.44 2,001,931.92 1,241,439.50 Purchases of 1'5 854 104.55 P2 795 396.73 1'1,819 995.66 205,855.75 Capital Goods 1'12,237,832.92 exceeding - 205,855.75 - Pl Million 1'2,589,540.98 deferred for the 1'5,854,104.55 1'1,819 995.66 succeeding period Amortization of Input Tax on Capital Goods exceeding Pl Million Add: Current In ut Tax on - Domestic Purchases of Goods Other than Capital Goods 27,101.79 Importation of Goods Other than Capital Goods 149,103.00 Domestic Purchase of Services 291,973.07 Services Rendered by Non-residents 1,498,208.52 Total Allowable 1'1 974 191.73 Input Tax Less: Input Tax allocable to Exempt Sales - Input VAT per claim 1'1,974,191.73 In support of its input VAT, petitioner presented, among others, its Schedule of Input VAT Refund (Local Purchases), 166 Schedule of Importation, 167 Schedule of Withholding VAT Payments (Services of Non-Residents- BIR Form No. 1600),168 Schedule of Income Payments to Non-Resident Suppliers, 169 and the related suppliers' official receipts and invoices, 170 importation documents 171 and Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld (BIR 166 Annex C, Exhibit "P-29", Docket- VoL 1!, pp. 576 to 583. '"Annex D, Exhibit "P-29", Docket- VoL 1!, p. 584. 168 Annex E, Exhibit "P-29"', Docket- Vol. 1!, p. 585. 169 Exhibit "P-755". 170 Exhibits "P-40" to "P-753", inclusive of sub-markings and Exhibit "P-848''. 171 Exhibits "P-768" to ''P-773".

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Forms No. 1600) 172 which were all examined by the Court- commissioned ICPA. As per !CPA's Report, the input VAT in the amount of P358,632.86 shall be disallowed for the following reasons: 173 With invalid supporting documents Amount Without supporting documents 1"265,677.81 Disallowed input tax on importations 54,448.05 38,507.00 TOTAL P358,632.86 Upon verification, We note that in its amended Quarterly VAT Returns for the four quarters of CY 2017, petitioner reported input VAT on domestic purchases of goods and services amounting to P2,482,861.86. On the other hand, the ICPA examined P2,496,428.98 input VAT on domestic purchases, an amount which is higher by P13,567.12 than what was reported per VAT Returns, as follows: Per amended Quarterly VAT Returnsl74 I" 250,057.59 Domestic purchases of goods other than capital goods 2,232,804.27 Domestic purchase of services P2,482,861.86 Total domestic_I'_Urchases_l'_er VAT Returns Per ICPA's findingsl75 I" 2,176,303.12 With valid supporting documents 265,677.81 With invalid supporting documents 54,448.05 Without supporting documents Total domestic purchases per ICPA findings P2,496,428.98 Difference p (13,567.12) 172 Exhibits "P-756" to "P-767''. 173 Par. 23, Conclusion and Recommendation, Docket- Vol. II, p. 572. 174 Exhibit "P-32" "P-33" "P-34" "P-35" Total 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter CY 2017 Period Domestic 1'27,101.79 1'40,359.18 1'127,863.09 1'54,733.53 1'250,057.59 Purchases of 291,973.07 767,017.57 657,796.36 Goods Other thar 516,017.27 2,232,804.27 Capital Goods P2,482,861.86 Domestic Purchase of Services 175 Par. 18, Exhibit "P-29", Docket- Vol. II, p. 571. See Annex C for details, Exhibit "P-29", Docket- Vol. II, pp. 576 to 583.