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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

141658 March 18, 2005

COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. T E P ILIPPINE AMERICAN ACCI!ENT INSURANCE COMPAN", INC., T E P ILIPPINE AMERICAN ASSURANCE COMPAN", INC., a#$ T E P ILIPPINE AMERICAN GENERAL INSURANCE CO., INC.,Respondents. D CARPIO, J.% Th& Ca'& "efore the !ourt is a petition for revie#$ assailin% the Decision& of ' (anuar) &*** of the !ourt of +ppeals in !+,-.R. SP No. ./0$/. The !ourt of +ppeals affir1ed the Decision . of 2 (anuar) $332 of the !ourt of Ta4 +ppeals 56!T+67 in !T+ !ases Nos. &2$8, &2$2 and &2$/. The !T+ ordered the !o11issioner of Internal Revenue 56petitioner67 to refund a total of P&3,2'2.*& to respondent co1panies 56respondents67. A#(&c&$&#( Fac(' Respondents are do1estic corporations licensed to transact insurance business in the countr). Fro1 +u%ust $3'$ to Septe1ber $3'&, respondents paid the "ureau of Internal Revenue under protest the .9 ta4 i1posed on lendin% investors b) Section $32,+8 of !o11on#ealth +ct No. 8// 56!+ 8//67, as a1ended b) Republic +ct No. /$$* 56R+ /$$*67 and other la#s. !+ 8// #as the National Internal Revenue !ode 56NIR!67 applicable at the ti1e. Respondents paid the follo#in% a1ounts: P',302.&2 fro1 Philippine +1erican 56P;I<+M67 +ccident Insurance !o1pan)= P',*8'.0* fro1 P;I<+M +ssurance !o1pan)= and P$8,28$.3' fro1 P;I<+M -eneral Insurance !o1pan). These a1ounts represented .9 of each co1pan)>s interest inco1e fro1 1ort%a%e and other loans. Respondents also paid the ta4es re?uired of insurance co1panies under !+ 8//. On .$ (anuar) $3'., respondents sent a letter,clai1 to petitioner see@in% a refund of the ta4es paid under protest. Ahen respondents did not receive a response, each respondent filed on &/ +pril $3'. a petition for revie# #ith the !T+. These three petitions, #hich #ere later consolidated, ar%ued that respondents #ere not lendin% investors and as such #ere not subBect to the .9 lendin% investors> ta4 under Section $32,+. The !T+ archived respondents> case for several )ears #hile another case #ith a si1ilar issue #as pendin% before the hi%her courts. Ahen respondents> case #as reinstated, the !T+ ruled that respondents #ere entitled to their refund. Th& R)*+#, o- (h& Co)r( o- Ta. A//&a*' The !T+ held that respondents are not ta4able as lendin% investors because the ter1 6lendin% investors6 does not e1brace insurance co1panies. The !T+ traced the histor) of the ta4 on lendin% investors, as follo#s: !ISION

