USA College of Law

NUÑEZ 1-E
Case Name Compañia General de Tabacos de Filipinas vs. City of Manila
Topic Taxation
Case No. | Date L-16619 |June 29, 1963
Ponente DlZON, J.
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. Both a license fee and
Doctrine
a tax may be imposed on the same business or occupation, or for selling the same article, this
not being in violation of the rules against double taxation.

RELEVANT FACTS
• Petitioner Compañia (aka Tabacalera), a wholesale and retail liquor dealer, paid both the license fees (in acc.
w/ Ordinance No. 3358) and sales tax (required by Ordinances Nos. 3634, 3301 and 3816) for the years 1954
to 1957.
• After the City, through its treasurer, issued an opinion claiming that liquor dealers paying the license fee
are not liable to pay the sales tax required by the 3 ordinances concerned, Tabacalera filed for a refund of
its sales tax (impliedly contending that he is being subjected to double taxation).

ISSUE: WON Tabacalera is entitled to the refund constituting the sales tax it paid for liquor sold, despite having
paid the appropriate fixed license fees
RULING:
No. The term “tax” applies – generally speaking – to all kinds of exactions which become public funds, and is loosely
used to include levies for revenue as well as levies for regulatory purposes. Legally speaking, however, license fee is
a legal concept quite distinct form 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.

That Tabacalera is being subjected to double taxation is untrue. 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 not anyone or anybody may freely
engage, considering that the sale of liquor indiscriminately may endanger public health and morals.

On the other hand, Ordinances Nos. 3634, 3301 and 3816 impose 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 rules
against double taxation.

RULING
DECISION REVERSED AND CASE DISMISSED.