762 PHIL. 450
MENDOZA, J.:
Petitioner is the manufacturer/producer of, among others, the following cigarette brands, with tax rate classification based on net retail price prescribed by Annex "D" to Republic Act (R.A.) No. 4280, to wit:Petitioner elevated its claim to the CTA En Banc, but was rebuffed after the tax tribunal found no cause to reverse the findings and conclusions of the CTA Division.Immediately prior to January 1, 1997, the above-mentioned cigarette brands were subject to ad valorem tax pursuant to then Section 142 of the Tax Code of 1977, as amended. However, on January 1, 1997, R.A. No. 8240 took effect causing a shift from the ad valorem tax (AVT) system to the specific tax system. As a result of such shift, the aforesaid cigarette brands were subjected to specific tax under Section 142 thereof, now renumbered as Section 145 of the Tax Code of 1997. Section 145 is quoted thus:
Brand Tax Rate Champion M 100 P1.00 Camel F King P1.00 Camel Lights Box 20's P1.00 Camel Filters Box 20's P1.00 Winston F King P5.00 Winston Lights P5.00 'Section 145. Cigars and Cigarettes - (A) Cigars. - There shall be levied, assessed and collected on cigars a tax of One peso (P1.00) per cigar.To implement the provisions for a twelve percent (12%) increase of excise tax on cigars and cigarettes packed by machines by January 1, 2000, the Secretary of Finance, upon recommendation of the respondent Commissioner of Internal Revenue, issued Revenue Regulations No. 17-99, dated December 16, 1999, xxx
(B) Cigarettes Packed by Hand. - There shall be levied, assessed and collected on cigarettes packed by hand a tax of Forty centavos (P0.40) per pack.
(C) Cigarettes Packed by Machine. - There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below:[1] If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be Twelve (P12.00) per pack:Variants of existing brands of cigarettes which are introduced in the domestic market after the effectivity of R.A. No. 8240 shall be taxed under the highest classification of any variant of that brand.
[2] If the net retail price (excluding the excise tax and the value added tax) exceeds Six pesos and Fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack, the tax shall be Eight Pesos (P8.00) per pack.
[3] If the net retail price (excluding the excise tax and the value-added tax) is Five pesos (P5.00) but does not exceed Six Pesos and fifty centavos (P6.50) per pack, the tax shall be Five pesos (P5.00) per pack;
[4] If the net retail price (excluding the excise tax and the value-added tax] is below Five pesos (P5.00) per pack, the tax shall be One peso (P1.00) per pack;
The excise tax from any brand of cigarettes within the next three (3) years from the effectivity of R.A. No. 8240 shall not be lower than the tax, which is due from each brand on October 1, 1996. Provided, however, that in cases where the excise tax rate imposed in paragraphs (1), (2), (3) and (4) hereinabove will result in an increase in excise tax of more than seventy percent (70%), for a brand of cigarette, the increase shall take effect in two tranches: fifty percent (50%) of the increase shall be effective in 1997 and one hundred percent (100%) of the increase shall be effective in 1998.
Duly registered or existing brands of cigarettes or new brands thereof packed by machine shall only be packed in twenties.
The rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3) and (4) hereof, shall be increased by twelve percent (12%) on January 1, 2000.
New brands shall be classified according to their current net retail price.
For the above purpose, 'net retail price' shall mean the price at which the cigarette is sold on retail in twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and value-added tax. For brands which are marketed only outside Metro Manila, the 'net retail price' shall mean the price at which the cigarette is sold in five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax.
The classification of each brand of cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex "D," shall remain in force until revised by Congress.
'Variant of a brand' shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand and/or a different brand which carries the same logo or design of the existing brand.
RR No. 17-99 likewise provides in the last paragraph of Section 1 thereof, "that the new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines and fermented liquor shall not be lower than the excise tax that is actually being paid prior to January 1, 2000."
On 31 March 2005, petitioner filed a claim for tax credit or refund under Section 229 of the National Internal Revenue Code of 1997 (1997 NIRC) for erroneously or illegally collected specific taxes covering the period June to December 31, 2004 in the total amount of Php219,566,450.00.
On November 14, 2005, petitioner filed a Petition for Review which was raffled to the Former First Division of this Court.
Respondent in his Answer raised among others, as a Special and Affirmative Defense, that the amount of TWO HUNDRED NINETEEN MILLION FIVE HUNDRED SIXTY SIX THOUSAND FOUR HUNDRED FIFTY PESOS (Php219,566,450.00) being claimed by petitioner as alleged overpaid excise tax for the period covering 1 June to 31 December 2004, is not properly documented.
After trial on the merits, the Former First Division of this Court rendered the assailed Decision, dated April 30, 2009, which consistently ruled that RR 17-99 is contrary to law and that there is insufficiency of evidence on the claim for refund.
