Case Summary (G.R. No. L-16619)
Facts
- Tabacalera, licensed under Ordinance No. 3358 as a first-class wholesale and retail dealer of intoxicating liquors, also operated as a wholesale and retail dealer of general merchandise.
- In its sworn quarterly declarations from Q3 1954 to Q2 1957 Tabacalera included liquor sales among its general merchandise sales and paid corresponding wholesale and retail sales taxes imposed by Ordinances Nos. 3634, 3301, and 3816, resulting in the payment at issue (P15,208.00 as the tax portion attributable to liquor sales).
- Ordinances Nos. 3634 and 3816 amended prior ordinances and, via administrative regulation (Exhibit A), treated “general merchandise” to include items enumerated in certain sections of the National Internal Revenue Code, which specifically included liquor.
- In 1954 the City Treasurer communicated, by letter addressed to a private accounting firm, his view that liquor dealers who pay the annual license fee under Ordinance No. 3358 were not also subject to the wholesalers’ and retailers’ taxes under the other ordinances. After learning of that opinion Tabacalera ceased including liquor sales in its later quarterly declarations. On December 3, 1957 Tabacalera formally demanded refund of the taxes previously paid; the demand was denied and Tabacalera instituted the present suit.
Contentions of the Parties
- Tabacalera’s primary contention: Because it already paid the annual license fees prescribed by Ordinance No. 3358 for the privilege of selling liquor, it should not also be subject to the municipal wholesalers’ and retailers’ sales taxes on the same liquor sales; the sales taxes it paid were an overpayment made by mistake and are therefore refundable.
- City’s defenses: (a) Ordinance No. 3358 license fees and the sales taxes are separate obligations and Tabacalera properly paid both; (b) if any overpayment occurred, it was paid voluntarily without protest and resulted from a mistake of law and the plaintiff’s neglect; (c) the tax amounts were passed on to consumers via elevated selling prices; and (d) the sums paid had already been expended for public improvements and services from which Tabacalera benefited.
Legal Principles Applied
- Distinction between license fees and taxes: The Court reiterated the legal difference — license fees are exactions imposed in the exercise of the police power for regulation, whereas taxes are imposed under the taxing power primarily to raise revenue. Although the terms are sometimes used loosely, the legal distinction is significant for determining permissibility of multiple impositions.
- Municipal authority: Under the charter powers vested in the Municipal Board of Manila (as expressed in Section 18 of Republic Act No. 409, cited in the opinion), the Board may fix license fees for regulated callings (e.g., sale of intoxicating liquors) and separately may impose taxes on dealers for purposes of revenue.
- Double taxation doctrine: The Court recognized that the imposition of both a regulatory license fee and a separate tax on the sale of the same article or business is not per se a violation of the rule against double taxation; authorities and texts (e.g., Bentley Gray Dry Goods Co. v. City of Tampa; McQuillin) support the position that both may lawfully be imposed where one is regulatory and the other is a revenue measure.
- Government non‑liability for legal errors of officers: The Court held that erroneous legal advice or opinions by government officers (here, the City Treasurer’s view communicated to an accounting firm) do not bind the government and cannot estop the City from enforcing its ordinances.
Application to the Facts and Court’s Analysis
- Characterization of the two exactions: The Court characterized Ordinance No. 3358 as a license scheme enacted pursuant to the Municipal Board’s power to regulate the sale of intoxicating liquors — a regulatory measure rooted in police power addressing health and morals. Conversely, Ordinances Nos. 3634, 3301, and 3816 were characterized as revenue measures imposing wholesale and retail taxes on sales of general merchandise (and, under their terms and administrative interpretation, inclusive of liquor).
- Effect on Tabacalera’s claim: Because the license fee and the sales taxes served different governmental ends — regulation versus revenue — their concurrent application to the sale of liquor did not constitute unlawful double taxation. The Court therefore concluded that the tax payments by Tabacalera were not an overpayment for which refund was warranted on the basis argued.
- T
Case Syllabus (G.R. No. L-16619)
Citation and Judicial Panel
- Reporter citation: 118 Phil. 380.
- G.R. No.: L-16619.
- Date of decision: June 29, 1963.
- Opinion by: DIZON, J.
- Justices concurring: Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Regala, and Makalintal, JJ.
Parties and Procedural Posture
- Plaintiff and appellee: Compania General de Tabacos de Filipinas (referred to in the decision as Tabacalera).
- Defendants and appellants: City of Manila and its Treasurer, Marcelino Sarmiento (referred to collectively as the City).
