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

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION HALLIBURTON CTA Case No. 10467 WORLDWIDE LIMITED PHILIPPINE BRANCH, Members: MANAHAN, Chairperson, Petitioner, REYES-FAJARDO, and -versus- ANGELES, II.. Promulgated: COMMISSIONER OF 'JUL 26 202'i INTERNAL REVENUE, Respondent. X--------------------------------------------------X DECISION REYES-FAJARDO, J.: This Petition for Review filed by Halliburton Worldwide Limited- Philippine Branch on February 16, 2021 seeks the refund or issuance of tax credit certificate (TCC) of alleged unutilized input value-added tax (VAT) in the amount of !>7,287,179.51, covering the four (4) quarters of calendar year (CY) 2018.1 PARTIES Petitioner Halliburton Worldwide Limited- Philippine Branch, is a Philippine branch office of Halliburton Worldwide Limited, a foreign company organized and existing under the laws of Cayman Islands, with office address at Unit 1502-03, 15th Floor Richville Corporate Tower, 1107 Alabang-Zapote Road Madrigal Business Park, Ayala Muntinlupa City 1780.2 It is licensed by the Securities Par. 1, Statement of the Case, Joint Stipulation of Facts and Issues OSFI), Docket - Vol. II, p. 561. 2 Par. 2, Petition for Review, Docket- Vol. I, p. 9.

DECISION CTA Case No. 10467 and Exchange Commission (SEC) to transact as a branch office in the Philippines 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.3 It is also registered with the Bureau of Internal Revenue (BIR), Revenue District Office (RDO) No. 53B, as a VAT taxpayer with Taxpayer's Identification Number (TIN) 266-369-565-000 as shown in its BIR Certificate of Registration dated October 23, 2008.4 Respondent is the duly appointed Commissioner of Internal Revenue vested under the 1997 National Internal Revenue Code, as amended by Republic Act (RA) No. 10963 (NIRC, as amended),5 with the authority to decide, approve, and grant refunds or tax credits of excess and unutilized input VAT. He holds office at the BIR National Office, BIR Road, Diliman, Quezon City.6 FACTS On July 15, 2020, petitioner filed with the BIR RDO No. 53B, its Application for Tax Credits/Refunds (BIR Form No. 1914), an administrative claim for refund of its alleged unutilized input VAT in the amount of P7,287,179.51, for the four (4) quarters of CY 2018.7 On February 16, 2021, petitioner filed a Petition for Review, docketed as CTA Case No. 10467, s to which respondent filed an Answer on August 20, 2021.9 3 Exhibit "P-1," Docket- Vol. II, pp. 717 to 728. 4 Par. 3, Stipulated Facts, )SF!, Docket- Vol. II, p. 562; and Exhibit "P-2," Docket- Vol. II, p. 729. 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, 110, 112, 114, 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. Par. 2, Stipulated facts, )Sf!, Docket- Vol. II, pp. 561 to 562. 7 Par. 5, Stipulated Facts, )SF!, Docket- Vol. II, p. 562; and Exhibit "P-27," "P-27-1," and "P-28," Docket- Vol. II, pp. 1065 to 1078. 8 Docket- Vol. I, pp. 8 to 28.

DECISION CTA Case No. 10467 Page 3 of44 On March 31, 2022, the Pre-Trial Conference was held.10 On April 20, 2022, the parties filed their Joint Stipulation of Facts and Issues,11 which was approved through Resolution dated May 4, 2022.12 On the basis thereof, the Court issued a Pre-Trial Order dated May 27, 2022.13 Trial ensued. Petitioner presented: (1) Ms. Nadia Wahida Ab Kadir,14 Accountant of Halliburton Business Services Sdn Bhd; and (2) Mr. Edward D. Roguel,15 the Court-commissioned Independent Certified Public Accountant (ICPA Roguel),16 as its witnesses. On November 23, 2022, petitioner filed its Formal Offer of Evidence,17 to which respondent filed his Comment/Opposition (To Petitioner's Formal Offer of Evidence dated November 23, 2022) on December 9, 2022.18 By Resolution dated January 13, 2023,19 the Court admitted the pieces of evidence offered by petitioner, except: 1. Exhibits "P-34," "P-49 to P-50," "P-82,11 11 P-91, 11 "P-93-1,11 ~~P-98-1,11 "P-101-1,11 ~~P-103-4,11 "P-121-1,11 "P- 122-1I II ~~P-123-1 to P-124I II "P-125I II "P-126I II "P-133-1 f II "P-135-1 to P-135-2,11 "P-135-4,11 "P-138,11 "P-144-1,11 ~~p_ 149 to P-150,11 "P-161 to P-161-1," "P-170 to P-171-1," 9 Motion for Extension of Time to File Answer dated July 13, 2021, Motion to Admit Answer and Judicial Affidavit of Christine C Virtudes dated August 20, 2021, and Resolution dated October 20, 2021, Docket- Vol. I, pp. 406 to 409, 412 to 444, and 499, respectively. 10 Order dated February 9, 2022, Docket- Vol. II, p. 505; and Order dated, March 31, 2022, Docket - Vol. II, unpaginated. 11 Docket- Vol. II, pp. 561 to 576. 12 Docket- Vol. II, p. 578. 13 Docket- Vol. II, pp. 585 to 601. 14 Exhibit "P-29," Docket- Vol. I, pp. 369, to 388 and 49 (signed Attestation); and Order dated, August 18, 2022, Docket- Vol. II, unpaginated. 15 Exhibit "P-28," Docket- Vol. II, pp. 659 to 684; and Order dated October 18, 2022, Docket -Vol. II, pp. 693 to 694. 16 Oatlz of Commission dated August 18, 2022, Docket - Vol. II, unpaginated; and Order dated, August 18, 2022, Docket- Vol. II, pp. unpaginated. 17 Docket- Vol. II, pp. 695 to 716. 18 Docket- Vol. II, pp. 1081 to 1094. 19 Docket- Vol. II, pp. 1096 to 1099.

DECISION CTA Case No. 10467 Page 4 of44 "P-172-1," "P-175," "P-181," "P-182-1 to P-182-2," "P- 183 to P-183-2," "P-184-1 to P-184-2," "P-186-1 to P-186- 4," "P-191-1," "P-191-3 to P-191-5," "P-193-6," "P-200-1 to P-201, " "P-209I " "P-219-1 f " "P-220-1I " "P-221-1I " "P- 222-1," "P-223-1," "P-224-1," "P-225-1," "P-226-1," "P- '227-1" "P-233" "P-235 to P-236" "P-240" "P-254" "P-IIII 262 to P-266," "P-268," and "P-276 to P-279," for failure to present the originals for comparison; 2. Exhibit "P-38-5," for not being found in the records and for failure to present the original for comparison; 3. Exhibit "P-87, including sub-markings," for failure of the document offered to correspond with the document actually marked; and 4. Exhibit "P-202-2" for not being found in the records. On January 19, 2023, petitioner filed a Reply (Re: Respondent's Comment/Opposition to Petitioner's Formal Offer of Evidence).zo However, through Resolution dated January 27, 2023,21 said Reply was rendered moot. Respondent presented Revenue Officer (RO) Christine C. Virtudes,zz as his witness. On February 20, 2023, respondent filed his Formal Offer of Evidence,23 to which petitioner filed its Comment/Opposition (Re: Respondent's Formal Offer of Evidence dated February 20, 2023) on March 8, 2023.24 On February 22, 2023, petitioner filed a Motion for Reconsideration (Re: Resolution dated January 13, 2023), 25 sans respondent's comment thereon.26 20 Docket- Vol. II, pp. 1100 to 1105. 21 Docket- Vol. II, p. 1107. 22 Exhibit "R-8," Docket- Vol. I, pp. 434 to 444; and Order dated, February 7, 2023, Docket- Vol. II, pp. 1108 to 1109. 23 Docket- Vol. II, pp. 1113 to 1117. Docket- Vol. II, pp. 1137 to 1140. 23 Docket- Vol. II, pp. 1123 to 1129.

