CTA Case No. 198 (Decision)

I J/ EPU I TC 0 TIIE PHILI~PIN~ COLRT OI� TAX APJ!EALS MANlLA TEFANI VD � DE r IDA , tit'on r , - versus - c � . J � 1.). l 8 ILVE 10 , as Coll ector of n � rnal ~ ev n ' spo dent. I SI Thi i an c ion cont sti h le ality o respondent oll ctor of In er al ve ue ' s c i i on as&e i 9 nd d ndin' fro th p titioner h rein the a ount of , 271 . 41, r pr s n n inclusiv of urcharge , lle g dly du on th r c ipts of n opera performa c e of "Ma an e B tterfly" , held un er h auspices of the f ation 1 Opera Co1 pany on Januar y 18, 1952 at th r E stern University u i- tori urn . It appears th t the petitioner her in, cstefani ldaba, is th mother of D lis y Aldaba ho pl y d the st llar rol of �Cio io-San" in the o ra p rfo .anc of � M dam Butterfly" shovn to the public on anu ry 18 , 1952 t th Far Eastern Univer ity udi- toriu. o This op ra pres ntation ~ar. hel d und r the auspic s of the � tion 1 Op ra o~pany for t he purpos of raising funds for th vic ti s of th Hioo - ibok vole no debac le. Th petition r herein suppli d th funds whic th ation 1 Op r omp ny us d in its pr nt t i on of s id op ra sho � It appearing t at tl.e afore 1 ntion d op r pr s ntation ~as sp n or d, nan 95

DICISI � 198 C.T � � - 2 .. nd p � ant y the t onal r omp ny, the r s- po n oll ctor o nt nal on Au u t 30, 1952 pu au nt to ec ion of ur t x Code as essed ag inat Ju n v er, pr nt of tion 1 Op ra p ny, the u of , 271.41 as us ment t x an urcharge on t h rec r ived from said oper pr - sentation. � Juan avi rt o v r, conte t d s id as s ent d clai ed re pon ibili ty for th p y- nt of t h a sement tax. Inst ad, he pointed to atefani a . d 1 aba a the p rson 11 bl on sa! tax by virtue of contr ct entered into on Deee r 17, 1951 y d � et e n said s. Aldab and nu 1 .Javier, er f t tion 1 Op r Compa y and n . of Ju l vi r, the comp ny's r sid nt. " resp. On the strength of aid c ntr ct ( xh. p. 15 I record) and upon th recommend tion of Senior gent 10ise an gustin , ho inve tigat the ca � t � Collector of Internal even e on rch 27, 195 ase ssed nd d an d � nt of nt t x reh 9 from th petition r h rein as fin ncie - - - - T2!O)_T..;ASLUR-C---�G-�----- The petitio r in h r na r to re pond nt on pril 15, 1953 enie responsibility for said a u e- ant tax and surc-harge. ver, on J 1y 13, 195 , .~ 96

- cD.Cr.I �I c s � 198 -- the petitioner offered s a co promiae ettle ent th ount of 500.00 and request d that the c s b re- ferr d t the Conf r nc taf f of the Bure u of Inter� nal v nu � The Conf r nc St ff r j ct d the off r of comprom se �3nd ffinned th d cisi n of th re pon- dent, hol n the t t oner i ble fo the am s nt t ax and surcharge .ention d arli r. The petition r then qu st d for reconsi ration and formal h ar- ing of th case b fore t e Conferenc taff hich ~as gr nted. In th form 1 h aring b for th Conf r nee ~t ff, etition clai � th 't r ly loan d �1 nu 1 Javi r, man ger o t e ational ra ..1p ny , th capital hich as us d bi t h sai omp ny in its pr ~ nt tion f th oper ~Mad m utterfly� �ith th under ta ding that the sam ould be r pai s ' soon as th company er with fun � P tition~r, throu h counsel fil d m or ndum i h th onf rene taff int ining th t sh s not for th . nt t x and surchar ss ssed ag in t h r ecau (1) h ad, ission fees to th o. era pres ntation of adam B� tt. fly" ere not tax )l_; (2) Granting th t the " r tc:.xa le, only ~ of the rec ipts should b taxed� (3) Pet i tioner is n ith r a propr � tor, 1 sse , nor op rator of a place of .use- m nt within th purvi. of section 260 of h x Co ; n (4) It th r s yon liabl fo th i is _.th atio 1 Op a om any hich sp s r d, rna- n 9 n pr s nt the op ra d e tterfly" sh � n the public on Jan ry 8~ 1952. Th onf r nc taff on Jul y 10, 19..-5 m d inding against th p titioner n h 1 r her� , 97 �:~....