Ori%inall), a person #ho #as en%a%ed in lendin% 1one) at interest #as ta4ed as a 1one) lender. CSec. $8/8547, Rev. +d1. !odeD The ter1 1one) lenders #as defined as includin% 6all persons #ho 1a@e a practice of lendin% 1one) for the1selves or others at interest.6 CSec. $8/25v7, id.D Ender this la#, an insurance co1pan) #as not considered a 1one) lender and #as not ta4able as such. To ?uote fro1 an old "IR Rulin%: 6The lendin% of 1one) at interest b) insurance co1panies constitutes a necessar) incident of their re%ular business. For this reason, insurance co1panies are not liable to ta4 as 1one) lenders or real estate bro@ers for 1a@in% or ne%otiatin% loans secured b) real propert). 5Rulin%, Februar) &0, $3&*= "IR $.2.&76 5The Internal Revenue <a#, +nnotated, &nd ed., $3&3, b) ".<. Meer, pa%e $8.7 The sa1e rule has been applied to ban@s. 6For 1a@in% invest1ents on salar) loans, ban@s #ill not be re?uired to pa) the 1one) lender>s ta4 i1posed b) this subsection, for the reason that 1one) lendin% is considered a 1ere incident of the ban@in% business. CSee Rulin% No. 8., 5October 0, $3&/7 &2 Off. -aF. $.&/76 5The Internal Revenue <a#, +nnotated, id.7 The ter1 61one) lenders6 #as later chan%ed to 6lendin% investors6 but the definition of the ter1 re1ains the sa1e. CSec. $8/8547, Rev. +d1. !ode, as finall) a1ended b) !o1. +ct No. &$2, and Sec. $8/25v7 of the sa1e !ode, as finall) a1ended b) +ct No. .3/.D The sa1e la# is e1bodied in the present National Internal Revenue !ode 5!o1. +ct No. 8//7 #ithout chan%e, e4cept in the a1ount of the ta4. CSee Secs. $0&5+7 5.7 5dd7 and $385u7, National Internal Revenue !ode.D It is a #ell,settled rule that an ad1inistrative interpretation of a la# #hich has been follo#ed and applied for a lon% ti1e, and thereafter the la# is re,enacted #ithout substantial chan%e, such ad1inistrative interpretation is dee1ed to have received le%islative approval. In short, the ad1inistrative interpretation beco1es part of the la# as it is presu1ed to carr) out the le%islative purpose. 2 The !T+ held that the practice of lendin% 1one) at interest is part of the insurance business. !+ 8// alread) ta4es the insurance business. The !T+ pointed out that the la# reco%niFes and even re%ulates this practice of lendin% 1one) b) insurance co1panies. The !T+ observed that !+ 8// also treated differentl) insurance co1panies fro1 lendin% investors in re%ard to fi4ed ta4es. Ender Section $0&5+75.75%%7, insurance co1panies #ere subBect to the sa1e fi4ed ta4 as ban@s and finance co1panies. The !T+ reasoned that insurance co1panies #ere %rouped #ith ban@s and finance co1panies because the latter>s lendin% activities #ere also inte%ral to their business. In contrast, lendin% investors #ere ta4ed at a different fi4ed ta4 under Section $0&5+75.75dd7 of !+ 8//. The !T+ stated that 6insurance co1panies 444 had never been re?uired b) respondent C!IRD to pa) the fi4ed ta4 i1posed on lendin% investors 444.6/ The dispositive portion of the Decision of 2 (anuar) $332 of the !ourt of Ta4 +ppeals 56!T+ Decision67 reads: A; R FOR , pre1ises considered, petitioners Philippine +1erican +ccident Insurance !o., Philippine +1erican +ssurance !o., and Philippine +1erican -eneral Insurance !o., Inc. are not ta4able on their lendin% transactions independentl) of their insurance business. +ccordin%l), respondent is hereb) ordered to refund to petitionerCsD the su1 of P',302.&2, P',*8'.0* and P$8,28$.3' in !T+ !ases No. &2$8, &2$2 and &2$/,

respectivel) representin% the fi4ed and percenta%e ta4es #hen 5sic7 paid b) petitioners as lendin% investor fro1 +u%ust $3'$ to Septe1ber $3'&. No pronounce1ent as to cost. SO ORD R D.' Dissatisfied, petitioner elevated the 1atter to the !ourt of +ppeals. 0 Th& R)*+#, o- (h& Co)r( o- A//&a*' The !ourt of +ppeals ruled that respondents are not ta4able as lendin% investors. In its Decision of ' (anuar) &*** 56!+ Decision67, the !ourt of +ppeals affir1ed the rulin% of the !T+, thus: A; R FOR , pre1ises considered, the petition is DISMISS D, hereb) +FFIRMINthe decision, dated (anuar) 2, $332, of the !ourt of Ta4 +ppeals in !T+ !ases Nos. &2$8, &2$2 and &2$/. SO ORD R D.3 Petitioner appealed the !+ Decision to this !ourt. Th& I'')&' Petitioner raises the sole issue: A; T; R R SPOND NT INSER+N! !OMP+NI S +R SE"( !T TO T; .9 P R! NT+- T+G +S < NDIN- INV STORS END R S !TIONS $0&5+75.75DD7 +ND $32,+, R SP !TIV <H IN R <+TION TO S !TION $385E7, +<< OF T; NIR!. $* Th& R)*+#, o- (h& Co)r( The petition lac@s 1erit. On the Additional Issue Raised by Petitioner Section $0&5+75.75dd7 of !+ 8// i1poses an annual -+.&$ (a. on lendin% investors, dependin% on their location.$$ The sole ?uestion before the !T+ #as #hether respondents #ere subBect to the /&rc&#(a,& (a. on lendin% investors under Section $32,+. Petitioner raised for the first ti1e the issue of the fi4ed ta4 in the Petition for Revie# $& petitioner filed before the !ourt of +ppeals. Ordinaril), a part) cannot raise for the first ti1e on appeal an issue not raised in the trial court.$. The !ourt of +ppeals should not have ta@en co%niFance of the issue on respondents> supposed liabilit) under Section $0&5+75.75dd7. ;o#ever, #e cannot entirel) fault the !ourt of +ppeals or petitioner. ven if the percenta%e ta4 on lendin% investors #as the sole issue before it, the !T+ ordered petitioner to refund to the P;I<+M co1panies 6the fi4ed and percenta%e ta4es CtDhen paid b) petitioners as lendin% investor.6 $8 +lthou%h the a1ounts for refund consisted onl) of #hat respondents paid as percenta%e ta4es, the !T+ Decision also ordered the refund to respondents of the fi4ed ta4 on lendin% investors. Respondents in their pleadin%s den) an) liabilit) under Section $0&5+75.75dd7, on the sa1e %round that the) are not lendin% investors. The ?uestion of #hether respondents should pa) the fi4ed ta4 under Section $0&5+75.75dd7 revolves around the sa1e issue of #hether respondents are ta4able as lendin% investors. In si1ilar circu1stances, the !ourt has held that an appellate court 1a) consider an unassi%ned error if it is closel) related to an error that #as properl) assi%ned. $2 This rule properl) applies to

