The Court of Tax Appeals (CTA) has granted the Bureau of Internal Revenue’s (BIR) petition which sought the reversal of the tax court’s first division ruling that granted the P2.8 million tax refund of NovaBala JV Corporation.

In its Jan. 4, 2024 decision, the court’s division ordered the BIR to refund P2,853,239.96 to NovaBala representing the construction firm’s excess creditable withholding taxes (CWT) for 2018.

NovaBala initially sought a refund of P20,381,132 which also included the alleged excess from erroneous withholding taxes for 2017 of P17,527,898.

Both Novabala and the BIR filed motions for reconsideration, but they were denied by the CTA’s first division.

On July 29, 2024, the BIR filed a petition for review before the CTA as a full court. It told the CTA that the firm did not declare fully in its annual income tax returns (AITRs) the entire income payments it received from Manila Water Company, Inc. (MWCI) for 2017 and 2018, resulting in non-compliance with a requisite for refund of alleged CWTs.

In its Oct. 10, 2025 decision, the CTA as a full court agreed that NovaBala failed to prove compliance with the requirement that the income upon which the taxes were withheld should be included in the AITR as part of the gross income.

"At the very least, respondent (NovaBala) should have presented to the Court how the 2018 billings, payments, and CWTs were recorded, and how and when the corresponding incomes were eventually credited to the revenue general ledger account, regardless of possible timing difference in CWT claim and revenue recognition," the court said.

Thus, the CTA said that NovaBala was not able to prove with competent evidence its entitlement to a refund or issuance of a tax credit certificate.

The 14-page decision was written by Associate Justice Maria Rowena Modesto-San Pedro with the concurrence of Associate Justices Ma. Belen M. Ringpis-Liban, Catherine T. Manahan, Jean Marie A. Bacorro-Villena, Marian Ivy F. Reyes-Fajardo, Lanee S. Cui-David, and Henry S. Angeles.