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    Pascual V CIR

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    Jocelyn Magbanua
    The petitioners bought and sold parcels of land in 1965-1966 and 1968-1970 respectively. They paid capital gains tax on the profits in 1973-1974 by availing tax amnesties. However, the Commissioner of Internal Revenue assessed them for deficiency in corporate income taxes, claiming they formed an unregistered partnership. The Court ruled that there was no evidence the petitioners intended to form a partnership or contribute to a common fund and divide profits. As co-owners of property, they were not automatically partners. The isolated land transactions did not make them partners. They shared profits as co-owners and properly paid capital gains tax, so they could not be considered an unregistered partnership liable for corporate income tax.

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    Pascual V CIR

    Uploaded by

    Jocelyn Magbanua
    300 views1 page
    The petitioners bought and sold parcels of land in 1965-1966 and 1968-1970 respectively. They paid capital gains tax on the profits in 1973-1974 by availing tax amnesties. However, the Commissioner of Internal Revenue assessed them for deficiency in corporate income taxes, claiming they formed an unregistered partnership. The Court ruled that there was no evidence the petitioners intended to form a partnership or contribute to a common fund and divide profits. As co-owners of property, they were not automatically partners. The isolated land transactions did not make them partners. They shared profits as co-owners and properly paid capital gains tax, so they could not be considered an unregistered partnership liable for corporate income tax.

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    Pascual v CIR

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    Pascual v CIR

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    The petitioners bought and sold parcels of land in 1965-1966 and 1968-1970 respectively. They paid capital gains tax on the profits in 1973-1974 by availing tax amnesties. However, the Commissioner of Internal Revenue assessed them for deficiency in corporate income taxes, claiming they formed an unregistered partnership. The Court ruled that there was no evidence the petitioners intended to form a partnership or contribute to a common fund and divide profits. As co-owners of property, they were not automatically partners. The isolated land transactions did not make them partners. They shared profits as co-owners and properly paid capital gains tax, so they could not be considered an unregistered partnership liable for corporate income tax.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    300 views1 page

    Pascual V CIR

    Uploaded by

    Jocelyn Magbanua
    The petitioners bought and sold parcels of land in 1965-1966 and 1968-1970 respectively. They paid capital gains tax on the profits in 1973-1974 by availing tax amnesties. However, the Commissioner of Internal Revenue assessed them for deficiency in corporate income taxes, claiming they formed an unregistered partnership. The Court ruled that there was no evidence the petitioners intended to form a partnership or contribute to a common fund and divide profits. As co-owners of property, they were not automatically partners. The isolated land transactions did not make them partners. They shared profits as co-owners and properly paid capital gains tax, so they could not be considered an unregistered partnership liable for corporate income tax.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Leonardo B. Billones, Jr.

    LLB 4B

    [G.R. No. L-78133. October 18, 1988.]


    MARIANO P. PASCUAL and RENATO P. DRAGON, Petitioners,
    v.
    THE COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS, Respondents.

    FACTS:
    Pascual and Dragon bought 2 parcels of land in 1965 and another 3 parcels of land in 1966. The
    2 parcels of land were resold in 1968 and the 3 parcels of land were sold in 1970. Corresponding capital
    gains tax were paid in 1973 and 1974 by availing tax amnesties the said years. However, the CIR
    assessed the petitioners for deficiency of payment in corporate income taxes for the year 1968 1970
    claiming that the petitioners formed an unregistered partnership.
    The petitioners protested the assessment.

    ISSUES:
    Whether or not petitioners are subject to the tax on corporation

    LAW:
    Commonwealth Act. No. 466 - National Internal Revenue Code
    SEC. 24. Rate of tax on corporations
    SEC. 84 (b). The term 'corporation' includes partnerships, no matter how created or organized, joint-stock companies, joint
    accounts (cuentas en participacion), associations or insurance companies, but does not include duly registered general
    copartnerships. (compaias colectivas).

    ARGUMENTS:
    PETITIONER'S ARGUMENTS RESPONDENT'S ARGUMENTS
    Petitioners asserted that they The Commissioner argued that petitioners as co-owners in the real estate
    transactions formed an unregistered partnership or joint venture taxable
    had paid their tax liabilities by as a corporation under Section 20(b) and its income was subject to the
    availing tax amnesties the said taxes prescribed under Section 24, both of the National Internal Revenue
    years Code; 1 that the unregistered partnership was subject to corporate income
    tax as distinguished from profits derived from the partnership by them
    which is subject to individual income tax; and that the availment of tax
    amnesty under P.D. No. 23, as amended, by petitioners relieved petitioners
    of their individual income tax liabilities but did not relieve them from the
    tax liability of the unregistered partnership

    COURTs RULING:
    NO. In 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. Respondent commissioner and/or his representative just assumed these conditions
    to be present on the basis of the fact that petitioners purchased certain parcels of land and became co-
    owners thereof.
    The common ownership of property does not itself create a partnership between the owners,
    though they may use it for the purpose of making gains; and they may, without becoming partners,
    agree among themselves as to the management, and use of such property and the application of the
    proceeds therefrom. (Spurlock v. Wilson, 142 S.W. 363, 160 No. App. 14.)
    In the present case, there is clear evidence of co-ownership between the petitioners. There is no
    adequate 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 make them partners. They shared in the gross profits as co-owners and paid their capital
    gains taxes on their net profits and availed of the tax amnesty thereby. Under the circumstances, they
    cannot be considered to have formed an unregistered partnership which is thereby liable for corporate
    income tax, as the respondent commissioner proposes.

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