the present case. Thus, #e shall consider and rule on the issue of #hether respondents are subBect to the fi4ed ta4 under Section $0&5+75.75dd7. Whether Insurance Companies are Taxable as Lending In estors Invo@in% Sections $32,+ and $0&5+75.75dd7 in relation to Section $385u7 of !+ 8//, petitioner ar%ues that insurance co1panies are subBect to t#o fi4ed ta4es and t#o percenta%e ta4es. Petitioner alle%es that: +s a lendin% investor, an insurance co1pan) is subBect to an annual fi4ed ta4 of P2**.** and anotherP2**.** under Section $0& 5+75.75dd7 and 5%%7 of the Ta4 !ode. +s an under#riter, an insurance co1pan) is subBect to the .9 ta4 of the total pre1iu1s collected and another .9 on the %ross receipts as a lendin% investor under Sections &22 and $32,+, respectivel) of the sa1e !ode. 444$/ Petitioner also contends that the refund %ranted to respondents is in the nature of a ta4 e4e1ption, and cannot be allo#ed unless %ranted e4plicitl) and cate%oricall). The rule that ta4 e4e1ptions should be construed strictl) a%ainst the ta4pa)er presupposes that the ta4pa)er is clearl) subBect to the ta4 bein% levied a%ainst hi1. Enless a statute i1poses a ta4 clearl), e4pressl) and una1bi%uousl), #hat applies is the e?uall) #ell,settled rule that the i1position of a ta4 cannot be presu1ed. $'Ahere there is doubt, ta4 la#s 1ust be construed strictl) a%ainst the %overn1ent and in favor of the ta4pa)er. $0This is because ta4es are burdens on the ta4pa)er, and should not be undul) i1posed or presu1ed be)ond #hat the statutes e4pressl) and clearl) i1port.$3 Section $0&5+75.75dd7 of !+ 8// also provides: Sec. $0&. Fixed taxes. I 5+7 On business 444 444 5.7 Other fixed taxes. I The follo#in% fi4ed ta4es shall be collected as follo#s, the a1ount stated bein% for the #hole )ear, #hen not other#ise specified= 444 5dd7 <endin% investors I $. In chartered cities and first class 1unicipalities, five hundred pesos= &. In second and third class 1unicipalities, t#o hundred and fift) pesos= .. In fourth and fifth class 1unicipalities and 1unicipal districts, one hundred and t#ent),five pesos= Provided, That lendin% investors #ho do business as such in 1ore than one province shall pa) a ta4 of five hundred pesos. Section $32,+ of !+ 8// provides: Sec. $32,+. Percentage tax on dealers in securities; lending investors . I Dealers in securities and lendin% investors shall pa) a ta4 e?uivalent to three per centu1 on their %ross inco1e.

