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    PGC Vs CIR

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    Francis Anthony Urbiztondo
    The document discusses a case where an insurance company ceded reinsurance premiums to foreign insurers without withholding taxes. The court ruled that the insurance company was required to withhold taxes on these reinsurance premiums paid to foreign insurers operating in the Philippines, even if the government had not previously required this, as taxes are necessary for the government to function and provide protections.

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    PGC Vs CIR

    Uploaded by

    Francis Anthony Urbiztondo
    22 views1 page
    The document discusses a case where an insurance company ceded reinsurance premiums to foreign insurers without withholding taxes. The court ruled that the insurance company was required to withhold taxes on these reinsurance premiums paid to foreign insurers operating in the Philippines, even if the government had not previously required this, as taxes are necessary for the government to function and provide protections.

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    PGC vs CIR

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    The document discusses a case where an insurance company ceded reinsurance premiums to foreign insurers without withholding taxes. The court ruled that the insurance company was required to withhold taxes on these reinsurance premiums paid to foreign insurers operating in the Philippines, even if the government had not previously required this, as taxes are necessary for the government to function and provide protections.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    22 views1 page

    PGC Vs CIR

    Uploaded by

    Francis Anthony Urbiztondo
    The document discusses a case where an insurance company ceded reinsurance premiums to foreign insurers without withholding taxes. The court ruled that the insurance company was required to withhold taxes on these reinsurance premiums paid to foreign insurers operating in the Philippines, even if the government had not previously required this, as taxes are necessary for the government to function and provide protections.

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    © All Rights Reserved
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    PHIL. GUARANTY CO., INC. v. CIR GR No.

    L-22074, April 30, 1965 13 SCRA 775


    FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic insurance company,
    entered into reinsurance contracts with foreign insurance companies not doing
    business in the country, thereby ceding to foreign reinsurers a portion of the
    premiums on insurance it has originally underwritten in the Philippines. The
    premiums paid by such companies were excluded by the petitioner from its gross
    income when it file its income tax returns for 1953 and 1954. Furthermore, it did not
    withhold or pay tax on them. Consequently, the CIR assessed against the petitioner
    withholding taxes on the ceded reinsurance premiums to which the latter protested
    the assessment on the ground that the premiums are not subject to tax for the
    premiums did not constitute income from sources within the Philippines because the
    foreign reinsurers did not engage in business in the Philippines, and CIR's previous
    rulings did not require insurance companies to withhold income tax due from
    foreign companies. ISSUE: Are insurance companies not required to withhold tax on
    reinsurance premiums ceded to foreign insurance companies, which deprives the
    government from collecting the tax due from them? HELD: No. 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. The petitioner's defense of reliance of good faith on rulings of
    the CIR requiring no withholding of tax due on reinsurance premiums may free the
    taxpayer from the payment of surcharges or penalties imposed for failure to pay the
    corresponding withholding tax, but it certainly would not exculpate it from liability to
    pay such withholding tax. The Government is not estopped from collecting taxes by
    the mistakes or errors of its agents.

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