Professional Documents
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The subject tax is levied with a regulatory purpose, to provide means for the rehabilitation and
stabilization of the threatened sugar industry. In other words, the act is primarily a valid exercise of
police power.
PEPSI-COLA BOTTLING COMPANY OF THE PHILS, INC V TANAUAN GR NO. L-31156, FEBRUARY 27, 1976
FACTS:
Pepsi Cola Bottling Company commenced a complaint with preliminary injunction before the Court of
First Instance of Leyte for the court to declare Section 2 of RA 2264 (Local Autonomy Act)
unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances Nos 23 and
27 of municipality of Tanauan, Leyte. Municipal Ordinance No. 23 (9/25/1962) levies and collects from
softdrinks producers and manufacturers a tax of 1/16 of a centavo for every bottle of softdrink corked.
Municipal ordinance no. 27 (10/28/1962) levies and collects on softdrinks produced or manufactured
within the territorial jurisdiction of this municipality a tax of 1 centavo on each gallon of volume
capacity. The taxes imposed are denominated as municipal production tax. CFI-Leyte dismissed the
complaint. Hence, this petition.
ISSUES:
Is Section 2 of RA 2264 an undue delegation of power, confiscatory and oppressive?
Do ordinances nos. 23 and 27 constitute double taxation and impose percentage or specific taxes?
Are ordinance nos. 23 and 27 unjust and unfair?
RULING:
No. Under the New Constitution, local governments are granted the autonomous authority to create
their own sources of revenue and to levy taxes. Section 5, Article XI provides: 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. Thus, legislative powers may be delegated to local governments in respect
of matters of local concern.
No. The intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is thus clear: it was
intended as a plain substitute for the prior ordinance no. 23 and operates as a repeal of the latter, even
without words to that effect. The tax is not a percentage tax as the volume capacity of the taxpayers
production of softdrinks is considered solely for purposes of determining the tax rate on the products
but there is no set ratio between volume of sales and amount of the tax. Nor can the tax levied be
treated as a specific tax. Softdrink is not one of those specified articles.
No. 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.
FACTS: The petitioner imported 119 cases of "Chatteau Gay" wine which it declared as "still wine" under
Section 134(b) of the Tax Code. The CIR later concluded that it should be classified as "sparkling wine",
and assessed the petitioner a deficiency specific tax thereon. Petitioner contends that the assessment is
unconstitutional because Section 134(a) of the Tax Code under which it was issued lays down an
insufficient and hazy standard by which the policy and purpose of the law may be ascertained, and gives
the Commissioner blanket authority to decide what is or is not the meaning of "sparkling wines."
Petitioner contends that there was an abdication of legislative power violative of the established
doctrine, delegata potestas non potest delegate.
ISSUES: WoN there was an abdication of legislative power in violation of the established doctrine,
delegata potestas non potest delegate.
RULING: NO. The purpose of the said provision is to impose a specific tax on wines and imitation wines.
The first clause of Section 134 states so in plain language. The sole object of the sub-enumeration that
follows is in turn unmistakably to prescribe the amount of the tax specifically to be paid for each type of
wine and/or imitation wine so classified and described. The section therefore clearly and undoubtedly
discloses the legislative will, leaving to the officers charged with implementation and execution thereof
nothing more than the administrative function of determining whether a particular kind of wine or
imitation wine falls in one class or another.