The issue in this case is whether the proceeds of insurance taken  by a corporation  on the  life of an important official to indemnify it against loss in case of his death, are taxable  as  income under the Philippine  Income Tax Law.

The parties submitted  the case to the Court of  First Instance of Manila for  decision upon the following agreed statement of facts:

1. That  the  plaintiff  is  a domestic  corporation  duly organized and existing  under and  by virtue of the laws of the Philippine Islands, having its-principal office at No. 732 Calle Eyangelista, Manila, P. I.; and that the defendant is the duly appointed, qualified and acting Collector of Internal Revenue of  the Philippine Islands.
   
2. That on March 18, 1925, plaintiff, in order to protect itself against the loss that it might suffer by reason of the death of its manager,  A. Velhagen,  who  had had  more than thirty-five (35) years  of experience in the manufacture of cigars in the  Philippine Islands, and whose death would be a serious loss to the plaintiff, procured from the Manufacturers Life Insurance Co., of Toronto, Canada, thru its local agent  E. E. Elser, an insurance  policy on the life of the said A. Velhagen for the sum of $50,000, United States currency.
   
3. That the plaintiff, El Oriente, Fabrica de Tabacos, Inc., designated itself as the sole beneficiary of said policy on the life of its said manager.
   
4. That during the time the life insurance policy here- inbefore referred to was in force and effect plaintiff paid from its funds all the insurance premiums  due thereon.
   
5. That the plaintiff charged as expenses of its business all  the said  premiums and deducted the same  from its gross incomes as reported in its annual income tax returns, which deductions were allowed by the defendant upon a showing made by the plaintiff that such premiums were legitimate expenses of its  (plaintiff's) business.
   
6. That  the said A. Velhagen, the insured, had no interest or participation in the  proceeds of said life insurance policy.
   
7. That upon the death of said A. Velhagen in the year 1929, the plaintiff  received all the proceeds of the  said life insurance policy, together with the interests and the dividends accruing thereon,  aggregating P104,957.88.
   
8. That over the protest of the plaintiff, which claimed exemption under section 4  of the Income  Tax  Law, the defendant Collector of Internal Revenue assessed and levied the sum of P3,148.74 as income tax on the proceeds  of the insurance policy  mentioned in the preceding paragraph, which tax the plaintiff paid under instant protest on July 2, 1930; and that defendant overruled said protest on July 9, 1930."

Thereupon,  a decision was handed down which absolved the defendant from the complaint, with costs against the plaintiff.  From this judgment, the plaintiff appealed,  and its counsel now allege that:

1. The trial court erred in holding that section 4 of the Income Tax Law (Act No. 2833)  is not applicable to the present case.
   
2. The trial court erred in reading into the law certain exceptions and distinctions not warranted by its clear and unequivocal  provisions.
   
3. The trial court erred in assuming that the proceeds of the life insurance policy in question  represented a net profit to the plaintiff when, as a matter of fact, it merely represented  an indemnity for the loss suffered by it thru the death of its manager, the insured."
   
4. The trial  court  erred  in  refusing to  hold that the proceeds of the life insurance policy in  question is not taxable income,  and in absolving the defendant from the complaint."

The Income Tax Law for the Philippines is Act No. 2833, as amended.  It is divided into four chapters: Chapter I On Individuals,  Chapter II On  Corporations, Chapter III General  Administrative  Provisions,  and   Chapter   IV General Provisions.  In Chapter I On Individuals, is to be found  section 4 which provides that, "The following incomes shall be exempt from the provisions of this law: (a) The proceeds of life insurance policies paid to beneficiaries upon the death of the insured  *  *  '*."  Section 10, as amended, in Chapter  II On Corporations, provides  that, "There shall be levied, assessed, collected, and paid annually upon the total net income received in the preceding calendar year from all sources by every corporation  *   *  *  a tax of three per centum upon such income  *   *  *."   Section 11 in the same chapter, provides the exemptions under the law,  but neither here nor in any other section is reference made to the provisions of section  4  in  Chapter  I.

