Case Digest (G.R. No. 78133)
Facts:
In 1965, petitioners Mariano P. Pascual and Renato P. Dragon acquired two parcels of land from Santiago Bernardino et al., and in 1966 purchased three additional parcels from Juan Roque. In 1968 they sold the first two parcels to Marenir Development Corporation, realizing a net profit of ₱165,224.70, and in 1970 they sold the remaining three parcels to Erlinda Reyes and Maria Samson for a net profit of ₱60,000.00. Petitioners paid the corresponding capital gains taxes in 1973 and 1974 by availing themselves of tax amnesties under Presidential Decree No. 23. In 1979, the Acting Commissioner of Internal Revenue assessed them for a total of ₱107,101.07 alleged deficiency corporate income taxes for 1968 and 1970, on the ground that their co-ownership constituted an unregistered partnership taxable as a corporation under Sections 20(b) and 24 of the National Internal Revenue Code (NIRC). Petitioners protested, contending that the tax amnesties had relieved them of any further liabiliCase Digest (G.R. No. 78133)
Facts:
- Acquisition and Disposition of Properties
- June 22, 1965: Petitioners purchased two parcels of land from Santiago Bernardino, et al.
- May 28, 1966: Petitioners purchased three parcels of land from Juan Roque.
- 1968: Sold the first two parcels to Marenir Development Corporation, realizing a net profit of ₱165,224.70.
- March 19, 1970: Sold the remaining three parcels to Erlinda Reyes and Maria Samson, realizing a net profit of ₱60,000.00.
- Tax Payments and Assessment
- 1973–1974: Petitioners paid capital gains taxes on the above profits by availing of the tax amnesties under P.D. No. 23.
- March 31, 1979: Acting BIR Commissioner assessed petitioners ₱107,101.07 as deficiency corporate income tax for 1968 and 1970, characterizing their transactions as an unregistered partnership or joint venture.
- June 26, 1979: Petitioners protested, asserting they had already availed of amnesty.
- August 22, 1979: Commissioner maintained that the tax amnesty only covered individual income tax, not the corporate income tax of an unregistered partnership.
- CTA Case No. 3045: On March 30, 1987, the Court of Tax Appeals (CTA) affirmed the assessment by majority (Presiding Judge Filler and Judge Reyes); Judge Roaquin dissented, finding no partnership.
Issues:
- Existence of an Unregistered Partnership
- Did petitioners form an unregistered partnership or joint venture taxable as a corporation under Sections 20(b) and 24 of the National Internal Revenue Code?
- Burden of Proof and Reliance on Evangelista
- Did the CTA err in presuming the existence of a partnership and shifting the burden of proof to petitioners?
- Was it proper to equate isolated land-sale transactions with the continuous business operations in Evangelista v. Collector?
- Effect of Tax Amnesty
- Does availing of the tax amnesty under P.D. No. 23 relieve petitioners from any corporate (partnership) income tax liability for the years 1968 and 1970?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)