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Of the P2,496,428.98 input VAT from domestic purchases examined by the ICPA, the amount of P54,448.05 pertains to input VAT from domestic purchases without supporting documents, thus, should be adjusted by the discrepancy of P13,567.12. In addition to the above disallowances, the following input VAT amounting to P3,938,706.63 shall likewise be disallowed for failure to meet the invmcmg and substantiation requirements prescribed under Sections 110(A), 113(A) and (B), and 237 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-2, 4.110-3, 4.110-8 and 4.113-1 of RR No. 16-2005,176 as amended, viz: Exhibit No. Supplier /Exporter Amount 1. Input VAT on domestic purchases of goods other than capital goods wherein petitioner's TIN Is not Indicated In the Invoice. "P-108" FERVID INTERNATIONAL PRODUCTS INC I' 6 090.43 "P-109" FERVID INTERNATIONAL PRODUCTS INC 6116.14 "P-110" FERVID INTERNATIONAL PRODUCTS INC 5,789.49 "P-111" FERVID INTERNATIONAL PRODUCTS INC 5 815.20 "P-112" FERVID INTERNATIONAL PRODUCTS INC 9,302.75 "P-113" FERVID INTERNATIONAL PRODUCTS INC 12 475.55 "P-114" FERVID INTERNATIONAL PRODUCTS INC 3,572.76 "P-115" FERVID INTERNATIONAL PRODUCTS INC 4,754.26 "P-116" FERVID INTERNATIONAL PRODUCTS INC 3,572. 76 "P-117" FERVID INTERNATIONAL PRODUCTS INC 5,566.27 "P-118" FERVID INTERNATIONAL PRODUCTS INC ,. 5 566.27 Subtotal 68 621.88 2. Input VAT on the domestic purchase of services ,.I' 8 216.39 wherein petitioner's TIN Is not Indicated In the OR. 8 216.39 "P-545", "P-548", "P-549", "P-550" SALVADOR LLANILLO & BERNARDO Subtotal 3. Input VAT on domestic purchases of services wherein petitioner's TIN and address are not Indicated In the OR. "P-545", "P-546", I' 16 758.00 17,280.00 "P-547" SALVADOR LLANILLO & BERNARDO 17,280.00 17,280.00 "P-626" SUPPLY OILFIELD SERVICES INC 17,280.00 17,280.00 "P-626" SUPPLY OILFIELD SERVICES INC ,. 103 158.00 "P-626" SUPPLY OILFIELD SERVICES INC "P-626" SUPPLY OILFIELD SERVICES INC "P-626" SUPPLY OILFIELD SERVICES INC Subtotal 4. Input VAT on the domestic purchase of services ,.p 21 370.36 wherein Input VAT Ia not separately Indicated in the OR. 21 370.36 "P-166", "P-167", "P-168", "P-169" !CO ASIAPACIFIC PHILIPPINES INC Subtotal 176 Supraatnote 151.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X 5. Input VAT on domestic purchases of services wherein the nature of service rendered cannot be ascertained In the OR. "P-87" DHL EXPRESS (PHILIPPINESI CORPORATION p 116.42 "P-189" ISUZU AUTOMOTIVE DEALERSHIP INC 1,506.48 "P-I90" ISUZU AUTOMOTIVE DEALERSHIP INC 850.86 "P-191" ISUZU AUTOMOTIVE DEALERSHIP INC 2 435.52 "P-236" PICASSO RENTAL MANAGEMENT CORP 879.84 "P-267", "P-274", R.G. MANABAT & CO 33,120.00 "P-275", "P-276" "P-702" SYCIP GORRES VELAYO & CO I5,184.28 "P-702" SYCIP GORRES VELAYO & CO 15 184.28 "P-702" SYCIP GORRES VELAYO & CO 15,184.28 "P-702" SYCIP GORRES VELAYO & CO 15,184.28 "P-702" SYCIP GORRES VELAYO & CO 15,184.28 "P-703" SYCIP GORRES VELAYO & CO 68 820.00 "P-704" SYCIP GORRES VELAYO & CO 15,195.62 "P-705" SYCIP GORRES VELAYO & CO 15,336.85 "P-705" SYCIP GORRES VELAYO & CO 15,336.85 "P-705" SYCIP GORRES VELAYO & CO 15,336.85 "P-705" SYCIP GORRES VELAYO & CO 15,336.85 "P-705" SYCIP GORRES VELAYO & CO 15 336.85 "P-705" SYCIP GORRES VELAYO & CO 15,336.85 "P-706" SYCIP GORRES VELAYO & CO 15 425.19 "P-707" SYCIP GORRES VELAYO & CO 9,000.00 "P-707" SYCIP GORRES VELAYO & CO 39,000.00 "P-707" SYCIP GORRES VELAYO & CO 27,000.00 "P-708" SYCIP GORRES VELAYO & CO 15425.19 "P-710" SYCIP GORRES VELAYO & CO 15,571.54 "P-711" SYCIP GORRES VELAYO & CO 15,571.54 "P-712" SYCIP GORRES VELAYO & CO 15,760.45 "P-713" SYCIP GORRES VELAYO & CO 27,600.00 "P-726" TECHNOLOGY EXPORTS SERVICES ,. 