CIR v. United Salvage and Towage (Phils) Inc.

(2014)

BIR found the respondent liable for deficiency in income tax, VAT, DST for certain years between 1992-1998 arising out of
service contracts with petroleum service contractors. [the tax issue is not relevant]

Facts relevant to Evidence issue:

(1) Respondent filed a petition with the CTA claiming that the assessments are void and the right of the government
to assess and collect deficiency taxes from them has prescribed on account of the failure to issue a valid notice of
assessment within the applicable period
(2) CTA:
a. Held that the Preliminary Assessment Notices for deficiency EWT for taxable years 1994 and 1998 were
not formally offered; and shall not be considered as evidence, nor shall it rule on their validity.
b. Other assessments were declared void for failure to comply with Section 228 of NIRC. Only valid
assessment was for taxable year 1992, but the action on this assessment had already prescribed.
(3) BIR filed petition with SC to overturn CTA decision on the grounds (among others) that the technical rules of
evidence, particularly with respect to offer of evidence, should not apply to

ISSUE: WON the court should compel the CTA to consider the assessments that were not formally offered.

BIR argues:

(1) Technical rules of evidence do not apply to CTA.

(2) While it failed to formally offer the assessments, their existence and due execution were duly tackled during the
presentation of petitioners witnesses.
(3) Also, even though they were not marked as exhibits, their existence and value were properly established.

SC: Although technical rules of evidence do not strictly apply to the CTA, and have been relaxed in the past for other cases,
the circumstances in the current case do not warrant doing so. The parties should strictly comply with Rule 132.34.

(1) Cases before the CTA under its original jurisdiction are new cases. Must be proven in minute detail.
(2) Only that evidence which is formally offered will be considered by the court. Identification and marking alone are
INSUFFICIENT.
(3) Distinction between identification and offer (FOR DOCUMENTARY EVIDENCE):
a. Identification: Done during trial and accompanied by the marking of the evidence as an exhibit
b. Offer: is done only when the party rests its case and not before.
(4) The choice of whether or not to offer is with the parties. The court cannot motu proprio consider evidence that
was not formally offered.
(5) EXCEPTION TO THIS RULE (People v. Napat)
a. Where the same must have been duly identified by testimony and duly recorded; AND
b. Incorporated in the records
(6) There must be STRICT COMPLIANCE with these two requisites to qualify for the exception.
(7) ITC: Not duly identified by testimony and not incorporated in the records of the case.

Rationale for the Rule on formal offer of evidence: A formal offer is necessary because judges are mandated to rest their
findings of facts and their judgment only and strictly upon the evidence offered by the parties at the trial. Its function is to
enable the trial judge to know the purpose or purposes for which the 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 the trial court.