C. P. CALANOC, PETITIONER, VS. THE COLLECTOR OF INTERNAL REVENUE, RESPONDENT.

This is a petition to review the decision of the Court of Tax
Appeals affirming an assessment of P7,378.57, by the Collector of
Internal Revenue as amusement tax and surcharge due on a boxing and
wrestling exhibition held by petitioner Calanoc on December 3, 1949 at
the Rizal Memorial Stadium.

By authority of a solicitation permit issued by the Social Welfare
Commission on November 24, 1949, whereby the petitioner was authorized
to solicit and receive contributions for the orphans and destitute
children of the Child Welfare Workers Club of the Commission, the
petitioner on December 3,1949 financed and promoted a boxing and
wrestling exhibition at the Rizal Memorial Stadium for the said
charitable purpose. Before the exhibition took place, the petitioner
applied with the respondent Collector of Internal Revenue for exemption
from payment of the amusement tax, relying on the provisions of Section
260 of the National Internal Revenue Code, to which the respondent
answered that the exemption depended upon petitioner’s compliance with
the requirements of law.

After the said exhibition, the respondent, through his agent,
investigated the tax case of the petitioner, and from the statement of
receipts which was furnished the agent, the latter found that the gross
sales amounted to P26,533.00; the expenditures incurred was P25,157.62;
and the net profit was only P1,375.38. Upon examination of the said
receipts, the agent 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.

Out of the proceeds of the exhibition, only P1,375.38 was remitted
to the Social Welfare Commission for the said charitable purpose for
which the permit was issued.

On November 24,1951, the Collector of Internal Revenue demanded from
the petitioner payment of the amount of P7,378.57 as the amusement tax
for the exhibition. Authority for this demand for payment is an opinion
of the Secretary of Finance dated June 15, 1948, authorizing denial of
application for exemption from payment of amusement tax in cases where
the net proceeds are not substantial or where the expenses are
exorbitant. Not satisfied with the assessment imposed upon him, the
petitioner brought this case to the Court of Tax Appeals for review.

After hearing, the tax court rendered the decision sought herein to be reviewed. Hence this petition.

Before this Court, the petitioner questions the validity of the
assessment of P7,378.57 imposed upon him by the respondent, as affirmed
by the tax court. He denies having received the stadium fee of P1,000,
which is not included in the receipts, and claims that if he did, he
can not be made to pay almost seven times the amount as amusement tax.
But evidence was submitted that while he did not receive said stadium
fee of P1,000, said amount was paid by the O-SO Beverages directly to
the stadium for advertisement privileges in the evening of the
entertainments. As the fee was paid by said concessionaire, petitioner
had no right to include the P1,000 stadium fee among the items of his
expenses. It results, therefore, that P1,000 went into petitioner’s
pocket which is not accounted for.

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 is
already dead and could no longer be questioned on the items contained
in said statement.

We have examined the records of the case and we agree with the lower
court that most of the items of expenditures contained in the statement
submitted to the agent are either exorbitant or not supported by
receipts. We agree with the tax court that the payment of P461.65 for
police protection is illegal as it is a consideration given by the
petitioner to the police for the performance by the latter of the
functions required of them to be rendered by law. The expenditures of
P460.00 for gifts, P1,880.05 for parties and other items for
representation are rather excessive, considering that the purpose of
the exhibition was for a charitable cause.

Wherefore, the decision sought herein to be reviewed is hereby affirmed, with costs against the petitioner.

Bengzon, C. J., Padilla, Bautista Angela, Concepcion, Reyes, J. B. L., Barrera, Paredes, Dizon and De Leon, JJ., concur.