DECISION CTA Case No. 10467 Under Resolution dated May 9, 2023,27 the Court admitted all pieces of evidence offered by respondent. Through Resolution dated June 14, 2023, 28 the petitioner's Motion for Reconsideration (Re: Resolution dated January 13, 2023) was partially granted. Accordingly, Exhibits "P-34," "P-38-5," "P-87, including sub-markings," "P-121-1," "P-122-1," "P-123-1 to P-124," "P-125I " "P-126I " "P-133-1I " "P-135-1 to P-135-2I " "P-135-4I " "P-138I " "P-144-1," "P-149 to P-150," "P-161 to P-161-1," "P-170 to P-171-1," "P-172-1," "P-175," "P-181," "P-182-1 to P-182-2," "P-183 to P-183-2," "P-184-1 to P-184-2," "P-186-1 to P-186-4," "P-191-1," "P-191-3 to P- 191-5I " "P-193-6I " "P-200-1 to P-201I " "P-202-2I " "P-209I " "P-219-1I " "P-220-1," "P-221-1," "P-222-1," "P-223-1," "P-224-1," "P-225-1," "P- 226-1," "P-227-1," "P-233," P-235 to P-236," "P-240," "P-254," "P-262 to P-266," "P-268," and "P-276 to P-279," were admitted as petitioner's evidence. However, the following documents were again denied: Exhibits "P-49 to P-50," "P-82," "P-91," "P-93-1," "P-98-1," "P-101-1" and "P-103-4," for failure to present the originals for comparison. In the Resolution dated August 16, 2023, this case was deemed submitted for decision. 29 considering respondent's Memorandum filed on August 7, 2023,30 and petitioner's Memorandum filed on August 10, 2023.31 ISSUE32 Is petitioner entitled to claim the refund or issuance of TCC in the amount of P7,287,179.51 of its alleged unutilized input VAT attributable to zero-rated sales for the four (4) quarters of CY 2018? 26 Records Verification dated April 18, 2023 issued by this Court's judicial Records Division, Docket- Vol. II, p. 1141. 27 Docket- Vol. II, pp. 1144 to 1145. 28 Docket- Vol. II, pp. 1149 to 1155. 29 Minute Resolution dated August 16, 2023, Docket- Vol. II, p. 1212. 30 Docket- Vol. II, pp. 1156 to 1176. 31 Docket- Vol. III, pp. 1180 to 1211. 32 Par. 9, Issue, )SF!, Docket- Vol. II, p. 563.

DECISION CTA Case No. 10467 ARGUMENTS Petitioner argues that its sales to Energy Development Corporation (EDC) and Philippine Geothermal Production Company (PGPC) must be conferred VAT zero-rating, because sales to registered renewable energy developers are automatically subject to 0% VAT. Petitioner further maintains that it satisfied all the conditions for the grant of input VAT refund under Section 112 of the NIRC, as amended. Specifically: 1) its administrative and judicial claims for input VAT refund were timely filed; 2) it is a VAT-Registered entity; 3) it is engaged in zero-rated sales of goods; 4) it had duly substantiated its input taxes in accordance with Sections 110 and 113 of the NIRC, as amended; 5) the input taxes it claimed are not transitional input taxes; 6) said substantiated input taxes are attributable to its zero-rated sales; 7) it had duly substantiated zero- rated export sales, which was paid for in acceptable foreign currency exchange proceeds, and duly accounted for under Bangko Sentral ng Pilipinas (BSP) rules and regulations; and 8) such substantiated input taxes were not applied to its output VAT. Therefore, petitioner asserts that it is entitled to its refund claim of unutilized input taxes, attributable to its zero-rated sales covering the four (4) Quarters of CY 2018 in the amount of !'7,287,179.51. Respondent counters that petitioner's input VAT refund claim must be rejected because: one, the Petition for Review was prematurely filed; two, petitioner failed to prove that its sales to EDC and PGPC are zero-rated; three, petitioner failed to prove that there was an actual offsetting of accounts to prove that constructive foreign currency exchange proceeds were inwardly remitted as required under Section 106(A)(2)(a); and Jour, VAT invoices or official receipts presented by petitioner failed to comply with the invoicing requirements under the law. RULING The Petition is partly meritorious. Petitioner is entitled to an input VAT refund, only to the extent of !'249,846.52; the prayer for refund in the amount of !'7,037,332.99 is denied.

DECISION CTA Case No. 10467 Requisites under the law for the grant of the refund or issuance of tax credit certificate of input VAT. Section 112 (A) and (C) of the NIRC, as amended, provides: SEC. 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)(1), (2) and (b) and Section 108(B)(1) 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. (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.

DECISION CTA Case No. 10467 Jurisprudence has laid down requisites which the taxpayer- applicant must comply with to successfully obtain an input VAT refund claim, as follows: As to the timeliness of the filing of the administrative and judicial claims: 1. the refund claim is filed with the BIR within two years after the close of the taxable quarter when the sales were made;33 2. in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of ninety (90) days, the judicial claim has been filed with this Court, within thirty (30) days from receipt of the decision or after the expiration of the said 90-day period;34 With reference to the taxpayer's registration with the BIR: 3. the taxpayer is a VAT-registered person;35 In relation to the taxpayer's output VAT: 4. the taxpayer is engaged in zero-rated or effectively zero-rated sales;36 5. for zero-rated sales under Section 106(A)(2)(a)(l), (2) and (b) and Section 108(B)(l) and (2),37 the acceptable foreign currency exchange proceeds have been duly 33 Intel Technologt; Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182364, August 3, 2010. 34 Refer to Energ1; Development Corporation v. Commissioner of Internal Revenue, G.R. No. 203367, March 17, 2021; Comndssioner of Internal Revenue v. CE Cnsecnnn Water and Energy Company, Inc., G.R. No. 212727, February 1, 2023; and Commissioner of Internal Revenue v. Vestas Services Philippines, Inc., G.R. No. 255085, March 29, 2023. 35 Intel TeclmolOgJJ Philippines, Inc. v. Commissioner of Internal Revenue, supra; San Roque Power Corporation v. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., v. Commissioner of Internal Revenue, supra. I d. 37 Under RA No. 10963, Section 106(A)(2)(a)(2) was renumbered to Section 106(A)(2)(a)(3) while Section 106(A)(2)(b) was deleted. However, there was no corresponding amendment to the subsections cited in Section 112(A) of the NIRC of 1997, as amended.

DECISION CTA Case No. 10467 accounted for in accordance with the Bangko Sentral ng Pilipinas (BSP) rules and regulations;38 As regards the taxpayer's input VAT being refunded: 6. the input taxes are not transitional input taxes;39 7. the input taxes are due or paid;40 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;41 and 9. the input taxes have not been applied against output taxes during and in the succeeding quarters.42 Petitioner's compliance with all the VAT invoicing requirements is required to be able to file a claim for input taxes attributable to zero-rated sales.43 The invoicing and substantiation requirements should be followed because it is the only way to determine the veracity of the taxpayer's claims.44 More importantly, compliance with all the VAT invoicing requirements is mandatory.45 38 Intel TeclmolOgJJ Philippines, Inc. v. Commissioner of Internal Revenue, supra; San Roque Power Corporation v. Commissioner of Internal Revenue, supra; and AT&T Commwzications Services Philippines, Inc., v. Commissioner of Intemal Revenue, supra. 39 /d. 40 /d. 41 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, supra; and San Roque Power Corporation v. Commissioner of Internal Revenue, supra. 42 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, supra; Snn Roque Power Corporation v. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, supra. 43 JRA Philippines, Inc. v. Commissioner of internal Revenue, G.R. No. 171307, August 28,2013. Nippon E:l.:prcss (Philippines) Corporation v. Com111issioner of Internal Revenue, G.R. No. 191495, July 23, 2018. See Eastern Telecommunications Philippines, Inc. v. Commissioner of I!tternnl Revenue, G.R. No. 183531, March 25, 2015.

DECISION CTA Case No. 10467 First and Second Requisites: petitioner's administrative and judicial claims for input VAT refund were timely filed. Section 112(A) of the NIRC, as amended, commands the taxpayer to file an administrative claim for input VAT refund, within two (2) years, following the close of the taxable quarter when the sales were made. Section 112(C) of the same Code grants the BIR a period of ninety (90) days from date of submission of the official receipts or invoices and other supporting documents, to decide on the taxpayer's administrative claim for input VAT refund. At present, said invoices, official receipts, and other supporting documents are submitted upon the filing of the taxpayer's administrative claim for input VAT refund.46 In turn, the taxpayer, may appeal to the Court, within thirty (30) days: a) from receipt of adverse decision rendered within said 90-day period; or b) after the lapse of said 90-day period, whichever is earlier. Petitioner's input VAT refund claim covering the four (4) quarters of CY 2018 was timely filed on July 15, 2020. Consider the following presentation: Quarter Period Covered Last day for filing an Date of filing of (CY 2018) administrative claim administrative claim for refund 1st Quarter January to March March 31, 2020 (but was 2nd Quarter 2018 extended up to July 15, July 15, 202048 April to June 2018 2020)47 June 30, 2020 (but was extended up to August 31, 2020)49 See Zuellig-Pharma Asia Pacific Ltd. Phils. ROHQ v. Commissioner of Jntemnl Revenue (C/R), G.R. No. 244154, july 15, 2020. Beginning June 11, 2014, or upon effectivity of Revenue Memorandum Circular (RMC) No. 54-2014, the documents are deemed complete upon filing of the taxpayer's administrative claim for input VAT refund. Pursuant to Section 4(z) of Republic Act (RA) No. 11469 as implemented by Section 2, of BIR Revenue Regulations No. 16-2020, filing of claims for VAT refund for calendar quarters ending March 31, 2018 was extended until july 15, 2020. Par. 5, Stipulated Facts, )SF!, Docket- Vol. II, p. 562; Exhibits "P-27" and "P-28," Docket- Vol. II, pp. 1065 to 1078; and Exhibit "R-3," Folder 1 of 11, BIR Records, pp. 2139 to 2151.

