GATCHALIAN v. COMMISSIONER OF INTERNAL REVENUE

GATCHALIAN v. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 45425; April 29, 1939

Ponente: J. Imperial

FACTS:

          On December 15, 1934, the plaintiffs, all 15 of them, each contributed in order to buy a sweepstakes ticket worth Php 2.00.

           That immediately thereafter but prior to December 16, 1934, plaintiffs purchased, in the ordinary course of business, from one of the duly authorized agents of the National Charity Sweepstakes Office one ticket bearing No. 178637 for the sum of two pesos (P2) and that the said ticket was registered in the name of Jose Gatchalian and Company.

          

          The above-mentioned ticket bearing No. 178637 won one of the third prizes in the amount of P50,000 and that the corresponding check covering the above-mentioned prize of P50,000 was drawn by the National Charity Sweepstakes Office in favor of Jose Gatchalian & Company against the Philippine National Bank, which check was cashed during the latter part of December, 1934 by Jose Gatchalian & Company

          

          Thereafter, Jose Gatchalian was required by income tax examiner Alfredo David to file the corresponding income tax return covering the prize won by Jose Gatchalian & Company and that on December 29, 1934

          

            The defendant made an assessment against Jose Gatchalian & Company requesting the payment of the sum of P1,499.94 to the deputy provincial treasurer of Pulilan, Bulacan. Tthe plaintiffs requested exemption from the payment of the income tax but it was rejected. The plaintiffs paid in protest the tax assessment given to them.

ISSUE:

Whether the plaintiffs formed a partnership, thus not exempted from paying income tax

HELD:

          Yes, the plaintiffs formed a partnership

   

       The Supreme Court held that according to the stipulated facts the plaintiffs organized a partnership of a civil nature because each of them put up money to buy a sweepstakes ticket for the sole purpose of dividing equally the prize which they may win, as they did in fact in the amount of P50,000.

         The partnership was not only formed, but upon the organization thereof and the winning of the prize, Jose Gatchalian personally appeared in the office of the Philippine Charity Sweepstakes, in his capacity as co-partner, as such collected the prize, the office issued the check for P50,000 in favor of Jose Gatchalian and company, and the said partner. in the same capacity, collected the said check.

          Having organized and constituted a partnership of a civil nature, the said entity is the one bound to pay the income tax which the defendant collected under the aforesaid section 10 (a) of Act No. 2833, as amended by section 2 of Act No. 3761.