ECISION - � 198 C. t.A. CAS liable for th a r entio ed u nt x nd aur.. ch r �� to er ll, 195 * t h pe ition r r ceiv d res n e ~ ollector o ntern 1 e enu infor n her o the adver th C nference t f and reiterating t e d a y- nt of the v entio � u&e t u.rch rg o thi petiti n f or r vi � Th p i �o r , 95 J 1 iled i he Court an urgen p tition to au p nd the collect on of the. t x i an o r to p t a on in doubl h oun o the tax a u~ht ~o e c llect d o gu rant p y ent of id li bility. n vie of th ccep anc y h r s onde Coll ctor of Internal . evenu of tn bond offered to answer for th tax liabilities hat i ht be determin d and th fact that the respondent agre d to hold in a eyanc the collec tion of th t x 1 tha ~ Court f ound it unnec s- aary tor solve t1e afore aid ur ent petition. t th h aring of t �s c ase on the merit , no wit- nes wer pr nted t o bolster th stand of eith r party. Inste d, they gre d to submit for th consi- e ation of t h Court, th record of the hearin be- fore the Conferenc taff of t he ure u of Internal Re- venue, and all the record of the ure u of Internal Revenu excl ively pertaining o t hi tax c a �� The partiea also submitted dditional docu entary evid ne e for the appraisal of th Court. We uld like to � phasiz th t the correctne s of re�pondent 's a aess nt has not b en � pug d by petitioner. Th only issue rai d by petmon r for 9

� 198 re l ut i on by this Court are s f ol lo sa- (l) Are the r ec t to t he per"" performane of � A da tterf l y� pre ented to th public on J nu ry 1 , 1952 t ax ble n r th provi ion f ection 200 f our Ta {2) In th vent they r t x bl , � uld t l y not ext � t n iit of ex- tion f ound in section 261 o the & o e? n (3) ho co ea ithin th purvie of "pro r or, lessee o~ operator f a pl ce of u :tent 1 con- lat d by s ction 260 of t h r , M ~. ste- f ania da. d 1 b or th , tion 1 a v 111pany? s to the fi t i tition r cl "ms that the admission f s to t op ra p rfor.3nc of ".a- d e But t rfly"are not t x 1 u.d r th revisions of s ctlon 260 of th T x \,;od inasu uch oaid pre- � nt tion ~as but on, singl 1 i ul t d perior anc or sbo ! ng. ' e not ee nny raeri to this cont n- ti n of the p tit oner he 1 involved � s no istinction. mus m nt tax co t pl t in s. c. ion 200 of the Tax Code is not a tax on th rigl-.t or rivil to hold or a show or p rfor1 anc � r it r is it a tax on th th at r r plac of a us ent. r t X in aid ection of our T X ~d is on i 0 d on th sion to th t r or plac of u ent. It i thee ore a t x on th ri ht or privil ge to nter t he places of amus ent n rated in said ction 260 of the Tax Code. hether or not ther as but 3 n 1 � iaolat d pr s nt tion or h th it is a regul rly run Ol' an ged ho ta d in a plac of us ent is not i~ 9 9 ..

� 198 - 6- a dete nativ factor in et inin th oblig t1on to coll t th tax. Th a e nt tax ill 1 ' y tt ach nd b coll ctibl when ver and herev r ad � - si n pric s are char ~ ed for th privil to nt r any l ac of .u e ent coming !thin th purvie thos nu r t d in s ction 260 of the Tax Cod J nles th r i n xpr ss st tutory exe ption on the .] s to the s cond i s e, petitioner clai that in th v nt th ad ission fe on aid op r in qu tion i axable , h b fits exe . tion 1- b s cti 261 of h 'ax o hou1 xt n to th op ra p rfor anc of anu ry 18 , 1952, c us th sa s h ld for th purpos i raisi f nd to h lp th hapless victi. s f th Hibo -~~bo vole disaste � Sect1on 261 of he Tax Cod a y. public ct o. 586 vh c petitio r invokes to be a li r d on d) find the for cit la cl r nd precise. - fore th 1 n nt of s ction 261 by Republic ct !o. 586� a is ion fe s to t at rs and other plac s of � re "Lota11y sfJm nt tax h n- ever th y r h 1d for and by r 1igious, charitabl , educ tion 1 or ci ntific ociation or institutionso ut otivat d p rh p by th gover ent' d sir for in- d rev nues nd a ar that so any ben fit or perfo nces 1ere eing h 1d for ps udo-r ligious, sci ntific, ch ritable or educational groups, our 1 gis�

