I. Republic of the Pbilippimis Court of Tax Appeals Quizoh City Amado Santiago, Jr. vs. The Commissioner of Internal Revenue

DECISION -

CTA CASE NO. 3220, ET AL.

NHODESTO RUBIO, Petitioner, - Yersua - C.7T.A. CASE NO. 3249

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

Ne ns Td ALFOHSN BORIA, Fetitioner, ~ versus — £7... CASE NO. 3250

THE COMMISSIONER OF INTERNAL

REVENUE , Resnpandent.

SS ea re — OM RBRETCHEN COJUANGBCHO, Fetitioaner, ~ YVOreisg - c.T.f% CASE NO. 3251

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

ca AVELING J. ANTONIO, Fetitioner, OV RSLNSR C.T.0%. CASE NO. 3282

THE COMMISSIONER OF INTERNAL

REVENUE , Reapondent.

SS i on ADELAIDA REYES, Petitioner, - Versus - C.T.A. CASE NO. 3283

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

SS a ae eee oe | Lbo

DELISTON -

CTA CASE NO. 3220, EF At.

PERNARDING REYES, Petitioner, Yersiiea oo

THE COMMISSIONER OF INTERNAL

REVENUE, Reepondent.

SE ee + Sf NARTINIAND ARAD, Fetitioner, — YReRrSRtisg -

THE COMMISSIONER OF INTERNAL

REVENUE, Reepondent.

wom TT TR DELFIN ALHEDA, Petitioner, ~ VeRrBUa =

THE COMMISSIONER OF INTERMAL

REVENUE, Respondent.

Meee eee ne COMRANG CALALANG, Fetittoner,

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

5 el a Ti ISIDRO RODRIGUEZ, Fetitioner, -~ Versus ~

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

Mom Loy C.F... CASE NO.

C.T.f. CASE NO.

c.7.f. CASE NO.

C.7.%. CASE NO.

C.T.A. CASE NO.

3234 3235 3234 3257 3258

DECTSIO --

CIA CASE NM. 327270, EF AL.

om A ~ MIGUEL J. ARROYO, Petitioner, — VPP Ste

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

a oc NICANOR DE GUZMAN, JR., Petitioner, — VePrRiuia om

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

MM a er rT) ROBERTO SARIDO, Fetitioner, VeEPRis om

THE COMMISSIONER OF TNTERNOL

REVENUE, Reanpondent.

Oe a eee OP ANTONTO RANOS, Petitioner, YePETER

THE COMMISSTONER OF INTERNAT

REVERIE, Reepnondent, Oe ny 2 VICENTE RAMIREZ, Fetitioner, - versus -

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

Momo TO wav C.T.A. CASE NO. 3259 C.F...

C.T.f.

C.T.Nn.

C.T.A.

CASE NO. 3262 CASE NO. 3263 CASE NO. 3264 CASE NO. 3265

DECISION --

CTN CASE NN. 32220, FET AL.

a ARISTED PUYAT, Fetitioner,

MRR GER

THE COMMISSIONER OF INTERNAT. REVENUE , Respondent.

Nee NE ay ay ENIL IO FBPINOSNA, Petitioner, Verses -

THE COMMISSIONER OF INTERNAL

REVEMIE, Resepondent.

a ESTRELLA FRANCISCO, Fetitioner,

— VRP SBUS

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

ue a rr a ew 7 Chu Suk YING, Fetitioner, “VRP

THE COMMISSTONER OF INTERNAL

REVENUE, Rerpondont.

Oy a ee Cee eo we) at if ELIAS COSCOLLUELA, Fetitioner, ~ yersus -

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

See em La C.7T.N. CASE NO. 3266 C.T.A. CASE NO. 3267 C.T.A. CASE NOG.

c.T.A. CASE NO.

C.T.A. CASE NO.

3268 3249 3270

DECISTON -

CTA CASE NO. 2220, ET AL.

& - LETICIN DOMINGO, Petitioner, - Yersusa — C.T-A. CASE NO. 3271

THE COMMISSIONER OF INTERNAL

REVENUE, Resnondent, ae C-J YULO ® SONS, INT., Petitioner, OVP RL e.T.%. CASE NQ. 3272

JUE COMMISSIONER OF INTERNAL

REVENUE , Respandent.

a JANES CHIONGRIAN, Petitioner, OVER ERLE om C.T.f\.

THE COMMISSIONER OF TNTERNAL, REVENUE, Respondent.

M »

DOLORES POPLETE, Petitioner, — VRP EBUIG no C.T.f.

THE COMMISSIONER OF INTERNAL

REVENUE , Respondent .

