Caltex v Commission on Audit (this doesnt cover all the issues, pls read the digest gen made/the

original if you wanna be super sure) The Oil Price Stabilization Fund (OPSF) was created by PD1958, amended by EO 137, for the purpose of minimizing frequent price changes brought about by exchange rate adjustments and/or changes in world market prices of crude oil and imported petroleum products. It was to be sourced from tax collections. COA sent a letter to Caltex, directing it to remit its collection to the OPSF, excluding that unremitted for 1986 and 1988 of the additional tax on petroleum products authorized under Section 8 of PD 1956; and that pending such remittance, all its claims for reimbursement from the OPSF shall be held in abeyance. Caltex requested COA for an early release of its reimbursement certificates from the OPSF. It invoked in support of such COA Circular No. 89-299 on the lifting of pre-audit of government transactions of national government agencies and GOCCs. However, COA denied this, and repeated its earlier directive to Caltex to forward payment of its unremitted collections to the OPSF. Caltex ten submitted a proposal to COA for the payment and the recovery of claims. COA approved the proposal but prohibited Caltex from further offseting remittances and reimbursements for the current and ensuing years. Caltex moved for reconsideration. I:1) W/n Caltex can claim for reimbursement of under recovery arising from sales to NAPOCOR -YES 1) W/n Caltex could be reimbursed on its sales to ATLAS and MARCOPPER-NO 2) W/n the amounts due from Caltex to the OPSF may be offsetted against Caltex outstanding claims from said funds-NO R: NO. 1) The COA admits in their Comment that under recovery arising from sales to NPC are reimbursable because NPC was granted full exemption from the payment of taxes; to prove this, COA traces the laws providing for such exemption. The last law cited is the Fiscal Incentives Regulatory Board's Resolution No. 17-87 of 24 June 1987 which provides, in part, "that the tax and duty exemption privileges of the National Power Corporation, including those pertaining to its domestic purchases of petroleum and petroleum products . . . are restored effective March 10, 1987." In a Memorandum issued on 5 October 1987 by the Office of the President, NPC's tax exemption was confirmed and approved. Hence, Caltex can recover its claim arising from sales of petroleum products to the National Power Corporation. 2) With respect to its claim for reimbursement on sales to ATLAS and MARCOPPER, Caltex relies on Letter of Instruction (LOI) 1416 w/c ordered the suspension of payments of all taxes, duties, fees and other charges, whether direct or indirect, due and payable by the copper mining companies in distress to the national government. Pursuant to this LOI, Minister of Energy Velasco issued a Memorandum Circular w/c advised oil companies that ATLAS and MARCOPPER mining corps are among those declared to be in distress. COA denied such claim based on the fact that Caltex has no authority to claim reimbursement for the uncollected impost because LOI-1416 was issued when the OPSF was not yet existing and could not have contemplated OPSF imposts at the time of its

formulation. The LOI was also never published in the Official Gazette so it has no force and effect. The SC said that even granting arguendo that the LOI has force and effect, Caltexs claim must still fail. Tax exemptions as a general rule are construed strictly against the grantee and liberally in favor of the taxing authority. The burden of proof rests upon the party claiming exemption to prove that it is in fact covered by the exemption so claimed. The party claiming exemption must therefore be expressly mentioned in the exempting law or at least be within its purview by clear legislative intent. In this case, CALTEX failed to prove that it is entitled, as a consequence of its sales to ATLAS and MARCOPPER, to claim reimbursement from the OPSF under LOI 1416. Though LOI 1416 may suspend the payment of taxes by copper mining companies, it does not give petitioner the same privilege with respect to the payment of OPSF 3) 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 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