Scribd Logo
Upload

Welcome to Scribd!

  • 5 views

    Mitsubishi - Manila Vs CIR

    Uploaded by

    Eman Esmer
    1) Mitsubishi Corporation - Manila Branch (petitioner) paid income taxes and branch profit remittance taxes for a project funded by loans from Japan, but argued it should not have paid taxes based on an agreement between Japan and the Philippines. 2) The Court of Tax Appeals initially ruled in petitioner's favor but its decision was later reversed. 3) The Supreme Court ultimately ruled that petitioner was entitled to a tax refund, as the Philippines government had agreed to assume tax obligations for the project, and the taxes were erroneously collected. It also held that the Bureau of Internal Revenue is the proper agency to process the refund.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Mitsubishi - Manila Vs CIR

    Uploaded by

    Eman Esmer
    5 views1 page
    1) Mitsubishi Corporation - Manila Branch (petitioner) paid income taxes and branch profit remittance taxes for a project funded by loans from Japan, but argued it should not have paid taxes based on an agreement between Japan and the Philippines. 2) The Court of Tax Appeals initially ruled in petitioner's favor but its decision was later reversed. 3) The Supreme Court ultimately ruled that petitioner was entitled to a tax refund, as the Philippines government had agreed to assume tax obligations for the project, and the taxes were erroneously collected. It also held that the Bureau of Internal Revenue is the proper agency to process the refund.

    Original Description:

    Tax

    Original Title

    Safari - 23 Aug 2019 at 7:01 AM(1)

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    1) Mitsubishi Corporation - Manila Branch (petitioner) paid income taxes and branch profit remittance taxes for a project funded by loans from Japan, but argued it should not have paid taxes based on an agreement between Japan and the Philippines. 2) The Court of Tax Appeals initially ruled in petitioner's favor but its decision was later reversed. 3) The Supreme Court ultimately ruled that petitioner was entitled to a tax refund, as the Philippines government had agreed to assume tax obligations for the project, and the taxes were erroneously collected. It also held that the Bureau of Internal Revenue is the proper agency to process the refund.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5 views1 page

    Mitsubishi - Manila Vs CIR

    Uploaded by

    Eman Esmer
    1) Mitsubishi Corporation - Manila Branch (petitioner) paid income taxes and branch profit remittance taxes for a project funded by loans from Japan, but argued it should not have paid taxes based on an agreement between Japan and the Philippines. 2) The Court of Tax Appeals initially ruled in petitioner's favor but its decision was later reversed. 3) The Supreme Court ultimately ruled that petitioner was entitled to a tax refund, as the Philippines government had agreed to assume tax obligations for the project, and the taxes were erroneously collected. It also held that the Bureau of Internal Revenue is the proper agency to process the refund.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    MITSUBISHI – MANILA vs

    CIR
    Mitsubishi Corporation - Manila Branch Vs.
    Commissioner of Internal Revenue

    G.R. No. 175722

    June 5, 2017

    Facts:

    On June 11, 1987, the governments of Japan


    and the Philippines executed an Exchange of
    Notes, whereby the former agreed to extend a
    loan amounting to Forty Billion Four Hundred
    Million Japanese Yen (¥40,400,000,000) to
    the latter through the then Overseas
    Economic Cooperation Fund (OECF, now
    Japan Bank for International Cooperation) for
    the implementation of the Calaca II Coal-Fired
    Thermal Power Plant Project (Project). In
    Paragraph 5 (2) of the Exchange of Notes, the
    Philippine Government, by itself or through its
    executing agency, undertook to assume all
    taxes imposed by the Philippines on Japanese
    contractors engaged in the Project.

    Consequently, the OECF and the Philippine


    Government entered into Loan Agreement No.
    PH-P768 dated September 25, 1987 for Forty
    Billion Four Hundred Million Japanese Yen
    (¥40,400,000,000). Due to the need for
    additional funding for the Project, they also
    executed Loan Agreement No. PH-P1419
    dated December 20, 1994 for Five Billion Five
    Hundred Thirteen Million Japanese Yen
    (¥5,513,000,000). Meanwhile, on June 21,
    1991, the National Power Corporation (NPC),
    as the executing government agency, entered
    into a contract with Mitsubishi Corporation
    (i.e., petitioner's head office in Japan) for the
    engineering, supply, construction, installation,
    testing, and commissioning of a steam
    generator, auxiliaries, and associated civil
    works for the Project (Contract). The
    Contract's foreign currency portion was
    funded by the OECF loans. In line with the
    Exchange of Notes, Article VIII (B) (1) of the
    Contract indicated NPC's undertaking to pay
    any and all forms of taxes that are directly
    imposable under the Contract.

