PASCUAL & DRAGON VS CIR AND CTA

FACTS:
Petitioners bought two parcels of land and another 3 parcels the following year. The 2 parcels were sold in 1968 while the other 3
were sold in 1970. Realizing profits from the sale, petitioners filed capital gains tax. However, they were assessed with
deficiency tax for corporate income taxes.
ISSUE:
Whether or not petitioners formed an unregistered partnership thereby assessed with corporate income tax.
RULING:
By the contract of partnership, two or more persons bind themselves to contribute MONEY , industry or property to a common
fund with the intention of dividing profits among themselves. There is no evidence though, that petitioners entered into an agreement
to contribute MPI to a common fund and that they intend to divide profits among themselves. The petitioners purchased parcels of
land and became co-owners thereof. Their transactions of selling the lots were isolated cases. The character of habituality peculiar
to the business transactions for the purpose of gain was not present.
The sharing of returns foes not in itself establish a partnership whether or not the persons sharing therein have a joint or common
right or interest in the property. There must be a clear intent to form partnership, the existence of a juridical personality different from
the individual partners, and the freedom of each party to transfer or assign the whole property.
Obillos et al vs. CIR/CA
GRN L68118 October 29, 1985
Aquino, J.:
FACTS:
Petitioners sold the lots they inherited from their father and derived a total profit of P33,584 for each of them. They treated the profit
as capital gain and paid an income tax thereof. The CIR required petitioners to pay corporate income tax on their shares, .20% tax
fraud surcharge and 42% accumulated interest. Deficiency tax was assessed on the theory that they had formed an unregistered
partnership or joint venture.
ISSUE:
Whether or not partnership was formed by the siblings thus be assessed of the corporate tax.
RULING:
Petitioners were co-owners and to consider them partners would obliterate the distinction between co-ownership and partnership.
The petitioners were not engaged in any joint venture by reason of that isolated transaction.
Art 1769 the sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a
joint or common right or interest in any property from which the returns are derived. There must be an unmistakable intention to form
partnership or joint venture

AFISCO Insurance et al vs. CA/CTA/CIR

GRN 112675 January 25, 1999
Panganiban, J.:
FACTS:
The 41 non-life insurance corporation entered into a Qouta Share Reinsurance Treaty with Munich, non-resident corporation. The
reinsurance treaty required petitioners to form a pool. CA ruled that the pool of machinery was a partnership taxable as a
corporation, and that the latters collection of premiums on behalf of its members was taxable income.
ISSUE:
Whether or not the insurance pool be taxable as an incorporation and its remittances be taxable as dividends.

RULING:
The Philippine legislative included in the concept of corporation those entities that resembled them such as unregistered
partnerships and associations. Section 24 covered unregistered partnerships and even associations and joint accounts, which had
no legal personalities apart from their individual members.
The term partnership includes a syndicate group, pool, joint venture or other unincorporated organization, through or by means of
which any business financial operation or venture is carried on.
The pool is taxable entity distinct from the individual corporate entities of the insurance companies. The tax on income is different
from the tax on dividends received by said companies, thus no double taxation.