G.R. Nos. 199729-30. February 27, 2019.*

 
MANILA BANKERS’ LIFE INSURANCE CORPORATION,
petitioner,  vs.  COMMISSIONER OF INTERNAL REVENUE,
respondent.
 
G.R. Nos. 199732-33. February 27, 2019.*
 
COMMISSIONER OF INTERNAL REVENUE,
petitioner,  vs.  MANILA BANKERS’ LIFE INSURANCE
CORPORATION, respondent.

Taxation; Gross Income; Under Section 27(E)(4), “gross income” as

used in determining Minimum Corporate Income Tax (MCIT) means “gross
receipts less sales returns, allowances, discounts and cost of services.”—
The provision allows the government to collect from corporations MCIT
equivalent to 2% of “gross income” in lieu of the 30% of “gross income”
basic income tax for domestic corporations, whenever the former is higher.
It must be borne in mind, however, that although both rates of taxes are
applied to “gross income” as tax base, the definition of “gross income,” for
purposes of MCIT and basic corporate income tax, varies. Under Section
27(E)(4) above quoted, “gross income” as used in determining MCIT means
“gross receipts less sales returns, allowances, discounts and cost of
services.” This definition is much more limited in terms of inclusions,
exclusions, and deductions, compared to the definition of “gross income”
for purposes for computing basic corporate tax under Sections 32 and 34 of
the NIRC.
Same; Prospectivity of Laws; Well-entrenched is the rule that statutes,
including administrative rules and regulations, operate prospectively only,
unless the legislative intent to the contrary is manifest by express terms or
by necessary implication.—Well-entrenched is the rule that statutes,
including administrative rules and regulations, operate prospectively only,
unless the legislative intent to the contrary is manifest by express terms or
by necessary 
_______________

* THIRD DIVISION.

 
 
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implication. In the present case, there is no indication that the revenue

regulation may operate retroactively. Similarly, the Court held in Pilipinas
Total Gas, Inc. v. CIR, 776 SCRA 395 (2015), that RMC 54-2014, requiring
that the application for VAT refund or credit must already be accompanied
by complete supporting documents, cannot be applied retroactively since it
imposes new obligations upon taxpayers in order to perfect their
administrative claim. To rule otherwise would unduly prejudice taxpayers
who had already filed their claims before RMC 54-2014 was issued, in
violation of Section 246 aforequoted. RMC 4-2003 cannot therefore be
invoked in assessing MBLIC’s deficiency MCIT for 2001. Rather, the
deductibility of premium taxes and DSTs from gross receipts ought to be
measured against the standard set under Section 27(E)(4) of the NIRC itself.
Same; Gross Income; The Commissioner of Internal Revenue’s (CIR’s)
contention — that premium taxes are not deductions from gross receipts
when determining the Minimum Corporate Income Tax (MCIT), but from
“gross income” in calculating corporate taxes — should therefore be given
due credence.—Contrarily, to accede to the CTA’s rationalization would
virtually allow all expenses to be deductible from gross receipts, erasing the
distinction between “gross income” for purposes of MCIT and “gross
income” for purposes of basic corporate taxes. The CIR’s contention — that
premium taxes are not deductions from gross receipts when determining the
MCIT, but from “gross income” in calculating corporate taxes — should
therefore be given due credence.
Same; Documentary Stamp Tax; Documentary Stamp Tax (DST) is
incurred “by the person making, signing, issuing, accepting, or
transferring” the document subject to the tax. And since a contract of
insurance is mutual in character, either the insurer or the insured may
shoulder the cost of the DST.—As can be gleaned, DST is incurred “by the
person making, signing, issuing, accepting, or transferring” the document
subject to the tax. And since a contract of insurance is mutual in character,
either the insurer or the insured may shoulder the cost of the DST. In this
case, it was duly noted by the CTA that MBLIC never disputed charging
DSTs from its clients as part of their premiums. Hence, it cannot readily be
said that it was MBLIC who “necessarily incurred” the expense. Moreover,
DSTs cannot also qualify as direct costs “to provide the services required

 
 

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by the customers and clients” since, just like premium taxes, they are
incurred after the service had been rendered. No error is then attributable to
the CTA in this regard.
Same; Same; Insurance; Documentary Stamp Tax (DST) becomes due
at the same time the insurance policy is executed or had.—Synthesized with
Section 173 earlier quoted, DST becomes due at the same time the insurance
policy is executed or had. By way of exception, however, Section 198 reads:
SEC. 198. Stamp Tax on Assignments and Renewals of Certain
Instruments.—Upon each and every assignment or transfer of any
mortgage, lease or policy of insurance, or the renewal or continuance of
any agreement, contract, charter, or any evidence of obligation or
indebtedness by altering or otherwise, there shall be levied, collected and
paid a documentary stamp tax, at the same rate as that imposed on the
original instrument. x  x  x Plainly, an insurance contract may again attract
DST at the same rate when it is (a) assigned or transferred, or (b) renewed
or continued by alteration or otherwise. Under the latter circumstance, an
alteration of the policy may result in attracting DST, though no new policy
is issued. MBLIC is then mistaken in its claim that it can only be liable
under Section 183 whenever a new policy is issued. For the pivotal question
is not the issuance or non-issuance of a new policy, but whether or not an
increase in the assured amount amounted to a renewal or continuance by
alteration or otherwise.
Same; Same; Same; Increases in the amount fixed in the policy by
virtue of the automatic increase clause necessarily altered or affected the
subject policies, and therefore, created or granted existing policyholders
new and additional rights.—Increases in the amount fixed in the policy by
virtue of the automatic increase clause necessarily altered or affected the
subject policies, and therefore, created or granted existing policyholders
new and additional rights. This finding is in consonance with the Court’s
resolution in Lincoln. In Lincoln, it was held that an increase in the assured
amount of an insurance policy would yield a corresponding increase in the
DST due. In the said case, private respondent issued a special kind of life
insurance policy known as the Junior Estate Builder Policy. Its
distinguishing feature is a clause providing for an automatic increase in the
amount of life insurance coverage upon attainment of a certain age by the
insured without the need of issuing a new policy.

