2Pepsi-Cola Bottling Company v Municipality of Tanauan

FACTS

Pepsi-Cola has a bottling plant in the municipality of Tanauan, Leyte. In September 1962, the municipality
approved Ordinance 23 which levies and collects “from soft drinks producers and manufacturers a tax of 1/16 of a
centavo for every bottle of soft drink corked.” In December 1962, the municipality also approved Ordinance 27
which levies and collects “on soft drinks produced or manufactured within the territorial jurisdiction of this
municipality a tax of 1 centavo on each gallon of volume capacity. Pepsi-Cola assailed the validity of the ordinances
as it alleged that they constitute double taxation in two instances: 1) Ordinance 27 covers the same subject matter
and impose practically the same rate as Ordinance 23; 2) the two ordinances impose percentage or specific taxes.

Pepsi-Cola also questions the constitutionality of RA 2264 (Local Autonomy Act of 1959) which allows for the
delegation of taxing powers to local government units; that allowing local governments to tax companies like
Pepsi-Cola is confiscatory and oppressive. The municipality assailed the arguments of Pepsi-Cola arguing that
among others, only Ordinance 27 is being enforced and that the latter law is an amendment of Ordinance 23,
hence there is no double taxation.

ISSUES: WON there is undue delegation of power; WON there is double taxation

RULING

No, there is no undue delegation of power. The Constitution even allows for such. Legislative powers maybe
delegated to local governments in respect of matters of local concern. By necessary implication, the legislative
power to create political corporations or purposes of self-government carries with it the power to confer on such
local government agencies the power to tax. Local governments are granted the autonomous authority to create
their own sources of revenue and to levy taxes.

No, there is no 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 is not forbidden by our
fundamental law. It becomes obnoxious where the taxpayer is taxed twice for the benefit of the same government
entity or jurisdiction, for the same purpose.

Notes:

The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every
independent government, without being expressly conferred by the people. Legislative powers may be delegated to
local governments in respect of matters of local concern.

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. Unless the amount is so excessive as to be prohibitive, courts will go slow in writing off an ordinance as
unreasonable.

The requirements for a valid tax ordinance are: (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.