Republic v.

Gonzales
13 SCRA 633
G.R. NO. L-17962 April 30, 1965
Facts:
Defendant-appellant, Blas Gonzales is a private concessionaire in the US military Base at Clark Field,
Angeles City, who is engaged in the manufacture of furniture and, per agreement with base authorities, supplied
them with his manufactured articles.
The BIR discovered that for the years 1946-47, appellant have undeclared income for the two years
causing deficiency in its tax dues. Despite the demand of the BIR to pay its tax due, appellant failed to do so. In
defense, appellant claim that as a concessionaire in an American Air Base, he is not subject to Philippine Tax laws
pursuant to the US-Phil. Military Bases Agreement.
Issue:
Is appellant is exempt from taxes?
Ruling:
No. A Filipino concessionaire in an American Air Base is subject to Philippine Income Tax laws under the
US-Phil Military Bases Agreement. Non in the provisions of the agreement shields a concessionaire, like the
appellant, from the payment of the income tax. For one thing, even the exemption in favor of members of the US
armed forces and nationals of the US does not include income derived from Philippine sources.