 
 

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The clause was to take effect in the year 1984. DSTs due were paid by
petitioner only on the initial sum assured. Nevertheless, the Court held that
therein private respondent is liable for DST on the increase of the amount
insured upon the effectivity of the automatic increase clause in 1984.
Same; Revised Rules of Procedure before the Court of Tax Appeals;
Under Rule 1, Section 3 of the Revised Rules of Procedure before the Court
of Tax Appeals (CTA), the Rules of Court of the Philippines shall have
suppletory application.—The Court rules that although MBLIC is correct in
saying that it may still raise prescription as a defense, it nevertheless failed
to establish that the prescriptive period had already expired. Under Rule 1,
Section 3 of the Revised Rules of Procedure before the Court of Tax
Appeals, the Rules of Court of the Philippines shall have suppletory
application. In turn, Section 1, Rule 9 of the Rules of Court states: Section
1. Defenses and objections not pleaded.—Defenses and objections not
pleaded either in a motion to dismiss or in the answer are deemed waived.
However, when it appears from the pleadings or the evidence on record
that the court has no jurisdiction over the subject matter, that there is another
action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court
shall dismiss the claim.
Remedial Law; Civil Procedure; Prescription; The Supreme Court (SC)
in China Banking Corporation v. CIR, 749 SCRA 525 (2015), citing Heirs of
Valientes v. Ramas, 638 SCRA 444 (2010), ruled that it is imbued with
sufficient discretion to review matters, not otherwise assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a
complete and just resolution of the case; more so, when the provisions on
prescription were enacted to benefit and protect taxpayers from
investigation after a reasonable period of time.—The Court in China
Banking Corporation v. CIR, 749 SCRA 525 (2015), citing Heirs of
Valientes v. Ramas, 638 SCRA 444 (2010), ruled that it is imbued with
sufficient discretion to review matters, not otherwise assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a
complete and just resolution of the case; more so, when the provisions on
prescription were enacted to benefit and protect taxpayers from
investigation

 
 

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after a reasonable period of time. Resultantly, the Court therein

appreciated the defense of prescription even though it was raised for the first
time before the Court of last resort. Indeed, the Court may give credence to
the defense of prescription even though it was raised for the first time on
appeal. However, as mentioned, the defense of prescription, though timely
invoked, was not sufficiently established. For though MBLIC endeavored to
prove that it filed DST returns covering the months of January-June 2001
before the August 5, 2004 FAN was issued, there was no showing that the
deficiency DSTs assessed pertained to the said timeframe.

PETITIONS for review on certiorari of the decision and resolution

of the Court of Tax Appeals En Banc.
The facts are stated in the opinion of the Court.

 
A. REYES, JR., J.:
 
Nature of the Case
 
 Before the Court are the consolidated petitions of Manila
Bankers’ Life Insurance Corporation (MBLIC) and the
Commissioner of Internal Revenue (CIR) filed under Rule 45 of the
Rules of Court. Both parties appealed from the August 18, 2011
Decision1 and December 9, 2011 Resolution2 of the Court of Tax
Appeals (CTA) En Banc in C.T.A.-E.B. Case Nos. 620 and 621. Said
rulings held (a) that premium taxes on insurance policies are
considered “costs of service” in computing the Minimum Corporate
Income Tax (MCIT); (b) that Documentary Stamp Taxes (DSTs)
paid on the insurance policies are not considered “costs of service”
in the MCIT computation; (c) that the DST

_______________

1  Penned by Associate Justice Caesar A. Casanova, with Associate Justices

Juanito C. Castañeda, Lovell R. Bautista, Erlinda P. Uy, Olga Palanca-Enriquez,
Esperanza R. Fabon-Victorino and Cielito N. Mindaro-Grulla, and Presiding Justice
Ernesto D. Acosta (on leave), concurring; Rollo (G.R. Nos. 199732-33), pp. 36-61.
2 Id., at pp. 62-69.

 
 

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may be assessed on the increase in the assured coverage of an

insurance policy, even when no new policy is issued; (d) that
MBLIC belatedly raised the defense of prescription; and (e) that
compromise penalties cannot be imposed.
 
The Facts
 
CTA Case No. 7266
 
On June 8, 2004, MBLIC received a Preliminary Assessment
Notice from the Bureau of Internal Revenue (BIR), assessing the
following alleged deficiency taxes for the year 2001:3
 
  
On June 23, 2004, MBLIC settled items 1 to 5 of the deficiency
assessments with the BIR’s Large Taxpayers Service (LTS), but
moved for reconsideration of items 6 and 7.4
However, on August 17, 2004, MBLIC received from the CIR a
Formal Letter of Demand with Formal Assessment Notices (FAN),
dated August 4, 2004, for its alleged MCIT

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3 Id., at p. 38.
4 Id.

 
 

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and DST deficiencies for 2001 in the aggregate amount of

P7,951,462.28, broken down as follows:5
 

 
The basic MCIT for 2001 in the amount of P398,233.52 was
based on the disallowances from MBLIC’s claimed deductions.
Essentially, according to the CIR, premium taxes and DSTs on
insurance policies are not deemed “costs of service” that can be
deducted from gross receipts for purposes of computing MCIT. The
CIR cited Section 27(E)(4) of the National Internal Revenue Code of
1997 (NIRC) and Revenue Memorandum Circular No. 4-2003
(RMC 4-2003). Under RMC 4-2003, premium taxes and DSTs are
not included in the enumeration of an insurance company’s direct
costs. Thus, MBLIC’s basic deficiency MCIT due for 2001 was
computed as follows:6
 

_______________

5 Id., at pp. 38-39.

6 Id., at p. 39.

 
 

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As regards the DST portion of the assessment, the base amount

of P4,841,002.50 was arrived at by applying the rate of P0.50 for
every P200.00 of P1,936,401,000.00, which pertains to the total
increase in the sum assured under the existing insurance policies in
2001 as reported by MBLIC to the Insurance Commission. It was
noted that the increase in the assured amount under the policies
entailed a corresponding increase in the DST due. Inclusive of
interest and penalties, the total amount of DST due is
P7,351,373.18.7
On September 15, 2004, MBLIC filed its letter-protest before the
LTS, contesting the assessment of the subject deficiencies. On
November 12, 2004, MBLIC submitted before the LTS Audit and
Investigation Division all the documents requested by the office.
Thereafter, on June 7, 2005, MBLIC filed a petition for review with
the CTA to protect its right to refute the assessment. The case was
docketed as CTA Case No. 7266. The CIR filed his Answer on
August 30, 2005.8
 Subsequently, on October 12, 2005, MBLIC prayed for leave of
court to file a Supplemental Petition, alleging therein that the
deficiency DST on transactions made from January to June 2001 is
null and void for having been issued beyond the three-year
prescriptive period. The CTA admitted the Supplemental Petition
over the opposition of the CIR.9
In turn, the CIR filed his Amended Answer,10  alleging that the
assessments were issued in accordance with existing law and
regulations, and that they were issued within the prescriptive period.
In any event, issues and defenses not raised in the administrative
level, such as prescription herein, cannot be raised for the first time
on appeal.

