Case Digest (G.R. No. 60714)
Facts:
Japan Air Lines, Inc. (JAL), a foreign corporation engaged in international air carriage, maintained an office at the Filipinas Hotel, Roxas Boulevard, Manila since mid‑July 1957 and on July 17, 1957 constituted Philippine Air Lines (PAL) as its general sales agent to sell tickets and reservations in the Philippines, although JAL had no aircraft operating to or from the Philippines during the years 1959 to 1963. On February 28, 1972 the Commissioner of Internal Revenue issued deficiency income tax assessment notices and a demand letter dated the same day to JAL for alleged unpaid income taxes, interest and a fifty percent surcharge for taxable years 1959 through 1963, totaling P2,099,687.52, and assessed a compromise penalty of P1,500 for alleged bookkeeping violations; JAL received the notices on June 2, 1972 and filed a protest on June 19, 1972 contending that as a non‑resident foreign corporation it was taxable only on Philippine‑source income and had none for those years. Th...