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Caltex v. COA end-users the consuming public.

Their primary obligation is to account


for and remit the taxes collection to the administrator of the OPSF.
Topic: (1) tax vs. ordinary debt, (2) purpose/objective of taxation: non-revenue / There is not merit in Caltexs contention that the OPSF contributions are
special / regulatory not for a public purpose because they go to a special fund of the
Ponente: Davide, Jr. J. government. Taxation is no longer envisioned as a measure merely to
raise revenue to support the existence of the government; taxes may be
DOCTRINE: levied with a regulatory purpose to provide means for the rehabilitation
A taxpayer may not offset taxes due from the claims that he may have against and stabilization of a threatened industry which is affected with public
the government. interest as to be within the police power of the State.
The oil industry is greatly imbued with public interest as it vitally affects
QUICK FACTS: Caltex Philippines questions the decisions of COA for disallowing the general welfare.
the offsetting of its claims for reimbursement with its due OPSF remittance PD 1956, as amended by EO No. 137 explicitly provides that the source of
OPSF is taxation.
FACTS:

The Oil Price Stabilization Fund (OPSF) was created under Sec. 8, PD 1956, as FACTS: In 1989, COA sent a letter to Caltex, directing it to remit its collection to
amended by EO 137 for the purpose of minimizing frequent price changes the Oil Price Stabilization Fund (OPSF), excluding that unremitted for the years
brought about by exchange rate adjustments. It will be used to reimburse the oil 1986 and 1988, of the additional tax on petroleum products authorized under the
companies for cost increase and possible cost underrecovery incurred due to PD 1956. Pending such remittance, all of its claims for reimbursement from the
reduction of domestic prices. OPSF shall be held in abeyance. The grant total of its unremitted collections of
the above tax is P1,287,668,820.
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 Caltex submitted a proposal to COA for the payment and the recovery of claims.
the latter denied. COA approved the proposal but prohibited Caltex from further offsetting
remittances and reimbursements for the current and ensuing years. Caltex
COA disallowed recover of financing charges, inventory losses and sales to moved for reconsideration but was denied. Hence, the present petition.
marcopper and atlas but allowed the recovery of product sale or those arising
from export sales. ISSUE: Whether the amounts due from Caltex to the OPSF may be offsetted
against Caltexs outstanding claims from said funds
Petitioners Contention:
Department of Finance issued Circular No. 4-88 allowing reimbursement. Denial RULING: No. Taxation is no longer envisioned as a measure merely to raise
of claim for reimbursement would be inequitable. NCC (compensation) and Sec. revenue to support the existence of government. Taxes may be levied with a
21, Book V, Title I-B of the Revised Administrative Code (Retention of Money for regulatory purpose to provide means for the rehabilitation and stabilization of a
Satisfaction of Indebtedness to Government) allows offsetting. threatened industry which is affected with public interest as to be within the
police power of the State.
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 PD 1956, as amended by EO 137, explicitly provides that the source of OPSF is
purpose behind OPSF exactions distinguishes it from tax. 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
Respondents Contention: government and taxpayer are not mutually creditors and debtors of each other
Based on Francia v. IAC, theres no offsetting of taxes against the the claims that and a claim for taxes is not such a debt, demand,, contract or judgment as is
a taxpayer may have against the government, as taxes do not arise from allowed to be set-off.
contracts or depend upon the will of the taxpayer, but are imposed by law.
Hence, COA decision is affirmed except that Caltexs claim for reimbursement of
ISSUE: WON Caltex is entitled to offsetting underrecovery arising from sales to the National Power Corporation is allowed.

DECISION: NO. COA AFFIRMED


FACTS: In 1989, COA sent a letter to Caltex directing it to remit to OPSF its
HELD: collection of the additional tax on petroleum authorized under PD 1956 and
It is settled that a taxpayer may not offset taxes due from the claims that pending such remittance, all of its claims from the OPSF shall be held in
he may have against the government. Taxes cannot be subject of abeyance. Petitioner requested COA for the early release of its reimbursement
compensation because the government and taxpayer are not mutually certificates from the OPSF covering claims with the Office of Energy Affairs. COA
creditors and debtors of each other and a claim for taxes is not such a denied the same.
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
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.