_______________

7 Id., at p. 40.
8 Id.
9 Id., at pp. 40-41.
10 The pertinent portion of which is quoted in the Rollo of G.R. Nos. 199732-33,
pp. 41-47.

 
 

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Anent the assessed deficiency MCIT, the CIR argued that RMC
4-2003 is applicable even though the assessment is for deficiencies
in the year 2001 since it merely clarified an existing NIRC provision
that MBLIC failed to rebut the findings of the CIR that premium
taxes and DSTs are not direct costs; and that the alleged expenses
are not deductions from gross receipts for computing MCIT, but
from gross income for computing the basic domestic corporate tax.
Regarding the deficiency DST, the CIR justified its assessment of
the increased assured amount by citing Section 198 of the NIRC,
which specifically provides that any alteration on any instrument or
agreement subject to DST, a policy insurance included, shall be
subject to incremental DST at the same rate as that imposed on the
original instrument. Reliance was likewise made on CIR v. Lincoln
Philippine Life Insurance Company, Inc. (Lincoln).11
Lastly, the CIR argued that claims for tax exemption ought to be
construed strictissimi juris against the claimant MBLIC, and that the
assessments are  prima facie  correct and presumed to have been
made in good faith. Absent proof of irregularities in the performance
of official duties, an assessment should not be disturbed.
 
CTA Case Nos. 7324 and 7378
 
CTA Case Nos. 7324 and 7378 arose from circumstances similar
to CTA Case No. 7266. These pertain to deficiency DSTs assessed
on the increases in the sums assured under existing insurance
policies, this time for the years 2002 and 2003. A summary of the
assessments is as follows:

_______________

11 429 Phil. 154; 379 SCRA 423 (2002).

 
 

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Upon due observance of the procedure for administrative
remedies, resulting in either the failure of the CIR to resolve the
protest within the reglementary period or in the denial of MBLIC’s
protest, MBLIC filed petitions for review with the CTA, docketed as
CTA Case Nos. 7324 and 7378. Upon motion of MBLIC, these
cases were consolidated with CTA Case No. 7266.14 Trial on the
merits thereafter ensued.

_______________

12 Rollo (G.R. Nos. 199732-33), pp. 47-48.

 14 Id., at p. 51.

 
 

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Ruling of the CTA Second Division

 
On November 6, 2009, the CTA Second Division rendered a
Decision15 on the consolidated petitions of MBLIC, upholding the
assessments made by the CIR with modifications.
According to the CTA Second Division, premium taxes are
deemed cost of services deductible from gross receipts in computing
for MCIT. It ruled, however, that DSTs are not so deductible. To
quote:16

In light of the foregoing, premium tax may be considered as a

direct cost and/or expense necessary to provide the service of
insurance considering that insurance companies, such as petitioner,
cannot effectively issue insurance policies without incurring the said
tax. It must be pointed out that in the issuance of a policy or contract
of insurance, its validity and binding effect depends (sic) upon the
payment of the premium, which is closely intertwined with the
payment of the premium tax that is accruing thereto.
x x x x
 However, [W]e can not say the same as regards the DST.
Unlike the premium tax, which is the direct liability of the
insurance company, the DST x  x  x is imposed upon “the person
making, signing, issuing, accepting or transferring” the document or
facility evidencing the transaction. Thus, DST may be imposed upon
either of the parties to the transaction in a contract of insurance, or
upon either the insurance company or the insured.

_______________

15  Penned by Associate Justice Erlinda P. Uy, and concurred in by Associate

Justices Juanito C. Castañeda, Jr. and Olga Palanca-Enriquez; Id., at pp. 80-113.
16 Id., at pp. 99-100.

 
 

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It is not disputed herein that the corresponding DST (like the

consequent premium tax) was included in the premiums charged to
petitioner’s clients. Thus, the latter are the ones who were made
liable to pay the DST, and not the petitioner. This being the case,
DST cannot be deemed as a direct cost or expense of petitioner
necessary to provide the insurance service. Consequently, the same
DST cannot form part of petitioner’s costs of service for purposes of
computing its MCIT for taxable year 2001. (Citations omitted)

 
Furthermore, the CTA Second Division ruled that the CIR erred
in utilizing RMC 4-2003 as the basis for the disallowances of the
deductions from gross receipts in computing for the MCIT, for the
issuance, issued on December 31, 2002, cannot be applied
retroactively to assess MBLIC for deficiency taxes for taxable year
2001.17
Anent the deficiency DST due, the CTA Second Division sided
with the CIR and applied the Lincoln ruling. Thus, it was held that
an increase in the coverage or the sum assured by an insurance
policy is subject to DST even though no new policy for such an
increase was issued.18
 On the issue of prescription, the CTA Second Division
cited Aguinaldo Industries Corp. (Fishing Nets Division) v. CIR, et
al.,19 (Aguinaldo) and ruled that the defense cannot be considered,
asserted as it was for the first time in MBLIC’s Supplemental
Petition instead of during the administrative stages of the
proceeding.20
Lastly, the compromise penalties imposed by the CIR were
cancelled because there was no mutual agreement between

_______________

17 Id., at pp. 101-104.

18 Id., at pp. 105-108.
19 197 Phil. 822; 112 SCRA 136 (1982).
20 Rollo (G.R. Nos. 199732-33), pp. 108-110.

 
 

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the parties to compromise. A 25% surcharge was imposed in its

stead.21
In sum, the CTA Second Division disposed of MBLIC’s petitions
in the following manner:22

WHEREFORE, in view of the foregoing considerations, the

consolidated Petitions for Review seeking the cancellation of
respondent’s assessments for; deficiency Minimum Corporate
Income Tax (MCIT) and deficiency Documentary Stamp Tax (DST)
and increments for taxable year 2001 in  CTA Case No. 7266;
deficiency DST and increments for taxable year 2002 in CTA Case
No. 7324; and deficiency DST and increments for taxable year 2003
in  CTA Case No. 7378  are  DENIED. The Formal Assessment
Notices issued by respondent against petitioner covering deficiency
MCIT for taxable year 2001 and deficiency DST for taxable years
2001, 2002 and 2003 are hereby  AFFIRMED WITH
MODIFICATIONS. The compromise penalties are CANCELLED.
However, a twenty-five percent (25%) surcharge is imposed,
pursuant to Section 248(A) of the NIRC of 1997.
 Accordingly, petitioner is hereby  ORDERED TO
PAY  respondent the amount of  FOURTEEN MILLION SIXTY-
THREE THOUSAND SIX HUNDRED SEVEN PESOS AND
51/100 (P14,063,607.51), representing its deficiency MCIT for
taxable year 2001 and deficiency DST for taxable years 2001, 2002,
and 2003, inclusive of increments, computed as follows:

