G.R. No. L-20060 April 30, 1968
LILIA DE JESUS-SEVILLA, petitioner, vs. THE COLLECTOR OF INTERNAL REVENUE, respondent.

FACTS

Petitioner Lilia de Jesus-Sevilla, a lawyer and businesswoman, agreed in June 1954 to provide working capital for a bullfight exhibition venture proposed by Jesus Sto. Tomas Cortes (Jes Cortes). On August 20, 1954, she executed a special power of attorney authorizing Jes Cortes to contract with a Portuguese bullfight troupe. On August 26, 1954, Jes Cortes signed the bullfight contract in his own name. On October 10, 1954, they entered into a “Contract of Management,” designating Cortes as promoter and Sevilla as general manager, wherein she agreed to provide working capital up to P100,000. Sevilla subsequently entered into contracts for advertising with Tabacalera and for arena construction with Harry Lyons, Inc. She provided a total working capital of P170,000, kept the books of accounts, handled ticket printing and sales, and employed personnel. Seven bullfight exhibitions were held. The Collector of Internal Revenue assessed Sevilla for amusement tax and surcharge totaling P111,056.84, plus a compromise penalty, based on the gross proceeds. The Court of Tax Appeals affirmed the assessment, except for the compromise penalty.

ISSUE

Whether or not petitioner Lilia de Jesus-Sevilla may be properly considered the proprietor or operator of the bullfight exhibitions, making her liable for the payment of the amusement tax under Section 260 of the National Internal Revenue Code.

RULING

Yes. The Supreme Court affirmed the decision of the Court of Tax Appeals, holding Sevilla liable for the amusement tax. The Court distinguished this case from Blaquera vs. Aldaba, where a financier was not held liable because participation was limited to providing funds akin to a loan. Here, Sevilla’s involvement was extensive and active: she authorized the bullfight contract via a special power of attorney, secured advertising and construction contracts, provided and managed the capital, kept the books, and handled receipts and disbursements. The Management Contract designating her as “agent” and Cortes as “promoter” did not negate her role as operator, as it was intended to secure her investment and assure funding for Cortes, not to revoke her prior authorization. Her argument that Cortes signed the tax returns as operator was unpersuasive, as these were prepared after her assessment. Therefore, she was more than a mere financier and was properly considered the operator liable for the tax.