Tax Digests for Sept 5

8/9/2019 Tax Digests for Sept 5

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C. F. CALANOC vs CIR

FACTS

To solicit and receive contributions for the orphans and destitute children of the

Child Welfare Workers Club of the Social Welfare Commission, CF Calanoc financed

and promoted a boxing and wrestling exhibition.

The CIR found that the gross sales generated by the exhibition 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 receipts, the CIR 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. Calanoc remitted toSWC P1,375.30 only.

Based on its findings, the CIR assessed Calanoc an amusement tax of P7,378.57.

DECISION: Expenses were excessive and not justified, notdeductible

Calanoc denied having received the stadium fee P1,000, which was not included in

the receipts. And that even if he did, he could not be made to pay almost seven

times the amount as amusement tax. Evidence was submitted, however, that the

said stadium fee of P1,000, was paid by the O-SO Beverages directly to the stadium

management for advertisement privileges on the day of the exhibition. Since thefee was paid by the concessionaire, Calanoc had no right to include the P1,000

stadium fee among the items of his expenses. It results, therefore, that P1,000 went

into Calanocs pocket unaccounted.

Furthermore petitioner admitted that he could not justify the other expenses, such

as those for police protection and gifts. He claims further that the accountant who

prepared the statement of receipts was already dead and could no longer be

questioned on the items contained in said statement.

Most of the items of expenditures contained in the statement submitted to the CIR

were either exorbitant or not supported by receipts. The payment of P461.65 for

police protection was illegal as it was a consideration given by Calanoc to the police

for the performance by the latter of the functions required of them to be rendered

by law. The expenditures of P460 for gifts, P1,880.05 for parties, and other items for

representation were rather excessive, considering that the purpose of the

exhibition was for a charitable cause.


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A th l f th J t i M 1944 h th M il t


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As the value of the Japanese war notes in May, 1944 when the Manila property wasbought, was 1 of the genuine Philippine Peso (Ballantyne Scale), and since thegain derived or loss sustained in the disposition of this property is to reckoned interms of Philippine Peso, the value of the Japanese war notes used in the purchaseof the property, must be reduced in terms of the genuine Philippine Peso todetermine the cost of acquisition. It, therefore, results that since the sum of

P66,000.00 in Japanese war notes in May, 1944 is equivalent to P5,500.00 inPhilippine currency (P66,000.00 divided by 12), the acquisition cost of the propertyin question is P66,000.00 plus P5,500.00 or P71,500.00 and that as the property wassold for P75,000.00 in 1951, the owners thereof Mariano and Felicidad Zamora

derived a capital gain of P3,500.00 or P1,750.00 each.

For the Quezon City property, the CTA was correct in giving credence to Zamorastestimony that the same was purchased in Philippine currency, because it is quiteincredible that real property with an assessed value of P46,910.00 should have

been sold in Japanese war notes with an equivalent value in Philippine currency ofonly P17,239.75. Thus, the gain derived from the sale is P15,361.75, after deductingfrom the selling price the cost of acquisition in the sum of P68,959.00 and the

expense of sale in the sum of P9,679.25.

IN VIEW HEREOF, the petition in each of the above-entitled cases is dismissed, and

the decision appealed from is affirmed, without special pronouncement as to costs.

Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala andMakalintal, JJ., concur.

Labrador and Barrera, JJ., took no part.


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Documents

Tax Digests for Sept 5