Case Digest (G.R. No. 17518)
Facts:
In Frederick C. Fisher v. Wenceslao Trinidad (43 Phil. 973, decided October 30, 1922 in Manila), the Philippine American Drug Company, a duly organized corporation under Philippine law, declared a “stock dividend” for its shareholders in 1919. Appellant Frederick C. Fisher, a stockholder, received a proportionate share of P24,800 in stock dividends. In March 1920, respondent Wenceslao Trinidad, Collector of Internal Revenue, demanded and, over Fisher’s protest, involuntarily collected P889.91 as income tax on the stock dividend under section 25 of Act No. 2833. Fisher filed a petition in the Court of First Instance of Manila for recovery of the tax paid, and Trinidad demurred on the ground that the petition failed to state a cause of action. The trial court sustained the demurrer, dismissing the petition, and Fisher appealed to the Supreme Court.Issues:
- Are “stock dividends” received by a shareholder from a corporation “in
Case Digest (G.R. No. 17518)
Facts:
- Background
- In 1919 the Philippine American Drug Company, a corporation duly organized under Philippine law, conducted business in Manila.
- Frederick C. Fisher (appellant) was a shareholder; Wenceslao Trinidad (appellee) was Collector of Internal Revenue.
- Transaction and litigation
- For the year 1919 the corporation declared a stock dividend; appellant’s share amounted to ₱24,800, evidenced by additional stock certificates.
- In March 1920 appellant paid under protest ₱889.91 as income tax on the stock dividend and sued for recovery. The appellee demurred; the lower court sustained the demurrer, dismissing the petition. Appellant appealed.
Issues:
- Primary Issue
- Whether “stock dividends” are “income” taxable under Section 25 of Act No. 2833.
- Subsidiary Issues
- Whether Philippine Act No. 2833 departs meaningfully from U.S. income‐tax statutes.
- Whether the Philippine Legislature may, by definition, treat capital items as income.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)