Case Summary (G.R. No. L-20060)
Background of the Case
- Petitioner Lilia de Jesus-Sevilla is a lawyer and businesswoman.
- In June 1954, she was introduced to Jes Cortes, a promoter of sports exhibitions.
- Jes Cortes proposed staging bullfight exhibitions in the Philippines, highlighting their potential financial success.
- Lilia agreed to raise the necessary working capital for the venture.
Contracts and Agreements
- On August 20, 1954, Lilia granted Jes Cortes a special power of attorney to contract with a Portuguese bullfight troupe.
- Jes Cortes signed a bullfight contract on August 26, 1954, in his own name.
- A "Contract of Management" was executed on October 10, 1954, designating Jes Cortes as the promoter and Lilia as the general manager.
- The contract stipulated that Lilia would arrange for working capital, guaranteeing repayment of any overdrafts.
Operational Involvement
- Lilia entered into contracts with Tabacalera for advertising rights and with Harry Lyons, Inc. for constructing the bullfight arena.
- Seven bullfight exhibitions were held between December 31, 1954, and February 6, 1955.
- Lilia managed the financial aspects, including bookkeeping, ticket sales, and personnel employment, providing a total working capital of P170,000.
Tax Assessment and Appeal
- The Collector of Internal Revenue assessed Lilia P111,056.84 as amusement tax and a P600 compromise penalty for failing to register her books of accounts.
- After her request for reconsideration was denied, Lilia appealed to the Court of Tax Appeals.
- The Court affirmed the tax assessment, except for the compromise penalty, leading to the current appeal.
Legal Issue
- The primary issue is whether Lilia can be considered the proprietor or operator of the bullfight exhibitions, thus liable for the amusement tax under Section 260 of the National Internal Revenue Code.
- Lilia argues that Jes Cortes should be deemed the operator, claiming her role was limited to financing.
Misplaced Reliance on Precedent
- Lilia cites the case of Blaquera vs. Aldaba, asserting that a financier cannot be held liable for amusement tax.
- The court finds this reliance misplaced, noting that Lilia's involvement extended beyond mere financing.
Active Participation in the Venture
- Lilia's role included granting authority to Jes Cortes, entering contracts, and managing the financial operations of the exhibitions.
- The court emphasizes that her participation was more than that of a passive financier, distinguishing her from the financier in the cited case.
Management Contract Interpretation
- Lilia argues that the Management Contract reversed their roles, making Jes Cortes the principal operator. ...continue reading