GATCHALIAN V. CIR, – G.R. NO. L-45425, APRIL 29, 1939

A group of fifteen (15) people contributed to buy a sweepstake ticket and they named it “Jose Gatchalian & Company”. The sweepstake ticket won the prize of 50,000 pesos. A check was given to Jose Gatchalian & company. Then, the check was encashed by Jose Gatchalian. 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. However, they refused to pay the income tax return alleging that they are a community of property, hence, they are exempted from tax.

Whether or not Jose Gatchalian & Company formed a partnership and should pay income tax returns accordingly

Yes, 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 (article 1665, Civil Code). The partnership was not only formed, but upon the organization thereof and the winning of the prize, JoseGatchalian 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. All these circumstances repel the idea that the plaintiffs (Jose Gatchalian and the other 14 people) organized and formed a community of property only. Hence, they should pay the income return tax accordingly


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