Neither Section $0&5+75.75dd7 nor Section $32,+ 1entions insurance co1panies. Section $0&5+7 5.75dd7 provides for the ta4ation of lendin% investors in different localities. Section $32,+ refers to dealers in securities and lendin% investors. The burden is thus on petitioner to sho# that insurance co1panies are lendin% investors for purposes of ta4ation. In this case, petitioner does not dispute that respondents are in the insurance business. Petitioner 1erel) alle%es that the definition of lendin% investors under !+ 8// is broad enou%h to enco1pass insurance co1panies. Petitioner insists that because of Section $385u7, the t#o principal activities of the insurance business, na1el), under#ritin% and invest1ent, are separatel) ta4able.&* Section $385u7 of !+ 8// states: 5u7 6<endin% investor6 includes all persons #ho 1a@e a practice of lendin% 1one) for the1selves or others at interest. 444 +s can be seen, Section $385u7 does not ta4 the practice of lendin% per se. It 1erel) defines #hat lendin% investors are. The ?uestion is #hether the lendin% activities of insurance co1panies 1a@e the1 lendin% investors for purposes of ta4ation. Ae a%ree #ith the !T+ and !ourt of +ppeals that it does not. Insurance co1panies cannot be considered lendin% investors under !+ 8//, as a1ended. !e"inition o" Lending In estors under CA #$$ !oes %ot Include Insurance Companies. The definition in Section $385u7 of !+ 8// is not broad enou%h to include the business of insurance co1panies. The Insurance !ode of $3'0&$ is ver) clear on #hat constitutes an insurance co1pan). It provides that an insurer or insurance co1pan) 6shall include all individuals, partnerships, associations or corporations 444 en%a%ed as principals in the insurance business, e4ceptin% 1utual benefit associations.6&& More specificall), respondents fall under the cate%or) of insurance corporations as defined in Section $02 of the Insurance !ode, thus: S !TION $02. !orporations for1ed or or%aniFed to save an) person or persons or other corporations har1less fro1 loss, da1a%e, or liabilit) arisin% fro1 an) un@no#n or future or contin%ent event, or to inde1nif) or to co1pensate an) person or persons or other corporations for an) such loss, da1a%e, or liabilit), or to %uarantee the perfor1ance of or co1pliance #ith contractual obli%ations or the pa)1ent of debts of others shall be @no#n as 6insurance corporations.6 Plainl), insurance co1panies and lendin% investors are different enterprises in the e)es of the la#. <endin% investors cannot, for a consideration, hold an)one har1less fro1 loss, da1a%e or liabilit), nor provide co1pensation or inde1nit) for loss. The under#ritin% of ris@s is the prero%ative of insurers, the %reat 1aBorit) of #hich are incorporated insurance co1panies &. li@e respondents. Gra#(+#, o- Mor(,a,& a#$ o(h&r Loa#' ar& I#0&'(1&#( Prac(+c&' (ha( ar& Par( o- (h& I#')ra#c& 2)'+#&''.