5 eo a 7 ENULI0 SALONA, Petitioner, - versus - C.T.A.

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

yom ae TT RT eM wae CASE NO. 3273 CASE NN. 3274 CASE NO. 3275

DECISTONM --

CTA CASE NO. 3220, ET AL.

ASTERIO FAVIS, Fetitioaner, ~~ VRAIS C.T.8. CASE NQ. 3276

THE COMMISSIONER OF INTERNAT

REVENUE, Reepondernt.

Mom Hin. CONSUELO FUYAT, Petitioner, VRP Sha Cc.T.f. CASE NO.

THE COMMIESSTONER OF INTERKAL

REVENUE, Respondent.

i a eT) ANTONTLO FLORETNDD, Fetitioner, VeEPrRum C.T.A. CASE NO.

THE COMMISSTOHER OF TNTERNAL

REVEMUE , Responnrent .

a a a S| DELFIN CERRER, Petitioner, VETPORULER oo c.1.f% CASE NN.

THE COMMTSSTONER GF INTERTIAL

REVENUE .

Respondent.

SY an me 4s FERNANDD CARRASCOSO, Fetitioner, ~ versus — c.T.f. CASE NO.

THE COMMISSIONER OF INTERNAL

REVENUE , Respondent.

Moree mem Lio 3277 3284 3285 3286

DECISION -

CIN CASE NO. 3220, ET AL.

> FO

CIRILO CINCO, Fetitioner, ~ Yersus - C.7T.4. CASE NO. 32A7

THE COMMISSTONER OF TNTERNAL

REVENUE, Responrtent.

Mm EF* ANTONIO J. ARAHETA, Fetitianer, VPPBUS ©.7.A. CASE NO. 3788

THE COMMISSIONER OF INTERNAL

REVENUE, Reanandent.

So V1 ANHTIE’R FARM, INC., Fetittaner, ~~ Yr Rts c.T.f. CASE NO. 3289

THE COMMISSIONER OF INTERNAT

REVENUE, Respondent, i a ee nT FRANELIN RANHOS, Fetitdtaner.

YRereairs 3 -T.A. CASE NO. 3290

TRE COMMISSTOMER OF INTERKNAL

REVENUE , Respondent.

a ENRIQUE COJUANGCO, Petitioner, ~ versus — C.7.4. CASE NO. 3291

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

a a a i a 7 DECISTON CTA CONSE NO. 32270, ET AL.

9 JOSE FERHANDEZ, Petitioner.

VERRIER m C.T.A. CASE NO. 3292

THE COMMISSIONER OF INTERNAL

REVEMUE, Reaponcdent.

Me wee RODALEO FORNENTO, Petitioner, VeErSug C.T.A. CASE NO. 3293

THE COMMISSIONER OF TNTERNAL

REVEMIF, Reapoandentk.

Mowe eee HACARIAQ ASISTIO, SER., Fetitioner, VER OREUES oo C.T.A. CASE NO. 3294

THE COMMISSTONER OF INTERNAL

REVEMUE , Reeapondank.

Moe te ene tee RESTITUTO RAYHUNDO, Fetitioner, VEY RUS C.7-8& CASE NO. 3295

THE COMMISSTOHER OF INTERNAL

REVENUE, Rieenondent.

eT JOSE COJTIANGCO, Petitioner, ~ versus ~ C.T.A. CASE NO. 3296

THE CONMISSIONER OF INTERNAL

REVENUE, Respondent.

Mom Lg

DECISION —-

CTA CASE NO. 32270, ET AL.

10 PEDRO COJIUANGCH, Petitioner, YRS C.T.A. CASE NO. 3297

THE COMMISSTONER OF INTERNAL

REVENUE , Fiernpondent.

HONEYECON STUD FART, TNC., Fetibtioner.

VRPSua oo C.T.0. CASE NO. 3298

THE CAMINISSIONER OF TNTERNAL

REVENUE, Reapondernt.

ALEJANDRO FLORENTIOO, Petitioner, WRU on C.T.f. CASE NO. 3299

THE COMMITSSTONER OF INTERNAL

REVENUE , Reepoandeont.

Oa er wt au ad FEDERICO GON7OLES, Petitioner, VE SEER C.T.A. CASE NO. 3300 THE COMMISSIONER OF TNTERNAL. REVENUE, Reenoandenk .

~ 4H

ROGELIO GONZALES, Fetitioner, -~ versus — C.T.4. CASE NO. 3301

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

MoM Léu

DECTSTON --

CTA CASE NO. 3220, ET AL.

