Vladimir Karl A.

Tolentino
Taxation 1

AMUSEMENT TAX:

G.R. No. L-15922 November 29, 1961

C. F. CALANOC, vs.
THE COLLECTOR OF INTERNAL REVENUE

Facts:

By authority of a solicitation permit issued by the Social Welfare Commission

on November 24, 1949, whereby the petitioner was authorized to solicit and receive
contributions for the orphans and destitute children of the Child Welfare Workers
Club of the Commission, the petitioner on December 3, 1949 financed and promoted
a boxing and wrestling exhibition at the Rizal Memorial Stadium for the said
charitable purpose. Before the exhibition took place, the petitioner applied with the
respondent Collector of Internal Revenue for exemption from payment of the
amusement tax, relying on the provisions of Section 260 of the National Internal
Revenue Code, to which the respondent answered that the exemption depended
upon petitioner's compliance with the requirements of law. After the said exhibition,
the respondent, through his agent, investigated the tax case of the petitioner, and
from the statement of receipts which was furnished the agent, the latter found that
the gross sales amounted to P26,553.00; the expenditures incurred was P25,157.62;
and the net profit was only P1,375,30. Upon examination of the said receipts, the
agent also found the following items of expenditures: (a) P461.65 for police
protection; (b) P460.00 for gifts; (c) P1,880.05 for parties; and (d) several items for
representation. Out of the proceeds of the exhibition, only P1,375.38 was remitted to
the Social Welfare Commission for the said charitable purpose for which the permit
was issued. On November 24, 1951, the Collector of Internal Revenue demanded
from the petitioner payment of the amount of 533.00; the expenditures incurred was
P25,157.62; and the net profit was only P1,375,38. Upon examination of the
Secretary of Finance dated June 15, 1948, authorizing denial of application for
exemption from payment of amusement tax in cases where the net proceeds are not
substantial or where the expenses are exorbitant. Not satisfied with the assessment
imposed upon him, the petitioner brought this case to the Court of Tax Appeals for
review.

Issue: Whether or not the petitioner is liable for amusement tax.

Held. No, most of the items of expenditures contained in the statement submitted to
the agent are either exorbitant or not supported by receipts. We agree with the tax
court that the payment of P461.65 for police protection is illegal as it is a
consideration given by the petitioner to the police for the performance by the latter of
the functions required of them to be rendered by law. The expenditures of P460.00
for gifts, P1,880.05 for parties and other items for representation are rather
excessive, considering that the purpose of the exhibition was for a charitable cause.
G.R. No. L-10155 August 30, 1958

WONG and LEE vs. COLLECTOR OF INTERNAL REVENUE and COURT OF TAX
APPEALS

Facts:

During the period included between January, 1952, and December 31, 1953,
the petitioners Wong Lee Din and Juanito Lee Tim, doing business under the firm
name Wong & Lee, operated under a lease contract, the Riviera, "a night club
located at Dewey Boulevard, Pasay City owned by Mariano Zamora". At the
beginning of the year 1953, Ted Lewin promoted the coming of the Xavier Cugat
Orchestra for a series of performances at the International Fair Auditorium in Manila.
Acting as promoter and booking agent of the Cugat Orchestra, Ted Lewin entered
into a contract with Wong & Lee in the early part of February, 1953, whereby the
Cugat Orchestra, after its matinee and evening performances at the International
Fair Auditorium, was to play and hold floor shows at the Riviera for nineteen nights,
from February 13 to March 8, 1953. Under the contract, Ted Lewin was to get all the
cover charges collected from the patrons of the night club as his compensation for
sponsoring the playing and holding of floor shows by the Cugat Orchestra at the
Riviera, while petitioners were to get the proceeds derived from food and drinks
served within the club premises during said period.

Issue: whether the petitioners were liable to pay the amusement tax.

Held: Yes, the tax is imposed on the lessee or operator of night clubs, like the
Riviera, and not on any person to whom said gross receipts are destined and
eventually paid, like Ted Lewin in the present case. If the petitioners feel that they
have overpaid him by delivering to him all the receipts for the cover charges, without
deducting the amusement tax, that is their own concern and clearly not of the
Collector of Internal Revenue. Petitioners should have known from the beginning that
they were liable to pay this tax, and if they failed to consider and include it in their
contract with Ted Lewin, they have no one but themselves to blame for a supposedly
poor bargain.
G.R. No. 180235 January 20, 2016

ALTA VISTA GOLF AND COUNTRY CLUB vs.

