SILVERIO BLAQUERA, AS COLLECTOR OF INTERNAL REVENUE, PETITIONER, VS. ESTEPANIA VDA. DE ALDABA AND THE COURT OF TAX APPEALS, RESPONDENTS.

This is an appeal from a decision of the Court of Tax Appeals
exempting respondent Estefania Vda. de Aldaba from the payment of the
amusement tax and surcharge due on the gross, receipts from the
presentation of the opera “Madame Butterfly” on January 18, 1952 at the
Far Eastern University (FEU) Auditorium. The decision was rendered
without prejudice to the Collector of Internal Revenue taking the
necessary steps to enforce the collection of the said tax and surcharge
from the party or parties properly liable thereto.

The opera performance aforementioned, which featured Dalisay Aldaba,
daughter of herein respondent Estefania Vda. de Aldaba, in the female
leading role; was presented for the benefit of the victims of the
Hibok-Hibok volcano eruptions. No rental appears to have been paid for
the use of the FEU Auditorium. The opera presentation, however, having
been sponsored, managed and presented by the National Opera Company,
the Collector of Internal Revenue, on August 30, 1952, pursuant to
section 260 of the Internal Revenue Code, assessed against Juan Javier,
president of the company, the sum of P3,271.41 as amusement tax and
surcharge on the receipts derived therefrom. Mr. Juan Javier contested
the assessment, alleging that the opera performance was for a
charitable organization. As requested by him, he was given time to
present the necessary papers in support of his allegation, but the time
granted expired without any evidence having been submitted by him.
However, Manuel Javier, his son and manager of the National Opera
Company, wrote to the Collector of Internal Revenue, pointing to
respondent Estefania Vda. de Aldaba as the person liable on said tax by
virtue of a contract entered into between him and Mrs. Aldaba on
December 17, 1951.

On the strength of said contract, and upon the recommendation of a
BIR agent, who investigated the case, the Collector of Internal Revenue
in his letter dated March 27, 1953, assessed and demanded payment of
the amusement tax and surcharge aforementioned from the respondent
Estefania Vda. de Aldaba as the “financier and capitalist” of the opera
show.

Answering the letter, Mrs. Aldaba denied responsibility for said tax
and submitted supporting papers to disprove her liability. Thereafter,
upon her request the case was referred to the Conference Staff of the
Bureau of Internal Revenue. The Conference Staff having sustained the
decision of the Collector holding her liable for the tax in question,
Mrs. Aldaba requested for a reconsideration and a formal hearing of the
case, which was granted. In that hearing, Mrs. Aldaba testified that
she merely loaned Manuel Javier, Manager of the National Opera Company,
the funds which were used for the presentation of the opera, with the
understanding that the same would be returned as soon as the company
was with funds. She also, through counsel, filed a memorandum,
contending, among other things, that she is neither a proprietor,
lessee, nor operator of a place of amusement within the purview of
section 260 of the Tax Code; and that if there is anyone liable for the
amusement tax, it is the National Opera Company which sponsored,
managed and presented the opera in question.

The Conference Staff, however, refused to reconsider its finding as
to Mrs. Aldaba’s liability. And as the Collector of Internal Revenue
reiterated the demand for the payment of the amusement tax and
surcharge in question, Mrs. Aldaba on October 19, 1955 filed a petition
for review with the Court of Tax. Appeals.

At the hearing of the case on the merits in that court, no oral
evidence was presented. Instead the parties agreed to submit the record
of the Bureau of Internal Revenue pertaining to the case and certain
documentary evidence.

Petitioner Aldaba now herein respondent, maintained as she did
before the Conference Staff—that she was not the proprietor, lessee, or
operator of an amusement place within the purview of section 260 of the
Internal Revenue Code; that at most, she merely advanced the funds to
finance the show by way of a loan to the National Opera Company thru
Manuel Javier, with the understanding that the same would be repaid as
soon as the company was in a position to do so; that it was the
National Opera Company which sponsored, managed, produced and presented
to the public the opera presentation and, therefore, it is the one
liable to the amusement tax and surcharge sought to be collected.

The Collector of Internal Revenue on the other hand, claimed that by
virtue of the contract entered into between Mrs. Aldaba and Manuel
Javier, the latter, as well as the National Opera Company represented
by Juan Javier were but employees of the said Mrs. Aldaba. She was,
according to the Collector, the “moving power behind the presentation
of the opera” and, therefore, the person liable for the amusement tax
and surcharge assessed on the receipts therefrom.

