FACTS:
Petitioners bought two (2) parcels of land and a year after, they bought another
three (3) parcels of land. Petitioners subsequently sold the said lots in 1968 and
1970, and realized net profits. The corresponding capital gains taxes were paid by
petitioners in 1973 and 1974 by availing of the tax amnesties granted in the said
years. However, the Acting BIR Commissioner assessed and required Petitioners to
pay a total amount of P107,101.70 as alleged deficiency corporate income taxes for
the years 1968 and 1970. Petitioners protested the said assessment asserting that
they had availed of tax amnesties way back in 1974. In a reply, respondent
Commissioner informed petitioners that in the years 1968 and 1970, petitioners as
co-owners in the real estate transactions formed an unregistered partnership or
joint venture taxable as a corporation under Section 20(b) and its income was
subject to the taxes prescribed under Section 24, both of the National Internal
Revenue Code 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. Hence, the petitioners were required to pay the deficiency income tax
assessed.
ISSUE:
RULING:
The Petitioners are simply under the regime of co-ownership and not under
unregistered partnership.