Petitioner filed its motion for reconsideration therefrom, and which was denied by the Former First Division on August 18, 2009.
Section 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition may include an application for a writ of preliminary injunction or other provisional remedies and shall raise only questions of law, which must be distinctly set forth. The petitioner may seek the same provisional remedies by verified motion filed in the same action or proceeding at any time during its pendency.In fact, the rule finds greater significance with respect to the findings of specialized courts such as the CTA, the conclusions of which are not lightly set aside because of the very nature of its functions which is dedicated exclusively to the resolution of tax problems and has accordingly developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority.[7][Emphasis and Underlining Supplied]
Section 3. Original document must be produced; exceptions. — When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases:In this case, petitioner did not even attempt to provide a plausible reason as to why the original copies of the documents presented could not be produced before the CTA or any reason that the application of any of the foregoing exceptions could be justified. Although petitioner presented one (1) witness to prove its claim, it appears that this witness was not even a signatory to any of the disputed documentary evidence.
(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; and
(d) When the original is a public record in the custody of a public officer or is recorded in a public office. (2a)
Petitioner posits that if their exhibits, specifically Exhibits "G", "G-1" to "G-7" and Exhibit "H", are admitted together with the testimony of their witness, the same would sufficiently prove their claim. A closer scrutiny of the records shows that petitioner did not file any offer of proof or tender of excluded evidence.It has been repeatedly ruled that where documentary evidence was rejected by the lower court and the offeror did not move that the same be attached to the record, the same cannot be considered by the appellate court,[16] as documents forming no part of proofs before the appellate court cannot be considered in disposing the case.[17] For the appellate court to consider as evidence, which was not offered by one party at all during the proceedings below, would infringe the constitutional right of the adverse party - in this case, the CIR, to due process of law.
Section 40, Rule 132 of the Rules of Court provides:Sec. 40. Tender of excluded evidence. - If documents or things offered in evidence are excluded by the court, the offeror may have the same attached to or made part of the record. If the evidence excluded is oral, the offeror may state for the record the name and other personal circumstances of the witness and the substance of the proposed testimony.The rule is that evidence formally offered by a party may be admitted or excluded by the court. If a party's offered documentary or object evidence is excluded, he may move or request that it be attached to form part of the records of the case. If the excluded evidence is oral, he may state for the record the name and other personal circumstances of the witness and the substance of the proposed testimony. These procedures are known as offer of proof or tender of excluded evidence and are made for purposes of appeal. If an adverse judgment is eventually rendered against the offeror, he may in his appeal assign as error the rejection of the excluded evidence.
It is of record that the denial of the excluded evidence was never assigned as an error in this appeal. Thus, this Court cannot pass upon nor consider the propriety of their denial. Moreover, this Court cannot and should not consider the documentary and oral evidence presented which are not considered to be part of the records in the first place. Thus, Exhibits "G", "G- 1" to "G-7" and Exhibit "H", together with the testimony of petitioner's witness thereon, cannot be admitted and be given probative valuer.[15]
While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in the interest of justice was never intended to be a license for erring litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be invoked only in proper cases and under justifiable causes and circumstances. While litigation is not a game of technicalities, every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.[19]And, as stressed in the case of Daikoku Electronics Phils., Inc. v. Raza:[20][Emphases Supplied]
To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of substantive justice, x x x The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse, xxxIn this case, as explained above, petitioner utterly failed to not only comply with the basic procedural requirement of presenting only the original copies of its documentary evidence, but also to adhere to the requirement to properly make its offer of proof or tender of excluded evidence for the proper consideration of the appellate tribunal.
We must stress that the bare invocation of "the interest of substantial justice" line is not some magic wand that will automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled, let alone dismissed simply because their non-observance may have resulted in prejudice to a party's substantial rights. Utter disregard of the rules cannot be justly rationalized by harping on the policy of liberal construction.[21][Emphases Supplied]
xxx, the documentary exhibits are not sufficient to prove the amounts being claimed by petitioner as refund. Looking at Exhibit 'G,' the same is a mere summary of excise taxes paid by petitioner for ALL of its cigarette brands. This Court cannot verify the amounts of excise taxes paid for the brands in issue which are Champion M-100s, Camel Filter Kings, Winston Filter Kings, and Winston Lights.Clearly, it is petitioner's burden to prove the allegations made in its claim for refund. For a claim for refund to be granted, the manner in proving it must be in accordance with the prescribed rules of evidence. It would have been erroneous had the CTA En Banc relied on petitioner's own Excise Tax Refund Computation Summary or the unsatisfactory explanation of its lone witness to justify its claim for tax refund.
This Court cannot likewise rely solely on petitioner's Excise Tax Refund Computation Summary. The figures therein must be verified through other documentary evidence which this Court must look into and which petitioner failed to properly provide.[22][Emphases Supplied]