Resolving the issues raised by the parties, the Court of Tax
Appeals, on February 27, 1956, rendered its decision, which, as already
stated, exonerated Mrs. Aldaba from the payment of amusement tax and
surcharge. From that decision, the Collector of Internal Revenue filed
the present petition for review.

The only question for determination as raised by the parties is
whether or not respondent Estefania Vda. de Aldaba falls under any of
the terms “proprietor, lessee, or operator of an amusement place”
within the purview of section 260 of the Internal Revenue Code, which
reads in part as follows:

“SEC. 260. Amusement Taxes.—There shall be collected
from the proprietor, lessee, or operator of theaters, cinematographs,
concert halls, circuses, and other places of amusement the following
taxes:

“In the case of theaters or cinematographs, the taxes
herein prescribed shall first be deducted and withheld by the
proprietors, lessees, or operators of such theaters or cinematographs
and paid to the Collector of Internal Revenue before the gross receipts
are divided * * *.”

After going over the record, we agree with the court below that the question must be resolved in the negative.^[1] We quote with favor pertinent portions of the decision of that court:

“The person liable under said section 260 is the
‘proprietor, lessee, or operator’ of the place of amusement. Hence, the
crux of the present question is whether the petitioner falls within the
definition of any of the terms employed by the law. As defined by
lexicographers:

‘A proprietor is one “who
has the legal right of exclusive title to anything, whether in
possession or not; an owner, sometimes, especially in statutory
construction, in a wider senses a person having interest less than
absolute and exclusive right, as, the usufruct, present control and
use, of property.’ (Vol. II Merriam-Webster 2d. ed. p. 1986.)

‘An
operator—(1) in general, one who or that which operates; as (a) one who
produces an effect or does something; an agent; (b) one who does
appropriate practical operations, as in business, art, or science; a
professional or official performer of such work.” (II Merriam-Webster
2d ed. p. 1707.)

“We believe that the
respondent (herein petitioner Collector of Internal Revenue) failed in
his attempt to make Mrs. Estefania Vda. de Aldaba fall within the
purview of the terms ‘proprietor, lessee, or operator of a place of
amusement.’ Respondent mainly relied on the contract (Exhibit ‘3’,
respondent, pp. 14 and 15 BIR records) dated December 17, 1951,
executed by and between the petitioner, and the letter of Manuel Javier
to the respondent Collector (Exhibit 2% respondent, p. 16 BIR records)
as well as the indorsements of Revenue Agents Moises San Agustin and
Jaime Majia (Exhibit ‘4’, respondent pp. 18 and 19, BIR records and
Exhibit ‘8’, respondent, p. 34 BIR records). Respondent did not in any
way present extraneous and independent corroborative evidence,
testimonial or documentary, to support his conclusion that:

‘The
moving force who put “activity, managed, conducted or carried out or
through” the presentation Madame Butterfly was the petitioner, employer
of Manuel Javier and Juan Javier and/or the National Opera Company. It
was she who financed and superintended the affair as is evident from
the specifications of the contract. As the capitalist of the show she,
(the petitioner) had had an absolute control over the presentation to
the extent that it was she who named the members of the cast to be
hired at fixed compensation which she herself set and paid. Moreover,
the “balance of proceeds of the advertisements” was turned to
petitioner and the receipts from the sales of the tickets were likewise
received by her. All these unmistakably show that the petitioner,
insofar as “Madame Butterfly” is concerned, was more than an operator;
in fact, she, was the owner or proprietor of the presentation. This
observation is strengthened by the fact that the alleged loan granted
by petitioner to Manuel Javier was never secured at all. Obviously,
every centavo spent for the venture was for her account just as the
profits realized therefrom inured to her benefit—an operation, which
only an owner or proprietor or operator could have carried out.’

“There
are so many vital links missing in the presentation of respondent’s
case that make us seriously doubt the correctness of respondent’s
decision. On the other hand, several established facts convince the
Court that the respondent has erred in his decision holding the
petitioner liable, for the amusement tax and surcharge in question.

“The
records show, and it has been admitted by respondent; both through his
memorandum and the decision of the Conference Staff dated July 10,
1956, that the preparations for the presentation of “Madame Butterfly”
was not undertaken by petitioner but by the National Opera Company.
Thus—

‘It appears that almost all of the
details of the performance was taken care of by the National Opera
Company, thru either Manuel or Juan Javier. Thus, the application for
solicitation permit granted the National Opera Company by the Social
Welfare Administration was signed by Manuel Javier; the orders for the
printing of the souvenir programs and tickets, wherein was indicated
the performance was under the sponsorship of the National Opera
Company, were undertaken under the name of said company by Manuel
Javier; the contracts for the services of the cast and conductor of the
performance were signed by Manuel Javier; the contributions to the
Social Welfare Administration was made in the name of National Opera
Company.1’ (p. 8, decision of the Conference Staff, dated July 10,
1955, p. 102 BIR records).

