GR 31156; (February 1976) (Digest)
G.R. No. L-31156 February 27, 1976
PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant, vs. MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant-appellees.
FACTS
Pepsi-Cola Bottling Company of the Philippines, Inc. filed a complaint challenging the constitutionality of Section 2 of the Local Autonomy Act ( Republic Act No. 2264 ) and the validity of Municipal Ordinances Nos. 23 and 27, series of 1962, enacted by Tanauan, Leyte. Ordinance No. 23 imposed a tax of 1/16 of a centavo per bottle of soft drink corked, while Ordinance No. 27 levied one centavo per gallon of soft drinks produced. Both ordinances required monthly production reports and denominated the levy as a “municipal production tax.” The Municipal Treasurer sought to enforce Ordinance No. 27 against Pepsi-Cola. The Court of First Instance of Leyte upheld the constitutionality of the law and the ordinances, dismissed the complaint, and ordered Pepsi-Cola to pay the due taxes.
ISSUE
The primary issues were: (1) whether Section 2 of R.A. No. 2264 constituted an undue delegation of taxing power; (2) whether Ordinances Nos. 23 and 27 resulted in double taxation or imposed percentage/specific taxes; and (3) whether the ordinances were unjust and unfair.
RULING
The Supreme Court affirmed the lower court’s decision. On the delegation of power, the Court ruled that the power of taxation, while inherently legislative, may be validly delegated to municipal corporations in matters of local concern. This delegation is a recognized exception to the non-delegation doctrine, supported by immemorial practice and the principle that the legislative power to create local governments implies the authority to confer taxing powers. The Court cited the then-new Constitution (1973), which explicitly granted local governments the power to create their own revenue sources. The delegation under R.A. No. 2264 was not invalid for being plenary; the legislature may delegate such measure of taxing power as it deems expedient, allowing municipalities to tax subjects the state itself might not tax for broader purposes.
Regarding double taxation, the Court found no constitutional prohibition against it. The due process clause does not forbid double taxation. The ordinances, though covering the same subject matter, were not simultaneously enforced; the municipality sought to enforce only Ordinance No. 27. The taxes imposed were neither percentage nor specific taxes but local production taxes duly authorized under the delegated power. Finally, the Court held the ordinances were not unjust or unfair. For a tax to violate due process, it must be for a private purpose, extraterritorial, or employ arbitrary/oppressive assessment methods. The levied tax was for a public purpose, observed uniformity, and was within the municipality’s jurisdiction, thus satisfying due process requirements. The claim of oppressiveness based on the tax being a significant cost was insufficient to invalidate the ordinance.