cD-...,.,CTI. S lO - E � 198 �. . . .CA - 7- l tor dee e it wise t o 11 it t hi gr ant of ex ption. fter th mend ent intro uc d by public ct No. 586 , th� exe ption li it to 0 ly 0 h x ble r.c i pt ' a 0 ly 1 n th r is a s owin th t th x- i h ld hib!tion is c a i abl s c�a . n or insti ution. t h 1 i la u w can d due h t they d n n n 0 r tl p 0 0 v ry sho r p rfor anc t bj ct ~o h 'ch i fun -rai in for charitabl purpo � n of he r qui i 0 ful filled in or r tha his pro ision of law a.y be avail ed of is that th a ission e or charg ust be col! cted by or for and in b half of duly regis- tered c hari abl as oc~a io o i stitution. lt no enough th t h cr a 'zatio r a sociation 1as f r d f or charita bl p rpos s, it is also essential that such ssocia 1on or �ns it tion be h p tition r is admitt dly not._J ile i t ppear in the pr sent case that th funds re rais d for -che victim of the .Iibok- Hibo. disast r and i vcn 'through the S cial � lfar J d .1inis- =e r tion, it has ot / ben sho~n that the d ission s t he opera p �for ance in question hav ben coll ct d by or for and i. -1a f of 'duly r gister d charitable organization or institutio '� In smuch the enefi- ci ry for who nd in hos h lf th ad ission fees ere collected is not a duly r gist red c ritabl in- �titution or s ciatio, tle enefits of ction 261 of t Tax Co c n not b av il d of. It is an oft-re- peated princ ple in t xation that t x ex ptions .ust be 101

c.r�� E � 1 8 trictly eon tru g n t th p r on el i ing such ex t on. H nee, thi Court i constr-ain to hold th t th x ption foun in s ction 261 of t Tax c i not pplicabl to t c r. to th thir n la t issu ' p titi r c th�t i not h proprietor, le ee, o oper tor � an us nt pl c i hin th purvi of c ion 2 f X , '� at t 0 r ly � vane d t unds to inance the sho by way f a 1 to t h I a- tiona! Op ra 0 p ny thru ' nu 1 vi r i h th und r- �tandi tha th ould b r p i soon th co any i i a positio to do o; th t �t a th Na- tiona! Op r o, pany thich spon or d , a a , produc d nd pr ent d to th pu lie the op r pr ation "Ma- d e utt rfly" on January ! 8 1 52J d that t h Na... tiona Op ra Company, h r fore, i th ntity lia 1 to th a. s m nt tax and surchar sou ht o e col- lect d. n th oth r han ' th sp ndent m intai s th t y virtu of h contr ct, r s � (pp. 14 � � 15 BI r cords) nt �nto y n bet n p ti- r an a 1 1 tt r, ell as t e tio al er o pa y pr nt by j n Javier r loye of the p ition r. pond nt ur r ar u h t the ovin p er b hind th pr s ntation 0 aa p ra "t e utt rfly" s th p tition r, h r for sh i h per on i bl for the us - t tav- and surchar a G s d by h respon ent on the dmis ion r c ipts to th �. 1 ' 952. pr s ntation of nuary .. ~ 102

