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Obillos, Jr. vs. Commissioner of Internal Revenue, 139 SCRA 436, October 29, 1985
Obillos, Jr. vs. Commissioner of Internal Revenue, 139 SCRA 436, October 29, 1985
Taxation; The dictum that the power to tax involves the power
to destroy should be obviated.—To regard the petitioners as having
formed a taxable unregistered partnership would result in
oppressive
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* SECOND DIVISION.
437
taxation and confirm the dictum that the power to tax involves
the power to destroy. That eventuality should be obviated.
Same; Partnership; Co-ownership; Where the father sold his
rights over two parcels of land to his four children so they can
build their residence, but the latter after one (1) year sold them
and paid the capital gains, they should not be treated to have
formed an unregistered partnership and taxed corporate income
tax on the sale and dividend income tax on their shares of the
profit's from the sale.—Their original purpose was to divide the
lots for residential purposes. If later on they found it not feasible
to build their residences on the lots because of the high cost of
construction, then they had no choice but to resell the same to
dissolve the coownership. The division of the profit was merely
incidental to the dissolution of the co-ownership which was in the
nature of things a temporary state. It had to be terminated sooner
or later.
Same; Same; Same; Mere sharing of gross income from an
isolated transaction does not establish a partnership.—Article
1769(3) of' the Civil Code provides that ''the sharing of gross
returns does not of itself establish a partnership, whether or not
the persons sharing them have a j oint or common right or
interest in any property from which the returns are derived".
There must be an unmistakable intention to form a partnership
or joint venture.
AQUINO, J..
439
VOL. 139, OCTOBER 29, 1985 439
Obillos, Jr. vs. Commissioner of Internal Revenue
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