Revenue v. Manila Bankers' Life Insurance Corporation

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari 12 and July 27, 2005 Resolution3 of the Court of Appeals in CA-G.R. SP No. 70600, which upheld the April 4, 2002 Decision4 of the Court of Tax Appeals (CTA) in CTA Case No. 6189. The facts as found by the CTA and Court of Appeals are undisputed. Respondent Manila Bankers' Life Insurance Corporation is a duly organized domestic corporation primarily engaged in the life insurance business.5 On May 28, 1999, petitioner Commissioner of Internal Revenue issued Letter of Authority No. 0000207056 authorizing a special team of Revenue Officers to examine the books of accounts and other accounting records of respondent for taxable year "1997 & unverified prior years."7 On December 14, 1999, based on the findings of the Revenue Officers, the petitioner issued a Preliminary Assessment Notice8 against the respondent for its deficiency internal revenue taxes for the year 1997.

The respondent agreed to all the assessments issued against it except to the amount of ₱2,351,680.90 representing deficiency documentary stamp taxes on its policy premiums and penalties. 9 Thus, on January 4, 2000, the petitioner issued against the respondent a Formal Letter of Demand10 with the corresponding Assessment Notices attached,11 one of which was Assessment Notice No. ST-DST2-97-0054-200012 pertaining to the documentary stamp taxes due on respondent's policy premiums: Documentary Stamp Tax on Policy Premiums Assessment No. ST-DST2-97-0054-2000 Tax Due 3,954,955.00 Less: Tax Paid 2,308,505.74 Tax Deficiency 1,646,449.26 Add: 20% Int./a 680,231.64 Recommended Compromise Penalty-Late Payment 25,000.00 Total Amount Due 2,351,680.90 13 The tax deficiency was computed by including the increases in the life insurance coverage or the sum assured by some of respondent's life insurance plans14: ISSUED INCREASED ORDINARY ₱648,127,000.00 ₱ 74,755,000.00 GROUP 114,936,000.00 744,164,000.00 TOTAL