DECISION CTA Case No. 10467 2nd Quarter July to September September 30, 2020 4th Quarter 2018 December 31, 2020 October to December 2018 To be sure, the last day for petitioner to file its administrative claim covering the 1st and 2nd quarter of CY 2018 is only until March 31, 2020 and June 30, 2020, respectively. However, due to Corona Virus Disease 2019 (COVID-19), the statutory deadlines and timeliness for the filling and submission of any document were extended. The filing of the VAT refund claims for calendar quarters ending March 31, 2018 was extended until July 15, 2020;50 while the filing of claims for VAT refund claims for calendar quarters ending June 30, 2018 were extended until August 31, 2020.51Thus, the filing of petitioner's administrative claim for input VAT refund covermg the four (4) quarters of CY 2018, was timely. Respondent had ninety (90) days from July 15, 2020, or until October 13, 2020 to decide on said administrative claim for refund. Pursuant to Section 4(tt) of RA No. 11494,52 the SOF issued Revenue Regulations (RR) No. 27-2020 dated October 6, 2020,53 which suspended the ninety (90)-day period for processing of input VAT refund claims under Section 112(C) of the NIRC, as amended, during 49 Pursuant to Section 4(z) of Republic Act (RA) No. 11469 as implemented by Section 2, of BIR Revenue Regulations No. 16-2020, filing of claims for VAT refund for calendar quarters ending june 30, 2018 were extended until August 31, 2020. 50 Section 4(z) of Republic Act (RA) No. 11469 as implemented by Section 2, of BIR Revenue Regulations No. 16-2020. 51 Section 4(z) of Republic Act (RA) No. 11469 as implemented by Section 2, of BIR Revenue Regulations No. 16-2020 52 AN ACT PROVIDING FOR COVID-19 RESPONSE AND RECOVERY INTERVENTIONS AND PROVIDING MECHANISMS TO ACCELERATE THE RECOVERY AND BOLSTER THE RESILIENCY OF THE PHILIPPINE ECONOMY, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES, otherwise known as "Bayanihan to Recover as One Act." Section 4. (tt) Moving of statutory deadlines and timelines for the filing and submission of any document, the payment of taxes, fees, and other charges required by law, and the grant of any benefit, in order to ease the burden on individuals under CQ; 53 Regulations Suspending the Filing and Ninety (90)- Day Processing of VAT Refund Claims Anchored Under Section 112 of the Tax Code of 1997, as Amended, in Relation to Section 4 (tt) of RA No. 11494, Otherwise Known as the "Bayanihan to Recover as One Act."

DECISION CTA Case No. 10467 the effectivity of RA No. 11494 or until the next adjournment of the Eighteenth Congress on December 19, 2020.54 Here, sixty-one (61) days had already lapsed from the filing of petitioner's administrative claim for refund on July 15, 2020 until before the effectivity of RA No. 11494 on September 14, 2020; hence, respondent had remaining twenty-nine (29) days from December 20, 2020 or until January 18, 2021 to act on said administrative claim. There being no adverse decision received by petitioner as of January 18, 2021, 55 the latter's administrative claim for refund is deemed denied under Section 7(a)(2) of RA No. 1125, as amended by RA No. 9282.56 Counting thirty (30) days from January 18, 2021, petitioner had until February 17, 2021 to file a Petition for Review. Thus, the filing of its judicial claim for input VAT refund on February 16, 2021, was timely vesting the Court with jurisdiction over CTA Case No. 10467. Third Requisite: petitioner is a VAT- registered taxpayer. Petitioner is a VAT-registered taxpayer with Tax Identification No. 266-369-565-000 as evidenced by Certificate of Registration with registration No. 9RC0000530550.57 R.A. No. 11494 became effective on September 11, 2020, before the lapse of respondent's 90-day period to act on petitioner's administrative claim for refund on September 30, 2020. 55 Par. 7, JSFI, Docket- Vol. II, p. 562. 56 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 disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations 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 of action, in which case the inaction shall be deemed a denial; (Boldfacing supplied) 57 Par. 3, Stipulated Facts, JSFI, Docket- Vol. II, p. 562; and Exhibit "P-2," Docket- Vol. II, p. 729.

DECISION CTA Case No. 10467 Fourth and Fifth Requisites: petitioner was able to partially establish that it was engaged in zero- rated sales for the four (4) quarters of CY 2018 m the amount of !'4,382,813.6 7. In its Amended Quarterly VAT Returns (BIR Forms No. 2550- Q) for the four (4) Quarters of CY 2018, petitioner reported total zero- rated sales/ receipts in the amount of J>94,633,039.84: CY 2018 Exhibit Reported Zero-Rated II P-3-1"58 Sales/Receipts }st Quarter "P-4-1"59 1' 26,732,466.44 2nd Quarter "P-5-1"6o 25,807,044.45 3rd Quarter "P-6-1"61 7,724,194.94 4 1h Quarter 34,369,334.01 Total 1'94,633,039.84 Petitioner allegedly generated zero-rated sales/receipts for the four (4) quarters of CY 2018 from: 1) export sales of goods to non- resident foreign affiliate doing business outside the Philippines under Section 106(A)(2)(a)(1) of the NIRC, as amended; and 2) sales of services to duly registered Renewable Energy (RE) Developers under Section 15(g) of RA No. 9513 or the Renewable Energy (RE) Act of 2008 detailed as follows: 62 Export Sale of Goods to Non- Sale of Services toRE Developers Resident 2018 Foreign Affiliate Total Exhibits PT Halliburton Drilling Systems I EDC64 PGrc65 Indonesia63 58 Docket- Vol. II, pp. 733 to 735. 59 Docket- Vol. II, pp. 739 to 741. 60 Docket- Vol. II, pp. 745 to 747. 61 Docket- Vol. II, pp. 751 to 753. 62 Par. 7, Petition for Review, Docket- VoL I, p. 10. 63 Par. 24, Petition for Review, Docket- Vol. I, p. 16. " Par. 19, Petition for Review, Docket- Vol. I, pp. 14 to 15. 65 Par. 21, Pelltion for Review, Docket- Vol. I, p. 15.

DECISION CTA Case No. 10467 151 Quarter "P-3-1"66 r 30,529.50 l' 26,701,936.94 - l' 26,732,466.44 25,807,044.45 - 25,807,044.45 znd Quarter t/P-4-!"67 - 7,724,194.94 7,724,194.94 33,270,953.95 - 34,369,334.01 3rd Quarter "P-5-1"68 - l' 1,098,380.0670 1'93,504,130.28 1'94,633,039.84 4th Quarter 1/P-6-1"69 - P1,098,380.06 Total P30,529.50 I. Export sale of goods to non-resident foreign affiliate under Section 106(A)(2)(a)(1) of the NIRC, as amended. Petitioner states that for the 1st quarter of CY 2018, it exported goods to its non-resident affiliate, PT Halliburton Drilling Systems Indonesia, amounting to P30,529.50. Petitioner was allegedly paid in acceptable foreign currencies accounted for in accordance with the rules and regulations of the BSP and Revenue Memorandum Circular (RMC) No. 42-2003, via offsetting arrangements for said sale.71 Thus, petitioner submits that the aforesaid export sale in the amount of P30,529.50 is subject to zero percent (0%) VAT pursuant to Section 106(A)(2)(a)(l) of the NIRC, as amended,72 which provides: SEC. 106. Vnlue-Added Tax on Sale of Goods or Properties. - (A) Rate and Base ofTax. - ... (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 66 Docket- Vol. II, pp. 733 to 735. 67 Docket- Vol. II, pp. 739 to 741. 68 Docket- Vol. II, pp. 745 to 747. 69 Docket- Vol. II, pp. 751 to 753. 70 Erroneously indicated as r1,089,380.06 per Petition for Review, please see Exhibit "P-27," Docket- Vol. II, p. 1066. 71 Pars. 24 and 25, Petition for Review, Docket- Vol. I, p. 16. 72 Par. 26, Petition for Review, Docket- Vol.!, p. 17.

DECISION CTA Case No. 10467 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)/3 To accord 0% VAT on sales made pursuant to Section 106(A)(2)(a)(l) of the NIRC, as amended, the following conditions must be complied with: first, the sale was made by a VAT-registered person; second, there was sale and actual shipment of goods from the Philippines to a foreign country; and third, said sale was paid for in acceptable foreign currency accounted for in accordance with the rules and regulations of the BSP. In relation to the second condition, any VAT-registered person claiming VAT zero-rated direct export sales must present, among others: one, SI as proof of sale of goods;74 and two, bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign countryJS Said Sis must also comply with the pertinent invoicing and substantiation requirements, containing all the required information under Sections 113(A) and (B), and 237 of the NIRC, as amended, in relation to Section 4.113-l(A) and (B) of RR No. 16-2005_76 These provisions respectively state: SEC. 113. Invoicing nnd 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 73 Boldfacing supplied. 74 Section 113(A)(1) of the NIRC, as amended, requires a VAT-registered person to issue a VAT invoice for every sale of goods, among others. See Tnkenakn Corporation-Philippine Branclz v. Commissioner of Internal Revenue, G.R. No. 193321, October 19,2016. 75 Commissioner of Internal Revenue v. Colt Commercial, Inc. and Colt Commercial, Inc. v. Commissioner of Internal Revenue, CTA EB Nos. 2006 and 2012, june 29, 2020, citing Intel Technology Philippines, Inc. v. Comlllissioller of Internal Revenue, G.R. No. 166732, April 27, 2007. 76 See Commissioner of Internal Revenue v. Filminera Resources Corporation, G.R. No. 236325, September 16, 2020.

