EUFEMIA EVANGELISTA, MANUELA EVANGELISTA, and FRANCISCA EVANGELISTA,

petitioners, vs.THE COLLECTOR OF INTERNAL REVENUE and THE COURT OF

TAX APPEALS, respondents. G.R. No. L-9996, October 15, 1957

Facts: Petitioners borrowed sum of money from their father and together with their own personal funds they
used said money to buy several real properties. They then appointed their brother (Simeon) as manager of the
said real properties with powers and authority to sell, lease or rent out said properties to third persons. They
realized rental income from the said properties for the period 1945-1949.

On September 24, 1954 respondent Collector of Internal Revenue demanded the payment of income tax on
corporations, real estate dealer's fixed tax and corporation residence tax for the years 1945-1949. The letter of
demand and corresponding assessments were delivered to petitioners on December 3, 1954, whereupon they
instituted the present case in the Court of Tax Appeals, with a prayer that "the decision of the respondent
contained in his letter of demand dated September 24, 1954" be reversed, and that they be absolved from the
payment of the taxes in question. CTA denied their petition and subsequent MR and New Trials were denied.
Hence this petition.

Issue: Whether or not petitioners have formed a partnership and consequently, 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. The essential elements of a partnership are two, namely: (a) an agreement to contribute money,
property or industry to a common fund; and (b) intent to divide the profits among the contracting parties.
The first element is undoubtedly present in the case at bar, for, admittedly, petitioners have agreed to, and did,
contribute money and property to a common fund. Upon consideration of all the facts and circumstances
surrounding the case, we are fully satisfied that their purpose was to engage in real estate transactions for
monetary gain and then divide the same among themselves, because of the following observations, among
others: (1) Said common fund was not something they found already in existence; (2) They invested the same,
not merely in one transaction, but in a series of transactions; (3) The aforesaid lots were not devoted to
residential purposes, or to other personal uses, of petitioners herein.

Although, taken singly, they might not suffice to establish the intent necessary to constitute a partnership, the
collective effect of these circumstances is such as to leave no room for doubt on the existence of said intent in
petitioners herein.

For purposes of the tax on corporations, our National Internal Revenue Code, includes these partnerships
with the exception only of duly registered general copartnerships within the purview of the term
"corporation." It is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar as said
Code is concerned and are subject to the income tax for corporations.