3 HIGUEL GOCOLAY, Febttioner, VeEBP SUIS

THE COMMISSIONER OF TINTERKHAL

REVENUE, Respondent.

re 2) ras REYNALDO GBONZALES, Petitioner,

YEY GAS

THE COMMISSIONER OF INTERNAL

REVENUE , Reepondeant, BE cnet nt wee E FELICIONO GUCE, SR... Petitioner,

VEN SLES

THE CONMISSTOHNER OF INTERNAL

REVENUE , Reapondent .

TERESITA GCE, Pobibtioner, Wer BEL EE

THE COMMISSIONER OF THTERAL

REVENUE, Roependent.

JUAN DE LEON, Fetittoner, VeEPEUS

THE COMMISSIONER OF INTERNAL

REVENUE , Respondent.

C.7T.A. CASE NO. 3302 C.T.9. CASE NO. 3303 .7.A. CASE NO. 3304 C.1T.%. CASE NO. 3305 C.T.A. CASE NO. 3306 DECTSTOT CTA CASE NO. 2220, FET A.

1?

Woe VICTOR TAN TOC], Petitioner, oO EEL om C.7T.A. CASE NO. 3310

THE COMMISSIONER DOF INTERNAL

REVENUE, Respondent.

Smee ee ~ > ANDRES SORIANO, IR., Petitioner, VRP EUR c.T.A CASE NO. 3341

THE CONMNNISSIONER OF INTERNAL

REVENUE , Respondent.

al REGING SINGSOM, Petitioner.

VRIOELER oo C.1T.f%% CASE NO. 3312

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

Hin. TERESA TRINIDAD, Fetibhioner.

YR oo C.7T.A. CASE NO. 3313

THE COMMISSIONER OF INTERNAL

REVENUE , FReenondernk .

Ce cry eee ts wee NE 1 ERNESTO TEQrNCO, Fetitioner, ~ Versium - C.7.f. CASE NO. 3314

THE COMMISSIONER OF INTERNAL

REVENUE , Respondent.

Live

NEL ISTOM -

CTA CASE NO. 3220, ET A.

AUGUSTO SANTOS, Petitioner.

ORES C.T.f. CASE NO. 3315

THE COMMISSIONER OF INTERNAL

REVENUE , Responcent, bas JOAQUIN YUSECO, Petitioner, MRP ESULER om C.T.0%. CASE NO. 3314

THE COMNISSTONER OF TNTERHAL

REVENUE , Respondent.

Or a a a a a 7 CARLOS VICEHTE.

Petitioner, yapeus = C.1-A. CASE NO. 3317

THE COMMISSIONER OF TMTERKMAL

REVENUE , Reenpondent.

ce JAINE VERGARA, FPotitionrr, WT LER om C.-T... CASE HO. 3318

TRE COMMISSIONER OF INTERNAL

REVENUE , Feaenondent., we ee ee, 2 RICARDO SILVERTIO, JR., Fetitioner, ~ Versus €.T.A. CASE NO. 32319

THE COMMISSIONER OF INTERNAL

REVENUE, Fesnpondent.

ee“ “nn DECISTON CTA CASE MO. F220, ET AL.

14 ANTONTA TRINIDAD, Fetitioner, Waod gate oe C.T-A. CASE NO. 3320 THE COMMISSTONER OF INTERNAL.

REVEMUE , Reenondent.

5 at JOSEPINGA MILLAR, Fetitioaner.

— VYerSUSB C.T.A. CASE NO. 3321

THE COMMISSIONER OF TINTERHAL

REVENUE, Respondent, 3 eee wees Ss CECILIO NENDDZA, Petitioner, “YEP GLU oo C.T.A. CASE NO. 3322

THE COMMISSTONER OF INTERNAL

REVENUE, Fee poncdernt,.

yt a en ny, NARCTISO NORALES, Petittoner., SPRUCE ne C.T.A. CASE NO. 33223

THE COMMISSTOHMER OF THTFERIAL

REVEHUE , Reepondent.

Ne eee eee tee rey mee OHAADO SANTIAGO, JR., Petitioner, ~ VerSUB - C.T.A. CASE NO. 3324

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

we Soa ro ©) Pad jou

DELUSION --

CIA CASE NO. 322270, ET AL.

as JOSE SANTOS, Petittoner, VRP sts

THE COMMISSTONER OF TNIERNAL

REVENUE , Respondent.

ao a e TERESA SOAULOG, Fetitioner.

VET BLIE

THE COMMISSIONER OF THITERHAL

REVENUE, Reaepondont.

ut ee Fee a ew] ay oad SOMTA ISLETA, Petitioner, WRITE LEE om

THE COMMISSIONER OF INTERNAL

REVENUE, Reenandent.

