G.R. No. 92585 May 8, 1992CALTEX PHILIPPINES, INC., petitioner,vs.

THE
HONORABLE COMMISSION ON AUDIT, HONORABLECOMMISSIONER BARTOLOME C.
FERNANDEZ and HONORABLECOMMISSIONER ALBERTO P. CRUZ, respondents.
Topic: (1) tax vs. ordinary debt, (2) purpose/objective of taxation: non-revenue / special /
regulatoryPonente: Davide, Jr. J.
DOCTRINE:
A taxpayer may not offset taxes due from the claims that he may have againstthe government.
QUICK FACTS
: Caltex Philippines questions the decisions of COA fordisallowing the offsetting of its claims for reimbursement
with its due OPSFremittance
FACTS:
The Oil Price Stabilization Fund (OPSF) was created under Sec. 8, PD 1956, asamended by EO
137 for the purpose of minimizing frequent price changesbrought about by exchange rate adjustments. It will be
used to reimburse theoil companies for cost increase and possible cost underrecovery incurred dueto reduction
of domestic prices.COA sent a letter to Caltex directing the latter to remit to the OPSF itscollection. Caltex
requested COA for an early release of its reimbursementcertificates which the latter denied.COA disallowed
recover of financing charges, inventory losses and sales tomarcopper and atlas but allowed the recovery of
product sale or those arisingfrom 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 asource of taxation, it instead established a special fund. This lack of publicpurpose behind OPSF
exactions distinguishes it from tax.Respondents Contention:Based on
Francia v. IAC
, theres no offsetting of taxes against the the claimsthat a taxpayer may have against the government, as taxes
do not arise fromcontracts or depend upon the will of the taxpayer, but are imposed by law.
ISSUE: WON Caltex is entitled to offsettingDECISION: NO. COA AFFIRMEDHELD:

It is settled that a taxpayer may not offset taxes due from the claimsthat he may have against
the government. Taxes cannot be subject of compensation because the government and
taxpayer are not mutuallycreditors and debtors of each other and a claim for taxes is not such
adebt, demand, contract or judgment as is allowed to be set-off.

Technically, the oil companies merely act as agents for the Governmentin the latters collection
since the taxes are, in reality, passed unto theend-users the consuming public. Their primary obligation
is to accountfor and remit the taxes collection to the administrator of the OPSF.

There is not merit in Caltexs contention that the OPSF contributions

aren o t f o r a p u b l i c p u r p o s e b e c a u s e t h e y g o t o a s p e c i a l f u n d
o f t h e government. Taxation is no longer envisioned as a measure merely toraise revenue to
support the existence of the government; taxes may belevied with a regulatory purpose to provide means for the
rehabilitationand stabilization of a threatened industry which is affected with publicinterest as to be
within the police power of the State.

The oil industry is greatly imbued with public interest as it vitally affectsthe general welfare.

PD 1956, as amended by EO No. 137 explicitly provides that the sourceof OPSF is taxation.