DECISION CTA Case No. 10467 (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. (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 seller 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. "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

DECISION CTA Case No. 10467 or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service. 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. SEC. 4.113-1. Invoicing Requirements. - (A) 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. 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 invoice/ 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 is a VAT-registered person, followed by his TIN;

DECISION CTA Case No. 10467 (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 peso (1'1,000.00) or more where the sale or transfer is made to a VAT- registered person, the name, business style, if any, 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." As for the first condition, petitioner's status as a VAT- Registered person may not be denied. 77 However, petitioner's claimed direct export sales of goods to its non-resident foreign affiliate, PT Halliburton Drilling Systems Indonesia, in the amount of !'30,529.50, failed to qualify for VAT zero-rating under 106(A)(2)(a)(l) of the NIRC as amended. Specifically, petitioner presented its Invoice No. 9503736351/8 and Air Waybill No. 203-1074-2502 79 to prove its export sale of equipment to PT Halliburton Drilling Systems Indonesia. The amount of !'30,529.50 must be denied VAT zero-rating for being 77 Supra note 57. 78 Exhibit "P-36," USB. 79 Exhibit "P-82," USB.

DECISION CTA Case No. 10467 violative of the invoicing requirements under Sections 113(A) and (B), and 237 of the NIRC, as amended, in relation to Section 4.113-1(A) and (B) of RR No. 16-2005, as follows: (1) the SI pertaining thereto was computer-generated for which petitioner has no existing registration with the BIR to use a computerized accounting system; and (2) the term "zero-rated" was not indicated on the face of said invoice. 8� Further, Air Waybill No. 203-1074-2502 81 was denied admission by the Court in its Resolution dated June 14, 202382 because of petitioner's failure to present the original for comparison. Hence, petitioner failed to comply with the second condition thereof. Also, petitioner did not adhere with the third condition. Petitioner presented In-House Cash and Intercompany Settlement Agreement,s3 to prove that its export sales of good in the amount of P30,529.50 was paid for in acceptable foreign currency accounted for in accordance with the rules and regulations of the BSP and RMC No. 42-2003, via offsetting arrangements.84 Yet, petitioner failed to submit 80 Exhibit "P-31," Docket- VoL II, p. 616. 81 Exhibit "P-82," USB. 82 Docket- VoL II, pp. 1149 to 1155. 83 Exhibit "P-26," Docket- VoL II, pp. 1051 to 1064. " Revenue Memorandum Circular No. 42-2003 SUBJECT: 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 Duty Drawback Center, Department of Finance (OSS) by Direct Exporters Q-8: With the full liberalization of the BSP rules on foreign exchange and trade transactions (CB Circular No. 1389 dated April 13, 1993 enunciated in RMC No. 57-97), the BIR requirement for full documentation of proofs of 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 arc zero-rated sales.

DECISION CTA Case No. 10467 documents establishing the existence of its foreign currency payables to PT Halliburton Drilling Systems Indonesia, such as those specified under letters "a" to "c" of RMC No. 42-2003, against which the receivable from its claimed export sales of !'30,529.50 was allegedly offset. Also, petitioner failed to provide a schedule of intercompany receivables/ payables account. Thus, it cannot be verified whether the sales of petitioner to PT Halliburton Drilling Systems Indonesia in 2018 was fully accounted for in the offsetting of receivables. 85 Moreover, an examination of the In-House Cash and Intercompany Settlement Agreement86 presented by petitioner does not bear any indication that petitioner and PT Halliburton Drilling Systems Indonesia agreed to the offsetting of their receivables from and payables to each other as required under letters "d" and "e" of RMC No. 42-2003. II. Sale of services to RE Developers under Section 15(g) of RA No. 9513 or the Renewable Energy (RE) Act of 2008. Petitioner claims that its sales to RE Developers, namely: (a) EDC, in the amount of !'93,504,130.28; and (b) PGPC, in the amount of !'1,098,380.06, are subject to VAT at zero-percent (0% ), pursuant to Section 15(g) of RA No. 9513 or the Renewable Energy (RE) Act of 2008. 87 Section 15 (g) of RA No. 9513 declares that aRE Developer's purchases of local supply of goods, properties, and services needed for the development, construction and installation of its plant facilities and 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, shall be entitled zero percent (0%) VAT. Accordingly, sales of services to an RE Developer is subject to zero percent (0%) VAT: 85 Exhibit "P-31," Docket- Vol. II, p. 614. 86 Exhibit "P-26," Docket- Vol. II, pp. 1051 to 1064. 87 Pars. 17 to 23, Petition for Review, Docket- I, pp. 14 to 15.

DECISION CTA Case No. 10467 CHAPTER VII GENERAL INCENTIVES Section 15. Incentives for Renewable EnergJJ 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: (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, geothermal, ocean energy and other emerging energy sources 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.ss 88 As provided also in Part III, Rule 5, Section 13.G of the Department Circular (DC) No. DC2009-05-0008 dated May 25, 2009 issued by the DOE, Implementing Rules and Regulations (IRR) of RA No. 9513: 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: 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: (b) Purchase of local goods, properties and services needed for the development, construction, and installation of the plant facilities of REDevelopers; and

DECISION CTACaseNo.10467 Page 22 of44 Before an RE Developer's local purchases of goods, properties, and services be conferred 0% VAT under Section 15(g) of RA No. 9513, said RE developer must secure a Department of Energy (DOE) Certificate of Registration and Board of Investments (BOI) Certification. Section 18(A), and (B), Part III, Rule 5 of the IRR of RA No. 9513 confirmed: 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 pre-terminate 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 Investment Priority Plan (IPP), unless declared otherwise by law. (c) Whole process of exploration and dcvelop1nent of REsources up to its conversion into power, including, but not limited to, the services performed by subcontractors andjor contractors.

DECISION CTA Case No. 10467 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. To confer 0% VAT on sales of goods, properties and services to an RE Developer pursuant to Section 15(g) of RA No. 9513 or the Renewable Energy (RE) Act of 2008, the following conditions must be present: first, the RE Developer must be registered with the DOE and BOI; and second, the local sales of goods, properties and services to the RE Developer are needed for the development, construction, and installation of the RE Developer's plant facilities and the whole process of exploration and development of RE sources up to its conversion into power. For the first condition, petitioner presented the following documents to prove that its clients, EDC and PGPC, are RE Developers duly registered with the DOE and BOI: Exhibits Exhibit Reference Certificate of Registration with the Department of Energy EDC PGPC Certification from the Board of Investments "P-14-1" to "P-19" 90 Endorsement from the Department of Energy to the Bureau of "P-14-5" 89 Internal Revenue "P-20" to Bureau of Internal Revenue (BIR) VAT Ruling No. 0218-2020 "P-16" 91 confirming that the sales to EDC are entitled to VAT Zero-rating "P-20-1"92 "P-18"93 "P-21" 94 "P-17" 95 N/A 89 Docket- Vol. II, pp. 778 to 782. 90 Docket- Vol. II, p. 800. 91 Docket- Vol. II, p. 790. Docket- Vol. II, pp. 801 to 802. 93 Docket- Vol. II, pp. 798 to 799. 9J Docket- Vol. II, p. 803. 95 Docket- Vol. II, pp. 791 to 797.

DECISION CTA Case No. 10467 In relation to the second condition, petitioner presented its contracts96 with EDC to show that for the subject period of claim, EDC engaged the services of petitioner for directional drilling services, mud logging services and back-off operation services for drilling of geothermal wells, which are all related to the exploration and development of renewable energy sources. As to petitioner's sale of services to PGPC, the ICPA Roguel noted that the same involves a sale of license to use COMPASS software and maintenance services thereof as evidenced by Purchase Order No. P05187197 and Quotation No. 22435701.98 According to ICPA Roguel, COMPASS is a drilling software used by well planners for directional and horizontal planning, anti-collision analysis and managing survey data for each well drilled; COMPASS was created by Landmark Software & Services, a Halliburton company.99 Indeed, petitioner's sale of services to PGPC also pertains to the exploration and development of renewable energy sources. Therefore, petitioner's sales of services to EDC and PGPC qualify for VAT zero-rating under Section 15(g) of REAct of 2008. In any event, considering that petitioner's sales to EDC and PGPC are one of services, the same must be substantiated by SIR- registered VAT official receipts (ORs) issued in accordance with the invoicing requirements under the VAT law and regulations. Based on ICPA Roguel's examination of petitioner's sales invoices (Sis),roo 0Rs101 and Certificates of Creditable Tax Withheld at Source (BIR Forms No. 2307),102 petitioner's reported zero-rated sales of services to EDC and PGPC amounted to 1'93,504,130.28 and Pl,098,380.06, respectively, in the total amount of 1'94,602,510.34, as summarized below:I03 96 Exhibits "P-24" and "P-24-2," Docket- Vol. II, pp. 888 to 1032; Exhibits "P-32" and "P- 33," USB. 97 Exhibit "P-34," USB. 98 Exhibit "P-35," USB. 99 Page 7, Exhibit "P-31," Docket- Vol. II, p. 614. 100 Exhibits "P-37-1" to "P-44-3," "P-46-1" to "P-48-1," USB. 101 Exhibits 11 P-37," "P-38," "P-39" to "P-48," USB. 102 Exhibits "P-51" to "P-81," USB. 103 Extracted from Annex C, Exhibit "P-31," Docket- Vol. II, p. 627.

