Caltex Philippines, Inc.

v COA
GR No. 92585, May 8, 1992
TOPIC: General and Fundamental Principles

Facts: Caltex Philippines questions the decisions of COA for disallowing the offsetting of its claims for
reimbursement with its due OPSF remittance.

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 under recovery 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.

Petitioner contends that 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.

Respondent’s contention on the other hand is based on Francia v. IAC that there’s no offsetting of taxes
against 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/s: WON Caltex is entitled to offsetting.

Held/Doctrine: 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 Caltex’s claim for reimbursement of under recovery arising
from sales to the National Power Corporation is allowed.