_______________

21 Id., at p. 110.
22 Id., at pp. 110-112. (Emphasis in the original)

 
 

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In addition, petitioner is hereby ORDERED TO PAY twenty

percent (20%) delinquency interest on P8,588,403.87, representing
the total amount due for taxable year 2001, computed from August
11, 2004; as well as on the P2,969,572.79 and P2,505,630.85 total
amounts due for taxable years 2002 and 2003, respectively, computed
from March 5, 2005 until full payment thereof: pursuant to Section
249(C)(3) of the NIRC of 1997.
SO ORDERED.

 
The CTA Second Division would affirm the said Decision
through its Resolution23 dated April 6, 2010.
 
Ruling of the CTA En Banc
  
Unsatisfied, both parties assailed the rulings of the CTA Second
Division. MBLIC maintained its posturing in its petitions. The CIR,
on the other hand, alleged that the CTA Second Division erred (a) in
allowing MBLIC to deduct premium taxes from gross receipts for
the purpose of computing the MCIT due, and (b) in cancelling the
compromise penalties assessed in the FANs.
The CTA En Banc, however, found no cogent reason to disturb
the findings and conclusions spelled out in the assailed rulings of the
CTA Second Division. In its discussion, the CTA  En Banc  merely
amplified the justification for barring MBLIC from raising
prescription as a defense. Thus, the CTA En Banc disposed of both
petitions in the following wise:24

WHEREFORE, the assailed Decision dated November 6, 2009

and Resolution dated April 6, 2010 of the

_______________

23 Id., at pp. 114-126.

24 Id., at p. 59. (Emphasis in the original)

 
 
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CTA Former Second Division are hereby AFFIRMED in toto, and

the instant Petitions for Review are hereby DISMISSED for lack of
merit.
SO ORDERED.

 
The parties’ respective motions for reconsideration were denied
by the CTA En Banc through its December 9, 2011 Resolution.25
Hence, the instant recourses.
 
The Issues
 
MBLIC framed the issues thusly:26
  
A. WHETHER OR NOT THE CTA  EN BANC  IN UPHOLDING
THE DECISION AND RESOLUTION OF THE CTA-
DIVISION COMMITTED REVERSIBLE ERROR IN
HOLDING THAT PETITIONER CANNOT RAISE THE ISSUE
OF PRESCRIPTION FOR THE FIRST TIME ON APPEAL IN
ITS PETITION FOR REVIEW FILED BEFORE THE CTA-
DIVISION IN CTA CASE NO. 7266.
B. WHETHER OR NOT THE CTA  EN BANC  IN UPHOLDING
THE DECISION AND RESOLUTION OF THE CTA-
DIVISION COMMITTED REVERSIBLE ERROR IN
HOLDING THAT DST IS NOT PART OF COST OF SERVICE
FOR PURPOSES OF COMPUTING [THE] MINIMUM
CORPORATE INCOME TAX (“MCIT”).
C. WHETHER OR NOT THE CTA  EN BANC  IN UPHOLDING
THE DECISION AND RESOLUTION OF THE CTA-
DIVISION COMMITTED REVERSIBLE ERROR IN
HOLDING THAT AN INCREASE IN THE COVERAGE OR
THE SUM ASSURED BY AN INSUR-

_______________

25 Id., at pp. 62-69.

26 Rollo (G.R. Nos. 199729-30), p. 112.

 
 

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ANCE POLICY IS SUBJECT TO DST ALTHOUGH NO NEW

POLICY FOR SUCH INCREASE IS ISSUED.
 
On the other hand, the CIR assigned the following errors:27
 
THE HONORABLE COURT [OF] TAX APPEAL[S]  EN
BANC  ERRED ON A QUESTION OF LAW WHEN (1) IT
AFFIRMED THE DECISION DATED NOVEMBER 6, 2009 AND
RESOLUTION DATED APRIL 6, 2010 RENDERED BY THE
FORMER COURT OF TAX APPEALS SECOND DIVISION’S
FINDING THAT THE PREMIUM TAX IS DEEMED PART OF
THE COST OF SERVICE FOR PURPOSES OF PETITIONER’S
ASSESSMENT FOR DEFICIENCY MINIMUM CORPORATE
INCOME TAX BUT NOT FOR PETITIONER’S ASSESSMENT
FOR DEFICIENCY DOCUMENTARY STAMP TAX AND (2)
WHEN IT CANCELLED THE COMPROMISE PENALTIES
AGAINST RESPONDENT.
 
To synthesize, the pivotal issue in the case at bar is whether or
not the CIR erred in assessing MBLIC for deficiency taxes.
Subsumed under this general statement are the following issues:
 
1. Whether or not MBLIC is liable for deficiency MCIT in 2001.
 
a. Whether or not RMC 4-2003 can be retroactively applied
as basis for the purported deficiency taxes in 2001.
b. Whether or not premium taxes constitute “cost of
services” deductible from gross receipts.
c. Whether or not DSTs constitute “cost of services”
deductible from gross receipts.

_______________

27 Rollo (G.R. Nos. 199732-33), p. 27.

 
 

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2. Whether or not MBLIC is liable for deficiency DST for

increases in the assured or covered amount stated in its
insurance policies even though no new instrument is issued.
3. Whether or not prescription was properly raised as a defense.
4. Whether or not compromise penalty could be imposed against
MBLIC.
 
The Court’s Ruling
  
The petition of the CIR is meritorious in part, while that of
MBLIC deserves scant consideration. The Court shall now discuss
the aforementioned issues in seriatim.
 
Liability for deficiency MCIT
 
Of particular importance to the case at bar is Section 27(E) of the
NIRC, which provides for the imposition of MCIT in the following
manner:

SEC. 27. Rates of Income tax on Domestic Corporations.—

x x x x
(E) Minimum Corporate Income Tax on Domestic Corporations.
—
(1) Imposition of Tax.—A minimum corporate income tax of two
percent (2%) of the gross income as of the end of the taxable year, as
defined herein, is hereby imposed on a corporation taxable under this
Title, beginning on the fourth taxable year immediately following the
year in which such corporation commenced its business operations,
when the minimum income tax is greater than the tax computed
under Subsection (A) of this Section for the taxable year.

