This remedial measure is intended to assist in the administration of justice by facilitating and expediting the preparation of cases for trial and guarding against undesirable surprise and delay; and it is designed to simplify procedure and obtain admissions of facts and evidence, thereby shortening costly and time-consuming trials. It is based on ancient principles of equity. More specifically, the purpose of the statute is to enable a party-litigant to discover material information which, by reason of an opponent's control, would otherwise be unavailable for judicial scrutiny, and to provide a convenient and summary method of obtaining material and competent documentary evidence in the custody or under the control of an adversary. It is a further extension of the concept of pretrial. 73 (Emphasis supplied)
Consistent with litigation's quest for truth, parties should welcome every opportunity in attaining this objective, such as acting in good faith to reveal material documents. 74
The scope of discovery must be liberally construed, as a general rule, to serve its purpose of providing the parties with essential information to reach an amicable settlement or to expedite trial. 75 "Courts, as arbiters and guardians of truth and justice, must not countenance any technical ploy to the detriment of an expeditious settlement of the case or to a fair, full and complete determination on its merits."76
Rule 27, Section 1 of the Rules of Court does not provide when the motion may be used. Hence, the allowance of a motion for production of document rests on the sound discretion of the court where the case is pending, with due regard to the rights of the parties and the demands of equity and justice. 77
In Eagleridge Development Corporation v. Cameron Granville 3 Asset Management, Inc., 78 we held that a motion for production of documents may be availed of even beyond the pre-trial stage, upon showing of good cause as required under Rule 27.79 We allowed the production of documents because the petitioner was able to show "good cause" and relevance of the documents sought to be produced, and the trial court had not yet rendered its judgment.
In this case, petitioner filed its Motion for Production of Documents after the Court of Tax Appeals Division had rendered its judgment. According to the Court of Tax Appeals Division, the documents sought to be produced were already discussed in the Commissioner's Memorandum dated October 21, 2010 and were already considered by the tax court when it rendered its Decision. 80 If petitioner believed that the evidence in the custody and control of respondent "would provide a better illumination of the outcome of the case," it should have sought their production at the earliest opportunity as it had been already aware of their existence.81 Petitioner's laxity is inexcusable and is a fatal omission.
Under these circumstances, there was indeed no further need for the production of documents and objects desired by petitioner. These pieces of evidence could have served no useful purpose. On the contrary, the production of those documents after judgment defeats the purpose of modes of discovery in expediting case preparation and shortening trials.
We find no reversible error on the part of the Court of Tax Appeals En Banc in affirming the Division's denial of petitioner's Motion for Production of Documents.
II
These consolidated cases involve the Tax Code provision defining new brand as opposed to variant of brand, as these two are treated differently for excise tax on fermented liquor.
Effective January 1, 1998, Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997, reproduced as Section 143 the provisions of Section 140 of the old Tax Code, as amended by Republic Act No. 8240, governing excise taxes on fermented liquor. Section 143 distinguishes a new brand from a variant of brand:
Sec. 143. Fermented Liquor. - There shall be levied, assessed and collected an excise tax on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar domestic fermented liquors in accordance with the following schedule:
(a) If the net retail price (excluding the excise tax and value-added tax) per liter of volume capacity is less than Fourteen pesos and fifty centavos (₱14.50), the tax shall be Six pesos and fifteen centavos (P6.15) per liter;
(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fourteen pesos and fifty centavos (P14.50) up to Twenty-two pesos (P22.00), the tax shall be Nine pesos and fifteen centavos (P9.15) per liter;
(c) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Twenty-two pesos (P22.00), the tax shall be Twelve pesos and fifteen centavos (Pl2.15) per liter.
Variants of existing brands which are introduced in the domestic market after the ejfectivity of Republic Act No. 8240 shall be taxed under the highest classification of any variant of that brand.
Fermented liquor which are brewed and sold at micro-breweries or small establishments such as pubs and restaurants shall be subject to the rate in paragraph (c) hereof. The excise tax from any brand of fermented liquor within the next three (3) years from the effectivity of Republic Act No. 8240 shall not be lower than the tax which was due from each brand on October 1, 1996. The rates of excise tax on fermented liquor under paragraphs (a), (b) and (c) hereof shall be increased by twelve percent (12%) on January 1, 2000. New brands shall he classified according to their current net retail price.
For the above purpose, 'net retail price' shall mean the price at which the fermented liquor is sold on retail in twenty (20) major supermarkets in Metro Manila (for brands of fermented liquor marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the 'net retail price' shall mean the price at which the fermented liquor 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 fermented liquor based on its average net retail price as of October 1, 1996, as set forth in Annex 'C,' shall remain in force until revised by Congress.
A 'variant of 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.
Every brewer or importer of fermented liquor shall, within thirty (30) days from the effectivity of R.A. No. 8240, and within the first five (5) days of every month thereafter, submit to the Commissioner a sworn statement of the volume of sales for each particular brand of fermented liquor sold at his establishment for the three-month period immediately preceding.
Any brewer or importer who, in violation of this Section, knowingly misdeclares or misrepresents in his or its sworn statement herein required any pertinent data or information shall be penalized by a summary cancellation or withdrawal of his or its permit to engage in business as brewer or importer of fermented liquor.
