G.R. Nos.
70116-19 August 12, 1986
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
FRANK ROBERTSON, JAMES W. ROBERTSON, ROBERT H. CATHEY, JOHN L.
GARRISON AND THE COURT OF TAX APPEALS, respondents.
FACTS:
Petitioner argues that respondent in this case cannot claim tax exemption based on the
provision in ARTICLE XII, Par 2, of the RP-US Military bases Agreement of 1947.
Respondents in this case are all citizens of the United States, holders of American
passports and admitted as Special Temporary Visitors under Section 9 (a) visa of the
Philippines Immigration Act of 1940, as amended.
Respondents are civilian employees in the U.S. Military Base in the Philippines in
connection with its construction, maintenance, operation, and defense. Their incomes
are solely derived from salaries from the U.S. Government by reason of their
employment in the U.S. Bases in the Philippines.
The petitioner CIR argues that the respondent should be taxed due to the following
reasons
1. Both respondents Frank Robertson and James Robertson, who are brothers, own
residential properties respectively declared in the name of James Robertson and in
the name of Frank Robertson's wife for taxation purposes
2. That James Robertson is now a retired Federal Civil Service employee and
presently living with his family in Olongapo City, which circumstance indicate that
respondents' residence in this country is not by reason only of his employment in
the U.S. naval base;
3. That respondent Robert H. Cathey owns the house at Quezon City where he
presently resides;
4. That the stay of respondent John Garrison who returned to the Philippines in the
year 1948 is uninterrupted except for a two-year stint in Okinawa in the years
1950 to 1952;
5. That the issuance in San Francisco, California of a Voter's Certificate to respondent
John Garrison in 1945 does not in any way indicate that he was a U.S. resident, in
the years 1969 to 1972.
CTA after due hearing, rendered its judgement in favor of respondents cancelling and
setting aside the assessments for deficiency income taxes of respondents for the taxable
years 1969-1972, inclusive of interests and penalties.
ISSUE:
Whether or not the respondents are exempted pursuant to RP-US Military Bases
Agreement
HELD:
Yes, SC has held that respondents are exempted from income taxes pursuant to RP-US
Military Bases Agreement.
Article XII, Par. 2, of the RP-US Military Bases Agreement of 1947, quoted as follows:
No national of the United States serving in or employed in the Philippines in connection
with the construction, maintenance, operation or defense of the bases and residing in
the Philippines by reason only of such employment, or his spouse and minor children
and dependent parents of either spouse, shall be liable to pay income tax in the
Philippines except in respect of income derived from Philippine sources or sources other
than the United States sources.
SC stated that there is no room left for us to doubt the validity of private respondents’
defense. In order to avail oneself of the tax exemption under the RP-US Military Bases
Agreement, the following must concur
1. He must be a national of the United States employed in connection with the
construction, maintenance, operation or defense, of the bases, residing in the
Philippines by reason of such employment, and
2. The income derived is from the U.S. Government (Art. XII par. 2 of PI-US Military
Bases Agreement of 1947).
Said circumstances are all present in the case at bar. Hence, there is nothing in
circumstances provided that justified the lifting of the tax exemption privilege of the
petitioners.