c.Cr.IAI.OCA� �- 198 The person liable under sad s c-tion 261 is the J "propri tor, 1 s ... � or op r or of the pl ce of Hance_, th crux of th pres nt qu tion is hether th p tition r 11 i hi the d finiti n of any of the term �~ploy d by th la. fin d by lexicograph rs right �--~ro--o~.-- i one ho ha th titl to anythi g, ther in pos e sion or not; an o ner so. �- times, peci lly in statutory con truction, in i r sen e, a erson h vin int r st 1 s than bsol t and excl iv right, the usufruct. present control an use, of prop rt ~ (Vol. II Merri m- eH t er 2d ed. p. 1 86 � or th t o;polfoc~~ h a o~er - t (1) in n eral 1 one ho s a) one ho ro- s; duces nd ff ct or do s so~ethingl an agent; ( b) one 1ho does appropri te pr act cal ope- sations, as in business{ art, or science; a professional or offi ci perform r of such ork. (II 1 rri~ - bster 2d ed. p. 1707)Q . e believe that he r pond nt fniled in his tt pt to k ~rs. tefania Vd � de ld b fall ithin th purvi 0 t t rms "proprietor, � e, or op r tor p c 0 lUSe n � .. espo ... l.nly r l i on th coru:r ct xhibit u3.. , r s- pon nt, pp. 1 nd 15 .l record } d t d D c er 17 19 1. ex cut d y t een the tition r_, nd tl lett r o n el to - h res nd t oll ctor ( xhi it 2" re Po 16 r cord ) a ell the in orse nt of ge ts .oi c. S n gu tin and � eji '4", r pondent pp. 18 & 19 8.. , r pond nt, P � 34 IR r ... record and xhi i ot i any ay pr nt extra- n dd cor ). espo neou n i ep nd n corrobor tive vid ce, t ti- oni l 0 doc nt ry, to upport his conclusion t t. 103

CI � 198 C. T . A. ... 10 .. �rh ving fore h p t ' ctivity, ' an g d, conduct� or c rried out r thro th presentation ad e utt rfly w the petiti ner, ploy r of nuel J vi r n Ju n Javier and/or the ational per Co - pany. It a$ he ho inane an uperin- t nded the aff ir a& i& evident fro th specific tion o th cont r � A h c - ta1ist of the &ho , sh , (the petit ioner) had ha n bsolute contr 1 over the pre&e ta ion t th extent th t it ~ &he ho n ed the mellnDera f the c:aat to e ire � xe co � n a ion hich she her elf &et n paid. or over, the t alanc of proc e & t e dvertise nt&i t urned to p tit i oner and the r c ipt r th & le o the i c e r li i receiv d by her. A 1 th a un i&ta ly sho t at t p itioner, �n far ' d e utt r f l y' is ooncern , ore than n operator1 i f ct, er r pr opriet or of the pr sentat i n. o servati n i s atr eng hened y t he ct he lleged lo n grant by peti t i oner to nuel Javi r a nev r & ured at 11. v1ously~ every centavo spent f or th v � tur a for her own account ju t as the pro it realized ther from inured to her nefits---an opera ion hich only or proprietor or operator could have uto" There re so a y vital lin & issin in the pre- sentation of r pond nt' case th t mak us ri u 1y doubt t correctnes of respond nt' d ci io � On h o h r hand, ever 1 ta lished facts convinc the Court th t the re ponde t h s erre in hi d cision holding the p titio er 1ia le for the use nt tax and surch r e in qu tion. he record sho , nd it h e n itted by res- pondent, oth through i � or nd nd th deci ion of the Conference t ff dated July 10, 1955, that the �preparation for the presentation of ' da e tterfly1 a not und rtaken by petitioner t by the atlon 1 per Co p ny. Thus - �x� ap ara th t 1 o all of t he �� tails ~ f t he rfo anc:e � t aken c:ar e - of y the tional Opera Co p ny, thru either ,, 10 4

NO. 198 ... 11 � anuel or Juan Javier. Thua,- the ap lica- ti n for solicitation p~r it granted th N tiona! 0 ra Co pany y the ocial elfare dministration was signe y nuel vi r; the orders for the printing of the ouvenir pro r $ 3nd ticke 1 herein aa indicated the erfo nee as under the spin or hip of t h ational Opera Co p ny, ere und r a n under t he n of said co pany y nu 1 J avierJ th contracts for the ervice of th ca t nd conductor f the perfor nc -were uel avi r� th contribu- tions to th ocial Welfare Adm!niatration a n th n of th Jational per pany. � (p. 8 ecision of the Confer nc J. d~t d July 10, 1955, p. 102 IR re- The profit and loaa at te ent of the ope~a . pre ent a- tion 1 like is certifi d to the ureau of Internal e nue by the atio 1 pera o any ai ne by Ju Javier. Furthermo e, a uel avi r in hia lett r to the uae u o Internal avenue { xhibi "2* reap ndent vi P� 16 BIR recorda) a �tte th t Juan J r o ed �the acore of the opera~ cost with furn iture and 0 h r thi 9 eed d on the st on � the d t set for the perfo nc � In fact, in dealin ith the public in g ner 1, d th g ver ent in articular, for nd after th pre entat ion, he tiona! 0 r Company app are to be the sole a r n ger nd produc er of th per- fo nee s 0 t o t e p blic on J anuary 18 , 1952. o here id the ational 0 r a Co pany gi even so ch a hint t h t ~~ so Estefania de lda as th financi r or capit l ist of the hol sho � ot ven in the ack- no g ent in the souvenir rogr ( xhibit " -1" p t � � 28 lR ecords) a th n of petitioner !r � stefani d A1dab ntion d. If it er tru that the petitioner a th oving apirit b hind th whole 105

