[go: up one dir, main page]
Scribd
Upload
108 views1 page

20commissioner of Internal Revenue vs. John L. Manning

The Supreme Court ruled that the shares in question were not treasury shares and that their declaration as stock dividends was invalid. The assessment by the Bureau of Internal Revenue for tax purposes was deemed lawful. Treasury shares must be fully paid and reacquired by the corporation, which the questioned shares did not meet the criteria for.

Uploaded by

zane
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
108 views1 page

20commissioner of Internal Revenue vs. John L. Manning

The Supreme Court ruled that the shares in question were not treasury shares and that their declaration as stock dividends was invalid. The assessment by the Bureau of Internal Revenue for tax purposes was deemed lawful. Treasury shares must be fully paid and reacquired by the corporation, which the questioned shares did not meet the criteria for.

Uploaded by

zane
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

[G.R. No. L-28398. August 6, 1975.

Commissioner Of Internal Revenue Vs. John L. Manning, W.D. Mcdonald, E.E. Simmons
And The Court Of Tax Appeals

FACTS:

Under a trust agreement, Julius Reese owned 24,700 of the 25,000 authorized capital stock of
Manta Trading and Supply Co., the rest are owned by herein respondents. Upon Reese’ death,
his shares was held in trust by the law firm Ross, Carrascoso and Janda for the private
respondent, who were to continue management of the corporation. These shares considered by
the respondents as treasury shares, prior to full payment, were declared as stock dividends was
in effect a distribution of the "assets or property of the corporation.". Such declaration was
assessed by the BIR as distribution of assets subject to income tax.

ISSUE: WON the subject shares are treasury shares

HELD:

NO. the Supreme Court held that the newly acquired shares were not treasury shares; their
declaration as treasury stock dividends was a complete nullity and that the assessment by the
Commissioner of fraud penalty and the imposition of interest charges pursuant to the provision
of the Tax Code were made in accordance with law.

Treasury shares are stocks issued and fully paid for and reacquired by the corporation either by
purchase, donation, forfeiture or other means and do not have the status of outstanding shares.
They may be re-issued or sold again and while held by the company participates neither in
dividends, because dividends cannot be declared by the corporation to itself, nor in meeting of
the corporation as voting stock for otherwise equal distribution of voting powers among
stockholders will be effectively lost and the directors will be able to perpetuate their control of
the corporation, though it still represent a paid for interest in the property of the corporation.
These features of a treasury stock are lacking in the questioned shares.

You might also like