Compania General de Tabacos de Filipinas vs.

City of Manila
Tax v. License fee
Summary: Petitioner Tabacalera filed an action before CFI Manila to recover
the sum of P15, 280 allegedly overpaid by it as taxes on the wholesale and
retail sales of liquor for the period from the 3rd quarter of 1954 to the 2nd
quarter of 1957 pursuant to Ordinances Nos. 3634, 3301 and 3816

Tabacalera is a wholesale and retail liquor dealer and is paying the

license fees prescribed by Ordinance 3358 from 1954-1957 and also
a wholesale and retail dealer of general merchandise and is paying
sales taxes required by Ordinance 3634, 3301 and 3816

Tabacalera included its liquor sales in its sworn statements of

wholesale, retail and grocery sales of general merchandise.

In 1954, the City Treasurer addressed a letter to an accounting firm,

expressing the view that liquor dealers who pays the annual license
fees under Ordinance 3358 is exempted from wholesale and retailers
taxes under City Ordinances 3634, 3301, and 3816.

The Tabacalera, upon learning of such stopped including quarterly

sworn declarations required by the latter ordinances, and in 1957,
demanded refund of the alleged overpayment.

Petitioner argued: in connection with its liquor sales it should pay the
license fees but not the municipal sales taxes and since it already paid the
license fees, the sales taxes paid by it amounting to P15,208 under the 3
ordinances in an overpayment by mistake and should be refundable
City of Manila argued: Tabacalera should pay the license fees prescribed by
Ordinance 3358 as well as the sales taxes imposed by the 3 other ordinances.
And assuming it should not pay the sales taxes with regard its liquor sales, it
is not entitled to refund because, it voluntarily paid the amount, overpayment
was mistake of law due to negligence and the government for public
improvements and services already used the amount
ISSUE: Is petitioner entitled to refund? NO.

HELD:

The term "tax" appliesgenerally speakingto all kinds of exaction

which become public funds. The term is often loosely used to include
levies for revenue as well as levies for regulatory purposes. Thus
license fees are commonly called taxes.
Legally speaking, license fee is a legal concept quite distinct from
tax
License fee is imposed in the exercise of police power for purposes
of regulation
Tax is imposed under the taxing power for the purpose of raising
revenues
The Ordinance 3358 prescribes municipal license fees for the
privilege of engaging in business of selling liquor and was enacted
by Municipal Board of Manila pursuant to its charger power to fix
license fees and regulate the sales of intoxicating liquor
(imported/local)
The license fees imposed is justified and is for its regulation because
such fee is a license for the privilege of engaging in such business
because not anyone or anybody may freely engage in such and that
the liquor is potentially harmful to public health and morals, and
must be subject to supervision or regulation by the state and by cities
and municipalities
As for the sales taxes on general merchandise they are revenue
measures by respondents by virtue of its power to tax dealers for the
sale of such merchandise
Both a license fee and tax may be imposed on the same business or
occupation or for selling same article without violating rule on
double taxation
Note:

Merchandise - all subjects of commerce and traffic; whatever sold

and bought in trade or market goods bought and sold for gain;
commodities to trade; commercial commodities in general
Regarding the letter by the treasurer that a liquor dealer who pays the
annual license fee is exempted from sales taxes is without merit,
because the government is not bound by the errors by its officers.