D CIS! � 198 c.;. 1. � - 12 - sho 11 r 1y th Nati na1 Oper Comp ny ~ith it year of xp ri nc in opera pr sent tion co 1d not hav uch a laring omi sion, by ckno 1 d in th lp of p r ons ho ~ ntri ut d l s t n d "prim ov r" of th sho 1 ithout o uch word of thank or t}"le 1 tt r. . po ho ' v rv in i ts, th t ot ithstand~ in 11 the vid nc ho in th t the 'ationa1 Op r Co an n~ th one o pon~or o , ~ana d ~nd pr nted th o r p rfor.anc in qu tion , et th contr ct x- hibit "3" bet s nia de A1daba nd �.anuel Javier . de tion 1 C..o.pany t ru Juan and .:at uel J< vi r . r ploy . of th p tition ro Gr nt- in for th of rg thnt his ~ r o, still th contra t r fer ed to in a contract, b t ~ en pri- vat pries, only t hy '-r priv� ther t and bo 1d by i � In �act t1 r pond nt oll~ctor of nte n 1 R v n �ould have n uthority or a is to shift th burdens of t x tion fro on p rty ho is call d � pon 1 to ans er f r t xes to nother per on ho is ot & 1i le. If the p tition r nd r th c ntr ct, - x- hi it " , undertook to ans r for any uch t x 1ia- ility, th &a i a privat~ on b t e n p titioner a the ation 1 Op r Co.pany an do not aff ct t urd n of t xation provided by la � (~e L Insul r v � achuca -Tanco 3 Phil. 567) . 1 xistenc of a priv t contract should not �n ny .anne hif the urd n o r pon i ility of p y n tX p rson 1 1ly 1�a l to pay tn t x. ~ar i ca no y t l' .1 v � 11 i tra1 saction fr t r ch of do i an con tit tio 1 po r� -- th J06

- DEC! I c. T�� CA NO. 198 ... 13 - tion -- "by making contracts about them�. ( or11an v. Baltimore, 294 UoS. 240). petitioner rightly ob- serves, �sue practic ould ake it v ry ea~y for persons ho shoul b legally liable to pay the tax to evade payment by rely entering into a c ntract ith ny other per n not i financ;ial sition to p y the tax.� 11 the ct atabli h d n proven to hav been perfor d in pre enti g to h u li the opera per- for11a ce � ad e utterfly� s a ly ow that it was not ade by petition r nor c ul he e dee ed the �op r tor" o the ithi t purvie oi said . term a& cont pl ed y sect on 2 0 the x Codee "To operate-- eans o ana e or to con uct1 to act or to control or to anag authoritative! ; to operate .eans to direct or superintend--� (State vs. Thomas, low 276 .1. 619, 620 ci ed in 29 or i and Phr �� , Permanent edition, pp. 537, 5 .} Our conclu&ion is no obviouss ar of the opinion nd so hold that the etition r, io stefania da. de ldaba is not and should not be held liabl e for the u e ent tax and surcharge sought to be collected by the respondent. P ISE CONSIDE 1 E tefania Vd � d ldab is hereby declar d not li ble for the payment of the u e ent tax and aurch rge s�essed against her in the ount of t3.27lc41. The decision of the respon- dent Collector of Internal evenue should be as it is hereby odified in this res t, without prejudice to his taking the nece aary steps to enforc� the collection of the use ent tax nd surcharge due on th receipts of the opera perfor nee of � adam� Butt rfly" held on 107

IO � �r .A, E Oo 198 - 14 .. January 18, 1952, at th Far East rn Univ rsity Audi- orium fro1 h party or par ie prop ly liabl �h r o. The ond filed y ition �n this cas is y ca c 1 an d clar d ~� hou force a d ffec � vJitho pro o 0c � 1v'anila , ilipp�n uary � l 56. E .� 108