    Petitioner completed the project on December


    2, 1995, but it was only accepted by NPC on
    January 31, 1998 through a Certificate of
    Completion and Final Acceptance. On July 15,
    1998, petitioner filed its Income Tax Return for
    the fiscal year that ended on March 31, 1998
    with the Bureau of Internal Revenue (BIR).
    Petitioner included in its income tax due the
    amount of P 44,288,712.00, representing
    income from the OECF-funded portion of the
    Project. On the same day, petitioner also filed
    its Monthly Remittance Return of Income
    Taxes Withheld and remitted P 8,324,100.00
    as BPRT for branch profits remitted to its
    head office in Japan out of its income for the
    fiscal year that ended on March 31, 1998.

    In a Decision dated December 17, 2003, the


    CTA Division granted the petition and ordered
    the CIR to refund to petitioner the amounts it
    erroneously paid as income tax and BPRT. It
    held that based on the Exchange of Notes,
    the Philippine Government, through the NPC
    as its executing agency, bound itself to
    assume or shoulder petitioner's tax
    obligations. Therefore, petitioner's payments
    of income tax and BPRT to the CIR, when
    such payments should have been made by
    the NPC, undoubtedly constitute erroneous
    payments under Section 229 of the NIRC.

    The CIR moved for reconsideration but was


    denied in a Resolution dated April 23, 2004;
    thus, the CIR elevated the matter to the CTA
    En Banc. In a Decision dated May 24, 2006,
    the CTA En Banc reversed the CTA Division's
    rulings and declared that petitioner is not
    entitled to a refund of the taxes it paid to the
    CIR. Petitioner sought reconsideration, but the
    CTA En Banc denied the motion in a
    Resolution dated December 4, 2006.

    Issues:

    Whether or not Mitsubishi Corporation –


    Manila Branch is entitled to a refund. Whether
    or not the Bureau of Internal Revenue should
    be the authorized government agency where
    the tax refund be claimed.

    Held:

    Yes, the petitioner is entitled to a refund. The


    CIR subsequently affirmed petitioner's non-
    liability for taxes and entitlement to tax
    refunds by issuing Revenue Memorandum
    Order (RMO) No. 24-200547 addressed to
    specified BIR offices. The RMO provides:
    Pursuant to the provisions of RMC No. 32-99
    as amended by RMC No. 42-99, Japanese
    contractors and nationals engaged in OECF
    funded projects in the Philippines shall not be
    required to shoulder the fiscal levies or taxes
    associated with the project. Therefore, the
    concerned Japanese contractors are entitled
    to claim for the refund of all taxes paid and
    shouldered by them relative to the conduct of
    the Project. Also, considering that petitioner
    paid the subject taxes in the aggregate
    amount of P 52,612,812.00, which it was not
    required to pay, the BIR erroneously collected
    such amount.

    On another issue, yes, the Bureau of Internal


    Revenue should be the authorized
    government agency where the tax refund be
    claimed. The Supreme Court held that in
    Sections 204 (C) of the NIRC grants the CIR
    the authority to credit or refund taxes which
    are erroneously collected by the government.
    The authority of the CIR to refund erroneously
    collected taxes is likewise reflected in Section
    229 of the NIRC.

    In this case, it is fairly apparent that the


    subject taxes in the amount of P
    52,612,812.00 was erroneously collected from
    petitioner, considering that the obligation to
    pay the same had already been assumed by
    the Philippine Government by virtue of its
    Exchange of Notes with the Japanese
    Government. Case law explains that an
    exchange of notes is considered as an
    executive agreement, which is binding on the
    State even without Senate concurrence.

    Hence, the petition is GRANTED. The Decision


    dated May 24, 2006 and the Resolution dated
    December 4, 2006 of the Court of Tax
    Appeals (CTA) En Banc are REVERSED and
    SET ASIDE. The Decision dated December 17,
    2003 of the CTA is REINSTATED.

    You might also like