Case Digest (G.R. No. 175772)
Facts:
Mitsubishi Corporation-Manila Branch v. Commissioner of Internal Revenue, G.R. No. 175772, June 05, 2017, the Supreme Court First Division, Perlas-Bernabe, J., writing for the Court.Petitioner Mitsubishi Corporation‑Manila Branch (the Manila branch of Mitsubishi Corporation) sought refund of income tax and branch profit remittance tax (BPRT) totaling P52,612,812.00, allegedly erroneously paid for the fiscal year ended March 31, 1998. Respondent is the Commissioner of Internal Revenue (CIR). The dispute arose from an Exchange of Notes dated June 11, 1987 between Japan and the Philippines under which the Philippine Government agreed to assume “all fiscal levies or taxes” imposed in the Philippines on Japanese firms operating in connection with the OECF‑funded Calaca II Project. The OECF and the Philippine Government executed Loan Agreements (PH‑P76, PH‑P141) to finance the Project, and the National Power Corporation (NPC) entered into a 1991 contract with Mitsubishi’s head office (Japan) to supply and install equipment; the foreign‑currency portion of the contract was funded by the OECF loans and Article VIII(B)(1) of the contract stated NPC would “pay any and all forms of taxes…including VAT” directly imposable under the contract.
Petitioner completed the project in December 1995 and obtained NPC’s Certificate of Completion and Final Acceptance on January 31, 1998. On July 15, 1998 petitioner filed its income tax return and remitted P44,288,712.00 as income tax and P8,324,100.00 as BPRT. On June 30, 2000 petitioner filed an administrative claim for refund with the CIR and, to preserve its judicial remedies, filed a petition for review with the Court of Tax Appeals (CTA) on July 13, 2000 (docketed C.T.A. Case No. 6139). Petitioner anchored its claim on BIR Ruling No. DA‑407‑98 and on the Exchange of Notes’ tax assumption clause.
The CTA Division, in a Decision dated December 17, 2003, granted the petition and ordered refund of the subject taxes, finding petitioner had substantiated erroneous payments and that NPC should have shouldered the tax payments. The CIR moved for reconsideration which the Division denied; the CIR then sought review by the CTA En Banc. In a Decision dated May 24, 2006, the CTA En Banc reversed the Division, ruling (1) petitioner failed to establish the payments were “erroneous” within Section 229 of the NIRC and that the Exchange of Notes granted no tax exemption, (2) the Exchange of Notes could not be read as a treaty granting tax exemption without S...(Subscriber-Only)
Issues:
- Is Mitsubishi Corporation‑Manila Branch entitled to a refund of the income tax and branch profit remittance tax it paid for the fiscal year ended March 31, 1998?
- If entitled to a refund, from which government entity should the r...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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