Fortune Tobacco Corporation filed a claim for a tax refund of over 200 million pesos for allegedly overpaid excise taxes from June to December 2004. The Commissioner of Internal Revenue denied the claim, arguing the records submitted were not properly documented. Both the Court of Tax Appeals division and en banc found Fortune Tobacco did not provide sufficient evidence to support its claim because the documents submitted were merely photocopies, violating evidentiary rules. The Supreme Court upheld this decision, stating Fortune Tobacco failed to follow proper procedures for submitting evidence and presenting its case.
Fortune Tobacco Corporation filed a claim for a tax refund of over 200 million pesos for allegedly overpaid excise taxes from June to December 2004. The Commissioner of Internal Revenue denied the claim, arguing the records submitted were not properly documented. Both the Court of Tax Appeals division and en banc found Fortune Tobacco did not provide sufficient evidence to support its claim because the documents submitted were merely photocopies, violating evidentiary rules. The Supreme Court upheld this decision, stating Fortune Tobacco failed to follow proper procedures for submitting evidence and presenting its case.
Fortune Tobacco Corporation filed a claim for a tax refund of over 200 million pesos for allegedly overpaid excise taxes from June to December 2004. The Commissioner of Internal Revenue denied the claim, arguing the records submitted were not properly documented. Both the Court of Tax Appeals division and en banc found Fortune Tobacco did not provide sufficient evidence to support its claim because the documents submitted were merely photocopies, violating evidentiary rules. The Supreme Court upheld this decision, stating Fortune Tobacco failed to follow proper procedures for submitting evidence and presenting its case.
FACTS: Fortune Tobacco Corporation is the manufacturer and producer of various cigarette brands which its tax duties on this products was put in to question. Since 1977, cigarettes were subject to ad valorem tax pursuant to our old Tax Code.When R.A. No. 8240 took effect on 1997, the ad valorem tax (AVT) system shifted to the specific tax system. To implement the provisions for a twelve percent (12%) increase of excise tax on cigarettes packed by machines by January 1, 2000, the Finance Secretary, upon recommendation of the CIR issued Revenue Regulations No. 17-99, dated December 16, 1999. On March 2005, Fortune Tobaccofiled a claim for tax credit and refund for erroneously or illegally collected specific taxes covering the period June to December 31, 2004 in the total amount of Php219,566,450.00. The CIRin his Answer raised an Affirmative Defense, that the said amount being claimed as alleged overpaid excise tax for the period covering 1 June to 31 December 2004, is not properly documented. On April 2009, the Former First Division of the CTA ruled that RR 17-99 is contrary to law, but there is insufficiency of evidence on the claim for refund. Fortune Tobacco elevated its claim to the CTA En Banc, found no cause even the Court should review Fortune Tobacco's evidence, the result would be the same. ISSUE: Whether the claim for refund by Fortune Tobacco, relying on the admissibility and the probative value of photocopied documents that allegedly contain a recording of petitioner's excise payments for the period covering June 1, 2004 up to December 31, 2004. HELD: Although both the CTA Division and the CTA En Banc provisionally admitted Fortune Tobaccos other documentary evidence, the same was refused due to its admission for being merely photocopies. The Rules of Court shall apply suppletorily in the proceeding before the tax tribunal. Hence, Section 3 of Rule 130 or the Best Evidence Rule will apply. In addition, Fortune Tobacco failed not only to 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. 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. 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. It also bears pointing out that at no point during the proceedings before the CTA En Banc and before this Court has Fortune Tobacco offered any plausible explanation as to why it failed to properly make an offer of proof or tender of excluded evidence. Instead, Fortune Tobacco harps on the fact that respondent CIR simply refused its claim for refund on the ground that RR 17-99 was a valid issuance. Thus, for its failure to seasonably avail of the proper remedy provided under Section 40, Rule 132 of the Rules of Court, Fortune Tobacco is precluded from doing so at this late stage of the case. Clearly, estoppel has already stepped in. Clearly, it is Fortune Tobacco'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. In addition, one who claims that he is entitled to a tax refund must not only claim that the transaction subject of tax is clearly and unequivocally not subject to tax - the amount of the claim must still be proven in the normal course,in accordance with the prescribed rules on evidence. After all, taxes are the lifeblood of the nation. The petition is denied.