British overseas airways corp. (BOAC) a wholly owned British Corporation, is engaged in international airlines business. From 1959to 1972, it has no loading rights for traffic purposes in the Philippines but maintained a general sales agent in the Philippines which was responsible for selling, BOAC tickets covering passengers and cargoes the CIR assessed deficiency income taxes against.
Is BOAC liable to pay taxes?
Yes. The source of income is the property, activity of service that produces the income. For the source of income to be considered coming from the Philippines, it is sufficient that the income is derived from the activity coming from the Philippines. The tax code provides that for revenue to be taxable, it must constitute income from Philippine sources. In this case, the sale of tickets is the source of income. The situs of the source of payments is the Philippines.