Any corporation, association or partnership liable for any of the acts or omissions in violation of this Section shall be fined treble the amount of deficiency taxes, surcharges and interest which may be assessed pursuant to this Section.
Any person liable for any of the acts or omissions prohibited under this Section shall be criminally liable and penalized under Section 254 of this Code. Any person who willfully aids or abets in the commission of any such act or omission shall be criminally liable in the same manner as the principal.
If the offender is not a citizen of the Philippines, he shall be deported / immediately after serving the sentence, without further proceedings for A deportation. (Emphasis supplied)
On January 1, 2005, Republic Act No. 933482 took effect, amending
Section 143 of the Tax Code to read:
Sec.143. Fermented Liquors. - There shall be levied, assessed and collected an excise tax on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar fermented liquors in accordance with the following schedule:
(a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is less than Fourteen pesos and fifty centavos (P14.50), the tax shall be Eight pesos and twenty-seven centavos (P8.27) per liter;
(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fourteen pesos and fifty centavos (P14.50) up to Twenty-two pesos (P22.00), the tax shall be Twelve pesos and thirty centavos (P12.30) per liter;
(c) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Twenty-two pesos (P22.00), the tax shall be Sixteen pesos and thirty-three centavos (₱16.33) per liter.
Variants of existing brands and variants of new brands which are introduced in the domestic market after the effectivity of this Act shall be taxed under the proper classification thereof based on their suggested net retail price: Provided, however, That such classification shall not, in any case, be lower than the highest classification of any variant of that brand.
A 'variant of a brand' shall refer to a brand on which a modifier is prefvced and/or suffvced to the root name of the brand.
Fermented liquors which are brewed and sold at micro-breweries or small establishments such as pubs and restaurants shall be subject to the rate in paragraph (c) hereof.
New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price.
'New brand' shall mean a brand registered after the date of effectivity of R.A. No. 8240.
'Suggested net retail price' shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported fermented liquor are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket to which a particular new brand of fermented liquor, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket which a particular new brand of fermented liquors shall be classified: Provided, however, That brands of fermented liquors introduced in the domestic market between January 1, 1997 and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress.
'Net retail price', as determined by the Bureau of Internal Revenue through a price survey to be conducted by the Bureau of Internal Revenue itself, or the National Statistics Office when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price at which the fermented liquor is sold on retail in at least twenty (20) major supermarkets in Metro Manila (for brands of fermented liquor marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed outside Metro Manila, the 'net retail price' shall mean the price at which the fermented liquor is sold in at least 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 fermented liquor based on its average net retail price as of October 1, 1996, as set forth in Annex 'C', including the classification of brands for the same products which, although not set forth in said Annex 'C', were registered and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the e/fectivity of this Act, shall remain in force until revised by Congress.
The rates of tax imposed under this Section shall be increased by eight percent (8%) every two years starting on January 1, 2007 until January 1, 2011.
Any downward reclassification of present categories, for tax purposes, of existing brands of fermented liquor duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited.
Every brewer or importer of fermented liquor shall, within thirty (30) days from the effectivity of this Act, and within the first five (5) days of every month thereafter, submit to the Commissioner a sworn statement of the volume of sales for each particular brand of fermented liquor sold at his establishment for the three-month period immediately preceding.
Any brewer or importer who, in violation of this Section, knowingly misdeclares or misrepresents in his or its sworn statement herein required any pertinent data or information shall be penalized by a summary cancellation or withdrawal of his or its permit to engage in business as brewer or importer of fermented liquor.
Any corporation, association or partnership liable for any of the acts or omissions in violation of this Section shall be fined treble the amount of deficiency taxes, surcharges and interest which may be assessed pursuant to this Section.
Any person liable for any of the acts or omissions prohibited under this Section shall be criminally liable and penalized under Section 254 of this Code. Any person who willfully aids or abets in the commission of any such act or omission shall be criminally liable in the same manner as the principal.
If the offender is not a citizen of the Philippines, he shall be deported immediately after serving the sentence, without further proceedings for deportation. (Emphasis supplied)
On December 19, 2012, Rep. Act No. 10351, otherwise known as the Sin Tax Law,83 was promulgated to further amend certain provisions on excise taxes on alcohol and tobacco products. Among the amendments to Section 143 were:
(1) Increase in the excise tax rates and transition from three (3)- tiered to two (2)-tiered tax rates starting January 1, 2014 until December 31, 2016; and to a single tax rate beginning January 1, 201 7, irrespective of the price levels at which the products were sold in the market;
(2) All fermented liquors existing in the market at the time of the effectivity of the Act shall be classified according to the net retail prices and the tax rates provided, based on the latest price survey of the fermented liquors conducted by the Bureau of Internal Revenue. However, any downward reclassification is prohibited;
(3) Fermented liquors introduced in the domestic market after the effectivity of the Act shall be initially tax-classified according to their suggested net retail prices until such time that their correct tax bracket is finally determined under a specified period; and
(4) The proper tax classification of fermented liquors, whether registered before or after the effectivity of the Act, shall be determined every two (2) years from the date of effectivity of the Act.