Halliburton Worldwide Limited - Philippine Branch vs. Commissioner of Internal Revenue

AMENDED DECISION

REYES-FAJARDO, J.:

For the Court's resolution is petitioner Halliburton Worldwide Limited- Philippine Branch (Halliburton Philippine Branch)'s Motion for Partial Reconsideration and Correction (Re: Decision dated July 26, 2024).¹ Petitioner seeks reconsideration of the Decision promulgated on July 26, 2024, where the Court partially granted petitioner's claim for refund in the amount of P249,846.59 representing petitioner's unutilized input VAT, attributable to its zero-rated sales covering the four quarters of calendar year (CY) 2018. After respondent Commissioner of Internal Revenue (CIR) filed its Comment/ Opposition, 2 the instant motion was submitted for resolution on October 8, 2024.

The present motion is partly meritorious. In the Assailed Decision, the Court did not consider as zero-rated a sale to Energy Development Corporation (EDC) amounting to

P22,229,678.09 because Official Receipt No. 1153 (Exhibit P-38), which was submitted to support the transaction, was unreadable. Petitioner submits this matter for reconsideration by offering the original carbon pink and white copies of Official Receipt No. 1153. We note that the document in question was admitted in evidence,3 but was adjudged as unreadable in the Assailed Decision.

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The instant motion is petitioner's first opportunity to refute the finding on the document's readability; thus, to accord due process, We shall accept the present submission of the original carbon pink and white copies of Official Receipt No. 1153.

The copies show that on April23, 2018, petitioner received from EDC the amount of P22,229,678.09 in payment of the following billing invoices:

Amount in

Amount in

Exh

Inv. No.

Date

USD

For ex

PHP

P-38-1

9503700729 Feb. 11,2018 103,111.45 50.4540 5,202,385.10

P-38-2

9503700730 Jan. 18, 2018 36,501.01 50.4540 1,841,621.96

P-38-3

9503716626 Jan. 6, 2018 28,867.20 50.0210 1,443,966.21

P-38-4

9503730760 Jan.31, 2018 1,862.40 51.0400 95,056.90

P-38-5'

9503730767 Jan. 31, 2018 25,608.00 51.0400 1,307,032.32

P-38-6

9503754813 Feb. 11,2018 240,524.25 51.3030 12,339,615.60 Total sales 413,866.31 22,229,678.09 The amount of $413,866.31, when translated to Philippine Peso, is equivalent to P22,229,678.09. This converted amount was traced to the Summary List of Purchases.4 On the other hand, petitioner's theory that a valid authority to print (ATP) is not an invoicing requirement (e.g., that must be complied with, especially in substantiating its claim for refund or credit of unutilized input VAT) contradicts the law. There is a mandatory requirement under Section 113(A)(²) of the Tax Code imposed upon every VAT-registered person to issue a VAT

' official receipt for every sale of services. A VAT official receipt within the context of the Tax Code shall be one that has been" duly registered" with the Bureau of Internal Revenue (BIR),s as provided with Section 237 of the Tax Code. In turn, pursuant to Section 238 of the Tax Code, due registration of receipts shall be accomplished by securing from the BIR an authority to print receipts before a printer can print the same. In this light, the issuance of official receipts beyond the validity period of its ATP is non-compliance with the prescribed rules and regulations on invoicing; official receipts issued without the requisite ATP shall not be appreciated in favor of a claim for refund of unutilized input VAT.

Based on these findings, We sustain the disallowance of sales of services supported by official receipts issued with expired ATP. On the other hand, the sale of service to EDC amounting to P22,229,678.09 shall now be regarded as a valid zero-rated sale. Resultantly, this amount is no longer treated as a disallowance; the total valid zero- rated sales for CY 2018 amounts to P26,612,491.76, computed as follows:

Zero-Rated Sales/Receipts Per VAT Return

Less: Disallowances

Export sale of goods not properly substantiated Sales of services to EDC and others Without supporting BIR-registered VAT ORs

Supported by:

VAT ORs with expired A TP ' BIR registered VAT ORs dated outside period of claim BIR registered VAT OR with unreadable details

Total Disallowances

Valid Zero-Rated Sales/Receipts

Original

P94,633,039.84 P30,529.50 89,445.18 51,840,875.38 16,059,698.02 22,229,678.09 P90,250,226.17 P4,382,813.67

Amended

P94,633,039.84 P30,529.50 89,445.18 51,840,875.38 16,059,698.02 P68,020,548.08 P26,612,491.76 Thus, We recompute the valid input VAT refundable to petitioner as follows:

Valid Input VAT

Divided by: Declared Zero-Rated Sales/Receipts

Multiplied by: Valid Zero-Rated Sales/Receipts

Input VAT Attributable to Valid Zero-Rated Sales/Receipts s

Section 237

Original

:P6,257,358.42 94,633,039.84 4,382,813.67

Amended

P6,257,358.42 94,633,039.84 26,612,491.76 P249,846.52 P1,759,680.34

WHEREFORE, petitioner Halliburton Worldwide Limited - Philippine Branch's Motion for Partial Reconsideration and Correction (Re: Decision dated on July 26, 2024) is PARTIALLY GRANTED. Accordingly, the dispositive portion of the Decision dated July 26, 2024 is AMENDED as follows:

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WHEREFORE, the Petition for Review filed by

Halliburton Worldwide Limited -Philippine Branch on

February 16, 2021, is

PARTIALLY

GRANTED.

Accordingly, respondent Commissioner of Internal Revenue is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of Halliburton Worldwide Limited- Philippine Branch in the amount of

ONE MILLION SEVEN HUNDRED FIFTY-NINE

THOUSAND SIX HUNDRED EIGHTY PESOS AND

THIRTY-FOUR

CENTAVOS

(Pl,759,680.34), representing petitioner's unutilized input VAT, attributable to its zero-rated sales for the four quarters of calendar year 2018.

Associate Justice

WE CONCUR:

,.. - A..

~ / .. / ""';,.c.~~ ......... .<.L.-tlt --- CATHERINE T. MANAHAN

Associate Justice

HENRY jlf-NGELES

Associate Justice

ATTESTATION

I attest that the conclusions in the above Amended 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 Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

R

10

Presiding Justice