In a resolution on March 24, the CTA en banc denied the claim of the commissioner of internal revenue to deny the appeal and remanded the petition for review to the CTA First Division to decide on the proper refundable amount.
Under the law, respondent CIR has the authority to decide, approve and grant claims for a tax refund. The previous ruling of the CTA division said that the company failed to prove that the services rendered to TF International, one of its foreign clients, were not in the same category as “processing, manufacturing or repacking of goods,” and services rendered were not “performed” in the Philippines.
“Given that the Service Agreement to the TF Remittance extends to TF International pursuant to the Addenda, the relevant provisions in the Service Agreement, insofar as it proves that services rendered are not in the same category as ‘processing, manufacturing or repacking of goods’ and that services were not performed in the Philippines, also apply to TF International,” The CTA en banc’s ruling said. It added that sales to the foreign corporation qualified for a VAT zero-rating.