Blue Cross Insurance, Inc.

September 4, 2007 BIR RULING [DA-477-07] DA 182-05 Blue Cross Insurance, Inc. Blue Cross Center 8000 Makati Avenue Makati City Attention: Hannelli Jardinico-Oasan Manager, Financial Accounting Gentlemen : This refers to your letter dated June 6, 2007 stating that Blue Cross Insurance, Inc. (BCII) is a non-life insurance Filipino corporation duly organized and existing under the laws of the Philippines; that BCII is primarily engaged in issuing policies for medical, travel and accident insurance; and that at present, BCII is subject to the percentage tax on life insurance premium of 5% of the total premium collected under Section 123 of the Tax Code of 1997. In connection therewith, you now request for confirmation of your opinion that the issuance of medical, travel and accident policies, categorized under life insurance pursuant to Section 179 of the Insurance Code of 1978 (P.D. No. 1460), is subject to documentary stamp tax imposed under Section 183 of the Tax Code of 1997, as amended by Republic Act (R.A.) No. 9243. ICHcTD In reply thereto, please be informed that Section 179 of PD No. 612, otherwise known as the "Insurance Code of the Philippines" provides that "SEC. 179. Life insurance is insurance on human lives and insurance appertaining thereto or connected therewith." DCcHIS Corollarily, Section 4.108-3 (i) of Revenue Regulations No. 16-2005 provides that "(i) . . . "Non-life insurance companies" including surety, fidelity, indemnity and bonding companies, shall include all individuals, partnerships, associations, or corporations, including professional reinsurers defined in Section 280 of PD 612, otherwise known as the Insurance Code of the Philippines, mutual benefit associations and government-owned or controlled corporations, engaging in the business of property insurance, as distinguished from insurance on human lives, health, accident and insurance appertaining thereto or connected therewith which shall be subject to the percentage tax under Section 123 of the Tax Code." CcTIDH Prescinding from the above-cited provisions, it is undisputed that medical, accident and even travel policies may be regarded as life insurance. ( Gallardo v. Morales, 107 Phil. 903) In life insurance, insurable interest exists where there is reasonable ground, founded on the relations of the parties, either pecuniary or contractual or by blood or affinity, to expect some benefit or advantage from the continuance of the life of the insured. A person has an unlimited interest in his own life which will support a policy taken by him in favor of himself. Thus, inasmuch as medical, accident and travel policies cover interest in the life of the insured, it falls within the contemplation of Section 179 of PD 612. Accordingly, medical, accident and travel policies are subject to documentary stamp tax imposed under Section 183 of the Tax Code of 1997, as amended by R.A. No. 9243, as implemented by Revenue Regulations No. 13-2004. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. AEDHST Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service