PPD PHARMACEUTICAL DEVELOPMENT PHILIPPINES CORP., v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION PPD PHARMACEUTICAL CTA Case No. 10375 DEVELOPMENT PHILIPPINES CORP. , Members: Petitioner, MANAHAN, Chairperson, REYES-FAJARDO, and -versus- ANGELES, JJ. COMMISSIONER OF Promu lgated : INTERNAL REVENUE, Respondent. OCT 30 2024 _ ~ X - - - - - - - - - - - - - - - - - - - - - - - - - //:.'f.J:-!# :_ '!" - ":~ - - - - - X RESOLUTION MANAHAN,J.: This resolves petitioner's Motion for Partial Reconsideration (Re: Decision dated 6 June 2024) filed on J uly 5, 2024, seeking for partial reconsideration of this Court's Decision dated June 6, 2024 (Assailed Decision) and granting th e refund of its excess and u nutilized inpu t value-added tax (VAT) in the amount of Php9,308,363.46. Petitioner argues that the nature of services rendered and the payments received maybe found in the admitted evidence. Petitioner also submitted billing statements for the Court's consideration. Petitioner insists that it accounted for Official Receipt (OR) No. 00000 18 in the 2018 first qu arter VAT Retu rn. The Certificate of Inward Remittance allegedly shows th at the amount was received on th e 9th of March 2018. Petitioner also argues that it properly substantiated its zero-rated sales for the second quarter of taxable year (TY) 20 18. On the other hand, respondent, in his Comment Opposition (Re: Motion for Partial Reconsideration dated 5 ~

R E S O LUT I O N CTA Case No. 10375 July 2024) filed on July 19, 2024, counters that this Court is correct in requiring petitioner to issue Bureau of Internal Revenu e-registered VAT ORs for foreign currency proceeds of each sales transaction. Respondent further argues that while petitioner has presented its inward remittances, the documents failed to show that the inward remittances were indeed made as payments for the petitioner's alleged zero-rated sales. Respondent insists that this Cou rt is correct in its finding that petitioner failed to substantiate its claim particularly the declared zero-rated sales fo r the months of April and May 2018. Respondent states that petitioner's claim for refund must be substantiated by VAT invoices or ORs prescribed under Sections 11 0(A) and 11 3(A) and (B) of th e 1997 National Internal Revenue Code (NIRC), as amended, in relation to Sections 4.110-1,4- 11 0-8 and 4 .1 13-1 of Revenue Regulations (RR) No. 16-05, as amended. The Ruling This Court shall determine first whether the instant Motion was filed on time. Section 1, Rule 15 of the Revised Rules of the Court of Tax Appeals (RRCTA) provides that: "SECTION 1. Who may and when to file motion.- Any aggrieved party may seek a reconsideration or new trial of any decision, resolution, or order of the Court. He shall file a motion for recon sideration or new trial within fifteen days from the date he received notice of the decision, resolution or order of the Court in question." (Emphasis supplied) The records of the instant case reveal that petitioner, th rough its counsel, received the copy of the Assailed Decision on June 20, 2024. In accordance with the abovementioned provision of the RRCTA, respondent had fifteen (1 5) days from receipt of notice of said d ecision from June 20, 2024 or until July 5, 2 0 24 within which to file his motion for r econsideration. Thus, t h e filin g of petitioner's Motion for Partial Reconsideration (Re: Decision dated 6 June 2024} on July 5, 2 024 was on time.IJitla--

RESOLUTION CTA Case No. 10375 Page 3 of6 At the outset, We would like to re-emphasize and highlight the factual findings of this Court as to the absence of some documentary requirements th at may prove petitioner's claim for refund as discussed in the Assailed Decision, to wit: "Scrutiny of the ORs submitted by petitioner shows that the same were in payment for certain billing statemen ts. Considering that there are unexplained differences, it is imperative for the Court to examine the nature of the service rendered and payments received by petitioner. Pursuant to the previously quoted Section 113 (8)(3) of th e 1997 NIRC, as amended, the following information, among others, are required to be indicated in the VAT invoice or VAT official receipt: a . Da te of transaction; b. Quantity; c. Unit cost; and d. Description of the goods or nature of the service . In this case, petitioner indicated only the corresponding billing statement number in the official receipt, however, petitioner did not submit the subject billing statements. Consequently, the Court cannot ascertain whether the payments received are indeed for the agreed-upon services rendered by petitioner or for something else . The billing statements could a lso help to shed some ligh t on the discrepancies between the amounts per VAT returns and ORs." (Unde rscoring ours) Given the fore going, p etitione r is submitting b elatedly the said billing statements through the instant motion. After a thorough review of the case, We deny the said motion on the following grounds: First, the trial of the case was terminated already and the case was already submitted for decision, hence , the Assailed Decision took into consideration all the evidence submitted by both parties during such trial. Hence, Section 34, Rule 132 of the Rules of Court, as amended, is controlling in this case, to wit: "Section 34. Offer ofevidence. - The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified." It is very clear from the abovementioned factual findings of this Court that petitioner failed to addu ce and offer said ~

