Beruflich Dokumente
Kultur Dokumente
whilebusinessimpliescontinuityoftransactions. An 2
premiums remitted to appellants by virtue of the income may be earned by a corporation in the
reinsurancecontracts,accordingly,hadfortheirsource Philippines although such corporation conducts all
the undertaking to indemnify Commonwealth
itsbusinessesabroad.Precisely,Section24oftheTax
Insurance Co. against liability. Said undertaking is
Code does not require a foreign corporation to be
theactivitythatproducedthereinsurancepremiums,
engagedinbusinessinthePhilippinesinorderforits
andthesametookplaceinthePhilippines.Inthefirst
income from sources within the Philippines to be
place, the reinsured, the liabilities insured and the
taxable. It subjects foreign corporations not doing
risks originally underwritten by Commonwealth
business in the Philippines to tax for income from
InsuranceCo.,uponwhichthereinsurancepremiums
sourceswithinthePhilippines.Ifbysourceofincome
and indemnity were based, were all situated in the
is meant the business of the taxpayer, foreign
Philippines.Secondly,contrarytoappellantsview,the
corporations not engaged in business in the
reinsurance contracts were perfected in the
Philippines would be exempt from taxation on their but on the net premium income, that is, after
incomefromsourceswithinthePhilippines. deducting general expenses, payment of policies and
Furthermore, as used in our income tax law, taxes.
incomereferstotheflowofwealth. Suchflow,inthe
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The reinsurance premiums in question being
instant case, proceeded from the Philippines. Such taxable,weturntotheissuewhetherornottheyare
income enjoyed the protection of the Philippine subjecttowithholdingtaxunderSection54inrelation
Government.Aswealthflowingfromwithinthetaxing toSection58oftheTaxCode.
jurisdictionofthePhilippinesandinconsiderationfor Subsection(b)ofSection53subjectstowithholding
protectionaccordeditbythePhilippines,saidincome taxthefollowing: interest,dividends,rents,salaries,
shouldproperlysharetheburdenofmaintainingthe wages,premiums,annuities, compensations,
government. remunerations, emoluments,or other fixed or
Appellants further contend that reinsurance
determinableannualorperiodicalgains,profits,and
premiumsnotbeingamongthosementionedinSection
incomeof any nonresident alien individual not
37oftheTaxCodeasincomefromsourceswithinthe
Philippines,thesameshouldnotbetreatedassuch. engaged in trade or business within the Philippines
Section 37, however, is not an allinclusive andnothavinganyofficeorplaceofbusinesstherein.
enumeration. It states that the following items of Section 54, by reference, applies this provision
gross income shall be treated as gross income from toforeign corporations not engaged in trade or
sources within the Philippines. It does not state or businessinthePhilippines.
implythatanincomenotlistedthereinisnecessarily Appellants maintain that reinsurance premiums
fromsourcesoutsidethePhilippines. are not premiums at all as contemplated by
As to appellants contention that reinsurance Subsection(b)ofSection53;thattheyarenotwithin
premiumsconstitutegrossreceiptsinsteadofgross the scope of other fixed or determinable annual or
income, not subject to income tax, suffice it to say periodicalgains,profits,andincome;that,therefore,
that, as correctly observed by the Court of Tax they are not items of income subject to withholding
Appeals, gross receipts of amounts that do not tax.
constitute return of capital, such as reinsurance Theargumentofappellantsisthatpremiums,as
premiums,arepartofthegrossincomeofataxpayer. usedinSection53(b),isprecededbyrents,salaries,
Atanyrate,thetaxactuallycollectedinthiscasewas wages and followed by annuities, compensations,
computednotonthebasisofgrosspremiumreceipts remunerations which connote periodical income
payabletotherecipientonaccountofsomeinvestment not at regular intervals. That the length of time during
orforpersonalservicesrendered.Premiumsshould, whichthepayments aretobemademaybeincreasedor
therefore, in appellants view, be given a meaning diminishedinaccordancewithsomeoneswillorwiththe
kindredtotheothertermsintheenumerationandbe happeningofaneventdoesnotmakethepaymentsanythe
lessdeterminableorperiodical.xxx.
understood in its broadest sense as a reward or
recompenseforsomeactdone;abonus;compensation Reinsurance premiums, therefore, are determinable
for the use of money; a price for a loan; a sum in andperiodicalincome:determinable,becausetheycan
additiontointerest. be calculated accurately on the basis of the
We disagree with the foregoing proposition. Since reinsurance contracts; periodical, inasmuch as they
Section 53 subjects to withholding tax various wereearnedandremittedfromtimetotime.
specified income, among them, premiums, the Appellants claim for refund, as stated, invoked a
genericconnotationofeachandeverywordorphrase rulingoftheCommissionerofInternalRevenuedated
composingtheenumerationinSubsection(b)thereofis December8,1953.Appellantsbriefalsocitedrulings
income. Perforce, the word premiums, which is ofthesameofficial,datedOctober13,1953,February
neitherqualifiednordefinedbythelawitself,should 7,1955andFebruary8,1955,aswellasthedecision
mean income and should include all premiums of the defunct Board of Tax Appeals in the case of
constituting income, whether they be insurance or FranklinBakerCo., therebyattemptingtoshowthat
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engaged inbusinessinthePhilippines.RepublicAct
WHEREFORE, the judgment appealed from is
herebyaffirmedwithcostsagainstappellants.Itisso
ordered.
Bengzon, C.J.,Bautista
Angelo,Concepcion,Reyes,
J.B.L.,Barrera,MakalintalandZaldivar,JJ.,concur.
Paredes,DizonandRegala,JJ.,tooknopart.
Judgmentaffirmed.