Caltex v. COA
Their primary obligation is to account
Topic: (1) tax vs. ordinary debt, (2) purpose/objective of taxation: non-revenue /
special / regulatory
Ponente: Davide, Jr. J.
DOCTRINE:
A taxpayer may not offset taxes due from the claims that he may have against
the government.
QUICK FACTS: Caltex Philippines questions the decisions of COA for disallowing
the offsetting of its claims for reimbursement with its due OPSF remittance
FACTS:
The Oil Price Stabilization Fund (OPSF) was created under Sec. 8, PD 1956, as
amended by EO 137 for the purpose of minimizing frequent price changes
brought about by exchange rate adjustments. It will be used to reimburse the oil
companies for cost increase and possible cost underrecovery incurred due to
reduction of domestic prices.
COA sent a letter to Caltex directing the latter to remit to the OPSF its collection.
Caltex requested COA for an early release of its reimbursement certificates which
the latter denied.
COA disallowed recover of financing charges, inventory losses and sales to
marcopper and atlas but allowed the recovery of product sale or those arising
from export sales.
Petitioners Contention:
Department of Finance issued Circular No. 4-88 allowing reimbursement. Denial
of claim for reimbursement would be inequitable. NCC (compensation) and Sec.
21, Book V, Title I-B of the Revised Administrative Code (Retention of Money for
Satisfaction of Indebtedness to Government) allows offsetting.
Amounts due do not arise as a result of taxation since PD 1956 did not create a
source of taxation, it instead established a special fund. This lack of public
purpose behind OPSF exactions distinguishes it from tax.
Respondents Contention:
Based on Francia v. IAC, theres no offsetting of taxes against the the claims that
a taxpayer may have against the government, as taxes do not arise from
contracts or depend upon the will of the taxpayer, but are imposed by law.
ISSUE: WON Caltex is entitled to offsetting
DECISION: NO. COA AFFIRMED
HELD:
It is settled that a taxpayer may not offset taxes due from the claims that
he may have against the government. Taxes cannot be subject of
compensation because the government and taxpayer are not mutually
creditors and debtors of each other and a claim for taxes is not such a
debt, demand, contract or judgment as is allowed to be set-off.
Technically, the oil companies merely act as agents for the Government
in the latters collection since the taxes are, in reality, passed unto the
end-users the consuming public.
for and remit the taxes collection to the administrator of the OPSF.
There is not merit in Caltexs contention that the OPSF contributions are
not for a public purpose because they go to a special fund of the
government. Taxation is no longer envisioned as a measure merely to
raise revenue to support the existence of the government; taxes may be
levied with a regulatory purpose to provide means for the rehabilitation
and stabilization of a threatened industry which is affected with public
interest as to be within the police power of the State.
The oil industry is greatly imbued with public interest as it vitally affects
the general welfare.
PD 1956, as amended by EO No. 137 explicitly provides that the source of
OPSF is taxation.
FACTS: In 1989, COA sent a letter to Caltex, directing it to remit its collection to
the Oil Price Stabilization Fund (OPSF), excluding that unremitted for the years
1986 and 1988, of the additional tax on petroleum products authorized under the
PD 1956. Pending such remittance, all of its claims for reimbursement from the
OPSF shall be held in abeyance. The grant total of its unremitted collections of
the above tax is P1,287,668,820.
Caltex submitted a proposal to COA for the payment and the recovery of claims.
COA approved the proposal but prohibited Caltex from further offsetting
remittances and reimbursements for the current and ensuing years. Caltex
moved for reconsideration but was denied. Hence, the present petition.
ISSUE: Whether the amounts due from Caltex to the OPSF may be offsetted
against Caltexs outstanding claims from said funds
RULING: No. Taxation is no longer envisioned as a measure merely to raise
revenue to support the existence of government. Taxes may be levied with a
regulatory purpose to provide means for the rehabilitation and stabilization of a
threatened industry which is affected with public interest as to be within the
police power of the State.
PD 1956, as amended by EO 137, explicitly provides that the source of OPSF is
taxation. A taxpayer may not offset taxes due from the claims he may have
against the government. Taxes cannot be subject of compensation because the
government and taxpayer are not mutually creditors and debtors of each other
and a claim for taxes is not such a debt, demand,, contract or judgment as is
allowed to be set-off.
Hence, COA decision is affirmed except that Caltexs claim for reimbursement of
underrecovery arising from sales to the National Power Corporation is allowed.
FACTS: In 1989, COA sent a letter to Caltex directing it to remit to OPSF its
collection of the additional tax on petroleum authorized under PD 1956 and
pending such remittance, all of its claims from the OPSF shall be held in
abeyance. Petitioner requested COA for the early release of its reimbursement
certificates from the OPSF covering claims with the Office of Energy Affairs. COA
denied the same.
ISSUE: Whether or not petitioner can avail of the right to offset any amount that
it may be required under the law to remit to the OPSF against any amount that it
may receive by way of reimbursement.

RULING: It is a settled rule that a taxpayer may not offset taxes due from the
claims that he may have against the government. Taxes cannot be the subject of
compensation because the government and taxpayer are not mutually debtors
and creditors of each other and a claim for taxes is not such a debt, demand,
contract or judgment as is allowed to be set-off. The oil companies merely acted
as agents for the government in the latters collection since taxes are passed
unto the end-users, the consuming public.