DECISION CTA Case No. 10467 Period Invoice OR Invoice OR Amount net CWT CWT (inPhP) Gross Sales of Claim Exhibit Exhibit Amount (in ofCWT Exhibit [b) (in PhP) (in PhP) [a+b] No. No US$) [a] No. 20,426.64 4,472,258.85 104 Sales Ofservices to EDC 20,304.00 4,382,813.67 - 69,018.54 8,380.80 22,229,678.09 ''P-37-1" 27,936.00 21,785,084.53 - 104,047.70 7,497.60 36,832.44 19,378,219.89 "P-37-2" 25,200.00 18,990,656.09 ''P-51" 28,879.32 106,111.45 "P-52" 1,901.14 6,428,824.56 ''P-37-3" "P-37" 36,501.01 6,300,248.08 "P-53'. 26,140.65 28,867.20 ''P-54" 246,792.31 5,128,612.98 ''P-37-4" 1,862.40 5,026,040.73 "P-55" 24,808.65 25,608.00 "P-56" 23,963.75 2,595,581.96 1" ''P-37-5" 240,524.25 2,543,670.32 ''P-57" 27,599.60 1,409,008.40 Quarter "P-38-1" 23,803.20 1,380,828.23 "P-58" 23,009.25 15,802,247.53 "P-38-2" 22,982.40 15,486,202.58 "P-59" 261,791.20 13,359,612.71 26,508.00 13,092,420.46 "P-60" 26,391.35 1,339,310.51 "P-38-3" "P-38" 22,099.20 1,312,524.30 "P-61" 57,849.10 1,360,774.80 "P-38-4" 251,761.64 1,333,559.30 "P-62" 25,905.43 93,504,130.28 25,444.80 91,634,048.29 "P-63'' 20,885.94 1,098,380.06 "P-38-5'' 65,283.93 1,098,380.06 "P-64" 23,936.01 1,098,380.06 24,624.00 1,098,380.06 ''P-65" 27,181.15 94,602,510.34 "P-38-6" 19,852.80 92,732,428.35 ''P-66" 24,704.04 22,752.00 "P-67" 24,354.65 "P-39-1" 25,444.80 "P-68" 26,332.41 23,078.40 "P-69'' 25,463.71 ''P-39-2" 22,752.00 "P-70" 1,756.35 24,624.00 "P-71" 24,691.58 ''P-39-3" "P-39" 23,803.20 "P-72'' 28,180.17 "P-39-4" 1,641.60 "P-73" 27,670.47 23,078.40 "P-74" 30,373.27 2od "P-39-5" 26,088.40 ''P-75" 258,001.21 25,608.00 "P-76'' 240,248.54 Quarter "P-39-6" 27,984.00 "P-77" 26,943.71 237,653.33 "P-78" 26,786.21 ''P-40-1" 227,784.17 "P-79" 27,215.50 25,608.00 1,870,081.99 "P-40-2" "P-40" 25,142.40 ��r-so�� "P-40-3" 25,200.00 - Subtotal "P-81" "P-40-4" - Subtotal - 1,870,081.99 "P-41-1" Total - "P-41-2" "P-41" "P-41-3" 3�d ��r-41-4" Quarter ''P-42-1" "P-42-2'' "P-42" "P-42-3'' "P-43-1" "P-43" "P-44-1" "P-44-2'' "P-44" 4th "P-44-3" Quarter "P-46-1" "P-46" ''P-46-2" "P-47-1" "P-47" "P-48-1" "P-48" Sales Ofservices to PGPC 4th "P-45-1" "P-45" Quarter ICPA Roguel noted that the amounts indicated in the ORs listed above pertain to the actual amounts collected which are net of creditable withholding taxes (CWT), except for the sale to PGPC in the amount of Pl,098,380.06.105 However, records show that the BIR Forms No. 2307 supporting the alleged CWT in the amounts of P20,426.64, and 104 Exhibit "P-84," USB. 105 Exhibit "P-31," Docket- Vol. II, pp. 614 to 615.

DECISION CTA Case No. 10467 Page 26 of44 P69,018.54, totaling P89,445.18, for OR marked as Exhibit "P-37" were denied admission by the Court in its Resolution dated June 14, 2023,106 because of petitioner's failure to present the original for comparison. Thus, the amount of P89,445.18 is deemed not supported by VAT OR and shall be disallowed. Moreover, the related sales of petitioner in the amount of P51,840,875.38, shall be disallowed because they were supported with ORs with expired Authority to Print (ATP). The validity period of the ATP was only until May 3, 2018, but the following ORs were issued beyond May 3, 2018, violative of the invoicing requirements under Sections 237 and 238 of the NIRC of 1997, as amended, quoted earlier:107 Invoice Invoice Date OR OR Date Period of Gross SalesW8 Exhibit Claim Exhibit I' 19,378,219.89 No. No. 6,428,824.56 Sales Ofservices to EDC "P-39" p 25,807,044.45 "P-39-1" 22 March 2018 "P-40" 26 June 2018 ''P-39-2" 4 April2018 24 July 2018 I' 5,128,612.98 "P-39-3" 6 Aoril2018 "P-41" "P-39-4" 6 Aoril2018 2,595,581.96 "P-39-5" 12 Aoril2018 "P-42" I' 7,724,194.94 2nd I' 1,409,008.40 "P-39-6'' 7Mav 2018 "P-43" "P-44" Quarter 15,802,247.53 I' 17,211,255.93 "P-40-1'' 22May 2018 "P-45'' I' 1,098,380.06 I' 1,098,380.06 "P-40-2" 31 Mav 2018 1'51,840,875.38 "P-40-3" 31 Mav 2018 "P-40-4" 31 Mav 2018 "P-41-1" 10 Julv 2018 05 September 2018 Subtotal "P-41-2" 18 Julv 2018 "P-41-3" 18 Julv 2018 04 October 2018 3rd "P-41-4" 20 July 2018 29 November 2018 "P-42-1" 27 August 2018 07 December 2018 Quarter "P-42-2" 29 August 2018 ''P-42-3" 29 Au oust 2018 Subtotal "P-43-1" 14 Seotember 2018 4th "P-44-1" "P-44-2" 25 September 2018 Quarter "P-44-3" 28 September 2018 Subtotal 9October 2018 4th Sales Ofservices to PGPC Quarter "P-45-1" Subtotal Total 106 Docket- Vol. II, pp. 1149 to 1155. 107 Annex C, Exhibit "P-31," Docket- Vol. II, p. 628. 108 Amounts collected per ORs plus CWT per BIR Forms No. 2307.

DECISION CTACaseNo.10467 Furthermore, ICPA Roguel found that petitioner's sales to EDC in the amount of P16,059,698.03 are supported by ORs dated February 6, 2020, outside the period of claim, i.e., CY 2018, thus, must also be disallowed, detailed as follows: Invoice Invoice Date OR OR Date Period of Gross Sales to Exhibit Exhibit Claim EDC109 26 November 2018 6 February 2020 No. 30 November 2018 No. 6 February 2020 4th I' 13,359,612.71 "P-46-1" 7 November 2018 6 February 2020 Quarter "P-46-2" "P-46" 1,339,310.51 "P-47-1" 22 October 2018 l 1,360,774.80 "P-48-1" "P-47" 1'16,059,698.02 "P-48" Total In addition, the Court found that the sale to EDC in the amount of P22,229,678.09 is supported by an official receipt no with umeadable details, hence, must also be disallowed. Summing it up, out of the P94,633,039.84 total amount of zero- rated sales/receipts reported by petitioner for the four (4) quarters of CY 2018, petitioner had valid zero-rated sales/receipts in the amount of P4,382,844.23, computed as follows: Zero-Rated tst Quarter 2nd Quarter 3rd Quarter 4th Quarter 2018 Sales/Receipts Per VAT 1'25,807,044.45 1'7,724,194.94 I' 34,369,334.01 I' 94,633,039.84 Return r 26,732.466.44 1'25,807,044.45 1'7,724,194. 94 1'18,309,635.99 I' 30,529.50 Less: Disallowances I' 30,529.50 16,059,698.02 ' Export sale of goods to 89,445.18 1'7,724,194.94 PT Halliburton Drilling 1'25,807,044.45 I' 34,369,334.01 89,445.18 Systems Indonesia not 22,229,678.09 I' - properlv substantiated I' 22,349,652.77 I' - I' - 51,840,875.38 Sales of services to EDC 1'4,382,813.67 without supporting BIR- 16,059,698.02 registered VAT ORs Sales of services to EDC 22,229,678.09 and PGPC supported by I' 90,250,226.17 VAT ORs with expired ATP 1'4,382,813.67 Sales of services to EDC supported by BIR registered VAT ORs dated outside the period of claim Sales of services to EDC supported by BIR registered VAT OR with unreadable details Total Disallowances Valid Zero-Rated Sales/Receipts 109 Amounts collected per ORs plus CWT per BIR Forms No. 2307. 110 Exhibit "P-38," USB.

