AN insurance company has sued the Cebu City Treasurer’s Office over the allegedly erroneous collection of business taxes amounting to over P4 million.

The Philippine AXA Life Insurance Corp. filed a civil suit with the Regional Trial Court last week against the city treasurer and asked for a refund of P4,271,645.

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Lawyers Ma. Iolanda Abella and Karen Climaco, on AXA Life’s behalf, said the taxes were “erroneously” collected from the company in 2008.

On Jan. 22, 2008, the company paid P4,271,645 in local business taxes.

The company had received P904,793,173 as payments for life insurance policies and declared this amount as its gross receipts for the year.


The amount included payments for variable life contracts with City Hall amounting to P864,544, 075.

The cost of insurance pertaining to variable contracts of AXA Life in 2007 reached P5,944, 247. Based on a Department of Finance circular, the taxable premiums of AXA Life should only be about P46,193,345. So, the company should have paid only P230,966.73 as business taxes to City Hall, the lawyers said.

AXA Life wrote the city treasurer to ask for a refund, but has yet to receive any decision on the administrative claim.

“The insurance premiums collected by insurance companies constitute their gross receipts. However, insofar as variable contracts are concerned, the portions of the premiums collected pertaining to variable contracts and the excess of the amount necessary to insure the lives of variable contracts should be excluded,” the firm said.

The insurance firm admitted it committed an error in including in its gross receipts some portions of the premiums excluded from business taxes by the finance department’s circular.

“However, such error should not preclude AXA Life from claiming a refund,” the petition read.

“No one, not even the State, should be allowed to enrich oneself at the expense of another, and simple justice requires the speedy refund of the wrongly held taxes.”