G.R. No. 192023 , November 21, 2018
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. JERRY OCIER, RESPONDENT.

FACTS

The Bureau of Internal Revenue (BIR) issued Final Assessment Notices against respondent Jerry Ocier for deficiency Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) for 1999. The assessments stemmed from gains allegedly realized from over-the-counter sales of shares of stock of Best World Resources Corporation (BW Resources). Ocier protested, claiming the transfer of 4.9 million shares to Dante Tan was a loan, not a sale, and thus not subject to the taxes. The BIR denied his protest. Ocier filed a petition for review with the Court of Tax Appeals (CTA).
During trial, the BIR, through the petitioner Commissioner of Internal Revenue, presented evidence but failed to formally offer it despite multiple opportunities granted by the CTA. The CTA Second Division granted Ocier’s petition and cancelled the assessments, a decision affirmed by the CTA En Banc. The CTA En Banc held the BIR’s failure to formally offer its evidence was fatal, rendering such evidence incompetent for consideration.

ISSUE

Whether the CTA En Banc erred in affirming the cancellation of the deficiency tax assessments based solely on the BIR’s failure to formally offer its evidence, disregarding other evidence on record and the respondent’s own admissions.

RULING

The Supreme Court reversed the CTA En Banc and reinstated the assessments. The Court clarified that while the failure to formally offer evidence renders that specific evidence incompetent, the claimant’s cause is not automatically lost. Courts have a positive duty to consider all relevant and competent evidence on record, including the adverse party’s admissions, to resolve the ultimate issue.
Applying this principle, the Court examined the records and found Ocier’s own protest letters and submissions to the BIR contained judicial admissions that established the essential facts of the transaction. He admitted transferring the shares to Dante Tan and receiving substantial monetary consideration in return. These admissions constituted a “disposition” of the shares as defined under tax law, making the transaction subject to CGT, as it was not done through the stock exchange. The transaction, embodied in a document, was also properly subject to DST as an excise tax on the privilege to transfer rights. Consequently, Ocier’s tax liability was established by his own admissions, notwithstanding the BIR’s procedural lapse. The case was remanded to the CTA solely for the proper computation of the CGT liability.