DECISION CTA Case No. 10467 Sixth Requisite: the input VAT being claimed are not transitional input taxes. Petitioner's claimed input VAT are not transitional input taxes. Section lll(A)111 of the NIRC, as amended, states that transitional input taxes are realized when: one, a person not previously liable for VAT, becomes liable for said tax; and two, on newly VAT-Registered persons. Transitional input tax credit operates to benefit newly VAT- registered persons, whether or not they previously paid taxes in the acquisition of their beginning inventory of goods, materials and supplies. During that period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer.112 None of these circumstances apply to petitioner. Seventh Requisite: Not all of petitioner's input VAT being claimed for refund �were duly substantiated. To prove that the input VAT claimed for refund for the four (4) quarters of CY 2018 were actually due or paid, Section llO(A) of the NIRC, as amended, must be observed, which provides: 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 111 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, male1�ials and supplies, whichever is higher, which shall be creditable against the output tax. 112 See Fort Bo11ijacio Development Corporation v. Commissioner of Internal Revenue, G.R. No. 173425, September 4, 2012.

DECISION CTACaseNo.l0467 (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. (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 (Pl,OOO,OOO): 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. Section 110(A) of the NIRC, as amended is implemented by Sections 4.110-1 to 4.110-3 of RR No. 16-2005, 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

DECISION CTA Case No. 10467 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: (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 materials supplied in the sale of services; or (5) For use in 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. SEC. 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:

DECISION CTA Case No. 10467 (a) To the importer upon payment of VAT pnor 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. SEC. 4.110-3. Claim for Input Tax on Depreciable Goods. - Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar month exceeds One Million pesos (P1,000,000.00), 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 the 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 (P1,000,000.00), 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 P1,000,000.00, excluding the VAT, will be subject to the amortization of input tax

DECISION CTA Case No. 10467 despite the fact that the monthly payments/installments may not exceed P1,000,000.00. Construction in progress (CIP) 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. 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 progress billings while input tax on the purchase of materials shall be recognized at the time the materials were purchased. (a) The amortization of the input VAT shall only be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized: Provided, 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. 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. Relative thereto, Section 4.110-8 of RR No. 16-2005 provides for the substantiation requirements of input tax credits, as follows: SEC. 4.110-8. Substantiation of Input Tnx 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

DECISION CTA Case No. 10467 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. (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. To prove entitlement to credits for input taxes due or paid, petitioner must not only present the supporting documents prescribed under Section 4.110-8 of RR No. 16-2005. In addition, these documents must comply with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the NIRC, as amended, as implemented by Section 4.113-1(A) and (B) of RR No. 16-2005. Based on petitioner's Amended Quarterly VAT Returns for 2018, the subject input VAT claim in the amount of P7,287,179.51 arose from petitioner's amortization of input tax on purchases of capital goods exceeding P1,000,000.00, current domestic purchases of goods other than capital goods, domestic purchases of services, and services rendered by non-residents, detailed as follows: 1st Quarter 2nd Quarter 3rct Quarter 4th Quarter (Exhibit 2018 (Exltibit "P-3-1")113 (Exhibit "P-l-1")114 (Exhibit "P-5-1")115 "P-6-1")116 Input Tax Deferred on l' 20,814.27 p 44,230.35 l' 36,424.99 r 28,619.63 11'1 Docket- Vol. II, pp. 733 to 735. 114 Docket- Vol. II, pp. 739 to 741. 115 Docket- Vol. II, pp. 745 to 747. 116 Docket- Vol. II, pp. 751 to 753.

DECISION CIA Case No. 10467 Capital Goods Exceeding 36,424.99 28,619.63 20,814.28 13,008.92 I PlMillion from Previous p 7,805.36 1' 7,805.36 1' 7,805.35 p 7,805.35 I Quarter Less: Input Tax on p 31,221.42 Purchases of Capital Goods Exceeding 64,944.57 21,016.73 21,675.00 5,546.52 113,182.83 P1 Million Deferred for the Succeeding Period 398,487.89 408,051.09 383,828.86 304,014.94 1,494,382.78 Amortization of Input Tax on Purchases of Capital 1,294,889.04 1,328,796.25 1,622,684.33 1,402,022.86 5,648,392.48 Goods Exceeding 1'1,766,126.86 1'1,765,669.44 1'2,035,993.54 1'1,719,389.67 1'7,287,179.51 1'1Million Add: Input VAT from Current Transactions: Domestic Purchases of Goods Other than Capital Goods Domestic Purchases of Services Services Rendered by :-Jon-Residents Total To support the above input VAT, petitioner presented, among others, its Schedule of Local Purchases with Input VAT,117 Schedule of Income Payments to Non-Resident Suppliers, 118 Monthly Remittance Returns of Value-Added Tax and Other Percentage Taxes Withheld (BIR Forms No. 1600),119 and suppliers' Sis and ORs.12o Yet, a review of the ICPA Report121 and petitioner's supporting documents shows that the amount of 1'1,029,821.09 must be disallowed, for failure to meet the substantiation and invoicing requirements as prescribed under Sections 110(A), 113(A) and (B), and 237 of the NIRC, as amended, as implemented by Sections 4.110- 1, 4.110-2, 4.110-8, 4.113-1(A) and (B) of RR No. 16-2005, as amended, as detailed below: Supplier Name Inv/OR Summary INPUT VAT (In Philippine Peso) Total Exhibit Reference 2nd Quarter 3rd Quarter 4th Quarter (2018) tst Quarter No. (Exhibit "P-31") Domestic purchases of services supported by VAT ORs but tlze uature of payme11t was not indicated and the invoices referred to therein were deuied admissiotz by the Court OILSERVE "P-93" Annex G 6,000.00 6,000.00 TRADING OILSERVE "P-98" Annex G 6,600.00 6,600.00 TRADING OILSERVE "P-101" Annex G 169.13 169.13 TRADING OILSERVE "P-103" Annex G 202.68 202.68 m Exhibit "P-88," USB. '" Exhibit "P-89," USB. 119 Exhibits "P-109" to "P-120-1," USB. 120 Exhibits "P-93" to "P-279," USB. 121 Pages 10 to 16, Exhibit "P-31," Docket- Vol. II, pp. 617 to 623.

DECISION CTA Case No. 10467 TRADING Domestic purchases of services supported by VAT ORs dated outside the period of claim FERVID INTERNATIONAL PRODUCTS INC "P-121" Annex I 2,704.48 2,704.48 FERVID "P-122" Annex I 3,645.97 3,645.97 I INTERNATIONAL PRODUCTS INC FERVID INTERNATIONAL PRODUCTS INC "P-123" Annex I 3,645.97 3,645.97 SYCIP GORRES "P-124" Annex I 16,523.06 16,523.06 VELAYO&CO SYCIP GORRES "P-125" Annex I 16,523.06 16,523.06 VELAYO&CO SYCIP GORRES VELAYO&CO "P-126" Annex I 16,031.93 16,031.93 Domestic purchases of goods/services supported by VAT Sls/ORs with 110 petitiouer's TIN and with petitioner's address different ~om tlzat a 'Jpeariux in t- etitiouer's Certification of Re ;istratiou with the BIR FERVID INTERNATIONAL Annex J 34,085.43 34,085.43 PRODUCTS INC "P-131-1" FERVID INTERNATIONAL Annex) 22,723.61 22,723.61 PRODUCTS INC "P-131-2" SONJU "P-132" Annex J 1,068.00 1,068.00 ENGINEERING SERVICES HI-SAFETY INDUSTRIAL SUPPLIES INC "P-238" Annex P 3,257.13 3,257.13 HPPPS "P-240" Annex P 5,430.52 5,430.52 PHILIPPINES INC HI-SAFETY "P-239" Annex P 386.79 386.79 INDUSTRIAL SUPPLIES INC Domestic purchases of services supported by Collectiou Receipt iustead of VAT OR FERVID "P-131" Annex) 2,880.00 2,880.00 INTERNATIONAL "P-131" 1,920.00 1,920.00 PRODUCTS INC Annex J FERVID INTERNATIONAL PRODUCTS INC Domestic purchases of seroices supported by VAT DRs with uo petitiotzer's TIN, VAT was not separately slwwu, and nature of pay1nent was 1wt indicated DHLEXPRESS "P-127" Annex) 465.66 465.66 (PHILIPPINES) 782.29 CORPORATION "P-128" Annex J 782.29 579.23 DHLEXPRESS 579.23 106.68 (PHILIPPINES) "P-129" Annex J CORPORATION DHLEXPRESS "P-130" AnnexJ 106.68 (PHILIPPINES) CORPORATION DHLEXPRESS (PHILIPPINES) CORPORATION Domestic purchase of service supported by VAT OR but iuput VAT was llOt shown separately SYCIP GORRES 16,333.87 is differeu t from that VELAYO&CO T-214" ArmexN 16,333.87 petitiouer's address Domestic purchases of goods/seroices supported by VAT Sls/ORs wherein '!l!Peariug iu petitiouer's Certtjicate of Registration with the BIR

