7/25/2019 Evangelista vs CIR Case Digest
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Evangelista, et al. v. CIR, GR No. L-9996, October 15, 1957
Facts Herein petitioners seek a review of CTAs decision holding
them liable for income tax,real estate dealers tax and residence
tax. As stipulated, petitioners borrowed from their father acertain
sum for the purpose of buying real properties. ithin !ebruary "#$%
to April "##$, they
have bought parcels of land from different persons, the
management of said properties wascharged to their brother
&imeon evidenced by a document. These properties were then
leasedor rented to various tenants. 'n &eptember "#($, C)*
demanded the payment of income tax on corporations, realestate
dealers fixed tax, and corporation residence tax to which the
petitioners seek to beabsolved from such payment.Iss!ehether
petitioners are sub+ect to the tax on corporations.R!ling The Court
ruled that with respect to the tax on corporations, the issue
hinges on themeaning of the terms corporation- and partnership- as
used in &ection $ /provides that a taxshall be levied on every
corporation no matter how created or organi0ed except general
co1partnerships2 and 3$ /provides that the term corporation
includes among others, partnership2 of
the 4)*C. 5ursuant to Article "676, 4CC /provides for the
concept of partnership2, its essentialelements are8 /a2 an
agreement to contribute money, property or industry to a common
fund9and /b2 intent to divide the profits among the contracting
parties.)t is of the opinion of the Court that the first element is
undoubtedly present for petitioners haveagreed to, and did,
contribute money and property to a common fund. As to the second
element,the Court fully satisfied that their purpose was to engage
in real estate transactions for monetarygain and then divide the
same among themselves as indicated by the following
circumstances8
". The common fund was not something they found already in
existence nor aproperty inherited by them pro indiviso. )t was
created purposely, +ointly borrowing a substantialportion thereof
in order to establish said common fund9
. They invested the same not merely in one transaction, but in a
series oftransactions. The number of lots ac:uired and transactions
undertake is strongly
indicative of a pattern or common design that was not limited to
the conservation andpreservation of the aforementioned common fund
or even of the property ac:uired. )nother words, one cannot but
perceive a character of habitually peculiar to businesstransactions
engaged in the purpose of gain9%. &aid properties were not
devoted to residential purposes, or to other personaluses, of
petitioners but were leased separately to several persons9$. They
were under the management of one person where the affairs relative
to saidproperties have been handled as if the same belonged to a
corporation or business andenterprise operated for profit9(.
;xisted for more than ten years, or, to be exact, over fifteen
years, since the firstproperty was ac:uired, and over twelve years,
since &imeon ;vangelista became themanager9
7. 5etitioners have not testified or introduced any evidence,
either on their purpose increating the set up already adverted to,
or on the causes for its continued existence.
The collective effect of these circumstances is such as to leave
no room for doubt on theexistence of said intent in petitioners
herein. Also, petitioners argument that their being mere co1owners
did not create a separatelegal entity was re+ected because,
according to the Court, the tax in :uestion is one imposedupon
