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Facts: Petitioner have no license to do business in the Philippines, sells passage documents for
off-line flights through Aerotel Limited, general sales agent in the Philippines. Petitioner filed for
claim of refund erroneously paid tax on Gross Philippine Billing for the year 2010. The CTA
denied the petition and reasoned that petitioner is a resident foreign corporation engaged in
trade or business in the Philippines and therefore is not liable to pay tax on GPB but cannot
allow refund because the petitioner is liable for the 32% income tax from its sales of passage
documents.
Issue: whether or not the CTA erred in its decision.
Held: Yes. Since it does not maintain flights to and from the Philippines, it is not taxable.
Petitioner, being an international carrier with no flights originating from the Philippines, does not
fall under the exception. Petitions falls under the general rule. The petitioner’s tax refund claim
assumed that the tax return it filed were correct because petitioner is liable under section 28 (a)
(1). Taxes can be offset if intimately related, unless exempted assumed within the purview or
general rule, liabilities and tax credit must first be determined before offset can take place.