SE eae woe NICANOR JACTINION LIT, Petitioner.

VR ELS

THE COMMISSIONER OF TNTERHOAL. REVENUE, Respondent.

RE ee a a ce GERARDO JACOR, Fetitiaoner, — Verses om

THE COMMISSIONER OF INTERNAL

REVENUE , Respondent.

SS So eT} C.7.8. CASE NO. 3325 C.7T-N. CASE NO. 3326 C.T.A. CASE NO. 3327 C.7.f CASE NO. 3328 C.T.A. CASE NO. 3329

DEL TST

CTA CASE NO. 3220, ET Mt...

14 JUAN JALAMDONT, Petitioner, WIRE ERLE oo C.T.A. CASE NO. 3330

THE CONMISS TONER OF TNTERNAL

REVENUE, Respondent.

ANTOANTO HARTIN, Petitioner, VEU C.T.%. CASE NO. S331

THE COMMESSTONER OF TATERMAL

REVEMUE , Pre portent « PAHO OCAMPO, Pettbhioner, WMP ELE C.T.AW. CAKE NO. 3332

THE COPE RG TER FF TM PERNAL

REVEVEIF , Pree pondent, Ne eee an ee re an ern - 4 a at LORENZO PORIA, Petitioner, NERY CSE EER fT... CASE NO. 3333

THE COMNMIGSLONER OF INTERNAL

REVENUE , Reanondent.

Mo a RICARDO PARREND, Petitioner, ~~ VerBUB C.7.8. CASE NO. 3334

THE COMMISSIONER OF INTERNAL

REVENUE , Respondent.

LG

DECISTOM -

CTA CASE NO. 2220, ET AL.

DAHTEL PATERNO, Fetitioner , VERROEREUER om

THE COMMISSIONER OF INTERNAL

REVENUE, Reeapmicent.

ee

M M

CHARTTO LUZURIAGBA, Fetitioner,

YRI SUG 7

THE CONMITSSTOHER OF TNTERNAT

REVENUE, Respondent.

ue ene ee ee oat SAMUEL SHARRUEF , Petitioner, VeP FL oo

THE COMMISS TONER OF INTERMAL

REVENUE, Reapondeank.

a a ee oa ANTONIA LLORA, Fetitioner, VEPreem os

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

5 i eT.

OSCAR LAPID, Petitioner, -~ versus -

THE COMMISSIONER QF INTERNAL

REVENUE , Respondent.

(eT L&o c.T.%. CASE NO.

C.T.A, CASE NO.

C.T.A. CASE NO.

C.7T.N%. CASE NO.

C.T.A. CASE NO.

3335 3336 3337 3338 3339 DECISTEnt -- CTA CASE NO. 32290, EF At.

1a - DALTON KING, Petitioner, VRE SEIPR C.T.A. CASE NO. F340

THE COUNESSIONER OF TNIERNAL

REVENUE , Respondent.

Spo ee a ae TT PEDRO NEDALLA, Fetitionor, Vereus — C.T.A. CASE NN, 3341 THE COMMISSIONER OF INTERN, REVENUE, Respondent, or weet = ~ 4 Pas pay NIEVES NOREND, Petitioner, ~ VEEL C.T.f. CASE NO. 3342

THE COMMISSLONER OF INTERNAL

REVENUE , Respondent.

a a a Lf CIRILLO SANTIAGO, Petitioner, WEL = C.T.f. CASE NO. 3343

THE CAMAISSTONER QF INTERNAL

REVEMUJE , Recpondent.

Ore a ?

RONALD ALLAN POE, Petitioner, ~ versus - C.T.4. CASE NO. 3344

THE COMMISSIONER OF INTERNAL

REVENUE, Respondent.

BOY LS'x

DECISVOM --

CTA CASE NO. 2220, ET AL.

AD w> F2 x boos 3 x mo fm!

These cases cover a claim for tax refund or tax credit of LOK “tas on winnings" under Section 269 Of the National Tnternal Revenue Code withheld by aforesaid racing clubs acting as withholding Agents and collected from petitioner for the years AD79 and LAO, The petitioners arsailed the validity and constitutionality of aforesaid Section 269 of the Tan Code, Seekbion 2O9 of the Tas Code provides as follawess SECTION Rae. Jax on. winnings. = Every person who wins do hoarse races ar Jai-Alead shall pay ai tax equivalent to tern percent of his winnings or “divideande", the tax toa he bared on the actual ooameuayt paid to him for every winning ticket after dreducting the cort of ticket. The tax herein prescribed ehal) he deducted from the “dividends” corresponding toa mach winning ticket and wittheld by the aperatear, manager. or person ain charge of the horse races or Jati-Alat hefore paying the "dividends" to the person entitied thereto. The same tax shall be collected fram owners of winning race horses at the same time and in the same manner above, The operator, manager. or person in charge of horse races of Jai-fAlai, shall, within twenty days from the date the tax was deducted and withheld in accordance with the first paragraph hereof, file a L&u DECTSION CTA CASE NO. 2220, ET A.

