Commissioner of Internal Revenue versus Jerry Ocier

G.R. No. 197192, June 4, 2014

First Division, Bersamin, J.

Facts: Jerry Ocier received an assessment notice from the Bureau of Internal
Revenue (BIR) showing deficiencies in the Capital Gains Tax (CGT) and
Documentary Stamp Taxes (DST) for the year 1999. Such arose from his sale of
shares of stock of Best World Resources Corporation (BW Resources) thru over
the counter transactions. He was served notices of assessment, to which he
filed a protest, this denied by BIR, he was given notice of preliminary collection
of deficiency assessments. Ocier filed a petition for review to the CTA which
granted his petition, and was affirmed by the CTA En Banc. The Commissioner
of Internal Revenue now files for a petition for certiorari to the Supreme Court.
The CIR does not deny the failure to formally offer BIR's evidence against Ocier
but insists that such failure was not fatal considering that the the latter’s liability
for the CGT and DST for the transfer of the BW Resources shares had still been
established by the evidence on record.

Issue(s): Whether the cancellation of Assessment Notices of Deficiency was

proper.

Decision: No. Petition granted, CTA En Banc decision reversed and set aside.
The Court grants the petition based on Ocier’s admission at trial of transferring
the 4.9 million shares of BW resources to Tan. Such transaction is evidently, liable
for CGT and DST despite the non-presentation of PANs as evidence. The CGT
is imposed on the net capital gains realized during the taxable year from the
sale, barter, exchange or other disposition of shares of stock in a domestic
corporation, except shares sold, or disposed of through the stock exchange.
The term disposition, being neither defined nor qualified in Section 24(C), is
accorded its ordinary meaning, that is, any act of disposing, transferring to the
care or possession of another, or the parting with, alienation of, or giving up of
property. With Ocier himself not disputing (but actually admitting) the transfer
of the 4.9 million shares of BW Resources to Tan, such manner of disposition of
the shares was definitely within the contemplation of Section 24(C) of the NIRC.
The DST is an excise tax on the exercise of a right or privilege to transfer
obligations, rights or properties incident thereto. The transfer of the shares of
stocks is an exercise of the privilege to transfer a right and properties incident
thereto that is embodied in the stock loan agreement/trust declaration. The
Court notes that evidence must be formally offered for the court to consider
the same, something the CIR failed to do in presenting the PANs for evidence.
It is held in CIR v. United Salvage Towage that for evidence to be considered,
the same must be formally offered. An exemption to the requirement of formal
offer needs that (1) the same must have been duly identified by testimony duly
recorded; and (2) the same must have been incorporated in the records of
the case. Being an exception, the same may only be applied when there is
strict compliance with the requisites mentioned above; otherwise, the general
rule in Section 34 of Rule 132 of the Rules of Court should prevail.

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