sic itur ad astra

Taxation Law | Income Tax Frederick C. Fisher, a stockholder, was taxed on stock dividends he received. He sought a refund on the ground that such dividends were not income. The Court ruled that stock dividends are not taxable income because they represent merely an increase in capital and do not constitute realized gain or profit. Frederick C. Fisher, a stockholder of the Philippine American Drug Company, received a stock dividend worth P24,800 in 1919, representing his proportional share in the corporation’s increased capital. The Collector of Internal Revenue required Fisher to pay income tax on the stock dividend , which he paid under protest, and thereafter filed a case to recover the amount, claiming it was wrongfully collected . The trial court sustained the government’s position through a demurrer, effectively ruling that the stock dividend was taxable as income, prompting Fisher to appeal. Fisher argued that stock dividends are not income but capital , since they merely repre...

Taxation Law | Income Taxation Spouses Vicente Madrigal and Susana Paterno claimed that their conjugal income should be split equally between them to reduce liability under the additional income tax. The Court ruled that for income tax purposes, the entire income is taxable to the husband because the wife’s interest is merely inchoate and income cannot be divided to avoid progressive taxation. Vicente Madrigal and his wife Susana Paterno were married under the conjugal partnership of gains . For the taxable year 1914, Madrigal declared a net income of P296,302.73 derived from their combined business activities. Madrigal later claimed that such income was conjugal income , and therefore should be divided equally between him and his wife , resulting in a lower additional income tax liability , and sought a refund of alleged overpaid taxes. The Collector of Internal Revenue rejected the claim, and the trial court ruled in favor of the government, holding that the entire income should be...