G.R. No. L-18349, July 30, 1966
THE MUNICIPALITY OF JOSE PANGANIBAN, PROVINCE OF CAMARINES NORTE, ETC., plaintiff and appellant, vs. THE SHELL COMPANY OF THE PHILIPPINES, LTD., defendant and appellee.

FACTS

The Municipality of Jose Panganiban enacted Ordinances Nos. 3 and 7 (series of 1956 and 1957) pursuant to Republic Act No. 1435 , which authorized municipal councils to levy an additional tax not exceeding 25% of the rates fixed in Sections 142 and 145 of the National Internal Revenue Code on manufactured oils sold or distributed within their limits. Based on these ordinances, the municipality assessed Shell Company a tax liability of P46,531.39 for sales of gasoline, lubricating oil, and diesoline to Philippine Iron Mines, Inc. from October 1, 1956, to May 17, 1960. The sales were perfected outside the municipality, and deliveries were made either by Shell’s lorries or through a common carrier (A.L. Ammen Transportation Co.) to Larap within the municipality. Shell had no depot, establishment, or place of business in the municipality. Shell resisted payment, arguing that Republic Act No. 1435 was unconstitutional for embracing more than one subject (amending the Internal Revenue Code and granting taxing power to local governments) contrary to Section 21, Article VI of the Constitution , and that even if constitutional, the levy was illegal as transactions were consummated outside the municipality. The Court of First Instance of Manila declared the law unconstitutional and dismissed the complaint.

ISSUE

1. Whether Republic Act No. 1435 is unconstitutional for violating the constitutional provision that no bill shall embrace more than one subject, which must be expressed in its title.
2. Whether the municipality could levy the tax on sales of manufactured oils where the sales were perfected outside but delivered within its territorial jurisdiction.

RULING

1. Republic Act No. 1435 is constitutional. The Act deals with only one subject: increasing the Highway Special Fund. The amendments to the Internal Revenue Code and the grant of taxing power to local governments are not separate subjects but means to achieve the single policy of augmenting the Highway Special Fund. The title (“An Act To Provide Means For Increasing Highway Special Fund”) sufficiently expresses this subject. The reference to the “Road and Bridge Fund” in Section 5 does not render the title defective, as the Highway Special Fund and Road and Bridge Fund are directly related—50% of the Highway Special Fund is allocated to the Road and Bridge Fund under Republic Act No. 917 .
2. The tax was properly levied by the municipality. The taxable situs for the sales tax is the place of delivery, not the place where the sale was perfected. Following the precedent in Shell v. Sipocot (G.R. No. L-12680, March 20, 1959), a sale is consummated upon delivery, and the municipality where delivery occurs has the authority to tax. Here, deliveries were made within the Municipality of Jose Panganiban, making the sales subject to its tax ordinances. Shell’s argument that the Sipocot ruling did not explicitly authorize taxation by the municipality of delivery was noted but found unpersuasive, given Shell’s prior reliance on that ruling.
The decision of the lower court was reversed. Shell was ordered to pay the tax claims, plus legal interest from the filing of the complaint and costs.