CTA Case No. 292 (Decision)

ftF.PlB l OF TJTJ'l; PlfiLIPPll'>RJ COUHl' Ul� 1 \ APPEAl-" MANILA U JOC, Y Cl.. , l t..l;. , Pet itioner , - versu . . (;. � 292 J. ent . X � - - ... - � --.. - 1 This 11 eal decisi n of r spond nt c llecto nternal R v nu !! ing ainst d nding fr p tition r her in , .. nil J ckey Club , lnc., pay cnt of t he sum f ?., � 27 defici ncy t ax , s ur ch r r;, penalty for the perio fro ov r 1950 to t J 1 19~ . incl sive. Th foll ing tari 1 fact!l 8l:' not di"'pUt d. titi ner r i n 1 or 1on o anizcd under u.r 1 s . uly uth ri% d nd lie ns t conduct horse r cin in th hilip in , in ccordenc ith t he provisi of th various laws , r gulat:ions and rules on hors r cing in th country. In rder t ive e ch hors t t p rticioat n in the r aces c dueted bv, p titionor an ov n chanc to 11in , t hey .r classifi d into gro ' d nding rience , 1Cight or iz , nd past �� on thei~ a as (a) � ov ton� - hors runn1n r cord. as foll fo.r t e first in an offici 1 r c ; (b) �p rdi .. g nes� - hor ses whi ch run in a � nouato� r ace bu~ . 151 I, Ito

� 292 - 2- ail to win f1r~t plac ; (c) enc dor � - horses which on ir t ploc in a -nov to� r ce or n a eert in n b r of tim sin �perdi ones� ac ; (d) "~ Cl sific do � - horae mich h va on first or aeeond or a cert in numb x f t1 s in v nc d r s� races. ora racing da s , t public place heir beta on th r lt of ors rae , and pureuan to ect on 19 of bllc ct No. , out f the wager u.nds 12-l/2.. th r f i et sid th c n t pers n , r ce track, r c ng club , ont ty con ucting the races � w c t, ounts f ort p y nt at o- riz o in, lace nd r� nd a ho n � I p rtl.CUl r p vi n ub ic ct .o. as d � � 193 � n Jun 22 , l 57. Th 1 n f th nt f und cti n t t � 1933 x d a f 1 , und r ce y r, sine t in Nov""..........,.... , 19 up to th pr � nt , peti t! n r h lde a � sp ci 1 nova o zac � . This r ce is so-called, b ca s th 152 ljf

o _s . - c ... . 1 � <... s r � 292 r f th novato horses r~g1ster6d for id r ace. niik in the ordin ry novato race , hav to pay, &id from th inscription ond decl rati n fe ~, not cr ~ 0 d l at d as re i tr - ion f e � It is not dioput d that t e ot 1 . o t coll etod as r gi tr tion fee , toget r t count xp :rt fund tak n n, o priv co r of petiti ner, i add t th five nd on h 1 p c: nt set sid. fr t total wager funds be n said ~ p ci l ncv to r e o constitu prize n y hich ~!11 b 1 id ng the winni g h r~ r i th t Gp ci 1 nov to r c: � . r 23 , 19!34 , r d nt 1 ct r of Int ': d r petiti nt of def ttOC) 2, 906. 7, urc r �� h.. d fie ency l' c:ult f d fe .ur f petit1 ner to retur t x purpo& ~ h unt ived by it in tic .f fr tl rs t r pa c ~ ting i t:h p- c1 1 nov .to r ce " for th p 1950 to ; t ..c..~..~., 1954. In pit of p tit1on bj c- ti ~ s , th c id d nd s fin lly x itor t by th 1espe dent oll ct r o Int mal ev nu on Jun 4 , 19~6, on th tho ry th t t e& r giGtr tio f for ed part f t e f r r �s gro& r cei t su ct to the a s nt x r ec on 260 of th Tax Cod � June '18 . 95 , pe iti e:r il d its pet �ti n for r vi with this Court. 153 lSi