THE CITY OF CEBU, HON. MAYOR TOMAS R. OSMEÑA, in his capacity as Mayor
of Cebu

Facts:

Petitioner is a non-stock and non-profit corporation operating a golf course in

Cebu City.On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted
City Tax: Ordinance No. LXIX, otherwise known as the "Revised Omnibus Tax:
Ordinance of the City of Cebu" (Revised Omnibus Tax: Ordinance). Section 42 of the
said tax ordinance on amusement tax was amended by City Tax Ordinance Nos.
LXXXII4 and LXXXIV5. In an Assessment Sheet7 dated August 6, 1998, prepared by
Cebu City Assessor Sandra I. Po, petitioner was originally assessed deficiency
business taxes, fees, and other charges for the year 1998, in the total amount of
P3,820,095.68, which included amusement tax on its golf course amounting to
P2,612,961.24 based on gross receipts of P13,064,806.20. 8

Issue: Whether or Not golf course is to be considered an amusement place.

Held: No, a golf course cannot be considered as an amusement place and is therefore
not subject to amusement tax. According to Section 140 of the Local Government Code
on amusement tax, the province may levy an amusement tax to be collected from the
proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing
stadia, and other places of amusement.

G.R. Nos. L-12928 and L-12932 March 31, 1962

THE PHILIPPINES INTERNATIONAL FAIR, INC., vs.

THE COLLECTOR OF INTERNAL REVENUE, ET AL.,

Facts:

The Philippines International Fair, Inc. — hereinafter referred to as the PIF —

is a duly organized domestic corporation, domiciled in the City of Manila. The
Philippine Government is its principal stockholder, controlling between 45% to 55%
of its capital stock. One of its main purposes, according to paragraph 2 of its Articles
of Incorporation, is the establishment, operation and management of international
fairs and expositions depicting the social, political, cultural and economic life, history,
progress and development of all countries, particularly the Philippines, and their
trade, political, and other relations with one another. During the months of February,
March, April and May, 1953, the PIF held in Manila an international fair and
exposition. Within its fair grounds were booths for the exhibition of the industrial and
agricultural products of the different provinces of the Philippines as well as of foreign
countries. Aside from side shows and various other attractions, the fair and
exposition had an amusement zone divided into four compounds, the biggest
attractions therein being the "Aquacade Show" and the "Xavier Cugat Show". In
addition, there was a large auditorium where balls and dances were held. Fees were
charged for admission to the exposition and amusement grounds and the
auditoriums.

Issue: Whether or not petitioner is exempt from amusement tax.

Held: No, following the literal interpretation as well as the spirit behind the enactment
of Republic Act No. 722, we hold, therefore, that the petitioner did not exempt from
payment of amusement taxes and surcharges in the amounts of P97,972.65 and
P24,493.16, respectively, on its receipts from admission tickets sold to the exposition
ground and auditorium during the months of March, April and May 1953.

G.R. Nos. L-13887 and L-13890 June 30, 1960

THE COLLECTOR (now Commissioner) OF INTERNAL REVENUE vs. MANILA

JOCKEY CLUB, INC.

Facts:

During the period November 1946 to October 1950, the Manila Jockey Club
paid amusement tax on its commission abovementioned but without including the 5
1/2% which, as stated, went to the Board on Races and to the owners of horses and
jockeys. Under the Internal Revenue Law, sec. 260, the amusement tax was payable
by the operator on its "gross receipts." Yet the Manila Jockey Club did not consider
as part of its "gross receipts" subject to amusement tax the amounts which it had to
deliver to the Board on Races, the horse owners and the jockeys. In this view it was
fully sustained by three opinions of the Secreatry of Justice rendered on three
different occasions (Opinion No. 345, series of 1941; Opinion No. 249, series of
1952 and Opinion No. 340, series of 1955) Notwithstanding the opinion of the legal
adviser of the Government, in October 1955, the Collector of Internal Revenue
demanded payment of amusement taxes amounting to P401,173.20 plus
P39,810.00, for the period of November 1946 to October 1950. After resisting the
demand and making appropriate representations, the Manila Jockey Club resorted to
the Court of Tax Appeals wherein it obtained judgment unanimously reversing the
Collector's stand in the matter.

Issue: Whether or not respondent is liable for amusement tax.

Held: No, the Government could not have meant to tax as gross receipt of the
Manila Jockey Club the 1/2 % which it directs same Club to turn over to the Board on
Races. The latter being a Government institution, there would be double taxation,
which should be avoided unless the statute admits of no other interpretation.