Ry true ane carrect return rith the Comminestioner of Tnternal Revemnee in the manner ar form to hr preeceribed by the Sreretary of Finance, and pay within the mame periad the total amount of tax so deducted and withheld.

Tf the tax thereim provided is net paid within the same pertod preecribed above, or aim case of willful neglect to file the return within the period preseribed herein, or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has heen made on the hasis of the return before the discovery of the falsity or fraved, the corresponding surcharges provided in Section 246A of this Code.

Sometime oan 2 April 197801, about FO written claims were filed with the office of the respondent Commissioner of Enternal Revenue hy the racehorse gunerca at the two racing clubs, mamely, the Manila Jockey Club at Felix Huertas Gt., Sta. Cruz, Manila and the Thilippine Racing Club at the Sta. Ana racetrack at ALP. Reyes St., Maketi, Metro Manila, for the refund or tax oeredit of the 104% "tax an winnings” toposed under Section 269 of the National Internal Revenue Code withheld by the aforesaid racing clubs acting as withholding agents of the Bureau af Internal Revenue from the prizes awarded to their (racehorse awners) racehorses on account of the horse races conducted in said clubs.

Tn order to beat as well as toll the statute LGU

DECISION -

CTA CASE NO. 32270, ET Al.

of limitations for the claims for refund or tax credit, petitioners, similtaneously with the filing of the claims for refund on 2 April 1981, filed with this Honorable Tan Court, the 9O petitions for revievr, dinelusive af the case of Amado Santiago, Je. ve. Commiesianer of Internal Revenue, CTA Case Ho. BPR, Ol’ the petitions have uniformly set forth common factual allegations and raises the Fame question of Yaw in assailing the validity and conskitubtionality of the afnmresaid Section 769 of the Tax Code.

Tn Chie course, thes respandent filed his answers to the petitions.

Petitioners later amended their petitions but only be clarify that the withheld taxes had been consolidated by the racing clubs referred to. and remitted oto the qnvernment din the name of the withholding agents racing clubs and nat in the individual pames of the various racehorse owners, YY consolidated trial was then held under the banner of the lead case Amada Santiago, Jr. vs. Cammissioner of Internal Revenue, CTA Case Na. 32220 with the dimplicit understanding that only one decision need be rendered to cover all these 90 petitions.

Fetitioner Amado Santiago. Jr. is the owner of racehorses which participates in horse racing 13:

DELTISION CTA CASE MOQ. 3220, FT Ni.

oF occasionally held at the racetracks of the Manila Jockey Club and Sta. Ana Racetracks under their respeckive franchises and pursuant ta Republic Act BOD and Presidential Yecree 420 creating the Philippine Racing Commissian.

As heretofore stated, for the years 1779 and 19789, the tokalo amont of FPR.A72.635 was allegedly deducted and withheld from petitioner as Lon “tan on winnings”, under Section P4? of the Tax Code, which amaunt was remitted and paid by petitioner’s withholding agent, Manila Jackey Club, Ine. and the Philippine Racing Cluh, Tne. to respondent Cammiseioner of Toternal Revenue.

On Apra’ 2, APB, petitioner filed a written claim for the refund/eredit of said 10% "tax oan winnings” with respandent and, simultaneously. a petition far review with this Court asking for refund of said amount an the alleged ground of the canstitutional infirmities of Section 269 of the Tax Code.

Th stich herse races, betting by the members of the general public in the results of the races is permitted by law and betting is dane through the sale of tickets in FS.00 or FPIO.90 amounts or multiples thereof, the total bets (called "wage DECISION CTA cnsE NO. 3220. ET nL. - 2~'1; - funds") being divided~ after racep in Vf:'r-Jous p.:~r- tic.i.rants~ namely, the board of stevJard the Philippine Racing CommJgsion 1.-'Jhich .i.s the r-acing authority in the countr-y), the r-acehor·· c;e owner~ s (the retitioners herein) n?g.i.sb:>red suc h by the Philippine R.:11cing Commission~ the h or-sP. t .F·ainer-c:; ~ the jockeys <'\nd the gr-ooms.

