Reagan Vs Commissioner Of Internal Revenue

WILLIAM C. REAGAN, ETC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, respondent. [Reagan vs. Commissioner of Internal Revenue, 30 SCRA 968(1969) Facts: Petitioner William Reagan, a citizen of the United States and an employee of Bendix Radio, Division of Bendix Aviation Corporation, which provides technical assistance to the United States Air Force, was assigned at Clark Air Base, Philippines. Petitioner questioned the payment of income tax assessed on him by respondent Commissioner of Internal Revenue on a sale of his 1960 Cadillac car to PFC William Johnson, Jr., US Marine Corps executed at Clark Air Base. It is the contention of the petitioner, that in legal contemplation the sale was made outside Philippine territory and hence outside of our jurisdiction. Petitioner seeks to refund the amount P2,979.00 of income tax he paid. Issue: Whether or not Clark Air Base is outside of Philippine territory therefore excluded from the jurisdictional powers of the Philippines to tax. Held: No. According to jurisprudence, People v. Acierto ,“By the [Military Bases] Agreement, it should be noted, the Philippine Government merely consents that the United States exercise jurisdiction in certain cases. The consent was given purely as a matter of comity, courtesy, or expediency over the bases as part of the Philippine territory or divested itself completely of jurisdiction over offenses committed therein." The Clark Air Force Base is not a foreign soil or territory for purposes of income tax legislation. There is nothing in the Military Bases Agreement that lends support to such assertion, It has not become foreign soil or territory. The Philippine's jurisdictional rights therein, certainly not excluding the power to tax, have been preserved. As to certain tax matters, an appropriate exemption was provided for.