Howden Vs Collector
Howden Vs Collector
Howden Vs Collector
3. Alexander Howden & Co. (British corporation) represented 8. AHC instituted an action in CFI Manila for the recovery of
the British insurance companies. The reinsurance contracts the amount claimed which was certified to the CTA;
were prepared and signed by the foreign reinsurers in DENIED CLAIM
England and sent to Manila where CIC signed them.
6. 5/12/54: AHC filed a claim for refund of P65,115.00 The source of an income is the property, activity or service
because it agreed to the payment of P977.00 as income that produced the income.
tax on the P4,985.77 accrued interest. It invoked the ruling
of CIR that it exempted from withholding tax reinsurance The reinsurance premiums remitted by virtue of the
premiums received from domestic insurance companies by reinsurance contracts had for their source the undertaking
foreign insurance companies not authorized to do business to indemnify Commonwealth Insurance Co. against liability.
in the Philippines. Such is the activity that produced the reinsurance
premiums and the same took place in the
7. AHC: Philippines.
a. The contracts of reinsurance were prepared The reinsured, the liabilities insured, and the risks
and signed abroad; situs lies outside the originally underwritten by Commonwealth Insurance
Philippines Co., upon which the reinsurance premiums and
indemnity were based, were all situated in the The tax actually collected in this case was computed not
Philippines. on the basis of gross premium receipts but on the net
premium income (after deducting general expenses,
The reinsurance contracts were perfected in the payment of policies and taxes)
Philippines because Commonwealth Insurance Co. signed
them last in Manila. Section 53 subjects to withholding tax various specified
income among them are premiums. It should mean income
The parties to the reinsurance contracts in question and should include all premiums constituting income,
evidently intended Philippine law to govern. It whether they be insurance or reinsurance premiums.
provided for arbitration in Manila, according to the laws of
the Philippines, of any dispute arising between the parties Assuming that reinsurance premiums are not within the
in regard to the interpretation of said contracts or rights in word premiums, they may be classified as determinable
respect of any transaction involved. and periodical income. Section 199 of the Income Tax
Regulations: Income is fixed when it is to be paid in
The contracts provided for the use of Philippine amounts definitely pre-determined. It is determinable
currency as the medium of exchange and for the whenever there is a basis of calculation by which the
payment of Philippine taxes. amount to be paid may be ascertained.
Section 24 of the Tax Code does not require a foreign Reinsurance premiums are determinable and periodical
corporation to be engaged in business in the Philippines in income: determinable, because they can be calculated
order for its income from sources within the Philippines to accurately on the basis of the reinsurance contracts;
be taxable. periodical, inasmuch as they were earned and remitted
from time to time.
Section 37 is not an all-inclusive enumeration. It does not
state or imply that an income not listed therein is
necessarily from sources outside the Philippines.