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

CTA Form No. 8 (For DCC) 1111111111111111111111 1111111111 111111111111111111111111111111111111111111111111 21 -000229-0055 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CASE NO. 10545 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 Vi llage Makati City ATT~ALBERT C .ARPON ATTY. CARL FITRI A. HUSSI N ATTY. JOCELYN P. L UMBRES Bureau of Internal Revenue Legal Division, Revenue Region No. 8-A, Makati City 36th Floor. Export Bank Plaza Building Sen. Gil Puyat Ave. comer Chino Roces Ave. Makati City 1230 AGAN :vtO:-.ITENEGRO MALASAGA & CO . 7th Floor, Electra House Building I I 5- I I 7 Esteban St., Legaspi Village Makati City I 229 GREETINGS: You are hereby notified by these presents that on March 25, 2025,a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, March 27, 2025. Atty. Mar ~ ret e Y. man Executiv Clerk of Court lll Page I of I

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION AIR DRILLING ASSOCIATES CTA CASE NO. 10545 PTE LTD., Members: Petitioner, - versus - DEL ROSARIO, P.J., Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. J{- - - - - - - - - - - - - - - - - - - - - - - - - - - RESOLUTIO CUI-DAVID, J.: On September 20, 2024, the Court promulgated a Decision (assailed Decision}, 1 the dispositive portion of which reads: WHEREFORE, in light of the foregoing considerations, the Petition for Review is DENIED for lack of merit. SO ORDERED. The assailed Decision denied petitioner's claim for a value- added taJ{ (VAT) refund due to its failure to prove that it was engaged in zero-rated or effectively zero-rated sales during the 4 th quarter of taJ{able year (TY) 2018. Dissatisfied with the ruling, petitioner filed the instant Motion for Reconsideration2 via personal service on October 8, 2024, and electronic mail (e-mail) on October 9 , 2024, praying for the Court to reconsider and set aside the assailecl Decision, citing the following grounds: 1 Docket- Vol. Ill, pp. 910-923. 2 !d. at 924-934.

RESOLUTION CTA Case No. 10545 Air Drilling Associates Pte Ltd. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------X 1. Tax refunds are civil in nature and require only proof by a preponderance of evidence; 2. The testimony of Rosebelle Liu established petitioner's zero-rated sales to Energy Development Corporation (EDC) for the 4th quarter ofTY 2018; 3. The service agreement between petitioner and EDC for the 4th quarter of TY 20 18 is a contract that may be established by oral evidence; and 4. The existence of the contract between petitioner and EDC for the 4th quarter of TY 2018 can also be established from the conduct of the parties. In his Comment/ Opposition (on Motion for Reconsideration) 3 filed via registered mail and e-mail on November 15, 2024, respondent submits that petitioner's Motion for Reconsideration should be denied for lack of merit. Citing the assailed Decision, respondent asserts that the Court correctly ruled that petitioner failed to prove that it was engaged in zero-rated or effectively zero-rated sales during the 4th quarter of TY 2018. According to respondent, the pieces of evidence presented by petitioner, including the testimony of Rosebelle Liu, who is neither a party to the alleged contract between petitioner and EDC nor present upon its execution, were not sufficient to establish petitioner's claim of zero-rated sales to EDC for the 4th quarter ofTY 2018 by a preponderance of evidence. Moreover, respondent emphasizes that tax refunds are in the nature of tax exemptions. As such, they are regarded as in derogation of sovereign authority and must be construed strictissimi juris against the person or entity claiming the exemption. For respondent, petitioner bears the burden of proving strictly compliance with the conditions set by law for the grant of a tax refund or credit and the required quantum of evidence to support its entitlement to the refund claimed. After a careful and thorough evaluation of the arguments proffered by petitioner, the Court finds no compelling legal basis to warrant reconsideration or modification of the assailed !d. at 948-951.

RESOLUTION CTA Case No. 10545 Air Drilling Associates Pte Ltd. v. Commissioner of Internal Revenue X------------------------------------------------------------------------------------X Decision, as the issues raised in the Motion for Reconsideration have been fully addressed and resolved therein. WHEREFORE, premises considered, petitioner Air Drilling Associates Pte. Ltd.'s Motion for Reconsideration is DENIED for lack of merit. SO ORDERED. LAAA'd11i LANt~~~tUI-DAVID Associate Justice WE CONCUR: Associate Justice ON OFFICIAL BUSINESS JEAN MARIE A. BACORRO-VILLENA Associate Justice