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    Sea-Land Services, Inc. v. CA

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    J. Lapid
    SEA-LAND Service, an American shipping company, transported military household goods and effects for the US government from Subic Naval Base. It paid 1.5% income tax on earnings from this contract. SEA-LAND claimed a refund, arguing the income was tax exempt under the RP-US Military Bases Agreement. The Court of Tax Appeals and Court of Appeals denied the refund. The Supreme Court affirmed, finding that transporting household goods and effects is not included in the Agreement's tax exemption for income from contracts related to "construction, maintenance, operation and defense of the bases." Tax exemptions are construed strictly against the taxpayer, and this activity did not directly contribute to Philippine defense.

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    Sea-Land Services, Inc. v. CA

    Uploaded by

    J. Lapid
    1K views1 page
    SEA-LAND Service, an American shipping company, transported military household goods and effects for the US government from Subic Naval Base. It paid 1.5% income tax on earnings from this contract. SEA-LAND claimed a refund, arguing the income was tax exempt under the RP-US Military Bases Agreement. The Court of Tax Appeals and Court of Appeals denied the refund. The Supreme Court affirmed, finding that transporting household goods and effects is not included in the Agreement's tax exemption for income from contracts related to "construction, maintenance, operation and defense of the bases." Tax exemptions are construed strictly against the taxpayer, and this activity did not directly contribute to Philippine defense.

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    Sea-Land Services, Inc. v. CA

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    SEA-LAND Service, an American shipping company, transported military household goods and effects for the US government from Subic Naval Base. It paid 1.5% income tax on earnings from this contract. SEA-LAND claimed a refund, arguing the income was tax exempt under the RP-US Military Bases Agreement. The Court of Tax Appeals and Court of Appeals denied the refund. The Supreme Court affirmed, finding that transporting household goods and effects is not included in the Agreement's tax exemption for income from contracts related to "construction, maintenance, operation and defense of the bases." Tax exemptions are construed strictly against the taxpayer, and this activity did not directly contribute to Philippine defense.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views1 page

    Sea-Land Services, Inc. v. CA

    Uploaded by

    J. Lapid
    SEA-LAND Service, an American shipping company, transported military household goods and effects for the US government from Subic Naval Base. It paid 1.5% income tax on earnings from this contract. SEA-LAND claimed a refund, arguing the income was tax exempt under the RP-US Military Bases Agreement. The Court of Tax Appeals and Court of Appeals denied the refund. The Supreme Court affirmed, finding that transporting household goods and effects is not included in the Agreement's tax exemption for income from contracts related to "construction, maintenance, operation and defense of the bases." Tax exemptions are construed strictly against the taxpayer, and this activity did not directly contribute to Philippine defense.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    SEA-LAND SERVICE, INC., petitioner, vs.

    COURT OF APPEALS and COMMISSIONER OF INTERNAL


    REVENUE, respondents.
    G.R. No. 122605
    April 30, 2001

    FACTS
    Appeal via certiorari from the decision of the Court of Appeals affirming in toto that of the Court of Tax Appeals
    which denied petitioners claim for tax credit or refund of income tax paid on its gross Philippine billings.

    Sea-Land Service Incorporated (SEA-LAND), an American international shipping company licensed by the SEC to
    do business in the Philippines entered into a contract with the United States Government to transport military
    household goods and effects of U. S. military personnel assigned to the Subic Naval Base. From the aforesaid
    contract, SEA-LAND derived an income for the taxable year 1984 amounting to P58,006,207.54. During the taxable
    year in question, SEA-LAND filed with the BIR the corresponding corporate Income Tax Return (ITR) and paid the
    income tax due thereon of 1.5% as required in Section 25 (a) (2) of the National Internal Revenue Code (NIRC) in
    relation to Article 9 of the RP-US Tax Treaty, amounting to P870,093.12.

    Claiming that it paid the aforementioned income tax by mistake, a written claim for refund was filed with the
    BIR. However, before the said claim for refund could be acted upon by the Commissioner of Internal Revenue,
    SEA-LAND filed a petition for review with the CTA docketed, to judicially pursue its claim for refund and to stop
    the running of the two-year prescriptive period under the then Section 243 of the NIRC. CTA rendered its decision
    denying SEA-LANDs claim for refund of the income tax it paid in 1984. Petitioner appealed the decision of the
    CTA to the CA. The CA promulgated its decision dismissing the appeal and affirming in toto the decision of the
    CTA. Hence, this petition.

    ISSUE
    Whether the income that petitioner derived from services in transporting the household goods and effects of U. S.
    military personnel falls within the tax exemption provided in Article XII, paragraph 4 of the RP-US Military Bases
    Agreement

    HELD
    No. Laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally in favor of
    the taxing power. Taxation is the rule and exemption is the exception. The law does not look with favor on tax
    exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken
    and too categorical to be misinterpreted.

    Under Article XII (4) of the RPUS Military Bases Agreement, the Philippine Government agreed to exempt from
    payment of Philippine income tax nationals of the United States, or corporations organized under the laws of the
    United States, residents in the United States in respect of any profit derived under a contract made in the United
    States with the Government of the United States in connection with the construction, maintenance, operation and
    defense of the bases.
    It is obvious that the transport or shipment of household goods and effects of U. S. military personnel is not
    included in the term construction, maintenance, operation and defense of the bases. Neither could the performance
    of this service to the U. S. government be interpreted as directly related to the defense and security of the Philippine
    territories. When the law speaks in clear and categorical language, there is no reason for interpretation or
    construction, but only for application.
    The avowed purpose of tax exemption is some public benefit or interest, which the lawmaking body considers
    sufficient to offset the monetary loss entailed in the grant of the exemption. The hauling or transport of household
    goods and personal effects of U. S. military personnel would not directly contribute to the defense and security of
    the Philippines.

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