Case Digest (G.R. No. 12287)
Facts:
In Vicente Madrigal and Susana Paterno v. James J. Rafferty, decided August 7, 1918, Vicente Madrigal and his wife Susana Paterno, married under the Civil Code regime of sociedad de gananciales before January 1, 1914, filed a joint income tax declaration for 1914 reporting a net income of ₱296,302.73. Madrigal later claimed that, by reason of the conjugal partnership, this sum represented the combined income of husband and wife and should be split equally, thereby reducing their additional income tax liability under the Act of Congress of October 3, 1913 (the Income Tax Law). After an adverse ruling by the Attorney-General of the Philippine Islands, the United States Treasury Department reversed that opinion, directing the entire tax on the aggregate income to be assessed against Madrigal. Having paid the tax under protest, Vicente Madrigal and Susana Paterno sued the Collector and Deputy Collector of Internal Revenue in the Court of First ICase Digest (G.R. No. 12287)
Facts:
- Parties and Marriage
- Vicente Madrigal and Susana Paterno were legally married before January 1, 1914, under the Civil Code regime of sociedad de gananciales (conjugal partnership).
- Under that regime, property acquired during marriage becomes conjugal, with the wife holding only an inchoate (expectancy) interest until liquidation.
- Income Declaration and Government Action
- On February 25, 1915, Vicente Madrigal filed a sworn return declaring his net income for 1914 as ₱296,302.73.
- He later claimed that this entire sum was conjugal income and should be split equally: one half taxed to him and one half to his wife.
- Administrative and Judicial Proceedings
- The Philippine Attorney‐General initially agreed with Madrigal, but the U.S. Commissioner of Internal Revenue reversed that opinion, ruling the entire income taxable to the husband.
- After paying the disputed tax under protest, Vicente and Susana sued in the Court of First Instance, which upheld the tax assessment against Madrigal.
Issues:
- Application of Conjugal Partnership to Income Tax
- Whether the additional income tax under the Income Tax Law of October 3, 1913, may be divided equally between husband and wife by reason of their conjugal partnership.
- Whether Civil Code provisions on sociedad de gananciales override or modify the husband‐and‐wife filing and exemption rules of the American Income Tax Law as applied in the Philippines.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)