Revenue v. Fireman'S Fund Insurance Company

PARAS, J.:

This is an appeal from the decision of the respondent Court of Tax Appeals dated May 24, 1969, in C.T.A. Case No. 1629, entitled "FIREMAN'S FUND INSURANCE COMPANY v. COMMISSIONER OF INTERNAL REVENUE," which reversed the decision of petitioner Commissioner of Internal Revenue holding private respondent Fireman's Fund Insurance Company liable for the payment of the amount of P81,406.87 as documentary stamp taxes and compromise penalties for the years 1952 to 1958. Private respondent is a resident foreign insurance corporation organized under the laws of the United States, authorized and duly licensed to do business in the Philippines.

It is a member of the American Foreign Insurance Association, through which its business is cleared (Brief for Respondents, pp. 1-2) The antecedent facts of this case are as follows: From January, 1952 to December, 1958, herein private respondent Fireman's Fund Insurance Company entered into various insurance contracts involving casualty, fire and marine risks, for which the corresponding insurance policies were issued. From January, 1952 to 1956, documentary stamps were bought and affixed to the monthly statements of policies issues; and from 1957 to 1958 documentary stamps were bought and affixed to the corresponding pages of the policy register, instead of on the insurance policies issued. On July 3, 1959, respondent company discovered that its monthly statements of business and policy register were lost.

The loss was reported to the Building Administration of Ayala Building and the National Bureau of Investigation on July 6, 1959. Herein petitioner was also informed of such loss by respondent company, through the latter's auditors, Sycip, Gorres and Velayo, in a letter dated July 14, 1959. After conducting an investigation of said loss, petitioner's examiner ascertained that respondent company failed to affix the required documentary stamps to the insurance policies issued by it and failed to preserve its accounting records within the time prescribed by Section 337 of the Revenue Code by using loose leaf forms as registers of documentary stamps without written authority from the Commissioner of Internal Revenue as required by Section 4 of Revenue Regulations No. V-1.

As a consequence of these findings, petitioner, in a letter dated December 7, 1962, assessed and demanded from petitioner the payment of documentary stamp taxes for the years 1952 to 1958 in the total amount of P 79,806.87 and plus compromise penalties, a total of P 81,406.87. A breakdown of the amount of taxes due and collectible are as follows: YEAR AMOUNT 1952 P 6,500.00 1953 9,977.72 1954 10,908.89 1955 14,204.52 1956 12,108.26 1957 7,880.68 1958 16,257.60 Total stamp taxes due on policies issued from 1952 to 1958 77,837.67 Add: Stamp taxes on monthly statements during: 1957.......................................................................................... 1,218.35 1958..........................................................................................

3,264.39 Total................................................................................... ₱ 82,320.41 Less: Stamp taxes paid per voucher shown: 1957............................................................... ₱ 416.82 1958................................................................

2,096.72 2,513.54 AMOUNT DUE & COLLECTIBLE.............................................