221.87 Subtotal 471443.02 6. Input VAT on domestic purchases of services wherein the nature of the service rendered Is not Indicated In the OR. "P-277", "P-278" RAJAH TRAVEL CORPORATION p 72.00 120.00 "P-277" "P-279" RAJAH TRAVEL CORPORATION 72.00 "P-277" "P-280" RAJAH TRAVEL CORPORATION 72.00 72.00 "P-277", "P-281" RAJAH TRAVEL CORPORATION 72.00 72.00 "P-277", "P-282" RAJAH TRAVEL CORPORATION 72.00 420.00 "P-277", "P-283" RAJAH TRAVEL CORPORATION 348.00 72.00 "P-277" "P-284" RAJAH TRAVEL CORPORATION 72.00 72.00 "P-277" "P-285" RAJAH TRAVEL CORPORATION 72.00 72.00 "P-277" RAJAH TRAVEL CORPORATION 72.00 72.00 "P-286", "P-287" RAJAH TRAVEL CORPORATION 72.00 72.00 "P-286" RAJAH TRAVEL CORPORATION 72.00 216.00 "P-291", "P-292" RAJAH TRAVEL CORPORATION "P-291 ", "P-293" RAJAH TRAVEL CORPORATION "P-291", "P-294" RAJAH TRAVEL CORPORATION "P-291", "P-295" RAJAH TRAVEL CORPORATION "P-291", "P-296" RAJAH TRAVEL CORPORATION "P-291 ", "P-297" RAJAH TRAVEL CORPORATION "P-291", "P-298" RAJAH TRAVEL CORPORATION "P-291" "P-299" RAJAH TRAVEL CORPORATION "P-291", "P-300" RAJAH TRAVEL CORPORATION "P-291" RAJAH TRAVEL CORPORATION

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner oflnternal Revenue x------------------------------------------------------------------------------------------x "P-291", "P-301" RAJAH TRAVEL CORPORATION 216.00 "P-308" RAJAH TRAVEL CORPORATION 72.00 RAJAH TRAVEL CORPORATION "P-308" "P-309" RAJAH TRAVEL CORPORATION 348.00 "P-308" "P-31 0" RAJAH TRAVEL CORPORATION 348.00 "P-308", "P-311" RAJAH TRAVEL CORPORATION "P-308" "P-312" RAJAH TRAVEL CORPORATION 72.00 "P-308", "P-313" RAJAH TRAVEL CORPORATION 72.00 "P-308" "P-314" RAJAH TRAVEL CORPORATION 72.00 "P-308", "P-315" Subtotal 72.00 72.00 " 3 672.00 7. Input VAT on domestic purchases of services wherein input VAT is over-claimed. per claim per OR 1'24,744.62 "P-158", "P-159", !CO ASIAPACIFIC 1'493.68 I' 24 250.94 "P-160", "P-161" PHILIPPINES INC 10,122.80 "P-162", "P-163", !CO ASIAPACIFIC 11,273.55 201.96 9,920.84 "P-164", "P-165" PHILIPPINES INC 15,873.88 "P-173", "P-174", !CO ASIAPACIFIC 13,742.98 224.40 11,049.15 PHILIPPINES INC 13 901.91 "P-175" !CO ASIAPACIFIC 314.16 15,559.72 "P-176", "P-177'', PHILIPPINES INC "P-178", "P-179" !CO ASIAPACIFIC 269.28 13,473.70 "P-180", "P-181", PHILIPPINES INC !CO ASIAPACIFIC ,. 269.28 13 632.63 "P-182" PHILIPPINES INC 87.886.98 "P-183", "P-184", "P-185" Subtotal 8. Input VAT on importation of goods other than capital goods wherein the importer of the shipment is not under petitioner's name. "P-772" Halliburton Far East PTE LTD p 1,305,631.00 "P-773" Halliburton Energy Services (M) SDN BHD 1,868,707.00 Subtotal 1'3 174 338.00 TOTAL !'3 938 706.63 In sum, for purposes of compliance with the seventh requisite, only the amount of P7,954,060.55 represents petitioner's valid input VAT due or paid for the four quarters of CY 2017, as computed below: Total allowable input VAT per Quarterly VAT f' 12,443,688.67 Returns for CY 20 17 205,855.75 Less: Input Tax allocable to Exempt Sales Input VAT per claim Pl2 237 832.92177 Less: Disallowances 1"358,632.86 4,283,772.37 Per !CPA Report (13 567.12) P7 ,954,060.55 Less: Adiustment Per this Court's verification 3 938,706.63 Valid Input VAT 177 The actual amount of input VAT per claim is Pl2,237,833.00 (round up amount).

