GR L 12781; (August, 1960) (Digest)
G.R. No. L-12781; August 31, 1960
PHILIPPINE RACING CLUB, INC., petitioner, vs. COLLECTOR OF INTERNAL REVENUE, respondent.
FACTS
The petitioner, Philippine Racing Club, Inc., owner of a horse race track, paid income tax for the years 1950 and 1951 on amounts it received from the Philippine Charity Sweepstakes Office (PCSO). It filed a claim for refund totaling P19,699.00, alleging overpayment. The claim was denied, leading to a court action. The case was transferred to the Court of Tax Appeals pursuant to Republic Act No. 1125 . The Court of Tax Appeals dismissed the complaint. The stipulated facts and evidence showed the petitioner received two categories of income from the PCSO during 1950 and 1951: (1) track rentals for the use of its race track during Saturday races held under Republic Act No. 79 , and (2) its shares in the net proceeds from charity sweepstakes races held under Act No. 4130 , as amended.
ISSUE
Whether or not the petitioner is exempt from paying income tax on the amounts it received from the Philippine Charity Sweepstakes Office during 1950 and 1951.
RULING
The Supreme Court ruled that the petitioner is NOT exempt from income tax on the amounts received. The decision of the Court of Tax Appeals was affirmed.
1. Regarding Track Rentals (under Republic Act No. 79 ): The exemption clause in Section 3 of Republic Act No. 79 was held, following the precedent in Collector of Internal Revenue vs. Manila Jockey Club, Inc., to be limited to the specific municipal license fee and fixed tax on race tracks. It does not extend to the income tax on rentals received for the use of the race tracks.
2. Regarding Shares in Net Proceeds (under Act No. 4130 , as amended): The exemption from taxation under Section 6 of Act No. 4130 is limited to the holding of horse races and the sale of tickets by the PCSO itself. The law contains no provision exempting the racing club where such races are held from the payment of any tax, including income tax on its share of the proceeds.
Therefore, the petitioner is subject to income tax on both the track rentals and its shares in the net proceeds received from the PCSO.