Commissioner of Internal Revenue vs.

British Overseas Airways Corporation, 149

SCRA 395(1987)
"Doing" or "Engaging in" or "transacting" business have no specific meaning. Each
case has to be judged by its peculiar circumstances. implies a continuity of
commercial dealings and arrangements, and contemplates, to that extent, the
performance of acts or works or the exercise of some of the functions normally
incident to, and in progressive prosecution of commercial gain or for the purpose
and object of the business organization.
An international airline, like BOAC, which has appointed a ticket sales agent in the
Philippines and which allocates fares received to various airlines on the basis of
their participation in the services rendered. although BOAC does not operate any
airplane in the Philippines, is a resident foreign corporation subject to tax on
income received from Philippine sources.
Definition of "gross income" in the Tax Code is broad enough to include proceeds from
sales of airline tickets in the Philippines even if no service or airlifting of passenger
or cargo by an airline is done by its planes in the Philippines.
The test of taxability is the "source"; and the source of an income is that activity x x x
which produced the income.
Under P.D. 69 and P.D. 1355, international air carriers are subject to income tax of 2
% of their gross Philippine billings.
The common carrier's tax, an excise tax, where can be levied only when the act,
business or privilege is performed in the Philippines is different from the income
tax.
South African Airways vs. Commissioner of Internal Revenue, 612 SCRA 665(2010)
Under Sec. 28(A)(3)(a): Gross Philippine Billings refers to the amount of gross
revenue derived from carriage of persons, excess baggage, cargo and mail
originating from the Philippines in a continuous and uninterrupted flight,
irrespective of the place of sale or issue and the place of payment of the ticket or
passage document. Now, it is the place of sale that is irrelevant; as long as the
uplifts of passengers and cargo occur to or from the Philippines, income is
included in GPB.
Off-line air carriers having general sales agents in the Philippines are engaged in or
doing business in the Philippines and that their income from sales of passage
documents here is income from within the Philippines
Sec. 28(A)(3)(a) of the 1997 National Internal Revenue Code (NIRC) does not, in any
categorical term, exempt all international air carriers from the coverage of Sec.
28(A)(1) of the 1997 NIRChad legislatures intentions been to completely
exclude all international air carriers from the application of the general rule under
Sec. 28(A)(1), it would have used the appropriate language to do so.
An exception is defined as that which would otherwise be included in the provision
from which it is excepted, a clause which exempts something from the operation

of a statute by express words; An exception need not be introduced by the words

except or unlessan exception will be construed as such if it removes
something from the operation of a provision of law; If an international air carrier
maintains flights to and from the Philippines, it shall be taxed at the rate of 2 1/2%
of its Gross Philippine Billings, while international air carriers that do not have
flights to and from the Philippines but nonetheless earn income from other
activities in the country will be taxed at the rate of 32% of such income.
Taxes cannot be subject to compensation for the simple reason that the government
and the taxpayer are not creditors and debtors of each otherdebts are due to
the Government in its corporate capacity, while taxes are due to the Government
in its sovereign capacity.
Commissioner of Internal Revenue vs. Court of Appeals, 301 SCRA 152(1999)
A person assessed for deficiency withholding tax under Sections 53 and 54 of the
1939 Tax Code is being held liable in its capacity as a withholding agent and not in
its personality as a taxpayer .
The withholding agent is merely a tax collector, not a taxpayer and is not protected
by the amnesty under Presidential Decree 67
the withholding agent is the payor, a separate entity acting no more than an agent of
the government for the collection of the tax in order to ensure its payments; the
payer is the taxpayerhe is the person subject to tax impose by law; and the
payee is the taxing authority.
Tax amnesty, much like a tax exemption, is never favored nor presumed in law and if
granted by a statute, the terms of the amnesty like that of a tax exemption must
be construed strictly against the taxpayer and liberally in favor of the taxing
authority.
stock dividends, strictly speaking, represent capital and do not constitute income to
its recipientin a loose sense, stock dividends issued by the corporation, are
considered unrealized gain, and cannot be subjected to income tax until that gain
has been realized.
For the exempting clause of Section 83(b) to apply, it is indispensable that: (a) there
is redemption or cancellation; (b) the transaction involves stock dividends; and (c)
the time and manner of the transaction makes it essentially equivalent to a
distribution of taxable dividends. Of these, the most important is the third.
Redemption is repurchase, a reacquisition of stock by a corporation which issued the
stock in exchange for property, whether or not the acquired stock is cancelled,
retired or held in the treasury.
Redemption is repurchase, a reacquisition of stock by a corporation which issued the
stock in exchange for property, whether or not the acquired stock is cancelled,
retired or held in the treasury.

The three elements in the imposition of income tax are: (1) there must be gain or
profit, (2) that the gain or profit is realized or received, actually or constructively,
and (3) it is not exempted by law or treaty from income tax.