Case Digest (G.R. No. L-19342)
Facts:
In Lorenzo T. Ona and Heirs of Julia Bunales vs. Commissioner of Internal Revenue (G.R. No. L-19342, May 25, 1972), Julia Bunales died on March 23, 1944, leaving her husband Lorenzo T. Ona and five children as heirs. In 1948, Civil Case No. 4519 was filed in the Court of First Instance of Manila to settle her estate, and on May 16, 1949, the court approved the administrator’s project of partition. Three of the heirs were minors, so Lorenzo T. Ona was also appointed guardian of their persons and property. The estate comprised undivided interests in ten parcels of land (assessed at P87,860.00), six houses (P17,590.00), and a War Damage Commission award of about P50,000.00, which was used for joint rehabilitation of those properties. Subsequent loans and purchases increased the estate’s holdings, which Lorenzo managed by leasing, selling, and reinvesting proceeds into real estate and securities. From 1949 to 1956, the value of the common holdings rose from P105,450.00 to P480,005.2Case Digest (G.R. No. L-19342)
Facts:
- Decedent’s estate and administration
- Julia Bunales died on March 23, 1944, leaving surviving spouse Lorenzo T. Ona and five children as heirs.
- In 1948, Civil Case No. 4519 (CI Manila) was filed for estate settlement; Lorenzo T. Ona was appointed administrator on court approval.
- Partition project and guardianship
- On April 14, 1949, the administrator submitted a project of partition, approved May 16, 1949, allocating undivided interests in ten land parcels (P87,860 assessed value), six houses (P17,590), and War Damage Commission claims.
- Three heirs being minors, Lorenzo T. Ona was appointed guardian of Luz, Virginia, and Lorenzo Jr. on November 14, 1949.
- Management, investment and income reporting
- Properties were never physically divided; Lorenzo T. Ona managed, leased, sold, and reinvested proceeds in real estate and securities.
- Year-end book values rose from P105,450 in 1949 to P480,005.20 in 1956. Annual net income (installment sales, dividends, rentals, interests) was recorded and reported by share but retained and reinvested by the administrator.
- Tax assessment and procedural history
- For 1955 and 1956, the Commissioner of Internal Revenue treated the heirs as an unregistered partnership and assessed corporate income tax deficiencies of P8,092 and P13,899, plus surcharge and interest.
- Petitioners protested; the Court of Tax Appeals (CTA) denied their motion for reconsideration, upholding the partnership characterization and deficiency assessments (excluding two P50 compromises).
Issues:
- Whether petitioners are co-owners of inherited properties and their income or an unregistered partnership taxable under Sections 24 and 84(b) of the National Internal Revenue Code.
- If deemed a partnership, whether it is limited to subsequent investments and excludes income from inherited properties.
- Whether individual income taxes already paid on shares of profits may be credited against the assessed corporate income tax deficiency.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)