RESOLUTION CTA Case No. 10375 billing statements during the trial of the case. Thus, this Court cannot consider the belated submission of such documents. In Republic ofthe Philippines v. Fe Roa Gimenez and Ignacio B. Gimenez, 1 the Supreme Court ruled that: "More importantly, the Rules specifically provides that evidence must be formally offered to be considered by the court. Eviden ce not offered is excluded in the determination of the case. "Failure to m a k e a formal offer within a considerable period of time shall be deemed a waiver to submit it. II Rule 132 , Section 34 provides: SEC. 34. Offer ofevidence.- The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified. The rule on form a l offer of evidence is intertwined with the constitution a l guarantee of due process. Parties must be given t h e oppor tunity to review th e evidence submitted against t hem and take the n ecessary actions to secure th eir case . Hence, a ny docum en t or object that was marked for identification is n ot eviden ce unless it was "formally offer ed and th e opposing counsel [was] given an opportunity to object to it or cross-examine the witness called upon to prove or identify it. " This court explained further the reason for the rule: The Rules of Court provides that "the cour t shall consider n o evidence which h as not been formally offered." A forma l offer is n ecessary because judges are mandated to rest their findings of facts and th eir judgment only and strictly upon th e eviden ce offered by the parties at the trial. Its function is to enable the tria l judge to know th e purpose or purposes for which t h e proponent is presenting the evidence. On the other hand, this allows opposing parties to examine the evidence and object to its admissibility. Moreover, it facilitates review as the appellate court will not be required to review documents not previously scrutinized by t h e t ria l court. (Emphasis supplied, citations omitted) To consider a party's evidence which was not formally offered during tria l would deprive the other party of due process. Evidence not formally offered has no probative value and must be excluded by the court." Finally, petitioner filed a motion for reconsideration and not a motion for n ew trial where one of its grounds is the 'G.R. No. 17 467 3, Janua ry 11, 201 6. ~

RESOLUTION CTA Case No. 10375 introduction of a newly discovered evidence. Hence, the Court cannot consider such billings statements. However, newly discovered evidence is one "which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result." Thus, such billing statements cannot qualify as newly discovered evidence considering that they exist already even during the trial but petitioner just failed to adduce and offer. Petitioner also insists that it accounted for OR No. 0000018 in the first quarter VAT Return for 2018. The Certificate of Inward Remittance allegedly shows that the amount was received on the 9 th of March of 2018. However, it is very clear from the factual findings of the Court that p etitioner failed to reflect it in its own VAT Return and Summary List of Sales as testified by the Independent Certified Public Accountant (ICPA), to wit: "With regard to OR No. 000001 8 da ted April 3 0, 20 18 in th e amount of $94,007 .24 issued to 'PPD Global Limited', the ICPA found that this was not reported n eith er in the VAT Return nor in the Summary List of Sa les (SLS) for the 2nd Qua rter of 2018. Similarly, th e amount of $94,007.24 was not reflected in th e petitioner's HSBC US Dolla r bank account. However , this tran saction was included in th e 20 18 gen era l ledger s hown as a USD cash entry o f $94,017.24 (P4,888,837.8 1 in Philippin e Local Currency). The ICPA purported the difference of $ 10.00 as flat fee ba nk charges." Such assertion of petitioner cannot be con sidered sans any supporting evidence. Petitioner also argues that it properly substantiated its zero-rated sales for the second quarter of TY 2018 . However, such assertion was b elied by the factual findings of this Court, to wit: "The Court likewise notes that petition er's decla red zero-rated sales for the months of April and May 20 18 a re not fully substantiated with the VAT ORs submitted. On the other h and, th e OR for the month of May 20 18 exceeded the amount declared by petition er in its quarterly VAT return . Even so, the Court cannot be certain that the subject OR indeed pertains to the zero-rated sa\es declared by petitioner in its quarterly VJ\Treturn. ~

RESOLUTION CTA Case No. 10375 It bears stressing that petitioner only has one client and t hree (3) sales transactions for the second quarter of 20 18. However, based on the foregoing, the amounts declared per petitioner's quarterly VAT return for the 2nd quarter of 2018 do not tally with the ORs issued by petitioner." Petitioner should be aware that as a claimant for a refund of taxes paid, it must prove every aspect of its case as pronounced in the case of Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue,2 to wit: "... First, a judicial claim for refund or tax credit in th e CTA is by no means a n original action but rather an appeal by way of petition for review of a previous, unsuccessful administrative claim. Therefore, as in every a ppeal or petition for review, a petitioner h as to convince the appellate court that the quasi-judicial agency a quo did not have any reason to den y its claims. In this case, it was n ecessary for petition er to show the CTA not only that it was entitled under substantive law to t h e gra n t of its claims but a lso that it satisfied a ll the documentary and evidentiary requirements for a n a dministrative claim for refund or tax credit . Second, cases filed in the CTA are litigated de novo. Thus, a petitioner should prove every minute aspect of its case by presenting, formally offering and submitting its evidence to the CTA. ..." (Emphasis supplied) WHEREFORE, petitioner 's Motion for Partial Reconsideration (Re: D ecision dated 6 June 2024) is DENIED for lack of m erit. SO ORDERED. t"'~' T- .4<�~~-- CATHERINE T. MANAHAN Associate Justice WE CONCUR: ~~F.~-F~ MARIAN IVY F. REYES-FAJARDO Associate Justice s! HENRY e GELES Associate Justice 2 G.R. NO. 145526, March 16, 2 007.