EUFEMIA EVANGELISTA, MANUELA

EVANGELISTA, and FRANCISCA EVANGELISTA

,petitioners,
vs.
THE COLLECTOR OF INTERNAL REVENUE and
THE COURT OFTAX APPEALS,
respondents.
G.R. No. L-9996, Octob! "#, "9#$

Fact%&
Petitioners borrowed sum of money from their father
and together with their own personal funds theyused
said money to buy several real properties. They then
appointed their brother (Simeon) as manager of thesaid
real properties with powers and authority to sell, lease
or rent out said properties to third persons.
Theyrealized rental income from the said properties for
the period 1!"#1!.$n September %!, 1"!
respondent &ollector of 'nternal (evenue demanded
the payment of income ta) oncorporations, real estate
dealer*s fi)ed ta) and corporation residence ta) for the
years 1!"#1!. The letter of demand and
corresponding assessments were delivered to
petitioners on +ecember ,, 1"!, whereupon
theyinstituted the present case in the &ourt of Ta)
-ppeals, with a prayer that .the decision of the
respondent contained in his letter of demand dated
September %!, 1"!. be reversed, and that they be
absolved from thepayment of the ta)es in /uestion.
&T- denied their petition and subse/uent 0( and 1ew
Trials were denied.2ence this petition.
I%%'&
3hether or not petitioners have formed a partnership
and conse/uently, are sub4ect to the ta) on corporations
provided for in section %! of &ommonwealth -ct. 1o.
!55, otherwise 6nown as the 1ational'nternal (evenue
&ode, as well as to the residence ta) for corporations
and the real estate dealers fi)ed ta).
H(d& )ES.
The essential elements of a partnership are two,
namely7 (a)
an a*!+nt to cont!,b't +on-,.!o.!t- o!
,nd'%t!- to a co++on /'nd
8 and (b)
,ntnt to d,0,d t1 .!o/,t% a+on* t1
cont!act,n*.a!t,%
. The first element is undoubtedly present in the case at
bar, for, admittedly, petitioners have agreed to,and did,
contribute money and property to a common fund.
9pon consideration of all the facts andcircumstances
surrounding the case, we are fully satisfied that their
purpose was to engage in real estatetransactions for
monetary gain and then divide the same among
themselves, because of the followingobservations,
among others7 (1) Said common fund was not
something they found already in e)istence8 (%)They
invested the same, not merely in one transaction, but in
a series of transactions8 (,) The aforesaid lotswere not
devoted to residential purposes, or to other
personal uses, of petitioners herein.-lthough, ta6en
singly, they might not suffice to establish the intent
necessary to constitute a partnership, thecollective
effect of these circumstances is such as to leave no
room for doubt on the e)istence of said intent
inpetitioners herein.:or purposes of the ta) on
corporations, our 1ational 'nternal (evenue &ode,
includes these partnerships
;
with the e)ception only of duly registered general
copartnerships
;
within the purview of the term.corporation.. 't is,
therefore, clear to our mind that petitioners herein
constitute a partnership, insofar as said&ode is
concerned and are sub4ect to the income ta) for
corporations
G.R. No. $2"33 Octob! "2, "922
MARIANO P. PASCUAL and RENATO P.
4RAGON, petitioners,
vs.
THE COMMISSIONER OF INTERNAL
REVENUE and COURT OF TAX
APPEALS, respondents.
:-&TS7
1. $n <une %%, 15", petitioners bought two (%) parcels
of land from Santiago =ernardino, et al. and on 0ay
%>, 155, they bought another three (,) parcels of land
from <uan (o/ue. The first two parcels of land were
sold by petitioners in 15> to0arenir +evelopment
&orporation, while the three parcels of land were sold
by petitioners to ?rlinda (eyes and 0aria Samson on
0arch 1,1@A. Petitioners realized a net profit in the
sale made in 15> in the amount of P15",%%!.@A, while
they realized a net profit of P5A,AAA.AA in the sale
made in 1@A. The corresponding capital gains ta)es
were paid by petitioners in 1@, and 1@! by availing
of the ta) amnesties granted in the said years.2owever,
in a letter dated 0arch ,1, 1@ of then -cting ='(
&ommissioner ?fren '. Plana, petitioners were assessed
and re/uired to pay a total amount of P1A@,1A1.@A as
alleged deficiency corporate income ta)es for the years
15> and 1@A.
%.respondent &ommissioner informed petitioners that
in the years 15> and 1@A, petitioners as co#owners in
the real estate transactions formed an unregistered
partnership or 4oint venture ta)able as a corporation
under Section %A(b) and its income was sub4ect to the
ta)es prescribed under Section %!, both of the 1ational
'nternal (evenue &ode
,. 't ruled that on the basis of the principle enunciated
in Evangelista 3 an unregistered partnership was in fact
formed by petitioners which li6e a corporation was
sub4ect to corporate income ta) distinct from that
imposed on the partners.
'SS9?7
1.3B1 petitioners have formed co#ownership or an
unregistered partnership.
%. wBn are sub4ect to the ta) on corporations provided
for in section %! of &ommonwealth -ct. 1o. !55
2?C+7
1. this is a clear evidence of co#ownership between the
petitioners. 'n the present case, there is no evidence
that petitioners entered into an agreement to contribute
money, property or industry to a common fund, and
that they intended to divide the profits among
themselves. (espondent commissioner andB or his
representative 4ust assumed these conditions to be
present on the basis of the fact that petitioners
purchased certain parcels of land and became co#
owners thereof.
'n ?vangelista, there was a series of transactions where
petitioners purchased twenty#four (%!) lots showing
that the purpose was not limited to the conservation or
preservation of the common fund or even the properties
ac/uired by them. The character of habituality peculiar
to business transactions engaged in for the purpose of
gain was present.
%. 1$.The sharing of returns does not in itself establish
a partnership whether or not the persons sharing therein
have a 4oint or common right or interest in the property.
There must be a clear intent to form a partnership, the
e)istence of a 4uridical personality different from the
individual partners, and the freedom of each party to
transfer or assign the whole property.
There is no ade/uate basis to support the proposition
that they thereby formed an unregistered partnership.
The two isolated transactions whereby they purchased
properties and sold the same a few years thereafter did
not thereby ma6e them partners. They shared in the
gross profits as co# owners and paid their capital gains
ta)es on their net profits and availed of the ta) amnesty
thereby. 9nder the circumstances, they cannot be
considered to have formed an unregistered partnership
which is thereby liable for corporate income ta), as the
respondent commissioner proposes.