 
 

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x x x x
(4) Gross Income Defined.—For purposes of applying the
minimum corporate income tax provided under Subsection (E)
hereof, the term ‘gross income’ shall mean gross sales less sales
returns, discounts and allowances and cost of goods sold. ‘Cost of
goods sold’ shall include all business expenses directly incurred to
produce the merchandise to bring them to their present location and
use.
x x x x
In the case of taxpayers engaged in the sale of service, ‘gross
income’ means gross receipts less sales returns, allowances,
 discounts and cost of services. ‘Cost of services’ shall mean all direct
costs and expenses necessarily incurred to provide the services
required by the customers and clients including (A) salaries and
employee benefits of personnel, consultants and specialists directly
rendering the service and (B) cost of facilities directly utilized in
providing the service such as depreciation or rental of equipment
used and cost of supplies: Provided, however, That in the case of
banks, ‘cost of services’ shall include interest expense. (Emphasis
supplied)

 
The provision allows the government to collect from corporations
MCIT equivalent to 2% of “gross income” in lieu of the 30% of
“gross income” basic income tax for domestic corporations,28
whenever the former is higher. It must be borne in mind, however,
that although both rates of taxes are applied to “gross income” as tax
base, the definition of “gross income,” for purposes of MCIT and
basic corporate income tax, varies.
Under Section 27(E)(4) above quoted, “gross income” as used in
determining MCIT means “gross receipts less sales returns,
allowances, discounts and cost of services.” This definition is much
more limited in terms of inclusions, exclu-

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28 Section 27(A) of the NIRC.

 
 

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sions, and deductions, compared to the definition of “gross income”

for purposes for computing basic corporate tax under Sections 3229
and 3430 of the NIRC.31 In formulaic terms, Section 27(E)(4) can be
expressed thusly:

_______________

29 SEC. 32. Gross Income.—
 (A) General Definition.—Except when otherwise provided in this Title, gross
income means all income derived from whatever source, including (but not limited to)
the following items:
(1) Compensation for services in whatever form paid, including, but not
limited to fees, salaries, wages, commissions, and similar items;
(2) Gross income derived from the conduct of trade or business or the
exercise of a profession;
(3) Gains derived from dealings in property;
(4) Interests;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Prizes and winnings;
(10)   Pensions; and
(11)   Partner’s distributive share from the net income of the general
professional partnership.
(B) Exclusions from Gross Income.—The following items shall not be included
in gross income and shall be exempt from taxation under this title:
(1) Life Insurance.—x x x
(2) Amount Received by Insured as Return of Premium.—x x x
(3) Gifts, Bequests, and Devises.—x x x
(4) Compensation for Injuries or Sickness.—x x x
(5) Income Exempt under Treaty.—x x x
(6) Retirement Benefits, Pensions, Gratuities, etc.—x x x
(7) Miscellaneous Items.—
(a) Income Derived by Foreign Government.—x x x

 
 

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282 SUPREME COURT REPORTS ANNOTATED

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(b) Income Derived by the Government or its Political Subdivisions.

—x x x
(c) Prizes and Awards.—x x x
x x x x
 (d) Prizes and Awards in Sports Competition.—x x x
(e) 13th Month Pay and Other Benefits.—x x x
x x x x
(f) GSIS, SSS, Medicare and Other Contributions.—x x x
(g) Gains from the Sale of Bonds, Debentures or other Certificate of
Indebtedness.—x x x
(h) Gains from Redemption of Shares in Mutual Fund.—x x x
30 SEC. 34. Deductions from Gross Income.—x x x
(A) Expenses.—
x x x x
(B) Interest.—
x x x x
(C) Taxes.—
x x x x
(D) Losses.—
x x x x
(E) Bad Debts.—
x x x x
(F) Depreciation.—
x x x x
(G) Depletion of Oil and Gas Wells and Mines.—
x x x x
(H) Charitable and Other Contributions.—
x x x x
(I) Research and Development.—
x x x x
(J) Pension Trusts.—
(K) Additional Requirements for Deductibility of Certain
Payments.—x x x
(L) Optional Standard Deduction.—x x x
(M) Premium Payments on Health and/or Hospitalization
Insurance of an Individual Taxpayer.—x x x
31 Commissioner of Internal Revenue v. Philippine Airlines, Inc., 609 Phil. 695,
713; 592 SCRA 730, 741 (2009).

 
 

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To refresh, the issue pertaining to MBLIC’s deficiency MCIT

assessment stemmed from its alleged excessive claim of deductible
“cost of services,” resulting in the CIR’s perceived understatement
of the MCIT due. Specifically, the CIR argues that premium taxes on
insurance and DSTs cannot be considered as deductible from gross
receipts since they are not among those identified under RMC 4-
2003 as costs of services.
 
i. RMC 4-2003 cannot be
retroactively applied
 
The first point of contention is the applicability of RMC 4-
2003.32 The circular reads:

Gross Receipts and Cost of Services Per Industry.—For purposes of

applying the MCIT, the ‘gross receipts’ and ‘cost of services’ of
taxpayers engaged in the following types of services, or any other
kind but of a similar nature, shall be determined as follows:
 
x x x x
(ii) Insurance and pension funding companies  refer to those
engaged in life and non-life insurance business as defined under the
Insurance Code and pre-need 

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32  Clarifying Items That Would Constitute Gross Receipts and Costs in
Determining “Gross Income” on Services for the Purpose of Computing the
Minimum Corporate Income Tax (MCIT) Pursuant to Sections 27(E) and 28(A)(2) of
the National Internal Revenue Code of 1997; promulgated on December 31, 2002.

