Caltex v. COA - Digest

Caltex Philippines, Inc. vs.
Commission on Audit
GR No. 92585 | May 8, 1992
Davide, Jr. (En Banc)
DOCTRINE: It is settled 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 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.
FACTS: COA sent a letter to Petitioner Caltex Philippines, Inc. (CPI), directing the latter
to remit to the Oil Price Stabilization Fund its collection of the additional tax on petroleum
products authorized under Section 8 of P.D. No. 1956 and informing it that, pending such
remittance, all of its claims for reimbursement from the OPSF shall be held in abeyance.
COA sent another letter to petitioner informing it that partial verification with the Office of
Energy Affairs of DOF showed that the grand total of its unremitted collections of the
above tax; directing it to remit the same, with interest and surcharges thereon; advising it
that the COA will hold in abeyance the audit of all its claims for reimbursement from the
OPSF; and directing it to desist from further offsetting the taxes collected against
outstanding claims in 1989 and subsequent periods.
Petitioner requested the COA for an early release of its reimbursement certificates from
the OPSF covering claims with the Office of Energy Affairs since June 1987 up to March
1989, invoking in support thereof a COA Circular on the lifting of pre-audit of government
transactions of national government agencies and government-owned or controlled
corporations. COA denied and repeated its directive to Petitioner to forward payment of
unremitted collections.
Petitioner then submitted to the COA a proposal for the payment of the collections and
the recovery of claims, since the outright payment to the OEA as a prerequisite for the
processing of said claims against the OPSF will cause a very serious impairment of its
cash position.
COA accepted the proposal but prohibited petitioner from further offsetting remittances
and reimbursements for the current and ensuing years. COA then sent a letter to OEA for
disallowances for recovery of financing charges, inventory losses, and sales to
MARCOPPER and ATLAS, while allowing the recovery of product sales or those arising
from export sales.
Petitioner then filed an Omnibus Request for Reconsideration of the said decision with
COA. COA affirmed its decision that CPI (CALTEX) has no authority to claim
reimbursement for this uncollected OPSF impost because LOI 1416, which exempts
distressed mining companies from ‘all taxes, duties, import fees and other charges’ was
issued when OPSF was not yet in existence and could not have contemplated OPSF
imposts at the time of its formulation. Moreover, it is evident that OPSF was not created
to aid distressed mining companies but rather to help the domestic oil industry by
stabilizing oil prices. Hence this petition.
Petitioner claims that the amounts due from it do not arise as a result of taxation because
“P.D. 1956, as amended, did not create a source of taxation; it instead established a
special fund . . .,” And that the OPSF contributions do not go to the general fund of the
state and are not used for public purpose, i.e., not for the support of the government, the
administration of law, or the payment of public expenses. This alleged lack of a public
purpose behind OPSF exactions distinguishes such from a tax.
ISSUE: WON Caltex Philippines can offset its amounts due against its reimbursements
and claims from the OPSF
RULING/S: NO. It is settled 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 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.
We find no merit in petitioner’s 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. There can be no doubt that the oil
industry is greatly imbued with public interest as it vitally affects the general welfare. Any
unregulated increase in oil prices could hurt the lives of a majority of the people and cause
economic crisis of untold proportions. It would have a chain reaction in terms of, among
others, demands for wage increases and upward spiralling of the cost of basic
commodities. The stabilization then of oil prices is one of prime concern which the state,
via its police power, may properly address.
Also, P.D. No. 1956, as amended by E.O. No. 137, explicitly provides that the source of
OPSF is taxation. No amount of semantical juggleries could dim this fact.
We may even further state that technically, in respect to the taxes for the OPSF, the oil
companies merely act as agents for the Government in the latter’s collection since the
taxes are, in reality, passed unto the end-users—the consuming public. In that capacity,
the petitioner, as one of such companies, has the primary obligation to account for and
remit the taxes collected to the administrator of the OPSF. This duty stems from the
fiduciary relationship between the two; petitioner certainly cannot be considered merely
as a debtor.

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