CIR v. Vestas Services Philippines, Inc.

 

CIR v. Vestas Services Philippines, Inc.

CTA EB NO. 2255

January 25, 2022

Doctrine:

Findings of fact by the Court of Tax Appeals in Division are generally accorded great weight and are not to be disturbed without any showing of grave abuse of discretion, considering that the members of the Division are in the best position to analyze the documents presented by the parties.

Facts:

Before the Court is a Petition for Review seeking the nullification of the Decision' ("Assailed Decision") dated September 20, 2019 and Resolution2 ("Assailed Resolution") dated February 13, 2020 of the Court of Tax Appeals Second Division ("Second Division"), partially granting Petitioner's claim for refund or issuance of a Tax Credit Certificate ("TCC") amounting to Php134,298,376.32, representing unutilized excess input value-added tax ("VAT") attributable to its zero-rated sales/ receipts for the second quarter of calendar year 2014.

Issue:

Whether or not the services rendered by Respondent to its customer VWS qualified for VAT zero rating.

Held: 

Yes. Section 108(B)(2)20 of the National Internal Revenue Code ("NIRC") of 1997, as amended, provides that the recipient of services is doing business outside the Philippines. Petitioner claims however that Respondent is actually an instrumentality by which VWS engages business in the Philippines. Petitioner is mistaken for two reasons. First, the Second Division, through its thorough examination of the evidence presented, ruled that VWS is a non-resident foreign corporation doing business outside the Philippines. This pronouncement was supported by documentary evidence, as follows: (1) Certificate of Non-Registration of Company issued by the Securities and Exchange Commission (SEC), (2). Consularized Articles of Association, (3) Certificate of Tax Residency issued by the Central Customs and Tax Administration of Denmark, and ( 4) Company Extract from the Danish Business Authority. It is settled that findings of fact by the Court of Tax Appeals in Division are generally accorded great weight and are not to be disturbed without any showing of grave abuse of discretion, considering that the members of the Division are in the best position to analyze the documents presented by the parties. 

Second, VWS and Respondent are two distinct corporate entities separately registered in two (2) different countries, Denmark and Philippines. Although VWS is one of the shareholders of Respondent, it is a fundamental principle of corporation law that "a corporation is an entity separate and distinct from its stockholders and from other corporations to which it may be connected."