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Gatchalian Vs Collector

This case involves Jose Gatchalian and others appealing a tax assessment on lottery winnings. The plaintiffs purchased a lottery ticket together and split the prize money when it won. The Collector of Internal Revenue assessed taxes on the winnings. Though the plaintiffs argued they did not form a partnership, the court found they organized as a partnership by each contributing money to purchase the ticket with the agreement to split any prize money. As a partnership, they were subject to income tax on the lottery winnings.

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142 views1 page

Gatchalian Vs Collector

This case involves Jose Gatchalian and others appealing a tax assessment on lottery winnings. The plaintiffs purchased a lottery ticket together and split the prize money when it won. The Collector of Internal Revenue assessed taxes on the winnings. Though the plaintiffs argued they did not form a partnership, the court found they organized as a partnership by each contributing money to purchase the ticket with the agreement to split any prize money. As a partnership, they were subject to income tax on the lottery winnings.

Uploaded by

EA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Jose Gatchalian, et.al. plaintiffs-appellants, vs. The Collector of Internal Revenue, defendant-appellee.

-A distraint warrant is a document served by the sheriff that indicates the amount of overdue taxes, the due date and instructions prohibiting

the removal or destruction of any property within the business.

Facts:

-Plaintiffs purchased, in the ordinary course of business, from one of the duly authorized agents of the National CharitySweepstakes Office one

ticket for the sum of two pesos (P2), said ticket was registered in the name of Jose Gatchalian and Company.

-The ticket won one of the third-prizes in the amount of P50,000.

-Jose Gatchalian was required to file the corresponding income tax return covering the prize won.

-Defendant-Collector made an assessment against Jose Gatchalian and Co. requesting the payment of the sum of P1,499.94 to the deputy

provincial treasurer of Pulilan, Bulacan.

-Plaintiffs, however through counsel made a request for exemption. It was denied.

-Plaintiffs failed to pay the amount due, hence a warrant of distraint and levy was issued.

-Plaintiffs paid under protest a part of the tax and penalties to avoid the effects of the warrant.

-A request that the balance be paid by plaintiffs in installments was made. This was granted on the condition that a bond be filed.

-Plaintiffs failed in their installment payments.

-Hence a request for execution of the warrant of distraint and levy was made.

-Plaintiffs paid under protest to avoid the execution.

-A claim for refund was made by the plaintiffs, which was dismissed, hence the appeal.

Issue: Whether the plaintiffs formed a partnership or community of property. If a partnership, hence liable for income tax.

Held: Yes. The plaintiffs formed a formed a partnership.

-According to the stipulation 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 Philippines Charity Sweepstakes, in his capacity as co-partner, as such collection 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.

-All these circumstances repel the idea that the plaintiffs organized and formed a community of property only.

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