Scribd Logo
Upload

Welcome to Scribd!

  • 59 views

    09 The Philippine Guaranty Co Vs Cir

    Uploaded by

    Joshua Erik Madria
    The Philippine Guaranty Co. entered into reinsurance contracts with foreign insurers not doing business in the Philippines. The Commissioner of Internal Revenue assessed withholding tax on the premiums ceded to foreign reinsurers, which PGCI protested. The Court of Tax Appeals upheld the assessment. The Supreme Court affirmed, holding that under Section 24 of the Tax Code, income from sources within the Philippines is subject to tax, and the undertaking of the foreign reinsurers to reinsure PGCI constituted a source within the Philippines. The Court applied the "Necessity Theory" in justifying taxation of the foreign reinsurers based on the benefits and protections provided by the Philippine government.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    09 The Philippine Guaranty Co Vs Cir

    Uploaded by

    Joshua Erik Madria
    59 views2 pages
    The Philippine Guaranty Co. entered into reinsurance contracts with foreign insurers not doing business in the Philippines. The Commissioner of Internal Revenue assessed withholding tax on the premiums ceded to foreign reinsurers, which PGCI protested. The Court of Tax Appeals upheld the assessment. The Supreme Court affirmed, holding that under Section 24 of the Tax Code, income from sources within the Philippines is subject to tax, and the undertaking of the foreign reinsurers to reinsure PGCI constituted a source within the Philippines. The Court applied the "Necessity Theory" in justifying taxation of the foreign reinsurers based on the benefits and protections provided by the Philippine government.

    Original Title

    09 the Philippine Guaranty Co vs Cir

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Philippine Guaranty Co. entered into reinsurance contracts with foreign insurers not doing business in the Philippines. The Commissioner of Internal Revenue assessed withholding tax on the premiums ceded to foreign reinsurers, which PGCI protested. The Court of Tax Appeals upheld the assessment. The Supreme Court affirmed, holding that under Section 24 of the Tax Code, income from sources within the Philippines is subject to tax, and the undertaking of the foreign reinsurers to reinsure PGCI constituted a source within the Philippines. The Court applied the "Necessity Theory" in justifying taxation of the foreign reinsurers based on the benefits and protections provided by the Philippine government.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    59 views2 pages

    09 The Philippine Guaranty Co Vs Cir

    Uploaded by

    Joshua Erik Madria
    The Philippine Guaranty Co. entered into reinsurance contracts with foreign insurers not doing business in the Philippines. The Commissioner of Internal Revenue assessed withholding tax on the premiums ceded to foreign reinsurers, which PGCI protested. The Court of Tax Appeals upheld the assessment. The Supreme Court affirmed, holding that under Section 24 of the Tax Code, income from sources within the Philippines is subject to tax, and the undertaking of the foreign reinsurers to reinsure PGCI constituted a source within the Philippines. The Court applied the "Necessity Theory" in justifying taxation of the foreign reinsurers based on the benefits and protections provided by the Philippine government.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    THE PHILIPPINE GUARANTY CO., INC.

    , Case Flow:
    vs. CIR – Tax assessment, PGCI protest
    THE COMMISSIONER OF INTERNAL CTA – Tax assessment declared valid,
    REVENUE and THE COURT OF TAX ordered PGCI to pay CIR
    APPEALS SC – affirmed
    G.R. No. L-22074            
    April 30, 1965
    Facts:
     Philippine Guaranty Co. Inc, a domestic insurance company, entered into reinsurance
    contracts with various foreign insurance companies not doing business in the
    Philippines. Said reinsurrance contracts were signed by Philippine Guaranty Co., Inc. in
    Manila and by the foreign reinsurers outside the Philippines, except the contract with
    Swiss Reinsurance Company, which was signed by both parties in Switzerland.
     In their income tax returns for 1953 and 1954, Philippine Guaranty Co Inc excluded from
    their gross income the premiums ceded to the foreign reinsurers. The company also did
    not withhold or pay tax on them.
     The Commissioner of Internal Revenue assessed against Philippine Guaranty Co., Inc.
    withholding tax on the ceded reinsurance premiums and declared the total collectible
    amounting to 375,345.00
     Philippine Guaranty Co Inc protested the assessment on the ground that reinsurance
    premiums ceded to foreign reinsurers not doing business in the Philippines are not
    subject to withholding tax. Its protest was denied and it appealed to the Court of Tax
    Appeals.
     CTA upheld the legality of the assessment and ordered PGCI to pay the CIR the total
    amount due.
     Petitioner maintained that the reinsurance premiums in question did not constitute
    income from sources within the Philippines because the foreign reinsurers did not
    engage in business in the Philippines, nor did they have office here.

    Issue: Held:
    Whether or not the insurance premiums are Section 24 of the Tax Code subjects foreign
    subject to tax even though foreign insurers did corporations to tax on their income from
    not engage in business in the Philippines. sources within the Philippines. The word
    "sources" has been interpreted as the activity,
    property or service giving rise to the
    income. The reinsurance premiums were
    income created from the undertaking of the
    foreign reinsurance companies to reinsure
    Philippine Guaranty Co., Inc., against liability
    for loss under original insurances. Such
    undertaking, as explained above, took place in
    the Philippines. These insurance premiums,
    therefore, came from sources within the
    Philippines and, hence, are subject to
    corporate income tax.

    Doctrine:

    Necessity Theory

    The power to tax is an attribute of sovereignty. It is a power emanating from necessity. It is a


    necessary burden to preserve the State's sovereignty and a means to give the citizenry an army
    to resist an aggression, a navy to defend its shores from invasion, a corps of civil servants to
    serve, public improvement designed for the enjoyment of the citizenry and those which come
    within the State's territory, and facilities and protection which a government is supposed to
    provide. Considering that the reinsurance premiums in question were afforded protection by the
    government and the recipient foreign reinsurers exercised rights and privileges guaranteed by
    our laws, such reinsurance premiums and reinsurers should share the burden of maintaining the
    state.

    You might also like