CALTEX vs COMMISSION ON AUDIT (208 SCRA 236) INHERENT LIMITATIONS: PURPOSE MUST BE PUBLIC PURPOSE FACTS: The Oil

Price Stabilization Fund (OPSF) was created under Sec. 8, PD 1956, as amended by EO 137 for the purpose of minimizing frequent price changes brought about by exchange rate adjustments. It will be used to reimburse the oil companies for cost increase and possible cost under recovery incurred due to reduction of domestic prices. On February 2 1998, COA sent a letter to Caltex directing it to remit its collection to the Oil Price Stabilization Fund (OPSF) excluding that unremitted for 1986 and 188 of the additional tax petroleum authorized under Section 8 of PD 1956 and that the pending such remittance, all its claims for reimbursement form the Oil Price Stabilization Fund shall be held abeyance. Caltex requested Commission on Audit for an early release of its reimbursement certificates which the latter denied.COA disallowed recover of financing charges, inventory losses and sales to marcopper and atlas but allowed the recovery of product sale or those arising from export sales. Caltex contended that Department of Finance issued Circular No. 4-88 allowing reimbursement and denial of claim for reimbursement would be inequitable. Amounts due do not arise as a result of taxation since PD 1956 did not create a source of taxation, it instead established a special fund. This lack of public purpose behind OPSF exactions distinguishes it from tax.

ISSUE: Whether or not the OPSF contributios are not for public purpose?

HELD:

The court find no merit in Caltex's contention that the Oil Price Stabilization Fund 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 existenceof 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 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 thesource of OPSF is taxation. No amount of semantical juggleries could dim this fact.