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Mitsubishi Corporation - Manila Branch vs.

CIR
June 5, 2017
GR. No. 175772

Facts:

On 1987, an Exchange of Notes was executed between the government of Japan and
Philippines. As agreed upon the amount of ¥40,400,000,000 loan was extended to the
Philippines for the implementation of the Calaca II Coal Fired Thermal Power Plant Project.
Under the Exchange of Notes the Philippine government shall assume all fiscal levies or taxes
imposed by the Philippines on Japanese firms and nationals operating as suppliers, contractors
or consultants engaged in the project. Consequently a loan agreement was entered through the
Overseas Economic Coopration Fund (OECF now Japan Bank for International Cooperation).

On 1994, the National Power Corporation as the executing government agency entered into a
contract with herein petitioner. In line with the Exchange of Notes the contract subject NPC to
pay any and all forms of taxes that may be imposed by the Philippine government. The project
has been completed and on 1998 petitioner filed its income tax return with the BIR including the
income from OECF-funded portion of the project. After 2 years petitioner filed with the CIR an
administrative claim for refund of erroneously payment of income tax pursuant to the provision
of Exchange of Notes.

Issues: WON the petitioner is entitled to a refund?

Ruling: