PRULife UK Insurance Corporation vs.

CIR

Facts:
On January 24, 2003, PRULife UK Insurance Corporation was assessed for several tax
deficiencies. Although PRU was able seasonably protest the assessment, it failed to submit the
necessary documents relative to premium tax. Meanwhile, the protest was received and the BIR
reinvestigated the tax case. As of September 19, 2003, the reinvestigation has not ceased and this
prompted PRU to file for a petition for review with the CTA.

PRU has not submitted the relevant documents in support of its protest insofar as premium tax
is concerned because according to them, it should not be subject to premium tax.

The Law applicable in the controversy for purposes of the 2/28/2018 meeting:

Article 228 of the NIRC

Such assessment may be protested administratively by filing a request for reconsideration
or reinvestigation within thirty (30) days from receipt of the assessment in such form and
manner as may be prescribed by implementing rules and regulations. Within sixty (60)
days from filing of the protest, all relevant supporting documents shall have been
submitted; otherwise, the assessment shall become final.

The Issues:

#1 Whether PRU failed to submit all relevant supporting documents relative to premium tax within 60
days from date of the filing of protest.

#2 Whether such failure to submit the documents and compliance with the 60 day period is a violation
of Section 228 of the NIRC.

#3 Whether the non-compliance/violation of Section 228 renders the BIRs assessment as final?

Held:

#1
The claim of petitioner that its cash collections did not comprise entirely of premiums collected cannot
be given credence. PRU should have presented supporting documents to prove such claim. Since PRU
failed to present a scintilla of evidence to that effect, this Court sustains BIR’s basis of cash collections.
[Student Remark: When it comes cash collections in the context of insurance, submission of relevant
documents relative to premium tax is a must to contest BIR’s assessment]

As for accounts receivables written off as bad debts, the Court agrees that the same should not be
subject premium tax because they were not collected as only the total premiums collected may be
subject to premium tax.
[Student Remark: The CTA did not pursue the premium tax on this one mainly because ‘the accounts
receivables written off as bad debts’ were not collected.]
Assessments should not be based on presumptions no matter how logical the presumption might be. In
order to stand the test of judicial scrutiny, the assessment must be based on actual facts.

#2 and #3
Notwithstanding petitioner's lack of relevant documents in support of its protest insofar as the premium
tax assessment is concerned, that assessment did not attain finality as respondent argued. The only
effect of petitioner's lack of supporting documents submitted is that it lost its chance of further
contesting the premium tax assessment.

The finality of the assessment, as worded in the provision of law, simply means that where the
taxpayer decides to forego with its opportunity to present the documents in support of its claim
within sixty {60) days from the filing of its protest, it merely lost its chance to further contest the
assessment.

Effectively, its non-compliance with the submission of the necessary documents would either mean that
the petitioner no longer wishes to further submit any document for the reason that its protest letter
filed was more than enough to support its claim, or that the petitioner failed to comply thus it can no
longer give justification with regard to its objections as to the correctness of the assessment notices.