True, respondents %ranted 1ort%a%e and other @inds of loans. ;o#ever, this #as not done independentl) of respondents> insurance business. The %rantin% of certain loans is one of several 1eans of invest1ent allo#ed to insurance co1panies. No less than the Insurance !ode 1andates and re%ulates this practice.&8 Enli@e the practice of lendin% investors, the lendin% activities of insurance co1panies are circu1scribed and strictl) re%ulated b) the State. Insurance co1panies cannot freel) lend to 6the1selves or others6 as lendin% investors can,&2 nor can insurance co1panies %rant si1pl) an) @ind of loan. ven prior to $3'0, the Insurance !ode prescribed strict rules for the %rantin% of loans b) insurance co1panies.&/ These provisions on 1ort%a%e, collateral and polic) loans #ere reiterated in the Insurance !ode of $3'0 and are still in force toda). Petitioner concedes that respondents> invest1ent practices are as 1uch a part of the insurance business as the tas@ of under#ritin%. Nevertheless, petitioner ar%ues that such invest1ent practices are separatel) ta4able under !+ 8//. The !T+ and the !ourt of +ppeals found that the invest1ent of pre1iu1s and other funds received b) respondents I throu%h the %rantin% of 1ort%a%e and other loans I #as necessar) to respondents> business and hence, should not be ta4ed separatel). Insurance co1panies are re?uired b) la# to possess and 1aintain substantial le%al reserves to 1eet their obli%ations to polic)holders.&' This obviousl) cannot be acco1plished throu%h the collection of pre1iu1s alone, as the le%al reserves and capital and surplus insurance co1panies are obli%ated to 1aintain run into 1illions of pesos. +s such, the creation of 6invest1ent inco1e6 has lon% been held to be %enerall), if not necessaril), &''&#(+a* to the business of insurance.&0 The creation of invest1ent inco1e in the 1anner sanctioned b) the la#s on insurance is thus part of the business of insurance, and the fruits of these invest1ents are essentiall) inco1e fro1 the insurance business. This is particularl) true if the invested assets are held either as reserved funds to provide for polic) obli%ations or as capital and surplus to provide an e4tra 1ar%in of safet) #hich #ill be attractive to insurance bu)ers.&3 The !ourt has also held that #hen a co1pan) is ta4ed on its 1ain business, it is no lon%er ta4able further for en%a%in% in an activit) or #or@ #hich is 1erel) a part of, incidental to and is necessar) to its 1ain business..*Respondents alread) paid percenta%e and fi4ed ta4es on their insurance business. To re?uire the1 to pa) percenta%e and fi4ed ta4es a%ain for an activit) #hich is necessaril) a part of the sa1e business, the la# 1ust e4pressl) re?uire such additional pa)1ent of ta4. There is, ho#ever, no provision of la# re?uirin% such additional pa)1ent of ta4. Sections $32,+ and $0&5+75.75dd7 of !+ 8// do not re?uire insurance co1panies to pa) double percenta%e and fi4ed ta4es. The) 1erel) ta4 lendin% investors, not lendin% activities. Respondents #ere not transfor1ed into lendin% investors b) the 1ere fact that the) %ranted loans, as these invest1ents #ere part of, incidental and necessar) to their insurance business. !+--&r&#( Ta. Tr&a(1&#( oI#')ra#c& Co1/a#+&' a#$ L&#$+#, I#0&'(or'. Section $0&5+75.7 of !+ 8// accorded different ta4 treat1ents to lendin% investors and insurance co1panies. The relevant portions of Section $0& state: Sec. $0&. Fixed taxes. (A) On business xxx 5.7 Other fixed taxes. I The follo#in% fi4ed ta4es shall be collected as follo#s, the a1ount stated bein% for the #hole )ear, #hen not other#ise specified=

444 5dd7 L&#$+#, +#0&'(or' I $. In chartered cities and first class 1unicipalities, five hundred pesos= &. In second and third class 1unicipalities, t#o hundred and fift) pesos= .. In fourth and fifth class 1unicipalities and 1unicipal districts, one hundred and t#ent),five pesos= Provided, That lendin% investors #ho do business as such in 1ore than one province shall pa) a ta4 of five hundred pesos. 444 5%%7 "an@s, insurance co1panies, finance and invest1ent co1panies doin% business in the Philippines and franchise %rantees, five hundred pesos. 444 5 1phasis supplied.7 The separate provisions on lendin% investors and insurance co1panies de1onstrate an intention to treat these businesses differentl). If !on%ress intended insurance co1panies to be ta4ed as lendin% investors, there #ould be no need for Section $0&5+75.75%%7. Section $0&5+75.75dd7 #ould have been sufficient. That insurance co1panies #ere included #ith ban@s, finance and invest1ent co1panies also supports the !T+>s conclusion that insurance co1panies had 1ore in co11on #ith the latter enterprises than #ith lendin% investors. +s the !T+ pointed out, ban@s also re%ularl) lend 1one) at interest, but are not ta4able as lendin% investors. Ae find no 1erit in petitioner>s contention that !on%ress intended to subBect respondents to t#o percenta%e ta4es and t#o fi4ed ta4es. Petitioner>s ar%u1ent %oes a%ainst the doctrine of strict interpretation of ta4 i1positions. Petitioner>s ar%u1ent is li@e#ise not in accord #ith e4istin% Burisprudence. In Commissioner o" Internal Re enue . &ichel J. Lhuillier Pa'nshop( Inc.,.$ the !ourt ruled that the different ta4 treat1ent accorded to pa#nshops and lendin% investors in the NIR! of $3'' and the NIR! of $30/ sho#ed 6the intent of !on%ress to deal #ith both subBects differentl).6 The sa1e reasonin% applies s?uarel) to the present case. ven the current ta4 la# does not treat insurance co1panies as lendin% investors. Ender Section $*05+7.& of the NIR! of $33', lendin% investors and non,life insurance co1panies, e4cept for their crop insurances, are subBect to value,added ta4 56V+T67. <ife insurance co1panies are e4e1pt fro1 V+T, but are subBect to percenta%e ta4 under Section $&. of the NIR! of $33'. Indeed, the fact that Sections $32,+ and $0&5+75.75dd7 of !+ 8// failed to 1ention insurance co1panies alread) i1plies the latter>s e4clusion fro1 the covera%e of these provisions. Ahen a statute enu1erates the thin%s upon #hich it is to operate, ever)thin% else b) i1plication 1ust be e4cluded fro1 its operation and effect... !&-+#+(+o# o- L&#$+#, I#0&'(or' +# CA 466 +' No( N&3. Petitioner does not dispute that it issued a rulin% in $3&* to the effect that the lendin% of 1one) at interest #as a necessar) incident of the insurance business, and that insurance co1panies #ere thus not subBect to the ta4 on 1one) lenders. Petitioner ar%ues onl) that the $3&* rulin%