 
 

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 Manila Bankers’ Life Insurance Corporation vs. Commissioner of
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companies, including health maintenance organizations. Their gross

receipts shall mean actual or constructive receipts representing: net
retained premiums (gross premiums net of returns, cancellations, and
premiums ceded)/
gross premium or
collection from planholders; membership fees (in
the case of HMOs); miscellaneous income; investment income not
subject to final tax; released reserve and, in the case of pre-need
companies, gross withdrawals from the trust funds set up
independently as mandated by the Securities and Exchange
Commission (SEC); and, all other items treated as gross income
under Section 32 of the Tax Code. Their costs of services shall refer
to those incurred directly and exclusively in the insurance and
pre-need business, including the generation of investment income
not subject to final taxes, and shall be limited to the following:

 
01. Salaries, wages and other employee benefits of
personnel directly engaged in said activities;
02. Commissions on direct writings/agents of pre-need
companies;
03. Claims, losses, maturities and benefits net of
reinsurance recoveries; and,
04. Net additions required by law to reserve fund (for
insurance companies) and in the case of pre-need
companies, contributions to the trust funds to be set
up independently as mandated by the SEC.
(emphasis added)
 
MBLIC claims that the restrictive language of RMC 4-2003
limits what constitutes “cost of service,” compared to the more
inclusive wording of the provision the issuance seeks to implement.
Because RMC 4-2003 would preclude MBLIC from claiming
deductions from gross receipts other than those expressly
enumerated, the company claims that the retroac-
 
 

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tive application of RMC 4-2003 to its 2001 taxes is not only

prejudicial but, in fact, violative of Section 246 of the NIRC, which
provides:

SEC. 246. Non-Retroactivity of Rulings.—Any revocation,

modification or reversal of any of the rules and regulations
promulgated in accordance with the preceding Sections or any of the
rulings or circulars promulgated by the Commissioner shall not be
given retroactive application if the revocation, modification or
reversal will be prejudicial to the taxpayers, except in the
following cases:
 
(a) Where the taxpayer deliberately misstates or omits
material facts from his return or any document required of him
by the Bureau of Internal Revenue;
b) Where the facts subsequently gathered by the Bureau of
Internal Revenue are materially different from the facts on
which the ruling is based; or
(c) Where the taxpayer acted in bad faith. (emphasis added)

 
Meanwhile, the CIR argues that invoking RMC 4-2003 herein is
proper since it merely clarified what constitutes “cost of service” as
defined under Section 27(E)(4). Since premium taxes and DSTs do
not form part of the exhaustive enumeration in the issuance, the CIR
therefore assessed MBLIC for deficiency MCIT.
We concur with MBLIC.
Well-entrenched is the rule that statutes, including administrative
rules and regulations, operate prospectively only, unless the
legislative intent to the contrary is manifest by express terms or by
necessary implication. In the present
 
 

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case, there is no indication that the revenue regulation may operate
retroactively.33
Similarly, the Court held in Pilipinas Total Gas, Inc. v. CIR34 that
RMC 54-2014, requiring that the application for VAT refund or
credit must already be accompanied by complete supporting
documents, cannot be applied retroactively since it imposes new
obligations upon taxpayers in order to perfect their administrative
claim. To rule otherwise would unduly prejudice taxpayers who had
already filed their claims before RMC 54-2014 was issued, in
violation of Section 246 aforequoted.
RMC 4-2003 cannot therefore be invoked in assessing MBLIC’s
deficiency MCIT for 2001. Rather, the deductibility of premium
taxes and DSTs from gross receipts ought to be measured against the
standard set under Section 27(E)(4) of the NIRC itself.
 
ii. Premium taxes are NOT
deductible costs of ser-
vices
 
Section 123 of the NIRC serves as basis for the imposition of
premium taxes. Pertinently, the provision reads:

SEC. 123. Tax on Life Insurance Premiums.—There shall be

collected from every person, company or corporation (except purely
cooperative companies or associations) doing life insurance business
of any sort in the Philippines a tax of five percent (5%) of the total
premium collected, whether such premiums are paid in money, notes,
credits or any substitute for money; x x x[.]

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33 BPI Leasing Corporation v. Court of Appeals, 461 Phil. 451, 460; 416 SCRA 4,
13 (2003).
34 774 Phil. 473; 776 SCRA 395 (2015).

 
 
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 Without the availability of RMC 4-2003, we can only evaluate
the deductibility of premium taxes (i.e., whether or not they
constitute cost of services) based solely on the wording of Section
27(E)(4). As per the provision, “cost of services” means all direct
costs and expenses necessarily incurred to provide the services
required by the customers and clients, including (A) salaries and
employee benefits of personnel, consultants and specialists directly
rendering the service and (B) cost of facilities directly utilized in
providing the service such as depreciation or rental of equipment
used and cost of supplies.
In ruling that premium taxes are deductible from gross receipts,
the CTA relied on the permissive wording of the provision. It held
that the phrase “including” meant that “cost of services” could
pertain to expenses other than salaries and production costs. On the
premise that premium taxes are expenses incurred by MBLIC to
further its business, the CTA then ruled that the same can be
considered as part of its cost of services, though not specifically
mentioned.35
While we agree that the enumeration in the provision is not
exhaustive, the CTA paid little to no attention to one of the express
requirements for deductibility — that the claimed deduction should
be a  direct  cost or expense. A cost or expense is deemed “direct”
when it is readily attributable to the production of the goods or for
the rendition of the service.
Measured against this standard, it is then easy to discern that
premium taxes, though payable by MBLIC, are  not  direct costs
within the contemplation of the phrase “cost of services,” incurred
as they are  after  the sale of service had already transpired. This
cannot therefore be considered as the equivalent of raw materials,
labor, and manufacturing cost of deductible “cost of sales” in the
sale of goods.
Contrarily, to accede to the CTA’s rationalization would virtually
allow all expenses to be deductible from gross re-

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35 Rollo (G.R. Nos. 199732-33), pp. 66-67.

 
 

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ceipts, erasing the distinction between “gross income” for purposes

of MCIT and “gross income” for purposes of basic corporate taxes.
The CIR’s contention — that premium taxes are not deductions from
gross receipts when determining the MCIT, but from “gross income”
in calculating corporate taxes — should therefore be given due
credence.
 
iii. DSTs are NOT deducti-
ble costs of services

 
The CTA did not, however, err in holding that DSTs are not
deductible costs of services. The general provision on DST states:

SEC. 173. Stamp Taxes Upon Documents, Loan Agreements,

Instruments and Papers.—Upon documents, instruments, loan
agreements and papers, and upon acceptances, assignments, sales and
transfers of the obligation, right or property incident thereto, there
shall be levied, collected and paid for, and in respect of the
transaction so had or accomplished, the corresponding documentary
stamp taxes prescribed in the following Sections of this Title, by the
person making, signing, issuing, accepting, or transferring the
same wherever the document is made, signed, issued, accepted or
transferred when the obligation or right arises from Philippine
sources or the property is situated in the Philippines, and the same
time such act is done or transaction had: Provided, That whenever
one party to the taxable document enjoys exemption from the tax
herein imposed, the other party who is not exempt shall be the one
directly liable for the tax. (emphasis added)

 
As can be gleaned, DST is incurred “by the person making,
signing, issuing, accepting, or transferring” the document subject to
the tax. And since a contract of insurance is mutual in character,
either the insurer or the insured may shoulder the cost of the DST.
 
