Criterion for "doing" or "engaging in" business

The Tax Code itself has provisions for a foreign corporation engaged in business within the Philippines and vice versa, to wit:
SEC. 22. Definitions - When used in this Title:

x x x x x x x x x 

(H) The term “resident foreign corporation” applies to a foreign corporation engaged in trade or business within the Philippines.

(I) The term ‘nonresident foreign corporation’ applies to a foreign corporation not engaged in trade or business within the Philippines. (Emphasis in the original)
Consequently, to come within the purview of Section 108(B)(2), it is not enough that the recipient of the service be proven to be a foreign corporation; rather, it must be specifically proven to be a nonresident foreign corporation.

There is no specific criterion as to what constitutes “doing” or “engaging in” or “transacting” business. It was ruled in Commissioner of Internal Revenue v. British Overseas Airways Corporation, thus:[1]
x x x. There is no specific criterion as to what constitutes “doing” or “engaging in” or “transacting” business. Each case must be judged in the light of its peculiar environmental circumstances. The term 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. “In order that a foreign corporation may be regarded as doing business within a State, there must be continuity of conduct and intention to establish a continuous business, such as the appointment of a local agent, and not one of a temporary character.”[2]

[1] 233 Phil. 406 (1987).

[2] Id. at 420 citing The Mentholatum Co., Inc. vs. Anacleto Mangaliman, 72 Phil. 524 (1941); Section 1, R.A. No. 5455; and Pacific Micronesian Line, Inc. v. Del Rosario and Pelingon, 96 Phil. 23, 30 (1954), which in turn cited Thompson on Corporations, Vol. 8, 844-847 (3rd ed.); and Fisher, PHILIPPINE LAW OF STOCK CORPORATION, 415.

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