Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                

PEPSI Cola Vs Tanauan

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 2

PEPSI-COLA vs TANAUAN

FACTS:

Plaintiff-appellant Pepsi-Cola commenced a complaint with preliminary injunction to declare


Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, unconstitutional
as an undue delegation of taxing authority as well as to declare Ordinances Nos. 23 and 27
denominated as "municipal production tax" of the Municipality of Tanauan, Leyte, null and void.
Ordinance 23 levies and collects from soft drinks producers and manufacturers a tax of one-
sixteenth (1/16) of a centavo for every bottle of soft drink corked, and Ordinance 27 levies and
collects 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. Aside
from the undue delegation of authority, appellant contends that it allows double taxation, and that
the subject ordinances are void for they impose percentage or specific tax.

ISSUE:

Are the contentions of the appellant tenable?

HELD:

No. On the issue of undue delegation of taxing power, the rule is that the power of taxation
is purely legislative and cannot be delegated. Exception to this, however, lies in the case of
municipal corporations wherein legislative powers may be delegated to local governments in
respect of matters of local concern. By necessary implication, the legislative power to create
political corporations for purposes of local self-government carries with it the power to confer on
such local governmental agencies the power to tax. Moreover, under the constitution, local
governments are granted the autonomous authority to create their own sources of revenue and to
levy taxes. The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant’s
pretense, would not suffice to invalidate the said law as confiscatory and oppressive.

The said ordinances of are not confiscatory or oppressive. The taking of property without
due process of law may not be passed over under the guise of taxing power. This is not to say
though that the constitutional injunction against deprivation of property without due process of law
may be passed over under the guise of the taxing power, except when the taking of the property is
in the lawful exercise of the taxing power, as when (1) the tax is for a public purpose; (2) the rule
on uniformity of taxation is observed; (3) either the person or property taxed is within the
jurisdiction of the government levying the tax; and (4) in the assessment and collection of certain
kinds of taxes notice and opportunity for hearing are provided. Due process does not require that
the property subject to the tax or the amount of tax to be raised should be determined by judicial
inquiry, and a notice and hearing as to the amount of the tax and the manner in which it shall be
apportioned are generally not necessary to due process of law.

There is no validity to the assertion that delegated authority can be declared unconstitutional
on the theory of double taxation. It must be observed that the delegating authority specifies the
limitations and enumerates the taxes over which local taxation may not be exercised. Double
taxation becomes obnoxious only where the tax payer is taxed twice for the benefit of the same
governmental entity or by the same jurisdiction for the same purpose, but not in the case where
one tax is imposed by the State and the other by the city of municipality.

In the case at bar, there is no double taxation. The difference between the two ordinances
clearly lies in the tax rate of the softdrinks produced: in Ordinance No. 23, it was 1/16 of a centavo
fr every bottle corked; in Ordinance No. 27, it is one centavo on each gallon of volume capacity.
The intention of the municipality of Tanauan in enacting Ordinance No. 27 is clear as it was
intended as plain substitute for the prior Ordinance No. 23 and operates as a repeal of the latter.
Even without words to that effect.

The imposition of "a tax of one centavo on each gallon of volume capacity" on all soft drinks
produced or manufactured under Ordinance No. 27, does not partake of the nature of a percentage
tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether
sold or not) and not on the sales. The volume capacity of the taxpayer’s production of soft drinks is
considered solely for purposes of determining the tax rate on the products, but there is not set ratio
between the volume of sales and the amount of the tax.

You might also like