Garrison et al. vs.

Court of Appeals

[G.R. Nos. 44501-05. July 19, 1990.] Doctrine: An alien actually present in t e ! ilippines " o is not a #ere transient or so$ourner is a resi%ent o& t e ! ilippines &or purposes o& inco#e ta'. (acts: !etitioners, Jo n Garrison, (ran) Ro*ertson, Ro*ert +at ey, Ja#es Ro*ertson, (elicitas %e Gu,#an an% -%"ar% .cGur) /!-01012N-R34 are 53 +iti,ens " o entere% t e country t rou6 t e ! ilippine 1##i6ration Act o& 1940 an% are e#ploye% in t e 53 Na7al 8ase in 2lon6apo +ity. 0 ey earn no ! ilippine source inco#e an% it is also t eir intention to return to t e 53 as soon as t eir e#ploy#ent as en%e%. 0 e 81R sent notices to !etitioners statin6 t at t ey %i% not &ile t eir 1nco#e 0a' Returns /10R4 &or 1999. 0 e 81R clai#e% t at t ey "ere resi%ent aliens an% re:uire% t e# to &ile t eir returns. 5n%er t en t en 1nternal Re7enue +o%e resi%ent aliens #ay *e ta'e% re6ar%less o& " et er t e 6ross inco#e "as %eri7e% &ro# ! ilippine sources. !etitioners re&use% statin6 t at t ey "ere not resi%ent aliens *ut only special te#porary 7isitors. ;ence, t ey "ere not re:uire% to &ile 10Rs. 0 ey

also clai#e% e'e#ption *y 7irtue o& t e R!-53 .ilitary 8ases A6ree#ent. 5n%er .ilitary 8ases A6ree#ent, a <national o& t e 5nite% 3tates ser7in6 in or e#ploye% in t e ! ilippines in connection "it construction, #aintenance, operation or %e&ense o& t e *ases an% resi%e in t e ! ilippines *y reason only o& suc e#ploy#ent= is only lia*le &or ta' on ! ilippine sources o& inco#e. 0 e +ourt o& Appeals el% t at t e 8ases A6ree#ent <spea)s o& e'e#ption &ro# t e pay#ent o& inco#e ta', not &ro# t e &ilin6 o& t e inco#e ta' returns . . .= 1ssue: 1. > et er or not !etitioners can *e consi%ere% resi%ent aliens. ?. > et er or not !etitioners are e'e#pt &ro# inco#e ta' un%er t e R!-53 .ilitary 8ases A6ree#ent. @. > et er or not !etitioners #ust still &ile 10R not"it stan%in6 t e e'e#ption. ;el%: 1. Aes. Re7enue Re6ulations No. ? 3ection 5 pro7i%es: <An alien actually present in the Philippines who is not a mere transient or sojourner is a

resident of the Philippines for purposes of income tax.=> et er or not an alian is a transient or not is &urt er %eter#ine% *y is: <intentions "it re6ar%s to t e len6t an% nature o& is stay. A #ere &loatin6 intention in%e&inite as to ti#e, to return to anot er country is not su&&icient to constitute i# as transient. 1& e li7es in t e ! ilippines an% as no %e&inite intention as to is stay, e is a resi%ent.= 0 e 3ection 5 &urt er pro7i%es t at if the alien is in the Philippines for a definite purpose which by its nature may be promptly accomplished, he is considered a transient.;o"e7er, i& an extended stay is necessary for him to accomplsh his purpose, he is considered a resident, <t ou6 it #ay *e is intention at all ti#es to return to is %o#icile a*roa% " en t e purpose &or " ic e ca#e as *een consu##ate% or a*an%one%.= ?. Aes. Not"it stan%in6 t e &act t at t e !etitioners are resi%ent aliens " o are 6enerally ta'a*le, t eir class is nonet eless exempt from paying taxes on income derived from their employment in the naval base by virtue of the RP-U !ilitary bases agreement.0 e 8ases A6ree#ent i%enti&ies t e persons N20 <lia*le to pay inco#e ta' in t e ! ilippines e'cept in re6ar% to inco#e %eri7e% &ro# ! ilippine sources or sources ot er t an t e

53 sources.= 0 ey are t e persons in " o# concur t e &ollo"in6 re:uisites, to "it: 14 nationals o& t e 5nite% 3tates ser7in6 in or e#ploye% in t e ! ilippinesB ?4 t eir ser7ice or e#ploy#ent is Cin connection "it construction,#aintenance, operation or %e&ense o& t e *asesB @4 t ey resi%e in t e ! ilippines *y reason only o& suc e#ploy#entB an% 44 t eir inco#e is %eri7e% e'clusi7ely &ro# <5.3. 3ources.= @. Aes -7en t ou6 t e petitioners are e'e#pt &ro# payin6 ta'es &ro# t eir e#ploy#ent in t e Na7al 8ase, t ey #ust ne7ert eless &ile an 10R. 0 e 3upre#e +ourt el% t at t e &ilin6 o& an 10R an% t e pay#ent o& ta'es are t"o %istinct o*li6ations. > ile inco#e %eri7e% &ro# e#ploy#ent connecte% "it t e Na7al 8ase is e'e#pt, inco#e &ro# ! ilippine 3ources is not. "he re#uirement of filing an $"R is so that the %$R can determine whether or not the U &ational should be taxed. <0 e %uty rests on t e 5.3. nationals concerne% to in7o)e an% prima facie esta*lis t eir ta'-e'e#pt status. 1t cannot si#ply *e presu#e% t at t ey earne% no inco#e &ro# any ot er sources t an t eir e#ploy#ent in t e A#erican

*ases an% are t ere&ore totally e'e#pt &ro# inco#e ta'.=