The bet. tJng is done by the uc.=;e of P.l ec tr·on ic machines \-"J id. c: h connec t.~ d to tot.;"~lLcatoF · t:.hr.\t r-e ·flects the tc~t;d betting.

The totr.-~1 "wr~q•'H ..

fund" or- "r.ool" i.e; divided among the gover·nmertt in the fonn of Amt.lc;ement t;;nt ~ a certain per - cent .=~ ge gnps to the r - r~c:ing club (6- 1/2/. in Oil!'! club~ 6 - .1./4/. in the othPr· ) and to the bettorg in the ·form of div.i.dendc;. Fr·om the div.i.dends or from the tickets, a certain f'P.F"Cen tagP. .is deducted fbr the pr - J~e of the 1·/Jnn.ing l mn:; e~ and respectivEP prizes for- t .hP. hor-ses thr.\t plc:~c:P.d seco nd~ third and so on.

·r he shar-es o ·f the hot" se vary - 60/. goes to the lfJinning hor .. se that co:~me first~ and 25/. for the second placer, 13/. for the third placer, and 2X for the fourth placer.

That the remaining 90/. of the winning horse prizes~ 12/. goes to the jockey, 10/. to the t.rainers, 5/. to the grooms P and 5/. for Ute

DECTSTON --

CrA CASE HO. 2220, ET At.

rehearses’ fund, and the remaining 38% goes to the racehorse owner. That aside from the 10% ta» withheld from the prize to the horses, the following taxes are imposed with the horse racer:

(a) POA amusement tax an Wednesday race (bh) BAZ franchise tax on A-l/2A commission af the racing clube: (ce) local tan of FR2,OOD to local governments of Wakatio and Manilas and (d) annther FPSO.LOO as aAddibionat local taxs (em) FRO.LOO daily by the official betting statinanss the jockeys, trainers, and greame have to pay income tax ton an their reapective shares af the FO racehorse prize. Petitioner's witness, Ex-Justice Mor end, explained (t.s.m., pp. 7-Pis hearing of Hovember 13, $9R5) thak Gf a tax on "winning" is warranted at all, it should be imposed anly an the "winning" horse, that is the horse that reached the finish line ahead of all the others because that is the only horse that can be considered a "winner", all the others caming in nest not being in racing parlance = and in the racing world, considered “winners” but only "placers", witness citing the rules on racing published by the Jockey Club of England and followed by other racing clubs all over the world.

Luu DECISION CTA CASE NO. 32220, ET AL.

Pom Racehorar owner witneacg FExy-Tustice Horeno further explained that ordinarily it is the person who goes to the amusement place sreeking to be amused who ehould pay the amusement tax, as in the caee af amusement ike sporting events, ballet dances, concerts boring contests, hasketball contests where fit ia the public that pays the amusement tas for providing the amusement. In this ease, however, of the Ox "tan on winnings" imposed by Section 7469 of the Tax Code, it is the racehorse owner, the performer in effect. that is being taxed on his "winnings".

The dermue posed for determination is whether or nok Section 26? of the Tax Code, imposing a tax of TOY on the winnings or "dividends" of every persan who wins in horse race or Jai-Nlai, based on the actual amount paid to him for every winning ticket after deducting the cost of the tickety the tam tio be deducted fram the "dividend" corresponding to each winning ticket and withheld by the operator, manager, oar performer in charge of the horse races or Jai-Alai before paying the "dividends" to the person entitled thereto, and the same tax. collected. from. owners of winning race above, is valid and constitutional.

Lua DECISION CTA CASE NO. 3220, ET AL. - 26 - PPti t.JonP.r· con tr-m rl c:;

thi=\t. SP.ction 2b9 of the T;:n:

Code Jc;

inv<"lid a nd un co n ~t Jtut.ional bec:<"USe the ta>: in ques tion vio lfl.t. P.a:; thP. r·ulP. of unif ormity of t;u:r;>.t.Jon, that .i..t is vio lative o ·f the equal protP.ct.ion c l a u !"'e of thF? Conc;t.itutiorq and that if the:? .10% t.:n: J s to be imposed ""t .:~ 11, it should be only on thP. pr·izP.

r_yf the h o r·c;e that finishes fir·st a nd not in t h e pr· izes .:~v1arrle d on the s ubsequent "placf?t··· s".

