Case Digest (G.R. No. L-26379)
Case Digest (G.R. No. L-26379)
Facts:
This is William C. Reagan v. Commissioner of Internal Revenue, G.R. No. L-26379, promulgated December 27, 1969, the Supreme Court En Banc, Fernando, J., writing for the Court (Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, and Teehankee, JJ., concur; Reyes, J., in the result; Barredo, J., did not take part).Petitioner William C. Reagan, a U.S. citizen employed by Bendix Radio (a division of Bendix Aviation Corporation) assigned at Clark Air Base to render technical assistance to the U.S. Air Force, imported a tax-free 1960 Cadillac on April 22, 1960. On July 11, 1960, petitioner obtained the Base Commander's permit to sell the car provided the purchaser was a member of the U.S. Armed Forces or a U.S. citizen employed on the U.S. military bases; on that date he sold the Cadillac at Clark Air Base to Private First Class Willie (William) Johnson, Jr., United States Marine Corps, Sangley Point, Cavite, as evidenced by a Bill of Sale executed at Clark Air Base. Johnson in turn sold the car the same day in Manila to Fred Meneses.
Respondent Commissioner of Internal Revenue assessed petitioner for income tax after deducting the landed cost and personal exemptions, fixing petitioner’s net taxable income from the transaction at P17,912.34 and the tax at P2,979.00. Petitioner paid the tax, sought a refund administratively, and then filed suit in the Court of Tax Appeals to recover P2,979.00 plus legal interest. The Court of Tax Appeals, in a decision dated May 12, 1966, denied the refund, holding that the tax was legally collected. Petitioner appealed to the Supreme Court (the decision before the Court is styled as an appeal from the Court of Tax Appeals).
Petitioner’s central contention was that the sale occurred on Clark Air Base which, he argued, was "in contemplation of law" outside Philippine territory and therefore beyond the reach of Philippine income tax. He invoked prior language in Philippine decisions (notably Saura Import and Export Co. v. Meer and later Co Po v. Collector of Internal Revenue) to support a claim of exemption. The Commissioner maintained that Clark Air Base remained Philippine territory for purposes of taxation and that any limited exemptions in the Military Bases Agreement applied only as expressly provided.
Issues:
- Was petitioner liable for Philippine income tax on the sale of his automobile at Clark Air Base, i.e., was the sale within Philippine territorial jurisdiction for taxation purposes?
- Are the earlier statements in Saura Import and Export Co. v. Meer and related cases that goods on U.S. military bases were "in contemplation of law on foreign soil" controlling and sufficient to exempt the petitioner from income tax?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)