 
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In this case, it was duly noted by the CTA that MBLIC never
disputed charging DSTs from its clients as part of their premiums.
Hence, it cannot readily be said that it was MBLIC who “necessarily
incurred” the expense.36 Moreover, DSTs cannot also qualify as
direct costs “to provide the services required by the customers and
clients” since, just like premium taxes, they are incurred after the
service had been rendered. No error is then attributable to the CTA
in this regard.
 
Liability for DST
 
We now proceed to the assessed deficiency DST liability of
MBLIC for increases in the assured amount of the insurance policies
it issued. MBLIC had been reporting the said increases to the
Insurance Commission. The veracity of these reports utilized by the
CIR in its assessment was neither disputed nor denied by MBLIC.
Instead, the company merely argued that it cannot be made liable for
additional DST unless a new policy is issued.
We do not agree.
The imposition of DST on insurance policies is sourced on
Section 183 of the NIRC, which states:

SEC. 183. Stamp Tax on Life Insurance Policies.—On all

policies of insurance or other instruments by whatever name the
same may be called, whereby any insurance shall be made or
renewed upon any life or lives, there shall be collected a one-time
documentary stamp tax at the following rates:

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36 Id., at p. 100.

 
 

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Synthesized with Section 173 earlier quoted, DST becomes due
at the same time the insurance policy is executed or had. By way of
exception, however, Section 198 reads:

SEC. 198. Stamp Tax on Assignments and Renewals of Certain

Instruments.—Upon each and every assignment or transfer of any
mortgage, lease or policy of insurance, or the renewal or
continuance of any agreement, contract, charter, or any evidence of
obligation or indebtedness by altering or otherwise, there shall be
levied, collected and paid a documentary stamp tax, at the same rate
as that imposed on the original instrument. (emphasis added)

 
Plainly, an insurance contract may again attract DST at the same
rate when it is (a) assigned or transferred, or (b) renewed or
continued by alteration or otherwise. Under the latter circumstance,
an alteration of the policy may result in attracting DST, though no
new policy is issued. MBLIC is then mistaken in its claim that it can
only be liable under Section 183 whenever a new policy is issued.
For the pivotal question is not the issuance or non-issuance of a new
policy, but whether or not an increase in the assured amount
amounted to a renewal or continuance by alteration or otherwise.
We approve the ruling of the CTA. Increases in the amount fixed
in the policy by virtue of the automatic increase clause necessarily
altered or affected the subject policies, and therefore, created or
granted existing policyholders new and additional rights.37 This
finding is in consonance with the Court’s resolution in Lincoln.

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37 Id., at p. 108.

 
 
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In Lincoln, it was held that an increase in the assured amount of

an insurance policy would yield a corresponding increase in the DST
due. In the said case, private respondent issued a special kind of life
insurance policy known as the Junior Estate Builder Policy. Its
distinguishing feature is a clause providing for an automatic increase
in the amount of life insurance coverage upon attainment of a certain
age by the insured without the need of issuing a new policy. The
clause was to take effect in the year 1984. DSTs due were paid by
petitioner only on the initial sum assured. Nevertheless, the Court
held that therein private respondent is liable for DST on the increase
of the amount insured upon the effectivity of the automatic increase
clause in 1984. As the Court ratiocinated:38

It is clear from Section 173 that the payment of documentary

stamp taxes is done at the time the act is done or transaction had and
the tax base for the computation of documentary stamp taxes on life
insurance policies under Section 183 is the amount fixed in policy,
unless the interest of a person insured is susceptible of exact
pecuniary measurement.  What then is the amount fixed in the
policy? Logically, we believe that the amount fixed in the policy is
the figure written on its face  and whatever increases will take
effect in the future by reason of the “automatic increase clause”
embodied in the policy without the need of another contract.
Here, although the automatic increase in the amount of life
insurance coverage was to take effect later on, the date of its
effectivity, as well as the amount of the increase, was already definite
at the time of the issuance of the policy. Thus, the amount insured by
the policy at the time of its issuance necessarily included the
additional sum covered by the automatic increase clause be-

_______________

38  Commissioner of Internal Revenue v. Lincoln Philippine Life Insurance

Company, Inc., supra note 11 at pp. 161-162; pp. 429-430.

 
 

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cause it was already determinable at the time the transaction was

entered into and formed part of the policy.
The “automatic increase clause” in the policy is in the nature of a
conditional obligation under Article 1181, by which the increase of
the insurance coverage shall depend upon the happening of the event
which constitutes the obligation. In the instant case, the additional
insurance that took effect in 1984 was an obligation subject to a
suspensive obligation, but still a part of the insurance sold to which
private respondent was liable for the payment of the documentary
stamp tax. (Citations omitted; emphasis supplied)

 
The case ended with a warning that tax laws cannot be
circumvented in order to evade the payment of just taxes. And to
claim that the increase in the amount insured should not be included
in the computation of the documentary stamp taxes due would be a
clear evasion of the law requiring that the tax be computed on the
basis of the amount insured.39
 
On Prescription
 
MBLIC next argues that, even assuming for the sake of argument
that it is liable for deficiency DST for guaranteed increases in the
covered amount of its policies, it cannot be assessed deficiency DST
for the entire fiscal year of 2001. More particularly, MBLIC averred
that it had religiously been filing monthly DST returns. And since
the CIR only has three years40 from the filing of the return to collect
any defi-

_______________

39 Id., at p. 162; p. 431.

40 SEC. 203. Period of Limitation Upon Assessment and Collection.—Except
as provided in Section 222, internal revenue taxes shall be assessed within three (3)
years after the last day prescribed by law for the filing of the return, and no
proceeding in court without assessment for the collection or such taxes shall be begun
after the expiration of such period: Provided, That in a case where a return is filed
beyond the period prescribed by law, the

 
  

