Article 22, STUDENTS AND TRAINEES

Paragraph (1) provides that an individual who ls a resident of one Contracting State at the time he becomes temporarily present ln the other Contracting State and who ls tempcrarily present therein for the primary purpose of studying at a university or other recognized educa­ tional institution, securing training required to qualify him to practice a profession or professional specialty, or studying or doing research as a recipient of a grant, allowance, or award from a governmental, religious, charitable, scientific, literary, or educational organization, will be exempt from tax by that other Contracting State, with respect to certain amounts, for a period not exceeding 5 taxable years from the date of his arrival in that other Contracting State, The amounts exempted under this provi­ sion are gifts from abroad !or the purpose of his maintenance, education, study, research or training: the grant, allowance, or award; and, income from personal services· performed in the other Contracting State not in excess of $3,000 (or its equivalent in Philippine pesos) !or any taxable year. For United States tax purposes, gifts will be considered to be from abroad when they are borne by a person who ls not a resident (dS defined in Article 3 (Fiscal Domicile)) of the United States,

Under paragraph (2), an individual who is a resident of one Contract­ ing State at the time he becomes temporarily present in the other Contract­ ing State and who is temporarily present therein as an employee of, or under contract with, a resident of the first-mentioned Contracting State, for the primary purpose of acquiring techn_ical, professional, or business experience from a person other than that resident of the first-mentioned Contracting State or other than a person related to such resident, or studying at a university or other recognized educational institution in that other Contracting State, will be exempt from tax by that other Contracting State f'or a period not exceeding 12 consecutive months, on income from personal services not in excess of $7,500 or Us equivalent in Philippine

pesos for any taxable year,

Under paragraph (3), an individual who is a resident of one Contract­ ing State at the time he becomes temporariliy present in the other Con­ tracting State and who is temporarily present therein for a period not exceeding 1 year, as a participant in a program sponsored by the govern­ ment of the other Contracting State, for the primary purpose of training, research, or study, will be exempt from tax by the other Contracting State with respect to his income from personal services in respect of such train­ ing, research, or study performed in that other Contracting State in an aggregate amount not in excess of $10,000 or its equivalent in Philippine pesos for any taxable year,

The monetary limits provided in paragraphs (1 ), (2), or (31 are in addition to, and not in lieu of, other exemptions provided by the Code, Thus, an unmarried resident of the Philippines who is temporarily present in the United States for the primary purpose of studying at a university

would be entitled to exclude $3,000 or income from the-performance of personal services (if he is present in the United States for periods totaling less than 90 days during the taxable year) and, in addition. would be entitled to the personal exemption allowed by section 151 of the Code, as provided in section 873(b) or the Code.

• In comparison to paragraph (2)(c) or Article 15 Ondependent Personal Services), which provides that the competent authorities may agre in an exchange or letters to a monetary limitation in excess or $10,000 or its equivalent in Philippine pesos, the monetary limitations of paragraphs

betv,een the competent authorities.

The first sentence of paragraph (4) provides that the benefits pro­ vided in paragraph (l) for certain students, trainees and researchers and the benefits provided under Article 21 (Teachers), when taken to­ gether, may extend only for such period of time, not to exceed 5 taxable years from the date or the individual's arrival, as may reasonably or customarily be required to effectuate the purpose of the visit. The second sentence of paragraph (4) makes it clear that the benefits provided by Article 21 (Teachers) will not be available to an individual if, during the immediately preceding period, the individual enjoyed the benefits provided by paragraph (l). Thus. a Philippine individual who originally entered the

United States for the purpose of becoming a student and received benefits under paragraph (l) must leave the United· States and reestablish residence in the Philippines before he can obtain the benefits or Article 21. In such a case, the person claiming the benefits of Article 21 on a subsequent oc a­ sion must first satisfy the competent authority of the United States that he had become a bona fide resident of the Philippines for a substantial period or time. In addition, the individual must, of course, meet the re­ quirements of paragraph (1) of Article 21, viz., he must return at the invitation of the United States, a political SUbaivision or local authority thereof, or a university or other recognized educational institution for the primary purpose of becoming a teacher, etc.

If an individual qualifies for the benefits of' more than one of the provisions of this Article, such individual may choose the most favorable provision but may not claim the benefits of more than one provision in any taxable year as a means of avoiding the limitation provided. Thus, for example, an individual who comes to the other Contracting State for the primary purpose of studying may be able to qualify under either para­ graph (2) or (3) of this Article. However, he cannot combine the maximum exclusion limits in those two paragraphs to exclude $17,500 during the taxable year. I!' the individual becomes a citizen of, or acquires immi­

(l), (2), and (3) cannot be increased by means of an exchange of letters

grant status in, the other Contracting State, that other Contracting State . may tax the individual without regard to this Article. See paragraphs (3)

and (4)(b) of Article 6 (General Rules of Taxation).