D r'"I.Sl�etc~. .. tJo. 292 :jf <... Th pa rtie rai e no issue of f ct. Noithe.r is them th a i e�l corr ctne s of rer. end nt ' s sse s nt 1 ugn d by p titi ner. Th� only s - t lon to be rosolv d therefor � is m ther or not . the afor�s C~tid re�istr 'tion f ea eoll�cted for the ecial nc �ato races� f orm part of th gx ~s rc - eeipts of potJ ti ner subj ct to th 2J arnu e .. nt tax p:r s crib d by ~"'ection 2 of the at1onill In- ternal venu ode. tit1on r cot nds th t inc t1e afo en- tion d 10. ~r istrttion f e ft is d sti1 d to fc rt of the p riz ard d to the winning ho:rse � it s hould v n a t t u s1r~11 r in character to the h r of th t t 1 b ccruing to th ~in- nin hors ners pr cscrib d hy� ct$on lB, Ex cutive Order o. 3 , n found in ecti r.n 19 of cblic ct � as om nd d. ~d ince, 8CC~rding to pc ti- tioner. e id 5-1/2 share of he total b ts ac~ in tc inninq hoxs er d es not fo pe rt of it ro s �ec ipt � th n the 10. 00 �r gistra. ti"n f ould lik ic be tx ated as not forming p rt of t rcss receipt � �Gro r ceipt~� for the pu ose cf to amu a- nt tax i~>os d under ~ection 260 of the t�ational Internal Aev nue Code , w s inte r t y th cr ... tary of Justic � r l ] Oct t r ~ � 1941, thu&J X X X � itn re oct to rae: tr ck t � te 'gros s r ceipts � u~ed in Section 2 . of th N t 1ona1 I nter nal R v nue Cod s ould be

DEC! ICN - � .. � \.;t �.E NO. 292 construed as the total a ount of caah re eived by t e r ce tr ck oper tor es its earning ithout including any am unt of money tha~ d es not o to its nd as it4j, property. The te nbov cnti onod has been h 1d as aynGnym us to 'gross art v. hirty a rnin ' (City of o rt 1 St . r s town <..o. , 122 l~ . 'I. Supp. 344, 346). It !O r.r:c ns th n- tire earnin s . receipt r t.e like, without any d duction fo~ xpens sir- eurr d (Webst r�a e nterna ional Dic- tion ry, p . 954; und 8. Wagnal!s, ' Di ction :ry of th tJ g i h L g , p . l O' ; se l o P ei ie Ga ~1 ctrie co. v. o ert , 67 c. 45 , 84 , 17 C 1. 1. Opinion Uo. 34~, s. 1941. � Th b v - qu t d o inion ~a nd r d in en- swer to t h qu.ry of the �anil Joclcy Club (n h ~�in pot tion r , na.la J ock Club . Inc. ) � d- dr os d to th� ~ecr t LY cf Finenco :h endorGed it t th cr t ry of Ju tic for r uling th r on. !.1 query eros fr the qu~ tion of :~hot r or not tl mu e t ta i ~o ed in ecti n ~60 of th ax Co houl b 1 v:.ed c: tle ~(distributed on tho Otn r f innin hors s of t 12-1/Z ' tot 1 gor f undc provid d in Sect io lE of c ti vc O.rd r ~� 3 � inion to. 345 , s . 1941, of t1 s ~x t ry of Juatic f~ndn affir ti on in in! on r o. "49 . � 195:2, ich , in ans' er to t r qu t wh .tb r Opi - nion No. 135. � l9e , tcok r t1 n i - nion No. 245 , � 1941, in th inte r taticn of t tero gross r ceipta ~ u~ed in cc ion 2o of t h Tax Cod , r ad o~ X X X X 1_55

