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Commissioner of Internal Revenue vs.

Manila Bankers' Life


Insurance Corporation,
645 SCRA 500, G.R. No. 169103 March 16, 2011
First Division- LEONARDO-DE CASTRO,J.:

Syllabus:
Same; Same; The documentary stamp tax on insurance policies,
though imposed on the document itself, is actually levied on the
privilege to conduct insurance business.- The documentary stamp tax
on insurance policies, though imposed on the document itself, is actually
levied on the privilege to conduct insurance business. Under Section 173, the
documentary stamp tax becomes due and payable at the time the insurance
policy is issued, with the tax based on the amount insured by the policy as
provided for in Section 183.

Same; Same; Every time the respondent registers and attaches an


Enrollment Card to an existing master policy, it exercises its
privilege to conduct its business of insurance and this is patently
subject to documentary stamp tax.- Whenever a master policy
admits of another member, another life is insured and covered. - This
means that the respondent, by approving the addition of another member to
its existing master policy, is once more exercising its privilege to conduct the
business of insurance, because it is yet again insuring a life. x x x Everytime
the respondent registers and attaches an Enrollment Card to an existing
master policy, it exercises its privilege to conduct its business of insurance
and this is patently subject to documentary stamp tax as insurance made
upon a life under Section 183.

Facts: Respondent Manila Bankers Life Insurance Corporation is a duly


organized domestic corporation primarily engaged in the life insurance
business. Respondent was assessed by the petitioner CIR for its deficiency
internal revenue taxes. One of which was assessment pertaining to the
documentary stamp taxes due on respondents policy premiums. Respondent
filed a protest with the BIR contesting the assessment for the deficiency
documentary stamp tax. When the latter failed to acted upon the protest,
respondent filed a petition for review with the CTA which granted the petition
and ordered to cancel and withdraw the assessment notice pertaining to the
deficiency documentary stamp tax. Aggrieved by the decision, petitioner
went to the CA which later on sustained the cancellation of the assessment.
Hence, petition.
Issue: WON the imposition of documentary stamp tax on increases in the
coverage or sum assured by the existing life insurance policies, even without
the issuance of new policies, is valid.

Held: Yes. The Petition is granted and hereby reversed the decision of CA.
Respondent is ordered to pay petitioner CIR the deficiency of documentary
stamp tax.
Ratio:
1. Documentary stamp tax is a tax on documents, instruments, loan
agreements, and papers evidencing the acceptance, assignment,
sale or transfer of an obligation, right or property incident
thereto.

2. The documentary stamp tax on insurance policies, though


imposed on the document itself, is actually levied on the privilege
to conduct insurance business. Under Section 173, the documentary
stamp tax becomes due and payable at the time the insurance policy is
issued, with the tax based on the amount insured by the policy as
provided for in Section 183.

In view of the fact that the assessment for deficiency documentary stamp
tax covered the taxable year 1997, the relevant and applicable legal
provisions are those found in the 1977 National Internal Revenue Code
(Tax Code) as amended,33 to wit:

Section173.Stamp Taxes Upon Documents, Loan Agree-


ments, Instruments and Papers.Upon documents, instruments,
loan agreements and papers, and upon acceptances, assignments,
sales and transfers of the obligation, right or property incident thereto,
there shall be levied, collected and paid for, and in respect of the
transaction so had or accomplished, the corresponding documentary
stamp taxes prescribed in the following sections of this Title, by the
person making, signing, issuing, accepting, or transferring the same
wherever the document is made, signed, issued, accepted, or
transferred when the obligation or right arises from Philippine sources
or the property is situated in the Philippines, and the same time
such act is done or transaction had: Provided, That whenever one
party to the taxable document enjoys exemption from the tax herein
imposed, the other party who is not exempt shall be the one directly
liable for the tax.
Section183.Stamp Tax on Life Insurance Policies.On all
policies of insurance or other instruments by whatever name the same
may be called, whereby any insurance shall be made or renewed upon
any life or lives, there shall be collected a documentary stamp tax of
fifty centavos on each two hundred pesos or fractional part thereof, of
the amount insured by any such policy. (Emphases ours.)
Commissioner of Internal Revenue vs. The Insular Life Assurance
Co., Ltd.,
725 SCRA 94, G.R. No. 197192 June 4, 2014
First Division- REYES,J.:

