"Stare decisis et non quieta movere.
Stand by the decisions and disturb not what is settled. Stare decisis simply
means that for the sake of certainty, a conclusion reached in one case should
be applied to those that follow if the facts are substantially the same, even
though the parties may be different. It proceeds from the first principle of
justice that, absent any powerful countervailing considerations, like cases
ought to be decided alike. Thus, where the same questions relating to the same
event have been put forward by the parties similarly situated as in a previous
case litigated and decided by a competent court, the rule of stare decisisis a
bar to any attempt to relitigate the same issue."
Facts:
Petitioner Commissioner of Internal Revenue
is the official duly authorized under Section 4 of the National Internal
Revenue Code (NIRC) of 1997 to assess and collect internal revenue taxes, as
well as the power to decide disputed assessments, subject to the exclusive appellate
jurisdiction of this Court.
Respondent The Insular Life Assurance, Co.,
Ltd. is a corporation duly organized and existing under and by virtue of the
laws of the Republic of the Philippines. It is registered as a non-stock mutual
life insurer with the Securities and Exchange Commission.
On October 7, 2004, respondent received an
Assessment Notice with Formal Letter of Demand both dated July 29, 2004,
assessing respondent for deficiency DST on its premiums on direct business/sums
assured for calendar year 2002, computed as follows:
Documentary
Stamp Tax
Deficiency
Documentary Stamp ₱70,732,389.83
Tax-Basic
Add:
Increments (Interest and 23,201,969.38
Compromise
Penalty)
Total
Amount Due ₱93,934,359.21
Thereafter, respondent filed its Protest
Letter on November 4, 2004, which was subsequently denied by petitioner in a
Final Decision, on Disputed Assessment dated April 15, 2005 for lack of factual
and legal bases. Apparently, respondent received the aforesaid Final Decision
on Disputed Assessment only on June 23, 2005.
Issue:
WHETHER OR NOT THE CTA EN BANC ERRED IN
RULING THAT RESPONDENT IS A COOPERATIVE AND [IS] THUS[,] EXEMPT FROM
DOCUMENTARY STAMP TAX.
Held:
The Court has pronounced in Republic of the
Philippines v. Sunlife Assurance Company of
Canada9
that "[u]nder the Tax Code although respondent is a cooperative,
registration with the CDA is not necessary in order for it to be exempt from
the payment of both percentage taxes on insurance premiums, under Section 121;
and documentary stamp taxes on policies of insurance or annuities it grants,
under Section 199."
Section 199 of the NIRC of 1997 provides:
Sec.
199. Documents and Papers Not Subject to Stamp Tax. – The provisions of Section
173 to the contrary notwithstanding, the following instruments, documents and
papers shall be exempt from the documentary stamp tax:
(a)
Policies of insurance or annuities made or granted by a fraternal or
beneficiary society, order, association or cooperative company, operated on the
lodge system or local cooperation plan and organized and conducted solely by
the members thereof for the exclusive benefit of each member and not for
profit.
x x x x
(Emphasis ours)
As regards the applicability of Sunlife to
the case at bar, the CTA, through records, has established the following
similarities between the two which call for the application of the doctrine of
stare decisis:
1.
Sunlife Assurance Company of Canada and the respondent are both engaged in
mutual life insurance business in the Philippines;
2. The
structures of both corporations were converted from stock life insurance
corporation to non-stock mutual life insurance for the benefit of its
policyholders pursuant to Section 266, Title 17 of the Insurance Code of 1978
and they were made prior to the effectivity of Republic Act (R.A.) No. 6938,
otherwise known as the "Cooperative Code of the Philippines";
3. Both
corporations claim to bea purely cooperative corporation duly licensed to
engage in mutual life insurance business;
4. Both
corporations claim exemption from payment of the documentary stamp taxes (DST)
under Section 199(1) of the Tax Code (now Section 199[a] of the NIRC of 1997,
as amended); and
5.
Petitioner CIR requires registration with the CDA before it grants tax exemptions
under the Tax Code.
The CTA observed that the factual
circumstances obtaining in Sunlife and the present case are substantially the
same. Hence, the CTA based its assailed decision on the doctrine enunciated by
the Court in the said case. On the other hand, the petitioner submitted that
the doctrine in Sunlife should be reconsidered and not be applied because the
same failed to consider Section 3(e) of R.A No. 6939,12 which provides that CDA
has the power to register all cooperatives,13 to wit:
Section
3. Powers, Functions and Responsibilities. – The Authority shall have the
following powers, functions and responsibilities:
xxxx
(e)
Register all cooperatives and their federations and unions, including their
division, merger, consolidation, dissolution or liquidation. It shall also
register the transfer of all or substantially all of their assets and
liabilities and such other matters as may be required by the Authority;
xxxx
The Court presented three justifications in
Sunlife why registration with the CDA is not necessary for cooperatives to
claim exemption from DST.
First, the NIRC of 1997 does not require
registration with the CDA. No tax provision requires a mutual life insurance
company to register with that agency in order to enjoy exemption from both
percentage and DST. Although a provision of Section 8 of the Revenue Memorandum
Circular (RMC) No. 48-91 requires the submission of the Certificate of
Registration with the CDA before the issuance of a tax exemption certificate,
that provision cannot prevail over the clear absence of an equivalent
requirement under the Tax Code.
Second, the provisions of the Cooperative
Code of the Philippines do not apply.19 The history of the Cooperative Code was
amply discussed in Sunlife where it was noted that cooperatives under the old
law, Presidential Decree (P.D.) No. 17520 "referred only to an
organization composed primarily of small producers and consumers who
voluntarily joined to form a business enterprise that they themselves owned,
controlled, and patronized. The Bureau of Cooperatives Development — under the
Department of Local Government and Community Development (later Ministry of
Agriculture) — had the authority to register, regulate and supervise only the
following cooperatives: (1) barrio associations involved in the issuance of
certificates of land transfer; (2) local or primary cooperatives composed of
natural persons and/or barrio associations; (3) federations composed of
cooperatives that may or may not perform business activities; and (4) unions of
cooperatives that did not perform any business activities. Respondent does not
fall under any of the abovementioned types of cooperatives required to be
registered under [P.D. No.] 175."
When the Cooperative Code was enacted years
later, all cooperatives that were registered under PD 175 and previous laws
were also deemed registered with the CDA. Since respondent was not required to
be registered under the old law on cooperatives, it followed that it was not
required to be registered even under the new law.
"The distinguishing feature of a
cooperative enterprise is the mutuality of cooperation among its
member-policyholders united for that purpose. So long as respondent meets this
essential feature, it does not even have to use and carry the name of a
cooperative to operate its mutual life insurance business. Gratia argumenti
that registration is mandatory; it cannot deprive respondent of its tax
exemption privilege merely because it failed to register. The nature of its
operations is clear; its purpose well-defined. Exemption when granted cannot
prevail over administrative convenience."
Third, the Insurance Code does not require
registration with the CDA. "The provisions of this Code primarily govern
insurance contracts; only if a particular matter in question is not
specifically provided for shall the provisions of the Civil Code on contracts
and special laws govern."
There being no cogent reason for the Court to
deviate from its ruling in Sunlife, the Court holds that the respondent, being
a cooperative company not mandated by law to be registered with the CDA, cannot
be required under RMC No. 48-91, a mere circular, to be registered prior to
availing of DST exemption.
"While administrative agencies, such as
the Bureau of Internal Revenue, may issue regulations to implement statutes,
they are without authority to limit the scope of the statute to less than what
it provides, or extend or expand the statute beyond its terms, or in any way
modify explicit provisions of the law. Indeed, a quasi-judicial body or an
administrative agency for that matter cannot amend an act of Congress. Hence,
in case of a discrepancy between the basic law and an interpretative or
administrative ruling, the basic law prevails. "
Petition is DENIED.
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