Topics: Title:

Insurance law: Insurable Interest; Corporate beneficiary; Proceeds; excluded to gross income El Oriente vs. Posada, 56 Phil. 147 (1931) MALCOLM, J.:

Facts:

The plaintiff-Corporation is the sole beneficiary of the duly paid policy on the life of its manager. Upon the death of the manager, the plaintiff-Corporation received all the proceeds of the said policy. The defendant Collector of Internal Revenue levied income tax on the proceeds which the plaintiff paid under protest. The defendant overruled said protest based on the Philippine Income Tax Law (Act No. 2833, enforced in 1920) Section 10 that there shall be levied, assessed, collected, and paid annually upon the total net income received in the preceding calendar year from all sources by every corporation. Is the proceeds taken by a corporation are taxable as income under the Philippine Income Tax Law (Act No. 2833, enforced in 1920)? No. The proceeds of the life insurance policy in question as representing an indemnity and not taxable income, it is a capital. Moreover there is lack of express legislative intention to tax the proceeds of life insurance policies paid to corporate beneficiaries.

Issue: Ruling: Legal Basis:

Note:

In the present National Internal Revenue Code 1997, the proceed of life insurance is still not subject to income tax as a general rule.