Syllabus: Taxation; Percentage Taxes; Documentary Stamp taxes;


Cooperatives; The Court has pronounced in Republic of the
Philippines v Sunlife Assurance Company of Canada, 473 SCRA 129
(2005), that [u]nder the Tax Code although respondent is a
cooperative, registration with the Cooperative Development
Authority (CDA) is not necessary in order for it to be exempt from
the payment of both percentage taxes on insurance premiums,
under Section 121: and documentary stamp taxes on policies of
insurance or annuities it grants, under Section 199.- The Court has
pronounced in Republic of the Philippines v. Sunlife Assurance Company of
Canada9 that "[u]nder the Tax Code although respondent is a cooperative,
registration with the CDA is not necessary in order for it to be exempt from
the payment of both percentage taxes on insurance premiums, under
Section 121; and documentary stamp taxes on policies of insurance or
annuities it grants, under Section 199."

Facts: Respondent The Insular Life Assurance, Co., Ltd is registered as a


non-stock mutual life insurer with the Securities and Exchange Commission.
Respondent received an assessment for deficiency on DST on its premiums
on direct business/sums assured for year 2002. Thereafter, respondent filed
a protest which was subsequently denied by the CIR. CTA rendered decision
in favor of respondent and thus, granting the Petition for Review and held,
among others, that respondent sufficiently established that it is a
cooperative company and therefore, it is exempt from the DST on the
insurance policies it grants to its members. Hence, petition.

Issue: WON respondent is required to be registered with the Cooperative


Development Authority (CDA) to be considered as a cooperative company
and be entitled to the exemption provided under Section 199(a) of the NIRC.

Held: No. The petition is Denied.

Ratio:
1. The Court has pronounced in Republic of the Philippines v. Sunlife
Assurance Company of Canada, 473 SCRA 129 (2005), that [u]nder the
Tax Code although respondent is a cooperative, registration with the
Cooperative Development Authority (CDA) is not necessary in order for it
to be exempt from the payment of both percentage taxes on insurance
premiums, under Section 121; and documentary stamp taxes on policies
of insurance or annuities it grants, under Section 199.

2. The NIRC of 1997 defined a cooperative company or association as


conducted by the members thereof with the money collected from
among themselves and solely for their own protection and not for profit.
Consequently, as long as these requisites are satisfied, a company or
association is deemed a cooperative insofar as taxation is concerned. In
this case, the respondent has sufficiently established that it conforms with
the elements of a cooperative as defined in the NIRC of 1997 in that it is
managed by members, operated with money collected from the members
and has for its main purpose the mutual protection of members for profit.

3. The Court presented three justifications in Sunlife why registration with


the CDA is not necessary for cooperatives to claim exemption from DST.

First, the NIRC of 1997 does not require registration with the CDA. No tax
provision requires a mutual life insurance company to register with that
agency in order to enjoy exemption from both percentage and DST.
Although a provision of Section 8 of the Revenue Memorandum Circular
(RMC) No. 48-91 requires the submission of the Certificate of Registration
with the CDA before the issuance of a tax exemption certificate, that
provision cannot prevail over the clear absence of an equivalent
requirement under the Tax Code.

Second, the provisions of the Cooperative Code of the Philippines do not


apply. The history of the Cooperative Code was amply discussed in Sunlife
where it was noted that cooperatives under the old law, Presidential
Decree (P.D.) No. 175 referred only to an organization composed
primarily of small producers and consumers who voluntarily joined to form
a business enterprise that they themselves owned, controlled, and
patronized. The Bureau of Cooperatives Development under the
Department of Local Government and Community Development (later
Ministry of Agriculture) had the authority to register, regulate and
supervise only the following cooperatives: (1) barrio associations involved
in the issuance of certificates of land transfer; (2) local or primary
cooperatives composed of natural persons and/or barrio associations; (3)
federations composed of cooperatives that may or may not perform
business activities; and (4) unions of cooperatives that did not perform
any business activities. Respondent does not fall under any of the
abovementioned types of cooperatives required to be registered under
[P.D. No.] 175.

Third, the Insurance Code does not require registration with the CDA. The
provisions of this Code primarily govern insurance contracts; only if a
particular matter in question is not specifically provided for shall the
provisions of the Civil Code on contracts and special laws govern.