FACTS
For the period between 1947 and 1956, Mambulao Lumber Company paid the Government a total of P 9,127.50 as reforestation charges. The company, however, was claiming that the sum of 9,127.50, not having been used in the reforestation of the area covered by its license, the same is refundable to it or may be applied in compensation of P 4,802.37 due from it as forest charges.
RULING
The Supreme Court ruled in favor of the Government.
Mambulao Lumber Company and the Republic are not mutually creditors and debtors of each other because the Government does not owe anything to the company.
Consequently, the law on compensation is inapplicable. The amount paid by a licensee as reforestation charges is in the nature of a tax which forms a part of the Reforestation Fund, payable by him irrespective of whether the area covered by his license is reforested or not.
The SC held that no set-off is admissible against demands for taxes levied for general or local governmental purposes.
