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 arenot for a public purpose because they go to a special fund of thegovernment. 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.