does not appl) to the instant case because R+ /$$* introduced the definition of lendin% investors to !+ 8// onl) in $3/3. The subBect definition #as actuall) introduced 1uch earlier, at a ti1e #hen lendin% investors #ere still referred to as 1one) lenders. Sections 82 and 8/ of the Internal Revenue <a# of $3$8.8 56$3$8 Ta4 !ode67 state: S !TION 82. +1ount of Ta4 on "usiness. J Fi4ed ta4es on business shall be collected as follo#s, the a1ount stated bein% for the #hole )ear, #hen not other#ise specified: 444 547 Mone) lenders, ei%ht) pesos= 444 S !TION 8/. Aords and Phrases Defined. J In appl)in% the provisions of the precedin% section #ords and phrases shall be ta@en in the sense and e4tension indicated belo#: 444 4Mo#&5 *&#$&r4 includes a** /&r'o#' 3ho 1a6& a /rac(+c& o- *&#$+#, 1o#&5 -or (h&1'&*0&' or o(h&r' a( +#(&r&'(. 5 1phasis supplied7 +s can be seen, the definitions of 61one) lender6 under the $3$8 Ta4 !ode and 6lendin% investor6 under !+ 8// are identical. The ter1 61one) lender6 #as 1erel) chan%ed to 6lendin% investor6 #hen +ct No. .3/. a1ended the Revised +d1inistrative !ode in $3.&. .2 This sa1e definition of lendin% investor has since appeared in Section $385u7 of !+ 8// and later ta4 la#s. Note that insurance co1panies #ere not included a1on% the businesses subBect to an annual fi4ed ta4 under the $3$8 Ta4 !ode../ That !on%ress later sa# the need to introduce Section $0&5+75.75%%7 in !+ 8// bolsters our vie# that there #as no le%islative intent to ta4 insurance co1panies as lendin% investors. If insurance co1panies #ere alread) ta4ed as lendin% investors, there #ould have been no need for a separate provision specificall) re?uirin% insurance co1panies to pa) fi4ed ta4es. Th& Co)r( Accor$' Gr&a( 7&+,h( (o (h& Fac()a* F+#$+#,' o- (h& CTA. Dedicated e4clusivel) to the stud) and consideration of ta4 proble1s, the !T+ has necessaril) developed an e4pertise in the subBect of ta4ation that this !ourt has reco%niFed ti1e and a%ain. For this reason, the findin%s of fact of the !T+, particularl) #hen affir1ed b) the !ourt of +ppeals, are %enerall) conclusive on this !ourt absent %rave abuse of discretion or palpable error,.' #hich are not present in this case. 7 EREFORE, #e D NH the instant petition and +FFIRM the Decision of ' (anuar) &*** of the !ourt of +ppeals in !+,-.R. SP No. ./0$/. SO OR!ERE!. Davide, Jr., .J., ( hair!an), "uisu!bing, #nares$%antiago, and A&cuna, JJ., concur.

Foo(#o(&'
$

Ender Rule 82 of the Rules of !ivil Procedure.

'ollo, pp. &*,.*. Penned b) +ssociate (ustice Ra1on Mabutas, (r. #ith +ssociate (ustices +rte1io -. Tu?uero and Mercedes -oFo Dadole concurrin%.
& .

