Facts:

• The case "Commissioner of Internal Revenue v. Robertson" involves petitioners Frank Robertson, James W. Robertson, Robert H. Cathey, and John L. Garrison.
• All petitioners are American citizens employed in connection with the U.S. Military Bases in the Philippines.
• The case was decided on August 12, 1986, by the Second Division of the Supreme Court of the Philippines.
• The respondents were assessed for deficiency income taxes for the taxable years 1969-1972, inclusive of interests and penalties, by the Commissioner of Internal Revenue.
• The Court of Tax Appeals (C.T.A.) had previously ruled in favor of the respondents, canceling the tax assessments.
• The respondents claimed tax exemption under Article XII, Paragraph 2 of the RP-US Military Bases Agreement of 1947.
• This agreement exempts U.S. nationals employed in connection with the construction, maintenance, operation, or defense of the bases from paying Philippine income tax on income derived from the U.S. Government.
• The Commissioner of Internal Revenue challenged this ruling, arguing that the respondents did not meet the criteria for tax exemption as their residence in the Philippines was not solely by reason of their employment.

Issue:

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Ruling:

• The Supreme Court affirmed the decision of the Court of Tax Appeals, ruling in favor of the respondents and dismissing the petition for review filed by the Commissioner of Internal Revenue.
• The Court upheld ...(Unlock)

Ratio:

• The Court's decision was based on the clear and explicit terms of Article XII, Paragraph 2 of the RP-US Military Bases Agreement of 1947.
• This provision exempts U.S. nationals employed in connection with the U.S. Military Bases in the Philippines from paying Philippine income tax on income derived from the U.S. Government.
• The Court found that the respondents met all the criteria for tax exemption: they were U.S. nationals, employed in connection with the construction, maintenance, operation, or defense of the bases, residing in the Philippines by reason of such employment, and their income was derived from the U.S. Government.
• The Court rejected the petitioner's argument that the respondents' residence in the Philippines was not solely by reason of their employment.
• The Court no...continue reading