G.R. No. 158085 - Republic vs. Sunlife Assurance Co. of Canada

Sun Life Assurance Company of Canada (Sun Life) is a mutual life insurance company organized under Canadian laws.
It is registered and authorized by the Philippine Securities and Exchange Commission and the Insurance Commission to operate as a mutual life insurer in the Philippines, with its principal office in Makati City.

On October 20, 1997, Sun Life filed its third-quarter 1997 insurance premium tax return and paid Php 31,485,834.51.
For August 21 to December 18, 1997, Sun Life filed documentary stamp tax (DST) declaration returns and paid Php 30,000,000.00.

December 29, 1997: The Court of Tax Appeals (CTA) ruled in *Insular Life Assurance Co. Ltd. v. CIR* that mutual life insurance companies are purely cooperative companies and exempt from premium and documentary stamp taxes—later affirmed by the Supreme Court.
Relying on this, Sun Life filed on August 20, 1999, an administrative claim with the Commissioner of Internal Revenue (CIR) for tax credits based on the alleged erroneous payment of premium tax and DST totaling Php 61,485,834.51.
CIR failed to act on the claim, prompting Sun Life to file a petition with the CTA on August 23, 1999, praying for issuance of a tax credit certificate for the claimed amount.

CIR argued that Sun Life must prove it qualifies under Section 121 (now 123) of the Tax Code as a cooperative to claim exemptions.
Tax exemptions should be strictly construed against claimants.
CIR insisted that Sun Life must show compliance with Section 204 in relation to Section 229 of the 1997 Tax Code.
CIR further contended Sun Life should be registered with the Cooperative Development Authority (CDA) to avail tax exemptions, which Sun Life had not done.
CIR disputed that Sun Life's ownership was vested exclusively in its members entitled to vote and elect the Board of Trustees.
CIR pointed to amendments in the 1997 Tax Code subjecting mutual life insurance companies to regular corporate income tax as recognition that such companies operate for profit.

On November 12, 2002, the CTA ruled in favor of Sun Life, holding that mutual life insurance companies are purely cooperative and exempt from premium and documentary stamp taxes under Section 121 (now 123) and Section 199(a) of the Tax Code.
The Court of Appeals (CA) upheld the CTA ruling, recognizing Sun Life as a cooperative managed and operated by its member-policyholders solely for mutual protection and not for profit.
The CA confirmed Sun Life’s entitlement to refund of the amounts erroneously paid as premium and documentary stamp taxes.
CIR’s motion for reconsideration was denied.

Whether Sun Life qualifies as a purely cooperative association under relevant Tax Code provisions.
Whether registration with the CDA is necessary to claim tax exemption.
Whether Sun Life is exempt from payment of premium tax and documentary stamp tax.

Whether Sun Life qualifies as a purely cooperative company or association under Section 121 (now 123) of the National Internal Revenue Code and related provisions, i.e., being organized and conducted solely by its members for their exclusive benefit and not for profit.

Whether registration with the Cooperative Development Authority (CDA) is a sine qua non (essential requirement) for claiming tax exemptions under the Tax Code.

Whether Sun Life is entitled to exemption from payment of taxes on life insurance premiums and documentary stamp tax (DST).