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G.R. No. 76573 March 7, 1990 MARUBENI CORPORATION (formerly Marubeni Iida, Co., Ltd.), petitioner, vs.

COMMISSIONER OF INTERNAL REVENUE AND COURT OF TAX APPEALS, respondents.


G.R. No. 76573 (Marubeni Corporation vs. Commissioner of Internal Revenue and the Court of Tax Appeals). - In our
decision dated September 14, 1989, we ruled that petitioner was a non-resident foreign corporation subject to Section 24
(b) (1) of the National Internal Revenue Code of 1977 which states:
"Tax on foreign corporations. (1) Nonresident foreign corporations . . . (iii) On dividends received from a domestic
corporation liable to tax under this Chapter, the tax shall be 15% of the dividends received which shall be collected and
paid as provided in Section 53 (d) of this Code, subject to the condition that the country in which the non-resident foreign
corporation is domiciled shall allow a credit against the tax due from the non-resident foreign corporation taxes deemed to
have been paid in the Philippines equivalent to 20% which represents the difference between the regular tax (35%) on
corporations and the tax (15%) on the dividends provided in this section; . . . ."
"Based on this finding, we reversed the decision of respondent Court of Tax Appeals dated February 12, 1986 which
affirmed the denial by respondent Commissioner of Internal Revenue of petitioner's claim for refund. We thus ordered the
Commissioner of Internal Revenue to refund or grant as tax credit in favor of petitioner the amount of P144,452.40.
"On October 5, 1989, the Solicitor General, representing the public respondent, filed a motion for reconsideration stating
that although we correctly ruled that petitioner is a non-resident foreign corporation still petitioner could not avail itself of
the preferential tax rate of 15% under said Section 24(b)(1) because it failed to comply with the requisites set forth
thereunder.
"On October 9, 1989, petitioner similarly filed its motion for reconsideration remaining steadfast to its position that it is a
resident foreign corporation subject only to the ten percent (10%) final intercorporate dividend tax.
"We grant the motion for reconsideration filed by the Solicitor General.
"Section 24(b)(1) is explicit on the conditions for the availment of the preferential fifteen percent (15%) tax rate. Under said
provision, petitioner must show that Japan grants a tax credit to Marubeni, taxes deemed to have been paid in the
Philippines equivalent to at least twenty percent (20%) against the tax due from Marubeni. aisa dc
"Noteworthy is the recent case of Commissioner of Internal Revenue vs. Procter and Gamble PMC (G.R. No. 66835, April
15, 1988, 160 SCRA 560). In that case we denied Procter and Gamble's claim for refund for its parent company in the
United States since it failed to meet the following conditions necessary for the availment of the preferential fifteen percent
(15%) tax namely: (1) to show the actual amount credited by the U.S. Government against the income tax due from PMCUSA on the dividends received from private respondent; (2) to present the income tax return of its mother company for
1975 when the dividends were received; (3) to submit any authenticated document showing that the US Government
credited 20% of the tax deemed paid in the Philippines.
"In the case at bar, petitioner similarly failed to comply with the requisites set forth under Section 24(b)(1). Petitioner
reasons that it cannot furnish the Commissioner of Internal Revenue with the confidential income tax return of Marubeni
Japan since such a requirement is beyond the power of Philippine taxation laws. (Rollo, p. 238).
"Such reasoning finds no merit. Section 24(b)(i) of the National Internal Revenue Code of 1977 is clear and explicit on the
conditions for the availment of the preferential fifteen percent (15%) tax rate. Normally the Philippines imposes a higher
thirty five percent (35%) tax rate on corporations. But since the Philippines seeks to lessen the impact of double taxation
between countries, we impose only the lower tax rate of fifteen percent (15%) on dividends subject to the condition that
the country in which the non-resident foreign corporation is domiciled allows a tax credit of twenty percent (20%). Such
prerequisite must be strictly complied with because the fifteen percent (15%) tax rate is a concession in the nature of a tax
exemption vis-a-vis the normal rate of thirty five (35%) on corporations.
"Petitioner's motion for reconsideration merely reiterates the same arguments previously raised in its petition and does not
raise substantial issues not raised upon in our decision dated September 14, 1989. Accordingly, since petitioner failed to
comply with the conditions set forth under Section 24 (b)(1) of the National Internal Revenue Code of 1977, we hereby
modify the decision dated September 14, 1989 and rule that petitioner corporation is subject to the twenty five percent
(25%) tax rate on dividends pursuant to Article 10(2) of the Philippine-Japan Tax Convention. The Commissioner of
Internal Revenue is hereby ordered to recompute the tax due from petitioner corporation using the correct tax base and
rate."
"Very truly yours,
(Sgd.) JULIETA Y. CARREON

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