Under the view we take of the case, it is sufficient for our purposes to direct attention to the anomalous and vague condition of the law.  It is certain that the proceeds of life insurance policies paid to individual beneficiaries upon the death of the insured are exempt.  It  is not so certain  that the  proceeds of life insurance  policies  paid to corporate beneficiaries upon the death of the  insured are likewise exempt.  But at least,  it may be said that the law is indefinite in phraseology and does not permit us unequivocally to hold that the proceeds of life insurance policies received by corporations constitute income which is taxable.

The situation will be better elucidated by a brief reference to laws on  the same subject in the United  States.  The Income Tax Law of 1916 extended to the Philippine Islands. It was natural, therefore, for the Philippine Legislature, when it came to enact Act No. 2833, to copy the American statute.  Subsequently,  the (congress of the United States enacted its  Income  Tax  Law of  1919, in which certain doubtful subjects  were clarified.   Thus,  as  to the  point before us, it was made^clear, when not only in the part of the law concerning individuals  were exemptions  provided for beneficiaries, but also in the part concerning corporations, specific reference was  made to the exemptions in favor of individual thereby making the same applicable to corporations.  This  was  authoritatively  pointed  out and decided by  the United  States Supreme Court in  the case of United States vs.  Supplee-Biddle Hardware Co.  ([1924], 265 U. S., 189), which involved facts quite similar to those before us.   We do not think the decision of the higher court in this case is necessarily controlling on account of the divergences noted in the federal statute and the  local statute, but we do find in the decision certain language of a general nature which  appears to furnish the clue to the correct disposition  of the instant  apical.  Conceding, therefore, without necessarily  having to decide, that  assignments of error Nos. 1 and 2 are not well taken, we would turn to the third assignment of error.

It will be recalled that El Oriente, Fabrica de Tabacos, Inc.,  took out the insurance on the life of  its manager, who had had more than thirty-five years'  experience in the manufacture of cigars  in the Philippines, to  protect itself against the loss it might suffer by reason of the death of its  manager.  We do not believe that this  fact signifies that when the plaintiff received P104,957.88 from the insurance on the life of its manager, it thereby realized  a net profit in this amount.   It is true that the Income Tax Law, in  exempting individual beneficiaries, speaks of the proceeds of life insurance  policies as income but this is a very slight indication of legislative intention.  In reality, what the plaintiff received was in the nature of an indemnity for  the loss which it actually suffered because of the death of its manager.

To quote the exact words in the cited case of Chief Justice Taft delivering the opinion of the court:

"It  is  earnestly pressed  upon us that  proceeds of  life insurance paid  on the death  of the  insured  are in fact capital, and cannot be taxed as income under the Sixteenth Amendment.  Eisner vs. Macomber, 252 U. S.,  189, 207; Merchants'  Loan  & Trust  Co. vs. Smietanka, 255 U. S., 509,518.  We are not required to meet this question.  It is enough to sustain our construction of the act to say that proceeds of a life insurance policy paid on the  death of the insured  are not usually  classed as income.

"*   *   *   Life insurance in such a case is like that of fire and marine insurance, a contract of indemnity.  Central Nat. Bank vs. Hume,  128 U. S., 195r The  benefit to be gained by death has no periodicity.  It  is a substitution of money value for something permanently lost,  either in a house, a  ship, or a life.  Assuming, without  deciding, that Congress could call the proceeds of such indemnity income, and validly tax it as such, we think that, in view of the  popular conception of the life insurance as  resulting in a single addition of a total sum to the resources of the beneficiary,  and not in a periodical return, such a purpose on its  part should be express, as it certainly  is not here."

Considering, therefore, the purport of the stipulated facts, considering the uncertainty of Philippine law, and  considering the  lack  of  express legislative intention to  tax  the proceeds  of  life insurance policies paid to corporate beneficiaries, particularly when in the  exemption in  favor of individual beneficiaries in the chapter on this subject,  the clause is inserted "exempt from the provisions of this law," we deem it reasonable to hold the proceeds of the life insurance policy in question as representing an indemnity and not taxable income.

The foregoing pronouncements will result in the judgment being reversed and in another judgment being rendered in favor of the  plaintiff and against the defendant for  the sum of P3,148.74.  So  ordered,  without costs in  either instance.

Avanceña, C. J., Street, Villamor, Ostrand, Romualdez, Villa-Real, and Imperial,  JJ., concur.