Professional Documents
Culture Documents
415
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 1/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
7. ID.; ID.; ID.The Income Tax Law does not look on the
spouses as individual partners in an ordinary partnership.
MALCOLM, J.:
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 2/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 3/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
ISSUES.
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 4/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
418
the Income Tax Law are as the name implies taxes upon
income and not upon capital and property; that the fact
that Madrigal was a married man, and his marriage
contracted under the provisions governing the conjugal
partnership, has no bearing on income considered as
income, and that the distinction must be drawn between
the ordinary form of commercial partnership and the
conjugal partnership of spouses resulting from the relation
of marriage.
DECISION.
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 5/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
419
420
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 6/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
per annum. They are jointly and separately liable for such
return and f or the payment of the tax. The single or
married status of the person claiming the specific
exemption shall be determined as of the time of claiming
such exemption if such claim be made within the year for
which return is made, otherwise the status at the close of
the year."
With these general observations relative to the Income
Tax Law in force in the Philippine Islands, we turn for a
moment to consider the provisions of the Civil Code dealing
with the conjugal partnership. Recently in two elaborate
decisions in which a long line of Spanish authoritie& were
cited, this court, in speaking of the conjugal partnership,
decided that "prior to the liquidation, the interest of the
wife, and in case of her death, of her heirs, is an interest
inchoate, a mere expectancy, which constitutes neither a
legal nor an equitable estate, and does not ripen into title
until there appears that there are assets in the community
as a result of the liquidation and settlement." (Nable Jose
vs. Nable Jose [1916], 15 Off. Gaz., 871; Manuel and
Laxamana vs. Losano [1918], 16 Off. Gaz., 1265.)
Susana Paterao, wife of Vicente Madrigal, has an
inchoate right in the property of her husband Vicente
Madrigal during the life of the conjugal partnership. She
has an interest in the ultimate property rights and in the
ultimate ownership of property acquired as income after
such income has become capital. Susana Paterno has no
absolute right to onehalf the income of the conjugal
partnership. Not being seized of a separate estate, Susana
Paterno cannot make a separate return in order to receive
the benefit of the exemption which would arise by reason of
the additional tax. As she has no estate and income,
actually and legally vested in her and entirely distinct from
her husband's property, the income cannot properly be
considered the separate income of the wife for the purposes
of the additional tax. Moreover, the Income Tax Law does
not look on the spouses as individual partners in an
ordinary partnership. The husband and wife are only
entitled to the exemption of P8,000, specifically granted by
the law.
421
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 7/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
"Income Tax.
"FRANK MC!NTYRE,
422
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 8/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
use and disposition; that in this case the wife has no 'separate
estate' within the contemplation of the Act of October 3, 1913,
levying an income tax.
"It appears further from the correspondence that upon the
foregoing explanation, tax was assessed against the entire net
income against Gregorio Araneta; that the tax was paid and an
application for refund made, and that the application for refund
was rejected, whereupon the matter was submitted to the
AttorneyGeneral of the Islands who holds that the returns were
correctly rendered, and that the refund, should be allowed; and
thereupon the question at issue is submitted through the
GovernorGeneral of the Islands and Bureau of Insular Affairs for
the advisory opinion of this office.
"By paragraph M of the statute, its provisions are extended to
the Philippine Islands, to be administered as in the United States
but by the appropriate internalrevenue officers of the Philippine
Government. You are therefore advised that upon the facts as
stated, this office holds that for the Federa! Income Tax (Act of
October 3, 1913), the entire net income in this case was taxable to
Gregorio Araneta, both for the normal and additional tax, and
that the application for refund was properly rejected.
"The separate estate of a married woman within the
contemplation of the Income Tax Law is that which belongs to her
solely and separate and apart from her husband, and over which
her husband has no right in equity. It may consist of lands or
chattels.
"The statute and the regulations promulgated in aceordance
therewith provide that each person of lawful age (not excused
from so doing) having a net income of $3,000 or over for the
taxable year shall make a return showing the facts; that from the
net income so shown there shall be deducted $3,000 where the
person making the return is a single person, or married and not
living with consort, and $1,000 additional where the person
making the return is married and living with consort; but that
where the husband and wife both make returns (they living
together), the
423
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 9/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
which latter event either the husband or wife may make the
return but not both. In all instances the income of husband and
wife whether from separate estates or not, is taken as a whole for
the purpose of the normal tax. Where the wife has income from a
separate estate and makes return thereof, or where her income is
separately shown in the return made by her husband, while the
incomes are added together for the purpose of the normal tax they
are taken separately for the purpose of the additional tax. In this
case, however, the wife has no separate income within the
contemplation of the Income Tax Law.
"Respectfully,
"DAVID A. GATES,
"Acting Commissioner."
424
Judgment affirmed.
_______________
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 10/11
3/1/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 038
http://www.central.com.ph/sfsreader/session/0000015a8a195024b42dfefb003600fb002c009e/t/?o=False 11/11