Compania General de Tabacos de Filipinas v.

City of Manila (1963)

Dizon
Tabacalera wants a refund from the City of Manila of its alleged double payment of taxes for its sale of
liquor. It contended that it paid taxes under Ordinance No. 3358 (for LIQUOR), and also under
Ordinance Nos. 3634 etc. (for GENERAL MERCHANDISE, which also includes LIQUOR).
Turns out, the payment under Ordinance No. 3358 was for license fees, not tax. The two are different.
License fees are imposed in the exercise of police power for purposes of regulation, while taxes are
imposed under the taxing power for the purpose of raising revenues. Tabacalera NOT entitled to a
refund.
Ordinance No. 3358 prescribes license fees for the selling of liquor
Ordinance No. 3634, 3301, 3816 imposes taxes for the sale of general merchandise

Compania General de Tabacos (Tabacalera) is both a wholesale and retail liquor dealer and a whole
sale and retail dealer of general merchandise.
As liquor dealer, Tabacalera paid annually the wholesale and retail LIQUOR fees under Ordinance
No. 3358.
In 1954, Ordinances Nos. 3634 and 3816 were passed. The City Treasurer issued regulations saying
that the GENERAL MERCHANDISE taxed under these ordinances includes articles referred to in a
chapter in the National Internal Revenue Code, which includes LIQUOR.
Because of these regulations, Tabacalera included its sales of LIQUOR in its sworn quarterly
declaration from the third quarter of 1954 up to the second quarter of 1957.

BASICALLY: Tabacalera paid for taxes for its sale of GENERAL MERCHANDISE which included LIQUOR
sales (under the 3 Ordinances), and at the same time paid for the license fees of its sale of LIQUOR
(under Ordinance No. 3358)

Tabacalera then learned of an Opinion of the City Treasurer addressed to Sycip, Gorres, Velayo &
Co, whereby the City said that the tax (note: City was mistaken, because it should be license fee)
paid under Ordinance No. 3358 is not included in the tax paid under Ordinances 3634, 3301, 3816.
Because of this, Tabacalera demanded refund from the City Treasurer of P15,208 the amount it
allegedly overpaid as taxes.
The City refused to give a refund.

City says:

Tabacalera is subject to pay the license fees under Ordinance No. 3358, aside from the sales taxes
under Ordinances Nos. 3634, 3301, and 3816.
Even if Tabacalera is not subject to the payment of both, it is not entitled to the refund because:
a. Tabacalera paid voluntarily and without protest
b. If the payment was made by mistake, such mistake arose from law and Tabacaleras
negligence
c. The overpaid amount had been added by Tabacalera to its selling price and passed to the
consumers
d. The said amount had already been spent by the City for improvements and services which
Tabacalera also enjoys
CFI ordered the City Treasurer of Manila to refund the P15, 208.

ISSUE: W/N Tabacalera is entitled to the refund NO. It should pay both the taxes and license fees.
The two are different.
RATIO:
License fees vs. Tax

License fees are commonly called taxes. This is because tax applies generally to all kinds of
exactions which become public funds. It is loosely used to include levies for revenue and levies for
regulatory purposes.
BUT, LEGALLY SPEAKING: a license fee is different from tax
LICENSE FEE imposed in the exercise of police power for purposes of regulation
TAX imposed under the taxing power for the purpose of raising revenues.

In this case:
Ordinance 3358 is one that prescribes municipal license fees for the privilege to engage in the
business of selling liquor or alcoholic beverages. It was enacted by the Municipal Board of Manila
pursuant to its charter power to regulate the sale of liquors.
License fees for regulation are justified, considering that the sale of liquor is potentially
harmful to public health or morals and must be subject to supervision by the State
The other Ordinances which impose taxes on the sale of General Merchandise are revenue
measures enacted by the Municipal Board of Manila by virtue of its power to tax dealers for the
sale of such merchandise.
The SC has previously held that Merchandise refers to all subjects of commerce and traffic;
whatever is usually bought and sold in trade or market; and commercial commodities in general.
Re: OPINION addressed to SGV: Government is not bound by the errors or mistakes committed by
its officers, specially on matters of law.
Decision reversed