(bid., pp. .&,8.. Penned b) +ssociate (ud%e Manuel K. -ruba #ith Presidin% (ud%e rnesto D. +costa and +ssociate (ud%e Ra1on O. De Ve)ra concurrin%.

Section $32,+ #as added to !+ 8// b) R+ /$$*. It states: Sec. $32,+. Percentage tax on dealers in securities; lending investors. Dealers in securities and lendin% investors shall pa) a ta4 e?uivalent to three)er centu! on their %ross inco1e.
8 2

'ollo, pp. .8,.2. (bid., p. .3. (bid., p. 8&.

'

Note that under Republic +ct No. 3&0&, decisions of the !T+ are no# appealable to the Supre1e !ourt via a verified petition for revie# on certiorari.
0 3

'ollo, p. .*. (bid., p. $*. Sec. $0&. Fixed taxes. (A) On business 444 444 5.7 Other fixed taxes. The follo#in% fi4ed ta4es shall be collected as follo#s, the a1ount stated bein% for the #hole )ear, #hen not other#ise specified= 444 5dd7 <endin% investors I $. In chartered cities and first class 1unicipalities, five hundred pesos= &. In second and third class 1unicipalities, t#o hundred and fift) pesos= .. In fourth and fifth class 1unicipalities and 1unicipal districts, one hundred and t#ent),five pesos=Provided, That lendin% investors #ho do business as such in 1ore than one province shall pa) a ta4 of five hundred pesos.

$*

$$

$&

!+ 'ollo, pp. ',$0. <i1 v. Lueensland To@)o !o11odities, Inc., 8&8 Phil. .2 5&**&7. 'ollo, p. 8&.

$.

$8

-arrido v. !ourt of +ppeals, -.R. No. $*$&/&, $8 Septe1ber $338, &./ S!R+ 82*. %ee also F.F. MaMacop !onstruction !o., Inc. v. !ourt of +ppeals, -.R. No. $&&$3/, $2 (anuar) $33', &// S!R+ &.2.
$2 $/

'ollo, p. $$&. !IR v. !+, ..0 Phil. .&& 5$33'7.

$'

<incoln Philippine <ife Insurance !o., Inc. v. !+, .28 Phil. 03/ 5$3307= !IR v. !+, su)ra.
$0 $3

(bid. Rollo, pp. $&,$.. Presidential Decree No. $8/* 5$3'07, as a1ended. Section $08, ibid.

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Maria !lara <. !a1pos, Insurance ' 5Eniversit) of the Philippines <a# !enter $30.7= 8. +1 (ur &d, Insurance, N$00.
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%ee Sections $30 to &*. of Presidential Decree No. $8/*. <oans are not even the chief 1eans of invest1ent. +ccordin% to the Insurance !o11ission, loans accounted for onl) $/./$9 of the invest1ents 1ade b) the insurance industr) in &**&. !o1pare this #ith the industr)>s invest1ent in bonds and %overn1ent securities, #hich a1ounted to 82.'29 5http:OO###.ic.%ov.phO1ain.aspPpa%esQstatper&**&7.
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In fact, pursuant to Insurance !ircular <etter No. */8,/* 5$3/*7, reiterated in the Insurance !ircular <etter of &* Ma) $302, no insurance co1pan) could %rant a loan to an) of its officers or directors #ithout the prior approval of the Insurance !o11issioner.
&2 &/

Presidential Decree No. /$& 5$3'87 provided: Sec. $30. No insurance co1pan) shall loan an) of its 1one) or deposits to an) person, corporation or association, e4cept upon first 1ort%a%e or deeds of trust of unencu1bered, i1proved or uni1proved real estate, includin% condo1iniu1s, in cities and centers of population of 1unicipalities in the Philippines #hen the a1ount of such loan is not in e4cess of sevent) )er centu! of the 1ar@et value of such real estate= or upon the securit) of first 1ort%a%es or deeds of trust of actuall) cultivated, i1proved and unencu1bered a%ricultural lands in the Philippines #hen the a1ount of such loan is not in e4cess of fort) )er centu! of the 1ar@et value of such land= or upon the purchase 1one) 1ort%a%es or li@e securities received b) it upon the sale or e4chan%e of real propert) ac?uired pursuant to sections t#o hundred and t#o hundred t#o= or upon bonds or other evidences of debt of the -overn1ent of the Philippines or its political subdivisions authoriFed b) la# to issue bonds, or upon bonds or other evidences of debt of %overn1ent,o#ned or controlled corporations and instru1entalities includin% the !entral "an@ or upon obli%ations issued or %uaranteed b) the International "an@ for Reconstruction and Develop1ent= or upon stoc@s, bonds or other evidences of debt as are specified in section t#o hundred. + life insurance co1pan), ho#ever, 1a) lend to an) of its polic)holders upon the securit) of the value of its polic) such su1 as 1a) be deter1ined pursuant to the provisions of the polic).

