Advertising Associates vs. CA

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    ADVERTISING ASSOCIATES, INC., petitioner, vs. COURT OF APPEALS and

    COMMISSIONER OF INTERNAL REVENUE, respondents.

    G.R. No. L-59758 | 1984-12-26

    AQUINO, J.:

    Facts:

    Ad!"t#s#$% Assoc#at!s #s &!#$% '!(d (#a&(! )o" *+ o$t"acto"s !"c!$ta%! ta/ )o" "!$ta(

    #$co0! )"o0 t'! (!as! o) $!o$ s#%$s a$d ((&oa"ds #0os!d & 19** ta/ cod! o$

    &s#$!ss a%!$ts a$d #$d!!$d!$t co$t"acto"s.

    !t#t#o$!" "!(#!s o$ t'! o((!cto"3s "(#$%s dat!d !t!0&!" 12, 196 a$d J$! 2, 1967

    t'at #t #s $!#t'!" a$ #$d!!$d!$t co$t"acto" $o" a &s#$!ss a%!$t /'. G a$d .

    As a("!ad stat!d, #t co$s#d!"s #ts!() a 0!d#a co0a$, (#! a $!;sa!" o" a "ad#o

    &"oadcast#$% co0a$, &t $ot a$ ad!"t#s#$% a%!$c #$ s#t! o) t'! "os! stat!d #$

    #ts a"t#c(!s o) #$co"o"at#o$. It a"%!s t'at #ts act o) (!as#$% #ts $!o$ s#%$s a$d ((&oa"dsdo!s $ot 0a! #t a &s#$!ss a%!$t o" a$ #$d!!$d!$t co$t"acto". It st"!ss!s t'at #t #s a

    0!"! (!sso" o) $!o$ s#%$s a$d ((&oa"ds a$d do!s $ot !")o"0 ad!"t#s#$% s!"#c!s.

    !ct#o$ 191 d!)#$!s a$ #$d!!$d!$t co$t"acto" as #$c(d#$% a(( !"so$s ;'os! act##t

    co$s#sts !ss!$t#a(( o) t'! sa(! o) a(( #$ds o) s!"#c!s )o" a )!!. !ct#o$ 194 o) t'!

    297,927.6 a$d >84,77*.1

    as co$t"acto"3s ta/ )o" 1967-1971 a$d 1972, "!s!ct#!(, #$c(d#$% 25+ s"c'a"%! t'!

    (att!" a0o$t #$c(d!s #$t!"!st o$ #ts #$co0! )"o0 ((&oa"ds a$d $!o$ s#%$s.

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    t'at t'! "!$ta( #$co0! o) Ad!"t#s#$% Assoc#at!s )"o0 ((&oa"ds a$d $!o$ s#%$s

    co$st#tt!d )!!s o" co0!$sat#o$ )o" #ts ad!"t#s#$% s!"#c!s.

    J$! 18, 1979 - Ad!"t#s#$% Assoc#at!s "!c!#!d t'at (!tt!" a$d N#$!t!!$ das

    (at!" o" o$ J( 7, #t )#(!d #ts !t#t#o$ )o" "!#!;. I$ #ts "!so(t#o$ o) A%st 28,

    1979, t'! !t#t#o$ ;as )#(!d ot o) t#0!

    *. BON t'! "#%'t to co((!ct a("!ad "!sc"#&!d.

    !(d:

    1. t'! $d!$#a&(! )act #s t'at $!o$ s#%$s a$d ((&oa"ds a"! "#0a"#( d!s#%$!d )o"

    ad!"t#s#$%. B! 'o(d t'at t'! !t#t#o$!" #s a &s#$!ss a%!$t a$d a$ #$d!!$d!$t

    co$t"acto" as co$t!0(at!d #$ s!ct#o$s 191 a$d 194.o;!!", #$ #!; o) t'! "#o" "(#$%s t'at t'! ta/a!" #s $ot a &s#$!ss a%!$t $o"

    a$ #$d!!$d!$t co$t"acto" a$d #$ #!; o) t'! co$t"o!"s#a( $at"! o) t'!

    d!)#c#!$c ass!ss0!$ts, t'! 25+ s"c'a"%! s'o(d &! !(#0#$at!d2. !t#t#o$ )o" "!#!; ;as )#(!d o$ t#0!.