o. 292 \ in:i n Nn. 34!\, � 1 41 , 1 furth re - affir1red in < :inJ.on No . 340. � � 195~, hich r it r t d th vi ~ that thero w a no conflict bot ee th two l:revi us "1nnI s. ( thus r.ec ipts"', for pu os & f the mus nt t x i cs bl und r ect!on 2 n ously and consist ntly intexprete by th ecr t ry of .Jvstice to eircu crib nly "th to al moun of ca~h r e iv d by the r c~ tr ck it m- ing ' ithout i ncl~ding any unt of mon y th t d s not go to t fund a its oro erty. � Th..i .cnt :rpr tativ ' �1 ing i~ ntitl d tc c n idtU"Ahle ~ h - i is in v AW f t e f c ..h 1. 4l a articu r l i 0 "''ini n f h ch�e w offic r nnd l~g 1 dvi r of t.h g 'V~ men � hb id, ..int r te io - ' the AttOJ' y ..G"'n !' 1 and th leg 1 d artrnent of at ~ h v - no u Qn t tutory meanin , ~inc� th~ At~o rn and his cf ic r required by 1 to i su i i ons for the 156 �

157 ' I.Sf

-~ - w1th th� c r &p ndin contribution of petitionor , goe t ~h � ne... of the rin .inq hcrse s p i2e oney. This ~r gistzati n f e - is m! an~ r . ut , 1t 1� to b. not d thut t do s not u t ~t . y go to petitioner to boc ito pt perty. P tione~ !s er ly � co duit thro gh w id~ this �o-cal ic- t:reticn fe pass s to h in 1ng ho .) 1 0 ... s er\' t1 n is born out by th c.t at p t tl n r haa lts~ed :t.t in the liu l ty sid of itll balanc sheete. The c t t i a P ra 1 er tho it. � � loy co Oepos t ia o n m. nt cau� t could ro not be li&t~ undar any ot.a r ll. t~l1 � our mind. ~ 11 ting of t e & -c tration tion o. th natur nd e a ence of th nt � of 1tc 90ing t t fwnd t.y pro rty o O\m r of th 1inn1 hors s , not o petit io .vf ~o all pur- pose& and pr ct1ce , t is s -e ll d f is but a trust fund , w1t petJ.tion r trust e. For s culd p ti - t1oner pr ri te it or i ts ccnomi u nd ain r otherwise div ct it to ther t n th t to wh t h it i eontr ctu lly d stin d, tit n r il.~. incur liabilit to t J rs of th nnin ra � the e~ t ary of Juatl.c � whieh � .1rm d nd r - e!fi ed in � &equent i ion� , n ren er d in an- $Wel' to a que inv ~ving th (distributed a � 9 th owners of inning h rs a) o th 12-1/ tot 1 wager funds provtd d in cti n 1 o d r No. 158

/ '' / - D c..: I ���� C tt. 292 -9- 3 � T:h p rtincnt. rcviG1 n f ~ceticn 18 of Ex cut5 f ~ct.: Ji 1.9 f ublic ct to. � �hich l tter t tutory r.:- 'ir.ion \'n ub!Ot. tj .nlly en ctcd in ~ ct'on :t.9 of ~ ublic tct l' o . 1933. 'h n Congr $$ n sub""tan~ia lly ro--en c"" d ection of uUv Order �o. 2n int n 1 of public c t o � !'In 1 3.., , i w cq\.I<Jint wit t cutiv int rt>rctntion ( i n �o . 345. � 1941~ of the " c- rotary� of Ju~t c th t "gro fo n in ct o ')0 of h Ta Cod e. C n r t h c:r � i 1... dly h in r t ti r on auch r - n ct n {e e\.i ... ut r~ C tructi n, V l . '2 , P� of th f r oina , � c b li nd o In vi coil ct d .t n v t r co d l. t prt ct t th y cct en ~ 0 the 1 fro 1.... ! the u cl ion r rc d , ithout pre ot:nc n v � nn1la, ril 2 , 1 1": � Cjf!l ~ G Rfkj.L- )3 ~ 7,J- 0 ~J() 6 159