DECISION CTA Case No. 10467 OILSERVE "P-138" Annex K 3,335.54 3,335.54 TRADING RAJAH TRAVEL "P-149" Annex K 576.00 576.00 CORPORATION RAJAH TRAVEL "P-150" Annex K 708.00 708.00 CORPORATION RAJAH TRAVEL "P-151" Annex K 432.00 432.00 CORPORATION RAJAH TRAVEL "P-152" Annex K 216.00 216.00 CORPORATION RAJAH TRAVEL "P-153" Annex K 180.00 180.00 CORPORATION RAJAH TRAVEL "P-154" Annex K 2,448.00 2,448.00 CORPORATION RAJAH TRAVEL "P-155" Annex K 348.00 348.00 CORPORATION RAJAH TRAVEL "P�156" Annex K 1,008.00 1,008.00 CORPORATION RAJAH TRAVEL CORPORATION "P-157" Annex K 144.00 I 144.00 RAJAH TRAVEL "P-158" Annex K 564.00 CORPORATION "P-159" Annex K 432.00 ! 564.00 RAJAH TRAVEL "P-160" Annex K CORPORATION I 432.00 RAJAH TRAVEL CORPORATION ' 1,530.00 i 1,530.00 RAJAH TRAVEL "P-161" Annex K 348.00 348.00 CORPORATION RAJAH TRAVEL "P-162" Annex K 288.00 288.00 CORPORATION RAJAH TRAVEL "P-163" Annex K 864.00 864.00 CORPORATION RAJAH TRAVEL "P-164" Annex K 852.00 852.00 CORPORATION ROXASCRUZ "P-169" Annex K 4,800.00 4,800.00 TAGLE AND CO RAJAH TRAVEL "P-177" AnnexM 420.00 420.00 CORPORATION RAJAH TRAVEL "P-165" Annex K 288.00 288.00 CORPORATION RAJAH TRAVEL CORPORATION "P-166" Annex K 432.00 432.00 RAJAH TRAVEL "P-167" Annex K 504.00 504.00 CORPORATION RAJAH TRAVEL "P-168" Annex K 2,136.00 2,136.00 CORPORATION Domestic purchases of services supported by VAT ORs but the nature of payment was not i11dicated; invoices referred to in the VAT ORs were uot preseuted SUPPLY OILFIELD SERVICES INC "P-176" Annex L 961.70 961.70 SUPPLY OILFIELD SERVICES INC "P-178" Annex :tvl 463.58 463.58 SUPPLY OILFIELD SERVICES INC "P-179" Annex ~1 166.2 166.20 SUPPLY OILFIELD SERVICES INC "P-180" AnnexM 335.18 335.18 SUPPLY OILFIELD SERVICES INC "P-187" Annex M 1,131.12 1,131.12 SUPPLY OILFIELD "P-188" Annex.M 7,776.17 7,776.17

DECISION CTA Case No. 10467 SERVICES INC SUPPLY OILFIELD SERVICES INC "P-190" Annex M 551.03 551.03 SUPPLY OILFIELD SERVICES INC "P-191" AnnexM 1,008.71 1,008.71 SUPPLY OILFIELD SERVICES INC "P-191" Annex M 4,339.07 4,339.07 SUPPLY OILFIELD "P-191" AnnexM 977.67 977.67 I SERVICES INC SUPPLY OILFIELD SERVICES INC "P-191" Annex M 5,095.99 5,095.99 SUPPLY OILFIELD I SERVICES INC "P-191" Annex M 954.15 954.15 SUPPLY OILFIELD SERVICES INC "P-191" Annex J-..,1 5,501.99 5,501.99 SUPPLY ! OILFIELD "P-193" Annex M SERVICES INC 318.05 318.05 SUPPLY OILFIELD "P-193" AnnexM SERVICES INC 3,856.82 3,856.82 SUPPLY OILFIELD "P-194" AnnexM SERVICES INC 1,005.21 1,005.21 SUPPLY OILFIELD "P-194" Annex M SERVICES INC 8,948.64 8,948.64 SUPPLY OILFIELD "P-195" AnnexM SERVICES INC 132.00 132.00 SUPPLY OILFIELD "P-199" Annex M SERVICES INC 2,350.56 2,350.56 SUPPLY OILFIELD "P-200" AnnexM SERVICES INC 5,013.16 5,013.16 Domestic purchases of services supported by VAT ORs witlt erasures but were not cotmtersigued by authorized sig11atory and with petitioner's address differenf: from that appearing in petitioner's Certificate of Reg with tlte BIR TECHNOLOGY EXPORTS SERVICES "P-219" AnnexO 42,232.20 42,232.20 TECHNOLOGY EXPORTS SERVICES "P-220" Annex 0 6,019.20 6,019.20 !CO ASIAPACIFIC PHILIPPINES INC "P-215" AnnexO 11,650.49 11,650.49 !CO ASIAPACIFIC PHILIPPINES INC "P-216" Annex 0 16,443.86 16,443.86 TECHNOLOGY EXPORTS SERVICES "P-221" AnnexO 42,232.20 42,232.20 TECHNOLOGY EXPORTS SERVICES "P-222" Annex 0 43,928.57 43,928.57 TECHNOLOGY EXPORTS SERVICES "P-223" Annex 0 34,787.53 34,787.53

DECISION CTA Case No. 10467 TECHNOLOGY "P-224" AnnexO 34,787.53 34,787.53 34,787.53 EXPORTS "P-225" Annex 0 34,787.53 34,787.53 SERVICES "P-226" AnnexO 34,787.53 34,787.53 TECHNOLOGY 1,344.00 34,787.53 EXPORTS ' SERVICES 4,858~~ TECHNOLOGY 4,858.19 i EXPORTS 21,016.73 SERVICES 1,475.42 TECHNOLOGY "P-227" Annex 0 760.75 EXPORTS "P-217" Annex 0 2,679.74 SERVICES 1,088.24 !CO ASIAPACIFJC PHILIPPINES INC : 9,034.58 Domestic purchases of seroices supported by documeuts other thau VAT ORs 1,070.62 5,353.60 FERVID "P-237" Annex P 21,016.73 4,788.34 INTERNATIONAL "P-242" Annex P 1,475.42 3,742.89 PRODUCTS INC "P-243" Annex P 3,438.87 QU!SUMBING "P-244" Annex P 760.75 14,950.87 TORRES 2,679.74 -51,096.60 QU!SUMBING 1,344.00 TORRES 6,425.72 QU!SU!viBING 3,414.29 TORRES 4,513.74 42,232.20 SUPPLY "P-269" Annex P 1,088.24 1,344.00 OILFIELD "P-270" Annex P 9,034.58 SERVICES INC SUPPLY OILFIELD SERVICES INC SUPPLY "P-271" Annex P 1,070.62 OILFIELD "P-272" Annex P 5,353.60 SERVICES INC "P-273" Annex P 4,788.34 SUPPLY "P-274" Annex P 3,742.89 OILFIELD "P-275" Annex P 3,438.87 SERVICES INC "P-276" Annex P 14,950.87 SUPPLY "P-277 Annex P (51,096.60) OILFIELD SERVICES INC "P-228" Annex P 1,344.00 SUPPLY "P-245" Annex P 6,425.72 OILFIELD "P-246" Annex P 3,414.29 SERVICES INC "P-247" Annex P 4,513.74 SUPPLY "P-278" Annex P OILFIELD "P-229" Annex P 42,232.20 SERVICES INC SUPPLY OILFIELD SERVICES INC TECHNOLOGY EXPORTS SERVICES BPO INTERNATIONAL INC QU!SUMBING TORRES QU!SUMBING TORRES QU!SUMBING TORRES TECHNOLOGY EXPORTS SERVICES BPO INTERNATIONAL

DECISION CTA Case No. 10467 INC BPO INTERNATIONAL "P-230" Annex P INC 2,400.00 2,400.00 BPO AnnexP 1,344.00 1,344.00 INTERNATIONAL "P-231" 1,706.81 1,706.81 9,082.40 9,082.40 INC 2,222.10 1,565.80 : O!LSERVE "P-241" Annex P TRADING 72.00 2,222.10 216.00 1,565.80 QUISUMBING "P-248" Annex P 216.00 TORRES 72.00 72.00 216.00 QUISUMBING "P-249" Annex P 216.00 TORRES 6,600.00 72.00 5,808.00 QU!SUMBING "P-250" Annex P 6,600.00 TORRES 34,787.53 5,808.00 RAJAH TRAVEL "P-251" Annex P 34,787.53 CORPORATION 1,344.00 RAJAH TRAVEL "P-252" Annex P CORPORATION 600.00 RAJAH TRAVEL "P-253" Annex P 1,344.00 CORPORATION 2,016.00 RAJAH TRAVEL "P-254" Annex P CORPORATION 1,344.00 72.00 SALVADOR 72.00 72.00 LLANILLO & 72.00 72.00 BERNARDO "P-267" Annex P 72.00 72.00 SISON CORILLO 72.00 72.00 PARONE&CO "P-268" Annex P TECHNOLOGY EXPORTS SERVICES "P-279" Annex P BPO 1'\ITERNATIONAL INC "P-232" Annex P 1,344.00 BPO 600.00 INTERNATIONAL 1,344.00 INC "P-233" Annex P 2,016.00 BPO 1,344.00 72.00 INTERNATIONAL 72.00 72.00 INC "P-234" Annex P 72.00 72.00 BPO 72.00 72.00 INTERNATIONAL 72.00 72.00 INC "P-235" Annex P BPO INTERNATIONAL INC "P-236" Annex P RAJAH TRAVEL CORPORATION "P-255" Annex P RAJAH TRAVEL CORPORATION "P-256" Annex P RAJAH TRAVEL CORPORATION "P-257" Annex P RAJAH TRAVEL CORPORATION "P-258" Annex P RAJAH TRAVEL "P-259" Annex P CORPORATION RAJAH TRAVEL CORPORATION "P-260" Annex P I RAJAH TRAVEL CORPORATION "P-261" Annex P RAJAH TRAVEL "P-262" A1mex P CORPORATION RAJAH TRAVEL CORPORATION "P-263" Annex P