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner oflnternal Revenue x------------------------------------------------------------------------------------------x Eighth requisite: Petitioner's input VAT is attributable to zero-rated sales. To reiterate, the eighth requisite is that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume. In the present case, there exist zero-rated sales and exempt sales. Still, it should be noted that the amount claimed was already net of input VAT attributable to exempt sales. Thus, for purposes of, and with regard to petitioner's compliance with the eighth requisite, only the amount of P7,669,580.19 represents petitioner's valid input VAT attributable to its valid zero-rated receipts for the CY 2017, computed as follows: Valid input VAT attributable to reported zero-rated sales/receipts f'7 ,954,060.55 Multiplied bv: Valid zero-rated receipts 128,552,843.81 Divided by: Total reported zero-rated sales/receipts 133 321,130.79 Valid Input VAT attributable to valid zero-rated receipts P7,669,580.19 Ninth requisite: The subject input taxes have not been applied against output taxes during and in the succeeding quarters. Having determined that petitioner had valid input VAT attributable to its zero-rated receipts, We shall now determine whether the same was not applied against its output VAT liability during and in the succeeding quarters, relative to the ninth requisite for the successful prosecution of an input VAT refund claim.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited- Philippine Branch vs. Commissioner oflntemal Revenue x------------------------------------------------------------------------------------------x The Supreme Court, in the case of Chevron Holdings, Inc. (Formerly Caltex Asia Limited) vs. Commissioner of Internal Revenue, 178 held that the input tax attributable to zero-rated sales, may, at the option of the VAT-registered taxpayer, be: (1) charged against output tax from regular 12% VATable sales, and any unutilized or "excess" input tax may be claimed for refund or the issuance of tax credit certificate; or (2) claimed for refund or tax credit in its entirety, and such option is vested with the taxpayer-claimant. In the instant case, petitioner claims for a refund of its unutilized input VAT attributable to zero-rated sales in its entirety, thus, availing of the second option mentioned above. Since petitioner had no 12% VATable sales for the four quarters of CY 2017, it had no output VAT against which the input VAT claim ofP12,237,833.00 may be applied or credited. Further, although the claimed input VAT of P12,237,833.00, which includes the valid input VAT of P7,669,580.19, was carried over by petitioner in its succeeding Quarterly VAT Returns,179 the same remained unutilized until it was deducted as "VAT Refu.nd/TCC Claimed" in its amended Quarterly VAT Return for the 4th quarter of CY 2018. 180 Therefore, the subject claim no longer formed part of the excess input VAT of P13,464,208.83 181 as of the end of the 4th quarter of CY 20 18. Hence, petitioner is, in effect, deemed to have fulfilled the ninth requisite for the refund of input VAT under Section 112(A) of the NIRC of 1997, as amended. Statutes that grant tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tax refunds in relation to the VAT are in the nature of such exemptions. 182 It is a claimant's burden to prove the factual basis of a claim for refund or tax credit.183 WHEREFORE, in light of the foregoing, the instant Petition for Review is PARTIALLY GRANTED. 178 G.R. No. 215159, July 5, 2022. 119 Exhibits "P-36" to "P-39". 180 Amount ofPI2,237,832.84 (with 1'0.16 rounding-off difference), Line 230, Exhibit "P-39". 181 Line 29, Exhibit "P-39'". 182 Panasonic Communication Imaging Corporation of the Philippines vs. Commissioner oflntemal Revenue, G.R. No. 178090, February 8, 2010. 183 Eastern Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 183531, March 25, 2015.

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x Accordingly, respondent is ORDERED to issue a tax credit certificate in favor of petitioner in the additional amount of Seven Million Six Hundred Sixty-Nine Thousand Five Hundred and Eighty Pesos and Nineteen Centavos (P7,669,580.19), representing petitioner's unutilized input VAT attributable to its zero-rated receipts for the 1st, 2nd, 3rd and 4th quarters of CY 2017. SO ORDERED. ~IYJ~ LANEE S. CUI-DAVID Associate Justice !CONCUR: � ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Di'fi,sion. ociate Justice Special 2n 1vision Acting Chairperson

DECISION CTA Case No. 10139 Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue X------------------------------------------------------------------------------------------X CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Special 2nd Division Acting Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Presiding Justice