143 SCRA 397 Political Law Sovereignty

Frank and James Robertson (brothers) were American citizens born in the Philippines. They
stayed here in the Philippines until they were repatriated by the US in 1945. Thereafter they
established their domicile in California. Soon after they were employed by the US Federal
Government as workers in the US Navy. They were later assigned at the US Naval Base in
Olongapo City in 1962. They hold American passports and are admitted as special temporary
visitors under the Philippine Immigration Act of 1940. On the other hand, the Commissioner of
Internal Revenue (CIR) contends that the American brothers are subject to taxation because their
residence here in the Philippines is not by reason of their employment in connection with the
construction, maintenance, operation or defense of the US Bases here as provided by the Military
Bases Agreement. Further, the burden of proof of such exemption to taxation shall be upon the
respondents.
ISSUE: Whether or not the American brothers are exempt from taxation?
HELD: Yes. The law and the facts of the case are so clear that there is no room left for doubt the
validity of the brothers defense. In order to avail oneself of the tax exemption under the RP-US
Military Bases Agreement: he must be a national of the United States employed in connection
with the construction, maintenance, operation or defense, of the bases, residing in the Philippines
by reason of such employment, and the income derived is from the U.S. Government (Art. XII
par. 2 of PI-US Military Bases Agreement of 1947). Said circumstances are all present in the case
at bar