G.R. No. 175772 - Mitsubishi Corp. - Manila Branch vs. Commissioner of Internal Revenue

On June 11, 1987, Japan and the Philippines executed an Exchange of Notes obliging the Philippine Government, through its agencies, to assume all taxes imposed on Japanese contractors under the loan for the Calaca II Coal‐Fired Thermal Power Plant Project.
The countries entered into Loan Agreement No. PH-P76 on September 25, 1987 (A40.4 billion yen) and Loan Agreement No. PH-P141 on December 20, 1994 (A5.513 billion yen) with OECF (now JBIC).

On June 21, 1991, NPC contracted Mitsubishi Corporation (Japan) for engineering, supply, construction, installation, testing, and commissioning of the steam generator and related works, funded by the OECF loans.
Petitioner’s head office completed the project on December 2, 1995; NPC issued the Certificate of Completion and Final Acceptance on January 31, 1998.

On July 15, 1998, petitioner filed its ITR for the fiscal year ending March 31, 1998, declaring P44,288,712 income from the OECF-funded portion and paid the corresponding tax; it also remitted P8,324,100 as branch profit remittance tax (BPRT).
On June 30, 2000, petitioner filed an administrative claim for refund of P52,612,812 (aggregate of income tax and BPRT) with the CIR and on July 13, 2000, filed a petition with the CTA Division (C.T.A. Case No. 6139).

On December 17, 2003, the CTA Division granted the refund, holding that NPC should have shouldered the taxes under the tax‐assumption clause and that RMC No. 42-99 could not apply retroactively.
On May 24, 2006, the CTA En Banc reversed, ruling no tax exemption existed and that RMC No. 42-99 required recovery from NPC; its December 4, 2006 resolution denied reconsideration, prompting this petition.

Whether petitioner is entitled to a refund of the erroneously paid income tax and BPRT.
If so, from which government entity— the CIR (BIR) or the NPC—should the refund be claimed?