[ ln 1 a c k o ·f u rd. ·f or m i t. y ~ E>t - ,Justice t1or·eno e>:pl ained t.hat ther·e is no equality Jc; n ot subject to thP. c"\musernent t.:.~>: or the .10% "t.;;n: s l apperJ an a mt.ISP.mf?t l t ta>:

cw .10% of the "ta>r on 1-'li n rd. n g s • " rP.t.if:".iO I1 E"I'" ciJd not cite t-lflere ther·e is il violation of t.hP Pq11a l rwot.ection c lause of th~ Constitution but instP.ad ~tat.ed in general terms, the~t te~~:atio n that is n ot unlform is necessa r-ily unequal e~ nd conc eded ly discriminating. In tile ma tter of double ta >:a tion, then!! is no pro hi bi tion .in our country and Constitution which pro hibits double tax<"ti o n. Here , a property may be ta>t e d twice and with the same kind or character of DELCISTUrt - CTA CASE NO. 32720, ET AL.

a ota. However, there is reason to believe that the racehorse owners Are nok taxed twice or with the same kind oar character of ai tax, hut with different LANES » ane with income tax oon its winnings and the ather ai kind of tax, or same may call it amusement tax, which is 160% of the "tax on winnings". The 10% "tan on vinnings" and “income tax" are entirely two different taxes, and when they Are imposed does nat amount to double taxation.

Finally, ait is lastly assailed by petitioner that aif the 10% “tax on winnings” GS warranted at all, it should only be imposed an the prize for the racehorse that finishes ahead of all the others. We cannoat agrerm with this interpretation of Section 269 Of the Tas Code since that did not provide for this kind of interpretation. The law is clear that it de anly dmposed an the "tax an winnings" so that no matter vlbether it is the ist, 2nd, Srd and 4th placer oor dovn the line, so long as the racehorse owners are entitled to the prizes ar winnings, then the raceharse owners should be subject to tay, and not "A. Only on the horse that crosses the finish line. first, because he is the winner. (And) The others have last." (t.s.nN.,. pp. 17-21, pp. 22-24, hearing of U5 November L985.)

Lube DECISION CTf\ CASE NO . 3220, ET nL. - 28 -- In :l.mposi.ng a 10% "t.ax on w.i.nn.ing~" ~ Sl!?ct.i.on ';?69 of t llP. Tax cod P. dope; not vio late the un.i ·formJty rule of taxation because uniformity of taxation mee~n.::;

t ll e~t all e~r· tic l es or kinds as in the case o f the .10% "ta>< on winn .ings" ~ ~·1hic h .is o ·f the same c 1 ass, sha 11 be Pllil. 541 .• 555.)

"Un.ifnrmity i n ta>:ation is ar:comp 1 i s h ed '-'lhP.n the bur-d e n of t.tl!.'J t;:n:

f;:dla equa lly c:~ nd .impar··t.ially upon ~11 the pP.rsons e~ nd properties s ubj ec t to it~ so that no higher r ·ate or· greater lev y is .i.mpD"'H~ d upon one p~!?rson or· s p ec Je elf pr·oper· ty t-.l121n upon othP.n"'' nimi lar 1 y s.i.tuated.

>:

>:

>1.

( Co"'"'i ttee Report 2, co~1flitte~ on Tn xAtio n ~nd D~bt ff~n~qe111ent, 197 1 Constitutional Con- vention, p. 220, CT A rec. ) TllP.r·e is then~ fore no d.i.scr·i.m.i.nat.i.on as to the impos.it.i.on of .1.0% on t h e 1-l.i.nn.i.ngs o f the r.:~c:ehorse r<espondent CornmJ s sioner·· of Inte n1Bl RevenuE!

.in st:r-engt h en.i ng our· h o lding her-etofore made , states that the power is un l.i.m i ted, comprehensive and s upr·eme Bnd is subject to no restriction whBtever, so that courts venture not to contravene.

(De Villata v. Stanl•y, 32 Ph.i 1 .

541 .• 555) To quote counsel fot~ respondent:

The power proceeds upon the fBct that e>:istence o ·f government cannot DECISION CTA CASE NN. 2220, FT At.

conbiniuwe without MEANS to pay its expenses and that for these means, it has the right to compel atl citizens and property within its limits to contribute.

In the case of Philippine Guaranty Co, ws. Commisstoner, Le P2eoTt, April Io, TOASG, IR BORA TTS, the Gupreme Court emids "The power to tax ais an attribute mf soverriaqnty. Tt an a povier emanating fram neceemity. Tt ds A necessary burden fo preserve the State's savereiqnty and means ta give the citizenry an army to resiet an aggression, a navy to defend its shores fram tnvastion, a COP pyR of civil Bseorvanter to REV » public improvements designated for the enjoyment of the citizenry and those which Come within thie State's territory. and facilities and preatecttion which a government is stpposed ta provide. wo uw ou."

