Facts:

 A Soriano Corporation (ANSCOR) redeemed 28,000 common shares from the estate of Don
Andres Soriano, the founder of the corporation.
 ANSCOR further increased its capital stock and redeemed an additional 80,000 common shares
from the estate.
 The purpose of these redemptions was to partially retire the stocks as treasury shares and reduce
foreign exchange remittances in case cash dividends were declared.
 The Bureau of Internal Revenue (BIR) assessed ANSCOR for deficiency withholding tax-at-
source based on these transactions.
 ANSCOR argued that it had no duty to withhold tax from the redemptions because they were
done for legitimate business purposes.
 ANSCOR also invoked the tax amnesty provisions of Presidential Decree No. 67.
Issue:
 Whether ANSCOR's redemption of stocks and exchange of common with preferred shares can be
considered as essentially equivalent to the distribution of taxable dividends.
Ruling:
 The redemption of stock dividends is subject to income tax.
 The exchange of common with preferred shares is not taxable.