Digest Created by: Raul Ronnel P. Barbosa JD-1PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., Plaintiff-Appellant, v. MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., Defendants-Appellees.

 

G.R. No. L-31156. February 27, 1976

PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., Plaintiff-Appellant,

v.

 MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., Defendants-Appellees.

 

 

Facts:

 

Plaintiff filed a complaint with preliminary injunction before the court of first instance of Leyte. The plaintiff prayed that Section 2 of R.A. 2264, known as the Local Autonomy Act, be declared unconstitutional on the grounds of undue delegation taxing power. Plaintiff also wanted to declare Ordinances no. 23 and 27, of the Municipality of Tanauan, Leyte, null and void.

On July 23, 1963, the parties entered into a Stipulation of Facts, the material portions of which state that, first, both Ordinances Nos. 23 and 27 embrace or cover the same subject matter and the production tax rates imposed therein are practically the same, and second that on January 17, 1963, the acting Municipal Treasurer of Tanauan, Leyte, as per his letter addressed to the Manager of the Pepsi-Cola Bottling Plant in said municipality sought to enforce compliance by the latter of the provisions of said Ordinance No. 27, series of 1962.

Ordinance No. 23 states: “from soft drinks producers and manufacturers a tax of one-sixteenth (1/16) of a centavo for every bottle of soft drink corked.  For the purpose of computing the taxes due, the person, firm, company or corporation producing soft drinks shall submit to the Municipal Treasurer a monthly report of the total number or bottles produced and corked during the month”.

Ordinance No. 27 states: “on soft drinks produced or manufactured within the territorial jurisdiction of this municipality a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity." For the purpose of computing the taxes due, the person, firm, company, partnership, corporation or plant producing soft drinks shall submit to the Municipal Treasurer a monthly report of the total number of gallons produced or manufactured during the month.”

Plaintiff argues that the two Ordinances constitute double taxation.

Court of First Instance held that the two ordinances and Sec. 2 of R.A. 2264 constitutional and dismissed the complaint.

 

 

Issues:

 

I. Is Sec. 2 of RA No. 2264 unconstitutional?

II. Do Ordinances Nos. 23 and 27 constitute double taxation?

III. Are ordinances Nos. 23 and 27 unfair?

 

Ruling:

 

I

Tax is the lifeblood of the state. This power is purely legislative and the legislative body cannot delegate such power to the executive and judiciary. The exception to this rule arises when it comes to municipalities. The legislative power to create political corporations for purposes of local governance carries with it power to put the power of taxation in a local government.

Sec. 5, Article 11 of the 1973 Constitution provides that: "Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law."  Sec. 2 of R.A. No. 2264 does not go beyond the legislative power to vest in local governments the power of local taxation.

II

Concept of double taxation: The taxpayer is taxed twice for the same purpose, the same government entity, or jurisdiction.

Double taxation does not become obnoxious in a case where one tax is imposed by the state and another by the city or municipality.

Do Ordinances Nos. 23 and 27 constitute double taxation? Plaintiff argued that the two ordinances cover the same subject matter and the same tax rate. SC, however, held that the two ordinances are not the same because Ordinance No. 23 has been impliedly repealed by Ordinance No. 27. Even the stipulation of facts confirms the fact that the Acting Municipal Treasurer of Tanauan, Leyte sought to compel compliance by the plaintiff-appellant of the provisions of said Ordinance No. 27, series of 1962. The aforementioned admission shows that only Ordinance No. 27, series of 1962 is being enforced by defendants-appellees. Even the Provincial Fiscal, counsel for defendants-appellees admits in his brief "that Section 7 of Ordinance No. 27, series of 1962 clearly repeals Ordinance No. 23 as the provisions of the latter are inconsistent with the provisions of the former."  The two ordinances do not constitute double taxation.

III

“The tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity on all soft drinks, produced or manufactured, or an equivalent of 1-1/2 centavos per case, cannot be considered unjust and unfair.  An increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory. Municipal corporations are allowed much discretion in determining the rates of imposable taxes.  This is in line with the constitutional policy of according the widest possible autonomy to local governments in matters of local taxation, an aspect that is given expression in the Local Tax Code (PD No. 231, July 1, 1973). Unless the amount is so excessive as to be prohibitive, courts will go slow in writing off an ordinance as unreasonable.  Reluctance should not deter compliance with an ordinance such as Ordinance No. 27 if the purpose of the law to further strengthen local autonomy were to be realized.”

The petition is dismissed, Section 2 of RA 2264 is upheld, Ordinance No. 23 is repealed by Ordinance No. 27 and is declared valid.

 

 

Digest Created by: Raul Ronnel P. Barbosa JD-1