“The profit and
loss statement of the opera presentation was likewise certified to the
Bureau of Internal Revenue by the National Opera Company signed by,
Juan Javier. Furthermore, Manuel Javier in his letter to the Bureau of
Internal Revenue (Exhibit ‘2’ respondent, p. 16 BIR records) admitted
that Juan Javier owned the score of the opera, costumes, settings
complete with furniture and other things needed on the stage on the
date set for the performance.’

“In fact, in dealing with the
public in general, and the government in particular, before and after
the presentation, the National Opera Company appeared to be the sole
sponsor, manager and producer of the performance shown to the public on
January 18, 1952. Nowhere did the National Opera Company given even so
much as a hint that Mrs. Estefania de Aldaba was the financier or
capitalist, of the whole show. Not even in the acknowledgment in the
souvenir program (Exhibit ‘H-1 pet. 28, BIR records) was the name of
petitioner Mrs. Estefania Vda. de Aldaba mentioned. If it were true
that the petitioner was the moving spirit behind the whole show, surely
the National Opera Company with its years of experience in opera
presentation could not have made such a glaring omission, by
acknowledging the help of persons who contributed less than the alleged
‘prime mover’ of the show without so much as a word of thanks for the
latter.”

In the face of the above findings of the Court of Tax Appeals, which
are all borne out by the record, petitioners claim that Manuel Javier,
as manager of the National Opera Company, acted merely as herein
respondent’s employee or agent by virtue of the agreement signed by
them, must be rejected. Indeed, there are strong reasons to believe
that the agreement referred to was actually a contract of loan. As
sworn to by Mrs. Aldaba before the Conference Staff, she agreed to
furnish the funds needed for the presentation of the opera upon
representations made by Manuel Javier that the said funds would be
regarded merely as “advances” on her part to be reimbursed later as
soon as the company would obtain funds of its own. She averred that she
was, in a way, forced to do this after seeing that the National Opera.
Company, or Mr. Javier, did not have the necessary funds to go ahead
with the performance of the opera “Madame Butterfly”, because her
daughter, Dalisay Aldaba, who had to come here from abroad, had already
publicly announced that she was going to appear therein.

There are, to be sure, provisions in the contract in question
purporting to show that Mrs. Aldaba undertook to pay the members of the
cast in the opera show and certain personnel whose services shall be
engaged by Manuel Javier. We believe, however, that these provisions
were inserted in the contract for the purpose of assuring Mrs. Aldaba
that the money she advanced to Mr. Javier would be used solely for the
opera performance. The contract was, as pointed out by respondent in
her brief, more of a budget plan showing how the amounts she had agreed
to advance were to be used. Thus, the members of the cast and other
personnel are specifically mentioned therein with their fixed
corresponding pay. It is significant to note that the various contracts
with the players and other personnel in the opera show were entered
into and signed by Manuel Javier himself, with the express stipulation
that he shall make the payment to them for their participation.

It was also provided in the contract that the “balance of the
proceeds of the advertisements,” after deducting therefrom the cost of
printing the programs and tickets, shall be turned over to respondent
Mrs. Aldaba. The stipulation, however, as stated by respondent in her
brief, was made with the understanding that the said balance would be
applied to the partial payment of the loan. No security having been
given for the said loan, the stipulation, apparently, was intended to
guarantee its payment.

It should here be stated that as the “financier and capitalist” of
the stage presentation—to borrow petitioner’s own words—herein
respondent cannot be held liable for the amusement tax in question.
Under section 260 of the Internal Revenue Code, the tax is imposed on
the proprietor, lessee, or operator of the place of amusement and not
on any person to whom the gross receipts are destined and eventually
paid. (Wong & Lee vs. Collector of Internal Revenue, et al., 104 Phil., 469; 55 Off. Gaz. [51] 10539.)

In view of the foregoing, the decision of the Court of Tax Appeals sought to be reviewed is hereby affirmed in toto, without costs.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, and Barrera, JJ., concur.
Concepcion, J., reserves his vote.
Reyes, J.B.L., J., did not take part.

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^[1] Under Rep. Act. 722, an
opera is exempt from the payment of any amusement tax on the receipts
therefrom. The law, however, took effect only June 6, 1952 and is
therefrom not applicable to the opera here in question which was
presented on January 18, 1952.