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". . . after having expressly recognized that petitioners need not pay income tax Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
here, there appears to be no logic in requiring them to file income tax returns Footnotes
which anyhow would serve no practical purpose since their liability on the
amounts stated thereon can hardly be exacted. The more practical view, taking 1. Rendered on May 17, 1976, the ponente being Lim, J., with whom concurred Gatmaitan
into account policy considerations that prompted the Government of the Republic and Domondon, JJ .
of the Philippines to exempt the petitioners, as well as other American citizens
2. Rendered on May 28, 1983 by Judge Augusto M. Amores (Branch I).
similarly situated, from the payment of income tax here, is to recognize the lesser
act of filing within the exemption granted. This is simply being consistent with the 3. In turn adopted from the Trial Court. Rollo, pp. 10-12; 27-29.
reason behind the grant of tax-exempt status to petitioners."
4. ART. XII, L.-par 2, part 2, see Rollo, p. 32.
Pointing out further to what they consider "the administrative implementation of that
(tax-exemption) provision (of the Bases Agreement) by both governments for about 22 5. Rollo, pp. 31-32.
years (which did not require the ling of income tax returns by American citizen
6. Decision dated Dec. 14, 1984, written for the Court by Associate Judge Alex Z. Reyes.
employees holding 9-A special visas like petitioners), and to "the higher plane of
political realities which prompted the Philippine Government to partially surrender its 7. G.R. Nos. 70116-19.
inherent right to tax," petitioners submit that "the particular problem involved in these
cases is a matter that has to nd solution and ought to be dealt with in conference 8. 143 SCRA 397; the decision having been written for the Second Division of the Court by
Paras, J., with whom concurred Feria, Fernan, Alampay, and Gutierrez, Jr., JJ.
tables rather than before the court of law." 1 2
9. SEC. 5.
Quite apart from the evidently distinct and different character of the requirement to pay
income tax in contrast to the requirement to file a tax return, it appears that the exemption 10. Petitioners' brief (Rollo, p. 90), pp. 10-11.
granted to the petitioners by the Bases Agreement from payment of income tax is not
absolute. By the explicit terms of the Bases Agreement, it exists only as regards income 11. Id., p. 11.
derived from their employment "in the Philippines in connection with construction, 12. Id., pp. 14-15.
maintenance, operation or defense of the bases;" it does not exist in respect of other
income, i.e., "income derived from Philippine sources or sources other than the US
sources." Obviously, with respect to the latter form of income, i.e., that obtained or
proceeding from "Philippine sources or sources other than the US sources," the petitioners,
and all other American nationals who are residents of the Philippines, are legally bound to
pay tax thereon. In other words, so that American nationals residing in the country may be
relieved of the duty to pay income tax for any given year, it is incumbent on them to show
the Bureau of Internal Revenue that in that year they had derived income exclusively from
their employment in connection with the U S. bases, and none whatever "from Philippine
sources or sources other than the US sources." They have to make this known to the
Government authorities. It is not in the first instance the latter's duty or burden to make
unaided verification of the sources of income of American residents. The duty rests on the
U.S. nationals concerned to invoke and prima facie establish their tax-exempt status. It
cannot simply be presumed that they earned no income from any other sources than their
employment in the American bases and are therefore totally exempt from income tax. The
situation is no different from that of Filipino and other resident income-earners in the
Philippines who, by reason of the personal exemptions and permissible deductions under
the Tax Code, may not be liable to pay income tax year for any particular year; that they are
not liable to pay income tax, no matter how plain or irrefutable such a proposition might
be, does not exempt them from the duty to file an income tax return. LLphil
These considerations impel affirmance of the judgments of the Court of Appeals and the
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