Afisco Insurance Corp. v. CA, G.R. No.

112675 dated January 25, 1999

Petitioners were under the theory that the “Pool” they have created was not subject to the corporate income tax
assessed by the CIR. However, another issue in this case revolves around the dividends remitted by the Pool. The
question was whether or not such dividends, if they were to be considered dividends at all, were subject to tax.
The Court said that since the Pool was an entity separate and distinct from the ceding companies, it is liable not
only for the corporate income tax but also for tax on dividends remitted to such companies. Income is clearly
different from dividends.

Ona v. CIR, G.R. No. L-19342 dated May 25, 1972

Since the petitioners engaged in the buying and selling of land, they were assessed deficiency taxes for corporate
income tax, under the theory that they formed not merely a co-ownership but an unregistered partnership. After
the Court upheld the view of the Commissioner on this matter, the Court discussed the issue of the shares of such
partners.

The petitioners asked that since they have been paying their individual income taxes including their share in the
profits of the unregistered partnership, they asked that the Court apply such payments to the deficiency of the tax
against such partnership. The Court replied thus:

“xxx it is the position of petitioners that the taxable income of the partnership must be reduced by the
amounts of income tax paid by each petitioner on his share of partnership profits. This is not correct;
rather, it should be the other way around. The partnership profits distributable to the partners
(petitioners herein) should be reduced by the amounts of income tax assessed against the partnership.
Consequently, each of the petitioners in his individual capacity overpaid his income tax for the years in
question, but the income tax due from the partnership has been correctly assessed. Since the individual
income tax liabilities of petitioners are not in issue in this proceeding, it is not proper for the Court to pass
upon the same.”