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ciency thereon, he is precluded from recovering deficiency DST for

the January-June 2001 period covered by returns filed earlier than
August 4, 2001 or three years from the issuance of the FAN.
The CIR, for its part, counters that the defense of prescription
was belatedly raised in MBLIC’s supplemental petition, and was not
invoked during the protest before the CIR. MBLIC refuted, however,
that the defense of prescription may be raised at any time.
The Court rules that although MBLIC is correct in saying that it
may still raise prescription as a defense, it nevertheless failed to
establish that the prescriptive period had already expired.
Under Rule 1, Section 3 of the Revised Rules of Procedure
before the Court of Tax Appeals, the Rules of Court of the
Philippines shall have suppletory application. In turn, Section 1,
Rule 9 of the Rules of Court states:

Section 1. Defenses and objections not pleaded.—Defenses and

objections not pleaded either in a motion to dismiss or in the answer
are deemed waived. However, when it appears from the pleadings
or the evidence on record that the court has no jurisdiction over the
subject matter, that there is another action pending between the same
parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the
claim. (emphasis added)

 
Thus, the Court in China Banking Corporation v. CIR,41 citing
Heirs of Valientes v. Ramas,42 ruled that it is imbued

_______________

three (3)-year period shall be counted from the day the return was filed. For purposes
of this Section, a return filed before the last day prescribed by law for the filing
thereof shall be considered as filed on such last day.
41 753 Phil. 58; 749 SCRA 525 (2015).

 
  

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with sufficient discretion to review matters, not otherwise assigned

as errors on appeal, if it finds that their consideration is necessary in
arriving at a complete and just resolution of the case; more so, when
the provisions on prescription were enacted to benefit and protect
taxpayers from investigation after a reasonable period of time.
Resultantly, the Court therein appreciated the defense of prescription
even though it was raised for the first time before the Court of last
resort.
Indeed, the Court may give credence to the defense of
prescription even though it was raised for the first time on appeal.
However, as mentioned, the defense of prescription, though timely
invoked, was not sufficiently established. For though MBLIC
endeavored to prove that it filed DST returns covering the months of
January-June 2001 before the August 5, 2004 FAN was issued, there
was no showing that the deficiency DSTs assessed pertained to the
said timeframe.
Stated in the alternative, MBLIC failed to establish that the
increase in coverage that resulted in the increase in DST due
occurred between January and June of 2001. Without this detail,
there is no way of knowing when the corresponding DST became
due, when the tax return therefor should have been filed, and,
consequently, when the three-year prescriptive period should be
reckoned.
 
Compromise Penalty
cannot be imposed

 
Finally, no error can be attributed to the CTA when it deleted the
compromise penalties that the CIR imposed on MBLIC. A
compromise, by its nature, is mutual in essence.43 It cannot therefore
be imposed without a predicate agreement. In this case, the fact that
MBLIC protested the assess-

_______________
 42 653 Phil. 111; 638 SCRA 444 (2010).
43 Vda. de San Agustin v. Commissioner of Internal Revenue, 417 Phil. 292, 302;
364 SCRA 802, 811 (2001).

 
 

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ment could only signify that there was no agreement to speak of.
WHEREFORE, premises considered, the Court hereby resolves
as follows:
a. The Petition for Review on Certiorari of Manila Bankers’ Life
Insurance Corporation, docketed as G.R. Nos. 199729-30, is
hereby DENIED for lack of merit
b. The Petition of the Commissioner of Internal Revenue,
docketed as G.R. Nos. 199732-33, is PARTLY
MERITORIOUS; and
c. The August 18, 2011 Decision and December 9, 2011
Resolution of the Court of Tax Appeals En Banc in C.T.A.-
E.B. Case Nos. 620 and 621 are hereby AFFIRMED with the
MODIFICATION that premium taxes are not deductible
from gross receipts for purposes of determining the minimum
corporate income tax due. As modified, the total deficiency
taxes due from Manila Bankers’ Life Insurance Corporation
shall be as follows:

 
Accordingly, Manila Bankers’ Life Insurance Corporation is
hereby ORDERED TO PAY the Commissioner of Internal Revenue
the amount of FOURTEEN MILLION SIX HUNDRED
NINETY-FIVE THOUSAND FOUR HUNDRED SEVENTY-
FOUR PESOS AND 93/100 (P14,695,474.93)
 
 
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representing the deficiency MCIT for taxable year 2001 and

deficiency DST for taxable years 2001, 2002, and 2003.
In addition, Manila Bankers’ Life Insurance Corporation is
hereby ORDERED TO PAY:
 
(a) Delinquency interest at the rate of twenty percent (20%) on
P9,220,271.29, representing the total amount due for taxable
year 2001, computed from August 11, 2004 until December
31, 2017 as well as on the P2,969,572.79 and P2,505,630.85
total amounts due for taxable years 2002 and 2003,
respectively, computed from March 5, 2005 until December
31, 2017, pursuant to Section 249(C)(3) of the NIRC of 1997,
and
(b) From January 1, 2018 until full payment, the rate of
delinquency interest on the total amounts due stated in the
preceding paragraph for taxable years 2001, 2002 and 2003
shall be twelve percent (12%) pursuant to Section 249(C)(3)
of the NIRC of 1997 as amended by Republic Act No. 10963,
otherwise known as the “Tax Reform for Acceleration and
Inclusion (TRAIN) Law” and implemented by Revenue
Regulations No. 21-2018.44

_______________

44  Section 6 of Revenue Regulations No. 21-2018 provides: Section 6. 

TRANSITORY PROVISION.—In cases where the tax liability/ies or deficiency
tax/es became due before the effectivity of the TRAIN Law on January 1, 2018, and
where the full payment thereof will only be accomplished after the said effectivity
date, the interest rates shall be applied as follows:

 
 

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SO ORDERED.

Peralta (Chairperson), Leonen, Hernando and

Carandang,** JJ., concur.

Petition of Manila Bankers’ Life Insurance Corporation denied;

Petition of Commissioner of Internal Revenue partly meritorious.
The August 18, 2011 decision and December 9, 2011 resolution of
Court of Tax Appeals En Banc affirmed with modification.

Notes.—As a general rule, therefore, any of the parties to a

transaction shall be liable for the full amount of the documentary
stamp tax (DST) due, unless they agree among themselves on who
shall be liable for the same. (ING Bank N.V. vs. Commissioner of
Internal Revenue, 790 SCRA 588 [2016])
A documentary stamp tax (DST) is a tax on documents,
instruments, loan agreements, and papers evidencing the acceptance,
assignment, sale or transfer of an obligation, right or property
incident thereto. (Philippine Bank of Communications vs.
Commissioner of Internal Revenue, 794 SCRA 34 [2016])

 
——o0o——

_______________

** Designated additional member per Special Order No. 2624 dated November 29,
2018.

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