- Nature of action: An action filed in the Court of First Instance of Manila by Tabacalera to recover alleged overpaid municipal taxes.
- Relief sought: Refund of the sum identified in the source as P15,208.00 (also once stated as P15,280.00 in the decision) allegedly overpaid as sales taxes on liquor sales for the period from the third quarter of 1954 to the second quarter of 1957, inclusive, under Ordinances Nos. 3634, 3301, and 3816.
- Intermediate proceedings: The Court of First Instance of Manila ordered the City Treasurer of Manila to refund the sum; the present appeal followed to the Supreme Court.
Factual Background — Business Activity and Payments
- Tabacalera is a duly licensed first class wholesale and retail liquor dealer.
- Tabacalera paid annual fixed license fees prescribed by a municipal ordinance (identified in the source variously as Ordinance No. 3358 and, elsewhere in the record, Ordinance No. 3353) for the years 1954 to 1957, inclusive.
- Tabacalera, as a wholesale and retail dealer of general merchandise, also submitted sworn quarterly declarations of wholesale, retail, and grocery sales of general merchandise from the third quarter of 1954 to the second quarter of 1957, inclusive.
- In those sworn statements Tabacalera included its liquor sales for the same period.
- It is not denied that of the taxes Tabacalera paid on all its sales of general merchandise, the sum sought in the action (referred to most consistently as P15,208.00) represents the tax corresponding to the liquor sales in question.
Ordinances, Regulations, and Financial Details
- Ordinance numbers implicated:
- Ordinance No. 3358 (described in the opinion as prescribing fixed license fees for the privilege to engage in the business of selling liquor or alcoholic beverages).
- Ordinance No. 3353 (appears in the record as the ordinance under which Tabacalera paid annually the wholesale and retail liquor license fees).
- Ordinances Nos. 3634, 3301, and 3816 (impose sales taxes on sales of general merchandise, wholesale and retail).
- City Treasurer regulation (marked Exhibit A):
- Issued pursuant to enactments in 1954 (City Ordinance No. 3634, amending City Ordinance No. 3420, and City Ordinance No. 3816, amending City Ordinance No. 3301).
- Declared that the term "general merchandise" as used in the ordinances includes all articles referred to in chapter 1, Sections 123 to 148 of the National Internal Revenue Code.
- Noted that Sections 133–135 of that Code included liquor among the taxable articles.
- Financial figures stated in the record:
- Total value of Tabacalera's liquor sales declared for the relevant quarters: P722,501.09.
- Wholesaler's tax paid under the ordinances for those sales: P13,688.00.
- Retailer's tax paid under the ordinances for those sales: P1,520.00.
- Total taxes paid on liquor sales under the three ordinances: P15,208.00 (this total is the principal sum sought to be recovered).
Chronology of Relevant Events
- 1954: City Ordinance No. 3634 and City Ordinance No. 3816 were passed, amending prior ordinances and prompting issuance of a treasurer's regulation (Exhibit A) interpreting "general merchandise" to include liquor.
- 1954: The City Treasurer addressed a letter to Messrs. Sycip, Gorres, Velayo and Co., an accounting firm, expressing the view that liquor dealers paying annual wholesale and retail fixed tax under City Ordinance No. 3368 (source also references 3358/3353 elsewhere) are not subject to wholesalers' and retailers' taxes under City Ordinances Nos. 3634, 3301, and 3816.
- Following receipt/learning of that opinion, Tabacalera stopped including liquor sales in its quarterly sworn declarations under the three ordinances.
- December 3, 1957: Tabacalera addressed a letter to the City Treasurer demanding refund of the alleged overpayment.
- The claim was disallowed by the City, and Tabacalera instituted the present action in the Court of First Instance of Manila, which ordered refund; the City appealed to the Supreme Court.
Legal Issues Presented
- Whether the municipal license fees paid by Tabacalera under Ordinance No. 3358 (or as elsewhere cited) for the privilege of engaging in the sale of liquor precluded the imposition or collection of municipal wholesale and retail sales taxes under Ordinances Nos. 3634, 3301, and 3816 on the same liquor sales.
- Whether Tabacalera is entitled to a refund of the taxes it paid under the three ordinances on the ground that such payments were an overpayment made by mistake because it already paid the license fees.
- Ancillary issues asserted by the City as defenses to refund:
- Payment was voluntary and without protest.
- Any mistake was a mistake of law arising from plaintiff's neglect of duty.
- The amount was added to the selling price and passed on to consumers.
- The amount had already