SOUTH AFRICAN AIRWAYS versus CIR

G.R. No. 180356

Februar 16! "010
THIR# #I$ISION
FACTS AS TO TH% &%TITION%R
Petitioner South African Airways, a foreign petitioner filed separate quarterly and annual
income tax returns for its off-line flights for the taxable year 2000. hereafter, on !ebruary ",
200#, petitioner filed with the $%&, a claim for the refund as erroneously paid tax on '(P$) for
the taxable year 2000. Such claim was unheeded. hus, petitioner filed a Petition for &e*iew
with the +A for the refund. Petitioner a*ers that a deficiency tax assessment does not, in
any way, disqualify a taxpayer from claiming a tax refund since a refund claim can proceed
independently of a tax assessment and that the assessment cannot be offset by its claim for
refund.
FACTS AS TO R%S&ON#%NT
,n -ay .0, 200/, the +A denied petition for lac0 of merit. hus, petitioner filed a Petition
for &e*iew before the +A 1n $anc, reiterating its claim for a refund of its tax payment on its
(P$. his was denied by the +A in its assailed decision. As to the denial of petitioner2s
claim for refund, the +A denied the claim on the basis that petitioner is liable for income tax
under Sec. 23'A)'.) of the .445 6%&+ and such liability would preclude their claim for a
refund of tax paid on the basis of Sec. 23'A)'#)'a).
ISSU% RAIS%# 'Y &%TITION%R
Petitioner argues that it is entitled for the refund despite the existence of a tax assessment
deficiency against it.
ISSU% RAIS%# 'Y R%S&ON#%NT
&espondent argues that petitionier cannot claim for refund it is liable for income tax and such
liability would preclude their claim for a refund.
RU(ING OF TH% SU&R%)% COURT
he +ourt ruled in fa*or of respondent
he grant of a refund is founded on the assumption that the tax return is *alid, that is, the
facts stated therein are true and correct. 7owe*er, the deficiency assessment, although not
yet final, created a doubt as to and constitutes a challenge against the truth and accuracy of
the facts stated in said return which, by itself and without unquestionable e*idence, cannot
be the basis for the grant of the refund. .
&%RSONA( %N# NOT%S
he fact of such deficiency assessment is intimately related to and inextricably intertwined
with the right of respondent ban0 to claim for a tax refund for the same year. o award such
refund despite the existence of that deficiency assessment is an absurdity and a polarity in
conceptual effects.