We fully coneur with the view of respondent fommtsedianer that Secktion 249 does nat violate the rule of equal pratection clause of the Conetitution. leatselature has the inherent power to select the eubjecths of taxation and possesses the freecom on classification through which an equitable distribution of the tan burden is achteved. Section 269 should not, therefore, be invalidated an equal pratection ground except by a clear showing that the tax statute is arbitrary or capricious, Nowhere can we find the arbitrariness Lou

NECTSION ~

CIA CASE NO. 3270, ET AL.

and capriciousness of Gerntinn 269 of the Tax Code. Seebtion Fo? dors not violate the due process clause of the Constitution. Tt can only be invoked where the baw as oso arbitrary and capricious that it finds no support ino the Constitutian. Where it is shown that th amounts to confiacatioan of property, ib would be a clear abuse of authority. But such is not the case here. There dis no fact shown in this case which shaw Section 2469 to he capricious or arbitrary. The presumption of its validity must neemsearily have to prevail. (Freita-MNalate Hotel and ffotel Operators Association wv. Hon. City Mayor, 20 SCRA SAPs OA’Gaerrpan and Yotng wv. Hartford Fire Insurance Co., PeP ULR, BSI PTO.L) The owners of horme racers derive income, and the public hardly derive profit from horee racing and so Seckhion 267 of the Tax Code imposed a 1O% "tas oan their winndnges” which is indeed for a valid pur pase.

This Court finds Gection 2469 of the Tax Cade nat vialative of the constitutional requirement of equitable taxation amounting to double taxation. Double taxation exists only when the same property is taxed twice when ait should be taxed but once:

both taxes must be imposed on the same property

NECTRTOM —-

CTA CASE NO. 3220, ET AL.

or subject matter, for the same purpose, by the same state, government or tanning authority. within the same jurisdiction or taxing district, during the same taxing period, and they must be the same hind ar character of tax. (Villanueva v. City of Tloeilea, €-26521, 26 SCRA STB, SEO), Double taxation "is samething not favored, but is permissible, provided same other constitutional requirement te onmobk truly violated, such asx the reqiipament that btanes mis E he tniform". (Villanueva ve. €Efty ef Tetlo, L-PéGP1, 24 SCRA Sad, stpra.,) MW close serutiny af the purposes of 10% tax on winnings wild fustify tte imposition, 1) Tax on winnings is aimed at the sector of socieky with spare time and extra money to spend on Unpradvckive venkhures. Hoaratloand economic reasons justify the imposition of higher taxes on legalized gambling:

2) Rising need far additional revenues for accelerated national developments and 3) The primary justification for the existence and maintenance af gambling establishments is the allocation of a portion of the incame derived therefrom to worthwhile projects Lvs NECTISTCt —- CTA COSE NO. 3220, ET AL.

such as charitable activities and the upkeep of the government.

Horeover, unless RA law is an repugnant to the supreme lav, courte should not declare ai law invalid. To tlonbbt an jtse validity ia to resolve the doubt adn favor of item validity. (& Ruling Case fam, Sees. Fil, Fe and FIs CherchyI]] and Tasxyt v. Rafferty, 32 Phil, SR0, Sea.)

Secoktion 26D of the Tare Cade , nat heing violative of the rule af untformity of ctaxation, rttte of equitable taxation, the equal protection clause ane the due Process clause of the Constitution, the aforesaid provision imposing the LOA tax oon winnings under Section 2469 of the Tan Code in constitutional, valid, lawful and enforceabie. Te de clear that the 10% tax on winnings of race herse ownere imposed under the said law was coblectecd ino accordance with Law and therefore nak reftindahie,

WHEREFORE, We an told that petitioner is not entitled to the refund af the amount of P9,472.63 as 10% tax on winnings under the Tax Code. Consequently, we equally hold that in the 9g90 petitions for review which have the same factual Allegations as this one, and which raised the same Ludo -- -----~---- -- DECISION CTA CASE NO. 3220 , ET AL. flUP.stion in thP.

v~lidity ~nd constJ tu t:t.on~ 1 tty of t .hP.

~for..,e;"'.td SP.ction 269 of citr->d, "'rP. not Pntltlerl to t:.hR t"'x refund of tOY.

t"'H 011 Ninnillg~ Jl"'id by them unrlP.r the Tax Code.

I CONCUR:

I CP.t"· tl fy this decision was r·eac:hP.d after due consultation bet~r1een the member-5 of the Court of Tax Appe~ls in accordance with Section 13~ Article VIII of the Canst tution.