AIR DRILLING ASSOCIATES PTE LTD. v. COMMISSIONER OF INTERNAL REVENUE

CTA Fonn No. 8 (For DCC) 1111111111111111111111 11111 11111 11111 11111 111111111111111 11111 111111111111111111 22-000042-0057 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA CASE NO. 10752 AIR DRILLING ASSOCIATES PTE LTD., Petitioner, -versus- NOTICE OF RESOLUTION COMMISSIONER OF INTERNAL REVENUE, Respondent. To : OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo St., Legazpi Village Makati City ATTY. ALBERT C. ARPON ATTY. CARL FITRI A. RUSSIN ATTY. J OCELYN P. LUMBRES Bureau of Intemal Revenue- Revenue Region No. 8A Legal Di vision, 36th Floor, Export Bank Plaza Buildi ng Sen. Gil Puyat Avenue comer Chi no Roces Avenue Makati City AGAN MONTENEGRO MALASAGA & CO. 7th Floor, Electra House Building 115-11 7 Esteban Street, Legazpi Village 1229 Makati C ity GREETINGS: You are hereby notified by these presents that on February 6, 2026, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, February 9, 2026. AttyE. xMecaurtiiave;oc~ i~CrthIaInI -Te

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION AIR DRILLING CTA CASE NO. 10752 ASSOCIATES PTE LTD., Members: Petitioner, -versus - BACORRO-VILLENA, Acting Chairperson, and CUI-DAVID, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, . Respondent. FEB 06@-:!0.0tiA/J/ ){- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -){ RESOLUTION CUI-DAVID, J.: For resolution 1s petitioner's Motion for Reconsideration 1 filed on September 5, 2025, and respondent's Comment/Opposition (to Petitioner's Motion for Reconsideration dated September 3, 2025) [Comment/Opposit i on],2 which was belatedly filed on October 30, 2025. Petitioner seeks reconsideration of the Decision dated August 13, 2025 (assailed Decision), 3 wherein the Court denied petitioner's Petition for Review . The dispositive portion of the assailed Decision states: WHEREFORE, premises considered, the instant Petition for Review is DENIED for lack of merit.4 The assailed Decision denied petitioner's claim for value- added ta){ (VAT) refund for failure to prove that it was engaged v in zero-rated or effectively zero-rated sales during the third (3 rd) ' DookOI- Vol. II. pp. 753- 764. !d.. unpaged. !d. at 727- 752. 4 !d. at451.

RESOLUTION CTA Case No. 10752 Air Drilling Associates Pte Ltd . v. Commissioner of Internal Revenue }(------------- ------------------------ ---- ------ -- ----- --- -------- ------ ---- ---------}( and fourth (4th) quarters of taxable year (TY) 2019. The Court found that petitioner failed to establish the Board of Investment (BOI) registration of Philippine Geothermal Production Company (PGPC) as a Renewable Energy (RE) Developer, and likewise failed to substantiate its sales of services to the Energy Development Corporation (EDC) and prove its BOI registration for all its projects with EDC. Hence, its claim for value-added tax (VAT) zero-rating on services rendered to PGPC and EDC was disallowed. In its Motion for Reconsideration, petitioner contends that: 1. Tax refunds are civil in nature and need only be established by a preponderance of evidence; 2. The testimony of witness Rosebelle Liu (Ms. Liu) established petitioner's zero-rated sales to EDC and PGPC for the 3rd and 4 th quarters of TY 2019; 3. The service agreement between petitioner and EDC for the 3 rd and 4 th quarters of TY 2019 constitutes a contract that may be established by oral evidence; 4. The existence of a contract between petitioner and EDC for the 3rd and 4 th quarters of TY 20 19 may also be established by the conduct of the parties; and 5. Petitioner established that it rendered services subject to VAT zero-rate and substantiated the present claim with relevant supporting documents. On the other hand, in his Comment/ Opposition, respondent maintains that petitioner failed to establish its zero- rated sales for the 3 rd and 4 th quarters of TY 20 19. As regards Ms. Liu's testimony, respondent argues that the admissibility of evidence should not be confounded with its probative value. Citing Government Service Insurance System v. The Court of Appeals, s respondent contends that testimonial evidence is easy to fabricate and that, in general, documentary evidence prevails over testimonial evidence. Further, respondent reiterates the arguments in his Memorandum 6 that: (1) there is no concrete proof of sale G. R. No. 52080, May 28, 1993 [Per J. Melo, Third Division). 6 Docket - Vol. II, pp. 695-706.

RESOLUTION CTA Case No . 10752 Air Drilling Associates Pte Ltd . v. Com mission er of Interna l Revenue x----- ---------------------------------- ---------- ----- -- ----------------------- ---- -x between EDC, PGPC and the petitioner for the subject claim period; (2) petitioner's sales to EDC and PGPC for the subject claim period are not zero-rated; and (3) petitioner failed to comply with invoicing requirements under Section 113 of the National Internal Revenue Code (NIRC) of 1997, as amended and Revenue Regulations (RR) No. 16-2 005. Finally, respondent reiterates tha t a claim for refund is strictly construed against the taxpayer , as it partakes of the nature of a tax exemption. The instant Motion for Reconsideration lacks merit. After a careful and thorough evaluation of the arguments proffered by petitioner , the Court finds no cogent reason to modify or overturn the assailed Decision. The issues and arguments now reiterated have already b een thoroughly considered, resolved, and addressed in the assailed Decision. In the absence of any new or significant grounds in petitioner's plea for reconsideration, the Court maintains its conclusion in the assailed Decision that p etitioner failed to establish its zero- rated sales for the 3 rd and 4 th quarters of TY 20 19. Contrary to petitioner's claim that the Court relied solely on documentary evidence, the Court evaluated all the facts, circumstances, and evidence on record submitted by both parties, including the t estimony of Ms. Liu, in determining whether petitioner satisfied the applicable quantum of proof in the present case, i. e. preponderance of evidence. An entitlement to a tax refund is for the taxpayer to prove and not for the government to disprove.7 Petitioner , however, failed to discharge this burden. Furthermore, it bears emphasis that the Court adheres to the well-settled rule that claims for tax refunds partake of the nature of tax exemptions and, as such, the statutes governing them must be construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. 8 Consequently, v even if the Court takes a second look at the facts of the case and the totality of the eviden ce presented, it will still reach the same conclusion, consistent with this controlling rule. Commissioner ofInternal Revenue v. Far East Bank & Trust Company (Now Bank ofthe Philippine Islands), G.R. No. 173854, March 15, 20 I0 [Per J. Del Castillo, Second Division]. Philippine Phosphate Fertilizer Corp. v. Commissioner of Internal Revenue, 500 Phil. 149-1 69 (2005) [Per J. Austria-Martinez, Second Division] citing Commissioner of Internal Revenue v. Seagate Technology, G.R. No. 153866, February I I, 2005 [Per J. Panganiban, Third Di vision].

RESOLUTION CTA Case No. 10752 Air Drilling Associates Pte Ltd. v. Commission er of Internal Reven ue x------------------------------------------------------------------------------------x WHEREFORE, premises considered , petitioner's Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED. LAN~~VID Associate Justice !CONCUR: ( J EAN MAJ~~~ ) O-VILLENA ~~iate Justice