1

since it already paid the license fees aforesaid, the sales taxes paid
G.R. No. L-16619 by it — amounting to the sum of P15,208.00 — under the three
ordinances mentioned heretofore is an overpayment made by
mistake, and therefore refundable.
Republic of the Philippines
SUPREME COURT The City, on the other hand, contends that, for the permit issued to
Manila it granting proper authority to "conduct or engage in the sale of
alcoholic beverages, or liquors" Tabacalera is subject to pay the
EN BANC license fees prescribed by Ordinance No. 3358, aside from the
sales taxes imposed by Ordinances Nos. 3634, 3301, and 3816;
that, even assuming that Tabacalera is not subject to the payment
G.R. No. L-16619             June 29, 1963 of the sales taxes prescribed by the said three ordinances as
regards its liquor sales, it is not entitled to the refund demanded
COMPAÑIA GENERAL DE TABACOS DE for the following reasons:.
FILIPINAS, plaintiff-appellee,
vs. (a) The said amount was paid by the plaintiff
voluntarily and without protest;
CITY OF MANILA, ET AL., defendants-appellants.
(b) If at all the alleged overpayment was made
Ponce Enrile, Siguion Reyna, Montecillo and Belo for by mistake, such mistake was one of law and
plaintiff-appellee. arose from the plaintiff's neglect of duty; .
City Fiscal Hermogenes Concepcion, Jr. and Assistant
City Fiscal M. T. Reyes for defendants-appellants. (c) The said amount had been added by the
plaintiff to the selling price of the liquor sold by
it and passed to the consumers; and
DIZON, J.:
(d) The said amount had been already expended
Appeal from the decision of the Court of First Instance of Manila
by the defendant City for public improvements
ordering the City Treasurer of Manila to refund the sum of
and essential services of the City government,
P15,280.00 to Compania General de Tabacos de Filipinas.
the benefits of which are enjoyed, and being
enjoyed by the plaintiff.
Appellee Compania General de Tabacos de Filipinas —
hereinafter referred to simply as Tabacalera — filed this action in
It is admitted that as liquor dealer, Tabacalera paid annually the
the Court of First Instance of Manila to recover from appellants,
wholesale and retail liquor license fees under Ordinance No. 3358.
City of Manila and its Treasurer, Marcelino Sarmiento — also
In 1954, City Ordinance No. 3634, amending City Ordinance No.
hereinafter referred to as the City — the sum of P15,280.00
3420, and City Ordinance No. 3816, amending City Ordinance
allegedly overpaid by it as taxes on its wholesale and retail sales of
No. 3301 were passed. By reason thereof, the City Treasurer
liquor for the period from the third quarter of 1954 to the second
issued the regulations marked Exhibit A, according to which, the
quarter of 1957, inclusive, under Ordinances Nos. 3634, 3301, and
term "general merchandise as used in said ordinances, includes all
3816.
articles referred to in Chapter 1, Sections 123 to 148 of the
National Internal Revenue Code. Of these, Sections 133-135
Tabacalera, as a duly licensed first class wholesale and retail included liquor among the taxable articles. Pursuant to said
liquor dealer paid the City the fixed license fees prescribed by regulations, Tabacalera included its sales of liquor in its sworn
Ordinance No. 3358 for the years 1954 to 1957, inclusive, and, as quarterly declaration submitted to the City Treasurer beginning
a wholesale and retail dealer of general merchandise, it also paid from the third quarter of 1954 to the second quarter of 1957, with
the sales taxes required by Ordinances Nos. 3634, 3301, and a total value of P722,501.09 and correspondingly paid a
3816.1äwphï1.ñët wholesaler's tax amounting to P13,688.00 and a retailer's tax
amounting to P1,520.00, or a total of P15,208.00 — the amount
In its sworn statements of wholesale, retail, and grocery sales of sought to be recovered.
general merchandise from the third quarter of 1954 to the second
quarter of 1957, inclusive, Tabacalera included its liquor sales of It appears that in the year 1954, the City, through its treasurer,
the same period, and it is not denied that of the taxes it paid on all addressed a letter to Messrs. Sycip, Gorres, Velayo and Co., an
its sales of general merchandise, the sum of P15,280.00 subject to accounting firm, expressing the view that liquor dealers paying the
the action represents the tax corresponding to the liquor sales annual wholesale and retail fixed tax under City Ordinance No.
aforesaid. 3358 are not subject to the wholesale and retail dealers' taxes
prescribed by City Ordinances Nos. 3634, 3301, and 3816. Upon
Tabacalera's action for refund is based on the theory that, in learning of said opinion, appellee stopped including its sales of
connection with its liquor sales, it should pay the license fees liquor in its quarterly sworn declarations submitted in accordance
prescribed by Ordinance No. 3358 but not the municipal sales with the aforesaid City Ordinances Nos. 3634, 3301, and 3816,
taxes imposed by Ordinances Nos. 3634, 3301, and 3816; and and on December 3, 1957, it addressed a letter to the City
 2

Treasurer demanding refund of the alleged overpayment. As the Appellee's contention that the City is repudiating its previous view
claim was disallowed, the present action was instituted. — expressed by its Treasurer in a letter addressed to Messrs.
Sycip, Gorres, Velayo & Co. in 1954 — that a liquor dealer who
The term "tax" applies — generally speaking — to all kinds of pays the annual license fee under Ordinance No. 3358 is exempted
exactions which become public funds. The term is often loosely from the wholesalers and retailers taxes under the other three
used to include levies for revenue as well as levies for regulatory ordinances mentioned heretofore is of no consequence. The
purposes. Thus license fees are commonly called taxes. Legally government is not bound by the errors or mistakes committed by
speaking, however, license fee is a legal concept quite distinct its officers, specially on matters of law.
from tax; the former is imposed in the exercise of police power for
purposes of regulation, while the latter is imposed under the taxing Having arrived at the above conclusion, we deem it unnecessary to
power for the purpose of raising revenues (MacQuillin, Municipal consider the other legal points raised by the City.
Corporations, Vol. 9, 3rd Edition, p. 26).
WHEREFORE, the decision appealed from is reversed, with the
Ordinance No. 3358 is clearly one that prescribes municipal result that this case should be, as it is hereby dismissed, with costs.
license fees for the privilege to engage in the business of selling
liquor or alcoholic beverages, having been enacted by the Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera,
Municipal Board of Manila pursuant to its charter power to fix Paredes, Regala and Makalintal, JJ., concur.
license fees on, and regulate, the sale of intoxicating liquors, Bengzon, C.J. and Concepcion, J., took no part.
whether imported or locally manufactured. (Section 18 [p],
Republic Act 409, 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.)

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], Republic Act No. 409, as
amended.).

Under Ordinance No. 3634 the word "merchandise" as employed

therein clearly includes liquor. Aside from this, we have held in
City of Manila vs. Inter-Island Gas Service, Inc., G.R. No. L-8799,
August 31, 1956, 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.

That Tabacalera is being subjected to double taxation is more

apparent than real. As already stated what is collected under
Ordinance No. 3358 is a license fee for the privilege of engaging
in the sale of liquor, a calling in which — it is obvious — 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 mentioned heretofore
impose is a tax for revenue purposes based on the sales made of
the same article or merchandise. It is already settled in this
connection that 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). This is precisely the case with the ordinances involved in the
case at bar.
3