Compania de
Tabacos v. City of Manila
Facts:
Compania General de Tabacos de Filipinas (Tabacalera) paid the City of Manila
the fixed license fees prescribed by Ordinance 3358 for the years 1954 to 1957.
In 1954, City Ordinance 3634 and 3816 were passed; where the term “general
merchandise” found therein included all articles in Sections 123 to 148 of the
Tax Code (thus, also liquor under Sedctions 133 to 135). The Tabacalera paid
its wholesaler’s and retailer’s taxes. In 1954, the City Treasurer addressed a
letter to an accounting firm, expressing the view that liquor dealers paying
the annual wholesale and retail fixed tax under Ordinance 3358 are not subject
to the wholesale aand retail deaklers’ taxes prescribed by City Ordinances
3634, 3301, and 3816. The Tabacalera, upon learning of said stopped including
quarterly sworn declaratons required by the latter ordinances, and in 1957,
demanded refunde of the alleged overpayment. The claim was disallowed.
Issue:
Whether there is a distinction between Ordinance 3358 and Ordinances 3634, 3301
and 3816, to prevent refund to the company
Held:
Yes. Generally, the term “tax” applies to all kinds of exactions which become
public funds. Legally, however, a license fee is a legal concept quite distinct
from tax: the former is imposed in the exercise of police power for purposes of
regulation, while the latter is imposed under the taxing power for the purpose
of raising revenues. Ordinance 3358 prescribes municipal license fees for the
privilege to engage in the business of selling liquor or alcohol beverages;
considering that the sale of intoxicating 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 authorized to act in the premises.
On the other hand, Ordinances 3634, 3301 and 3816 imposed taxes on the sales of
general merchandise, wholesale or retail, and are revenue measures enacted by
the Municipal Board of Manila.
Both a license fee and a tax may be imposed on the
same business or occupation, or for selling the same article, without it being
in violation of the rule against double taxation. The contrary view of the
Treasurer in its letter is of no consequence as the government is not bound by
the errors or mistakes committed by its officers, specially on matters of law.
The company, thus, is not entitled to refund.
Facts: Compañia
General de Tabacos de Filipinas (Tabacalera), as a duly licensed first class
wholesale and retail liquor dealer paid the City the fixed license fees
prescribed by Ordinance 3358 for the years 1954 to 1957, inclusive. In 1954,
City Ordinance 3634, amending City Ordinance 3420, and City Ordinance 3816,
amending City Ordinance 3301 were passed. By reason thereof, the City Treasurer
issued the regulations, according to which, the term “general merchandise”, as
used in said ordinances, includes all articles referred to in chapter 1,
Sections 123 to 148 of the National Internal Revenue Code. Of these, Section
133-135 included liquor among the taxable articles. Pursuant to said
regulations, Tabacalera included its sales of liquor in its sworn quarterly
declaration submitted to the City Treasurer beginning from the third quarter of
1954 to the second quarter of 1957, with a total value of P722, 501.09 and
correspondingly paid a wholesaler’s tax amounting to P13, 688 and a retailer’s
tax amounting to P1,520, or a total of P15,208. In 1954, the City, through its
treasurer, addressed a letter to Messrs. Sycip, Gorres, Velayo and Co., an
accounting firm, expressing the view that liquor dealers paying the annual
wholesale and retail fixed tax under City Ordinance 3358 are not subject to the
wholesale and retail dealers’ taxes prescribed by City Ordinances 3634, 3301,
and 3816. Upon learning of said opinion, the Tabacalera stopped including its
sales of liquor in its quarterly sworn declarations submitted in accordance
with the City Ordinances 3634, 3301, and 3816, and on 3 December 1957, it
addressed a letter to the City Treasurer demanding refund of the alleged
overpayment. As the claim was disallowed, the Tabacalera filed the action in
the CFI Manila to recover from the City of Manila and its Treasurer, Marcelino
Sarmiento the sum of P15,280.00 allegedly overpaid by it as taxes on its
wholesale and retail sales of liquor for the period from the third quarter of
1954 to the second quarter of 1957, inclusive, under Ordinances 3634, 3301, and
3816. The CFI Manila ordered the City Treasurer of Manila to refund the sum of
P15,280 to Compañia General de Tabacos de Filipinas. Hence, the appeal.
The Supreme Court reversed the decision appealed
from, with the result that the case should be dismissed, with costs.
1. Meaning
of “tax”; Distinction of taxes and license fee
The term “tax” applies —
generally speaking — to all kinds of exactions 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, however, license fee is a legal concept quite distinct from tax; the
former is imposed in the exercise of police power for purposes of regulation,
while the latter is imposed under the taxing power for the purpose of raising
revenues (MacQuillin, Municipal Corporations, Vol. 9, 3rd Edition, p. 26).
2.
Ordinance 3358 a valid regulatory enactment for the sale of intoxicating
liquors
Ordinance 3358 is clearly
one that prescribes municipal license fees for the privilege to engage in the
business of selling liquor or alcoholic beverages, having been enacted by the
Municipal Board of Manila pursuant to its charter power to fix license fees on,
and regulate, the sale of intoxicating liquors, whether imported or locally
manufactured. (Section 18 [p], RA as amended). The license fees imposed by it
are essentially for purposes of regulation, and are justified, considering that
the sale of intoxicating liquor is, potentially at least, harmful to public
health and morals, and must be subject to supervision or regulation by the
state and by cities and municipalities authorized to act in the premises.
(MacQuillin, supra, p. 445).
3.
Ordinance 3634, 3301 and 316 are revenue measures
On the other hand, it is
clear that Ordinances Nos. 3634, 3301, and 3816 impose taxes on the sales of
general merchandise, wholesale or retail, and are revenue measures enacted by
the Municipal Board of Manila by virtue of its power to tax dealers for the
sale of such merchandise. (Section 10 [o], RA 409, as amended.)
4.
Merchandise includes liquor; Merchandise defined
Under Ordinance 3634 the
word “merchandise” as employed therein clearly includes liquor. Aside from
this, it was held in City of Manila vs. Inter-Island Gas Service Inc. (99 Phil.
847), that the word “merchandise” refers to all subjects of commerce and traffic;
whatever is usually bought and sold in trade or market; goods or wares bought
and sold for gain; commodities or goods to trade; and commercial commodities in
general.
5.
Tabacalera not subject to double taxation; License fee and tax may be imposed
on same subject matter
That Tabacalera is being
subjected to double taxation is more apparent than real. What is collected
under Ordinance 3358 is a license fee for the privilege of engaging in the sale
of liquor, a calling in which not anyone or anybody may freely engage,
considering that the sale of liquor indiscriminately may endanger public health
and morals. On the other hand, what the three ordinances impose is a tax for
revenue purposes based on the sales made of the same article or merchandise.
Both a license fee and a tax may be imposed on the same business or occupation,
or for selling the same article, this not being in violation of the rule
against double taxation (Bentley Gray Dry Goods Co., vs. City of Tampa 137 Fla.
641, 188 SO. 758; MacQuillin, Municipal Corporations, Vol. 9, 3rd Edition, p.
83).
6.
Government not bound by errors of its officers, specially on matters of law
The contention that the
City is repudiating its previous view, expressed by its Treasurer in a letter
addressed to Messrs. Sycip, Gorres, Velayo & Co. in 1954, that a liquor
dealer who pays the annual license fee under Ordinance 3358 is exempted from
the wholesalers and retailers taxes under the other three ordinances is of no
consequence. The government is not bound by the errors or mistakes committed by
its officers, specially on matters of law.
Facts: 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" applies—generally speaking—to 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.
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