Revenue v. Ledesma

ZALDIVAR, J.:

Appeal by petitioner Commissioner of Internal Revenue - hereinafter referred to as Commissioner - from the decision of the Court of Tax Appeals, in its CTA Case No. 226, declaring as not in accordance with law the assessment of corporate income tax made by said Commissioner in the sum of P15,777.26 on the income of the co-partnership named "Hacienda Fortuna" during the period from January 1 to July 13, 1949, of which co-partnership herein respondents Carlos Ledesma, Julieta Ledesma, Amparo Ledesma de Gustilo and Vicente Gustilo, Jr. are its members.1 The undisputed facts, as shown in the record, are as follows: On July 9, 1949 herein respondents, Carlos Ledesma, Julieta Ledesma and the spouses Amparo Ledesma and Vicente Gustilo, Jr., purchased from their parents, Julio Ledesma and Florentina de Ledesma, the sugar plantation known as "Hacienda Fortuna," consisting of 36 parcels of land, situated in the municipality of San Carlos, province of Negros Occidental, with an area of approximately 1,202 hectares and with a sugar quota of 79,211.17 piculs, which sugar quota was included in the sale.

By virtue of the purchase, Carlos Ledesma acquired the one-third undivided portion of the plantation for the price of P144,043.00; Julieta Ledesma acquired another one-third undivided portion of the plantation for the same price; and respondents Amparo Ledesma de Gustilo and Vicente Gustilo, Jr. acquired the remaining one-third undivided portion also for the same price. Prior to the purchase, the sugar quota of 79,211.17 piculs was registered in the names of the vendors, Julio Ledesma and Florentina de Ledesma, under Plantation Audit No. 38-101 of the milling district of San Carlos Milling Co., Ltd. By virtue of the purchase Plantation Audit No. 58-101 was cancelled, and during the sugar crop year 1948-1949 the said sugar quota of 79,211.17 piculs was transferred to, apportioned among, and separately registered in the names of, the respondents, as follows: one-third to Vicente Gustilo, Jr. and Amparo Ledesma de Gustilo, under Plantation Audit No. 38-246; one-third to Carlos Ledesma, under Plantation Audit No. 38-247; and one-third to Julieta Ledesma under Plantation Audit No. 38248.

After their purchase of the plantation, herein respondents took over the sugar cane farming on the plantation beginning with the crop year 1948-1949. For the crop year 1948- 1949 the San Carlos Milling Co., Ltd. credited the respondents with their shares in the gross sugar production, as follows: Gross Production: Amparo Ledesma and Vicente Gustilo, Jr. 21,308.30 piculs Carlos Ledesma 21,308.30 " Julieta Ledesma 21,308.30