FACTS
The Commission on Audit (COA) ordered Caltex Philippines to remit to the OPSF its collection of additional tax on petroleum products as authorized under P.D. 1956. Pending such remittance, all CPI’s claims for reimbursement would be held in abeyance, too, and Caltex should desist from further offsetting the taxes it collected against its own outstanding claims for reimbursement.
Caltex argued that it should be allowed to offset its claims from the OPSF against its contributions to the fund as this had been allowed in the past. But COA insisted that there can be 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.
RULING
The Supreme Court ruled in favor of COA.
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 mutual 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. Too, Caltex's position that the OPSF contributions are not for public purpose is untenable.
The SC said that axation 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.
