PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., No. The imposition of “a tax of one centavo (P0.
n of “a tax of one centavo (P0.01) on each gallon (128 flued
plaintiff-appellant, vs.MUNICIPALITY OF TANAUAN, LEYTE, THE
MUNICIPAL MAYOR, ET AL., defendants-appellees
GR No. L-31156. February 27, 1976
FACTS
In 1963 Pepsi-Cola Bottling Company of the Philippines, Inc., (herein petitioner)
commenced a complaint with preliminary injunction before the CFI Leyte 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, series of 1962, of the municipality of
Tanauan, Leyte, null and void. Municipal Ordinance No. 23 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 of volume capacity” while
Municipal Ordinance No. 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 of volume capacity.” The tax imposed in both
Ordinances Nos. 23 and 27 is denominated as "municipal production tax.”
It was also alleged by petitioner that the aforementioned municipal ordinances
constitute double taxation in two instances: a) double taxation because Ordinance
No. 27 covers the same subject matter and impose practically the same tax rate as
with Ordinance No. 23, b) double taxation because the two ordinances impose
percentage or specific taxes.
The CFI of Leyte dismissed the complaint and upheld the constitutionality of
[Section 2, Republic Act No. 2264] declaring Ordinance Nos. 23 and 27 legal and
constitutional. From this judgment, Pepsi-Cola Bottling Company appealed to the
CA which, in turn elevated the case to the SC.
ISSUE of the CASE
a. Whether or not a municipal ordinance which imposes a tax of P0.01 for
every gallon of soft drinks produced in the municipality is a percentage
tax.
HELD:
ounces, U.S.) 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 no set ratio between the volume of sales and the amount of
the tax.
Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed
on specified articles, such as distilled spirits, wines, cigars and cigarettes, matches,
bunker fuel oil, diesel fuel oil, cinematographic films, playing cards, saccharine,
opium and other habit-forming drugs. Soft drinks is not one of those specified.
The tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume
capacity on all soft drinks, produced or manufactured, or an equivalent of 1½
centavos per case, cannot be considered unjust and unfair. 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, an
aspect that is given expression in the Local Tax Code (PD No. 231, July 1, 1973).
Unless the amount is so excessive as to be prohibitive, courts will go slow in writing
off an ordinance as unreasonable.
The municipal license tax of P1,000.00 per corking machine with five but not more
than ten crowners x x x imposed on manufacturers, producers, importers and dealers
of soft drinks and/or mineral waters x x x appears not to affect the resolution of the
validity of Ordinance No. 27. Municipalities are empowered to impose, not only
municipal license taxes upon persons engaged in any business or occupation but
also to levy for public purposes, just and uniform taxes. The ordinance in question
(Ordinance No. 27) comes within the second power of a municipality.