Evangelista vs.

Collector of Internal Revenue

Facts: Petitioners borrowed money from their father and purchased several
lands. For several years, these lands were leased to tenants by the
petitioners. In 1954, respondent Collector of Internal Revenue demanded from
petitioners the payment of income tax on corporations, real estate dealer's
fixed tax and corporation residence tax for the years 1945-1949. A letter of
demand and corresponding assessments were delivered to petitioners. Petitioners
claim that they should be absolved from paying said taxes since they are not a corporation.

Issue: Whether petitioners are subject to the tax on corporations provided

for in section 24 of Commonwealth Act. No. 466, otherwise known as the
National Internal Revenue Code, as well as to the residence tax for corporations and the real
estate dealers fixed tax.

Held: Yes. Petitioners are subject to the income tax and residence tax for corporation. As
defined in section 84 (b) of the Internal Revenue Code, "the term
corporation includes partnerships, no matter how created or organized." This
qualifying expression clearly indicates that a joint venture need not be
undertaken in any of the standard forms, or in conformity with the usual
requirements of the law on partnerships, in order that one could be
deemed constituted for purposes of the tax on corporations. Partnership, as
has been defined in the civil code refers to two or more persons who
bind themselves to contribute money, properly, or industry to a common fund,
with the intention of dividing the profits among themselves. Thus, petitioners,
being engaged in the real estate transactions for monetary gain and dividing
the same among themselves constitute a partnership so far as the Code is
concerned and are subject to income tax for corporation. Since Sec 2 of
the Code in defining corporations also includes joint-stock company, partnership,
joint account, association or insurance company, no matter how created or
organized, it follows that petitioners, regardless of how their partnership was
created is also subject to the residence tax for corporations.