G.R. Nos. 70116-19 – 143 SCRA 397 – Political Law – Basic Concepts – Elements of a State – Sovereignty – Exemption of the State’s Power to Tax – Treaties
Frank and James Robertson (brothers) were American citizens born in the Philippines. They stayed here in the Philippines until they were repatriated by the US in 1945. Thereafter they established their domicile in California. Soon after they were employed by the US Federal Government as workers in the US Navy. They were later assigned at the US Naval Base in Olongapo City in 1962. They hold American passports and are admitted as special temporary visitors under the Philippine Immigration Act of 1940. On the other hand, the Commissioner of Internal Revenue (CIR) contends that the American brothers are subject to income taxation because their residence here in the Philippines is not solely by reason of their employment in connection with the construction, maintenance, operation or defense of the US Bases here as provided by the Military Bases Agreement. The CIR also argues that being born in the Philippines, the Robertsons are not exempt from taxation. Further, the burden of proof of such exemption to taxation shall be upon the Robertsons.
ISSUE: Whether or not the American brothers are exempt from taxation?
HELD: Yes. The law and the facts of the case are so clear that there is no room left to doubt the validity of the brothers’ defense. In order to avail oneself of the tax exemption under the RP-US Military Bases Agreement: 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 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.
Anent the fact that the Roebrtsons were born in the Philippines, the SC cited the ruling of the Court of Tax Appeals: An examination of the words used [by the law] and the circumstances in which they were used, shows the basic intendment “to exempt all U.S. citizens working in the Military Bases from the burden of paying Philippine Income Tax without distinction as to whether born locally or born in their country of origin.” Ubi lex non distinguit nec nos distinguere debemos (one must not distinguish where the law does not distinguish).