DECISION CTACaseNo.10467 RAJAH TRAVEL "P-264" Annex P 72.00 72.00 CORPORATION "P-265" Annex P 72.00 72.00 RAjAH TRAVEL "P-266" Annex P 72.00 72.00 CORPORATION RAJAH TRAVEL ! CORPORATION 564.89 Domestic purchases ofgoods/services without supporting VAT Sis/ORs 8,954.06 DHLEXPRESS 69.64 191.40 (PHILIPPINES) 10,314.00 CORPORATION - Annex Q 564.89 722.64 AnnexQ 8,95406 5,328.00 !CO ASIAPACIFIC 1,575.79 Annex Q 69.64 PHILIPPINES INC - Annex Q 191.40 1,452.03 ' Annex Q 10,314.00 I' ISUZU 722.64 Annex Q 5,328.00 47,953.861 AUTOMOTIVE Annex Q 1,575.79 1,452.03 I DEALERSHIP INC - Annex Q 47,953.86 Annex Q 611.251 OILSERVE 611.25 Annex Q 4,756.60 i TRADING - AnnexQ 8,898.81 Annex Q 43,303.63 I PHILIPPINE Annex Q 1,252.85 4,756.60 LONG DISTANCE - Annex Q 8,898.81 PICASSO RENTAL Annex Q Annex Q 43,303.63 1 MANAGEMENT Annex Q Annex Q I CORP - Annex Q Annex Q 1,252.85 RAJAH TRAVEL Annex Q Annex Q 1,344.00 CORPORATION - 3,082.90 RICOH 16,560.00 460.68 PHILIPPINES INC - 12,913.75 SUPPLY 1,720.57 OILFIELD 204.00 SERVICES INC - TECHNOLOGY EXPORTS SERVICES - HOSPITALITY INTERNATIONAL INC - OILSERVE TRADING - SUPPLY OILFIELD SERVICES INC - TECHNOLOGY EXPORTS SERVICES - VALERO GRAND SUITES MANAGEMENT CORP - BPO INTERNATIONAL INC - 1,344.00 3,082.90 HPPPS 16,560.00 PHILIPPINES INC - 460.68 MANABAT 12,913.75 SAN AGUSTIN 1,720.57 204.00 ANDCOCPAS - OILSERVE TRADING - PHILIPPINE LONG DISTANCE - PICASSO RENTAL MANAGEMENT CORP - RAJAH TRAVEL CORPORATION -

DECISION CTA Case No. 10467 RICOH PHILIPPINES INC - AnnexQ 94.67 94.67 AnnexQ 960.00 960.00 ROXASCRUZ Annex Q 910.27 910.27 TAGLE AND CO - Annex Q AnnexQ 1,974.74 i VALERO GRAND Annex Q 6,870.18 i SUITES Annex Q 342.86 1,974.74 MANAGEMENT Annex Q 1,494.06 13,554.13 6,870.18 CORP - AnnexQ 33,120.00 342.86 Y2RENTAL Annex Q 1,494.06 Annex Q ! 13,554.13 MANAGEMENT Annex Q 9,869.86 33,120.00 CORPORATION - AnnexQ 3,438.00 9,869.86 Annex Q 3,438.00 BPO Annex Q 1,445.28 ' Annex Q 529.88 1,445.28 INTERNATIONAL AnnexQ 529.88 1,296.00 INC - Annex Q 1,401.28 1,296.00 Annex Q 3,840.00 1,401.28 DURBAN 8,712.00 3,840.00 Annex Q 8,712.00 APARTMENTS 3,388.66 3,388.66 CORP - 3,912.48 ! HPPPS 918.94 3,912.48 PHILIPPINES INC - 918.94 !CO ASIAPACIFIC 7,805.36 PHILIPPINES INC - 7,805.36 7,805.35 MANABAT 7,805.35 1,029,821.09 SAN AGUSTIN i ANDCOCPAS - OILSERVE TRADING - PHILIPPINE LONG DISTANCE - PICASSO RENTAL MANAGEMENT CORP - QUISUMBING TORRES - RAJAH TRAVEL CORPORATION - RICOH PHILIPPINES INC - ROXASCRUZ TAGLE AND CO - SISO:--J CORILLO PARONE&CO - SUPPLY OILFIELD SERVICES INC - TECHNOLOGY EXPORTS SERVICES - Y2RENTAL MANAGEMENT CORPORATION - Amortization of iuput VAT 011 purchases of capital goods exceeding P1Milliou without supportiug documents - - Annex Q 7,805.36 Annex Q 242,216.81 - - 7,805.36 Annex Q 272,409.10 - - 7,805.35 Annex Q 271,015.73 - - 7,805.35 244,179.45 Total Disallowed Input VAT

DECISION CTA Case No. 10467 Based on the foregoing, out of the 1"7,287,179.51 total input VAT claim, only the amount of 1"6,257,358.42 pertains to petitioner's valid input VAT, as computed below: 2018 Input VAT Claim Disallowances Valid Input VAT p 1,766,126.86 p 242,216.81 p 1,523,910.05 1" Quarter 1,765,669.44 272,409.10 1,493,260.34 2nd Quarter 2,035,993.54 271,015.73 1,764,977.81 3'd Quarter 1,719,389.67 244,179.45 1,475,210.22 4th Quarter p 7,287,179.51 p 1,029,821.09 p 6,257,358.42 Total Eight Requisite: a portion of petitioner's valid input VAT of 1'6,257,358.42 is attributable to its zero-rated sales/ receipts for the four (4) quarters of CY 2018. Section 112(A) of the NIRC, as amended, requires that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, the same provision recognizes that where there are zero-rated or effectively zero-rated sale and taxable sales 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. Considering that petitioner had only zero-rated sales, its valid input VAT of 1"6,257,358.42 may be attributed thereto. Out of petitioner's reported zero-rated sales of 1"94,633,039.84, only the amount of 1"4,382,813.67 is its valid zero-rated sales. Therefore, petitioner's refund of valid input VAT, attributable to said valid zero- rated sales, to the extent of 1"249,846.52, must be allowed, computed as follows: 1st Quarter znct Quarter 3'" Quarter 4th Quarter 2018 I 1'1,523,910.05 1'1,493,260.34 1'1,764,977.81 1'1,475,210.22 Valid Input VAT 1'6,257,358.42 Divided by: Declared Zero-Rated 26,732,466.44 25,807,044.45 7,724,194.94 34,369,334.01 94,633,039.84 Sales/Receipts Mllltiplled by: 4,382,813.67 0 0 0 4,382,813.67 Valid Zero-Rated Sales/Receipts Input VAT Attributable to Valid 1'249,846.52 0 0 0 1'249,846.52 ! Zero-Rated Sales/Receipts

DECISION CTA Case No.10467 Ninth Requisite: the claimed input taxes were not applied against output taxes during and in the succeeding quarters. As already pointed out, petitioner had no reported output tax for the four (4) quarters of CY 2018 as its reported sales/receipts were all zero-rated sales/receipts.122 Thus, it had no output VAT against which the reported input VAT claim of !'7,287,179.51 may be applied or credited. Although petitioner carried-over the subject claim of !'7,287,179.51 to the succeeding quarters, 123 the same remained unutilized until it was deducted as "VAT Refund/TCC claimed" in its 1st Quarterly VAT Return for CY 2020,124preventing the carry-over or application of such input taxes in the next taxable quarter/ s. In fine, petitioner is entitled to refund or issuance of TCC of unutilized input VAT, attributable to its zero-rated sales for the four (4) quarters of CY 2018, to the extent of !'249,846.52. WHEREFORE, the Petition for Review filed by Halliburton Worldwide Limited - Philippine Branch on February 16, 2021, is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND OR ISSUE ATAX CREDIT CERTIFICATE in favor of petitioner in the amount of P249,846.52, representing the latter's excess and unutilized input VAT, attributable to its zero-rated sales for the four (4) quarters of CY 2018. SO ORDERED. r. ~ &w ~ -f~wtrk MARIAN IV-9F. REYifS-FAJARDO Associate Justice 122 Annex E of Exhibit "P-31," Docket- VoL II, p. 630. 123 Exhibits "P-7" to "P-10," USB. 124 Line 23D, Exhibit "P-11-1," Docket- VoL II, p. 770.

DECISION CTACaseNo.l0467 We Concur: c~ 7- A..........C.�~."---- cATHERINE T. MANAHAN Associate Justice HENRY ~NGELES Associate Justice 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 Division. c~ 7~~~--,~�~----- cATHERINE T. MANAHAN Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division 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