<oans %ranted upon the securit) of real estate for a period lon%er than five )ears shall be a1ortiFed in 1onthl), ?uarterl), se1i,annual or annual install1ents= Provided, That no such loans shall have a 1aturit) in e4cess of t#ent) )ears. The phrase 6i1proved real estate6 used above is hereb) defined to 1ean land #ith per1anent buildin% or buildin%s erected or bein% erected thereon. 4cept as other#ise approved b) the !o11issioner, in case the buildin% or buildin%s on land do not belon% to the o#ner of the latter, no loan shall be %ranted on the securit) of the real estate in ?uestion unless both the o#ner of the buildin% or buildin%s and the o#ner of the land si%n the deed of 1ort%a%e, and unless the o#ner of the land is the -overn1ent of the Philippines or one of its political subdivisions, in #hich event the o#ner is not re?uired to si%n the deed of 1ort%a%e. Sec. $33. No loan b) an) insurance co1pan) on the securit) of real estate shall be 1ade unless the title to such real estate shall have first been re%istered in accordance #ith the e4istin% <and Re%istration +ct, or shall be a titulo real dul) re%istered, or have been previousl) re%istered under the provisions of the e4istin% Mort%a%e <a#. These provisions #ere carried over in the Insurance !ode of $3'0. Spouses Tiba) v. !+, .&/ Phil. 3.$ 5$33/7. %ee also Sections $38, &$* to &$8 of Presidential Decree No. $8/*.
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"o#ers v. <a#)ers> Mort%. !o., &02 E.S. $0& 5$3.&7.

(ustice (ose !. Vitu% and (ustice rnesto D. +costa, Ta4 <a# and (urisprudence, &nd ed., &2/, citin% !o11issioner of Internal Revenue v. !ourt of Ta4 +ppeals, !+,-.R. SP No. .32$$ to .32$., .* Septe1ber $33/. This !+ decision #as never appealed to this !ourt.
&3 .*

Standard,Vacuu1 Oil !o. v. +nti%ua, etc., et al., 3/ Phil. 3*3 5$3227. -.R. No. $2*38', $2 (ul) &**., 8*/ S!R+ $'0. The relevant portion of Sec. $*05+7 states: 5+7 Rate and "ase of Ta4. I There shall be levied, assessed and collected, a value,added ta4 e?uivalent to ten percent 5$*97 of %ross receipts derived fro1 the sale or e4chan%e of services, includin% the use or lease of properties. The phrase 6sale or e4chan%e of services6 1eans the perfor1ance of all @inds of services in the Philippines for others for a fee, re1uneration or consideration, includin% those perfor1ed or rendered b) 444 *&#$+#, +#0&'(or'= 444 services of ban@s, non,ban@ financial inter1ediaries and finance co1panies= and #o#8*+-& +#')ra#c& co1/a#+&' 5e4cept their crop insurances7, includin% suret), fidelit), inde1nit) and bondin% co1panies= 444. 5 1phasis supplied7

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+ppl)in% the 1a4i1 ex)ressio unius est exclusio alterius. %ee !o11issioner of Internal Revenue v. Michel (. <huillier Pa#nshop, Inc., su)ra note .$.
.. .8

+ct No. &..3 5$3$87.

.2

+ct No. .3/. 5$3.&7 provides: Sec. & Para%raph 5v7 of section fourteen hundred and si4t),five of the Revised +d1inistrative !ode is hereb) a1ended so as to read as follo#s: 65v7 R<endin% investor> includes all persons #ho 1a@e a practice of lendin% 1one) for the1selves or others at interest.6 444

The receipts of insurance co1panies #ere instead subBect to internal revenue ta4es under Sec. &$5e7 of the $3$8 Ta4 !ode.
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%u)ra note $'.