philex mining vs

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Philex Mining vs. CIR

GR 125704, August 28, 1998

Facts:

Philex Mining Corporation assails the decision of the court of appeals which

affirmed the decision of the court of tax appeals ordering philex to pay its excise tax liability

philex refused to pay and contended it has pending claims for vat input credit or refund

against the government which should be made compensate or set-off its tax liability.

Issue: can tax be subject for set-off?

Ruling:

No. tax cannot be the subject for compensation for simple reason that the

government and the tax payer are not mutual creditors and debtors of each other. Debtsare due in the government in its corporate capacity while taxes are due to the government

in its sovereign capacity. A tax payer cannot refuse to pay his taxes when they fall due

simply because he has a claim against the government that the collection of the tax is

contingent on the result of the law suit it filed against the government.

Compania General de Tabacos de Filipinas vs. Manila [G.R. No. L-

16619. June 29, 1963.]

En Banc, Dizon (J): 8 concurring, 2 took no part

Facts: Compaia 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


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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

wholesalers tax

amounting to P13,688 and a retailers tax amounting to P1,520, or a total of P15,208. In1954, 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 Compaia 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


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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 intoxicatingliquors, 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.)

Taxation Law I, 2003 ( 49 )Haystacks (Berne Guerrero)

4. Merchandise includes liquor; Merchandise defined

Under Ordinance 3634 the word merchandise as employed therein clearly includes liquor.

Aside


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officers, specially on matters of law.

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