Pepsi vs. Tanauan GRN L-31156 February 27, 1976 J.

Martin Pepsi filed a complaint with preliminary injunction before the CFI-Leyte to declare Section 2 of R. . !o.22"# $Local utonomy ct%& unconstitutional as an undue dele'ation of the ta(in' authority and declare null and )oid *unicipal +rdinance !o. 2,& which le)ies and collects from soft drin-s producers and manufacturers a ta( of ./." of a centa)o for e)ery bottle of soft drin-s cor-ed& and *unicipal +rdinance !o. 20& which le)ies and collects on soft drin-s produced or manufactured within the territorial jurisdiction a ta( of one centa)o on each 'allon of )olume capacity. 1he trial court dismissed the complaint and upheld the constitutionality of Sec. 2 of R. . !o. 22"# and declared *unicipal +rdinances !os. 2, and 20 )alid and constitutional. ppealed to the C & the case was certified to the SC as in)ol)in' pure 2uestion of law. 1he Supreme Court upheld the )alidity of the dele'ation to *unicipal Corporation or authority to ta( and li-ewise the )alidity of *unicipal +rdinance !o. 20& which repealed *unicipal +rdinance !o. 2,. S3LL 45S of the Rulin' of the Court .. 1 6 1I+!7 ! 15R87 !+!-98L8: 1I+! +F P+;8R& 86C8P1I+!.-1he power of ta(ation is an essential and inherent attribute of so)erei'nty& belon'in' as a matter of ri'ht to e)ery independent 'o)ernment& without bein' e(pressly conferred by the people. It is a power that is purely le'islati)e and which the central le'islati)e body cannot dele'ate either to the e(ecuti)e or judicial department of 'o)ernment without infrin'in' upon the theory of separation of powers. 1he e(ception& howe)er& lies in the case of municipal corporations& to which& said theory does not apply. Le'islati)e powers may be dele'ated to local 'o)ernments in respect of matters of local concern. 1his is sanctioned by immemorial practice. 4y necessary implication& the le'islati)e power to create political corporations for purpose of local self-'o)ernment carries with it the power to confer on such local 'o)ernmental a'encies the power to ta(. 2. I9.7 I9.7 I9.7 SC+P8 +F L+C L :+<8R!*8!1=S P+;8R 1+ 1 6.- 1he ta(in' authority conferred on local 'o)ernments under Section 2& Republic ct !o. 22"#& is broad enou'h as to e(tend to almost >e)erythin'& e(ceptin' those which are mentioned therein.> s lon' as the ta( le)ied under the authority of a city or municipal ordinance is not within the e(ceptions and limitations in the law& the same comes within the ambit of the 'eneral rule& pursuant to the rules of e(presio unius est e(clusio alterius& and e(ceptio firmat re'ulum in casibus non e(cepti. *unicipalities are empowered to impose not only municipal license ta(es upon persons en'a'ed in any business or occupation but also to le)y for public purposes& just and uniform ta(es. ,.I9.7 I9.7 I9.? LI*I1 1I+!..- *unicipalities and municipal districts are prohibited to impose >any percenta'e ta( on sales or other ta(es in any form based thereon nor impose ta(es on articles subject to specific ta(& e(cept 'asoline& under the pro)isions of

the !ational Internal Re)enue Code.> For purposes of this particular limitation& a municipal ordinance which prescribes a set of ratio between the amount of the ta( and the )olume of sales of the ta(payer imposes a sales ta( and is null and )oid for bein' outside the power of the municipality to enact. #.I9.7 I9.7 I9.7 98L8: 1I+! +F P+;8R 1+ 1 6 5!98R !8; C+!S1I151I+!.5nder the !ew Constitution& local 'o)ernments are 'ranted the autonomous authority to create their own sources of re)enue and to le)y ta(es. Section @& rticle 6I pro)ides? >8ach local 'o)ernment unit shall ha)e the power to create its sources of re)enue and to le)y ta(es& subject to such limitations as may be pro)ided by law.> ;ithal& it cannot be said that Section 2 of Republic ct !o. 22"# emanated from beyond the sphere of the le'islati)e power to enact and )est in local 'o)ernments the power of local ta(ation. @. I9.7 I9.7 I9.7 < LI9I13 1A8R8+F.- 1he plenary nature of the dele'ated power of local 'o)ernments under Section 2& of R. . !o. 22"# would not suffice to in)alidate the said law as confiscatory and oppressi)e. In dele'atin' the authority& the State is not limited to the e(act measure of that which is e(ercised by itself. ;hen it is said that the ta(in' power may be dele'ated to municipalities and the li-e& it is meant that there may be dele'ated such measure of power to impose and collect ta(es as the le'islature may deem e(pedient. 1hus& municipalities may be permitted to ta( subjects which for reasons of public policy the State has not deemed wise to ta( for more 'eneral purposes. ". I9.7 R8B5ISI18S F+R L ;F5L 868RCIS8 +F 1 6I!: P+;8R.-Constitutional injunction a'ainst depri)ation of property without due process of law may not be passed o)er under the 'uise of the ta(in' power& e(cept when the ta-in' of the property is in the lawful e(ercise of the ta(in' power& as when& $.% the ta( is for a public purpose7 $2% the rule on uniformity of ta(ation obser)ed7 $,% either the person or property ta(ed is within the jurisdiction of the 'o)ernment le)yin' the ta(7 and $#% in the assessment and collection of certain -inds of ta(es& notice and opportunity for hearin' are pro)ided. 0. I9.7 I9.7 I!S1 !C8S ;A8R8 958 PR+C8SS IS <I+L 189.9ue process is usually )iolated where the ta( imposed is for a pri)ate as distin'uished from a public purpose7 a ta( is imposed on property outside the State& i.e.& e(tra-territorial ta(ation7 and arbitrary or oppressi)e methods are used in assessin' and collectin' ta(es. 4ut& a ta( does not )iolate the due process clause& as applied to a particular ta(payer& althou'h the purpose of the ta( will result in an injury rather than a benefit to such ta(payer. 9ue process does not re2uire that the property subject to the ta( or the amount of ta( to be raised should be determined by judicial in2uiry& and a notice and hearin' as to the amount of ta( and the manner in which it shall be apportioned are 'enerally not necessary to due process of law. C. I9.7 9+54L8 1 6 1I+!7 :8!8R LL3 !+1 F+R4I998!.-1he dele'ated authority under Section 2 of the Local utonomy ct cannot be declared unconstitutional on the theory of double ta(ation. It must be obser)ed that the dele'atin' authority specifies the limitations and enumerates the ta(es o)er which local ta(ation may not be e(ercised.

1he reason is that the State has e(clusi)ely reser)ed the same for its own prero'ati)e. *oreo)er& double ta(ation& in 'eneral& is not forbidden by the fundamental law& since the injunction a'ainst double ta(ation found in the Constitution of the 5nited States and some states of the 5nion has not been adopted as part thereof. D. I9.7 I9.7 I9.7 86C8P1I+!.- 9ouble ta(ation becomes obno(ious only where the ta(payer is ta(ed twice for the benefit of the same 'o)ernmental entity or by the same jurisdiction for the same purpose& but not in a case where one ta( is imposed by the State and the other by the city or municipality. .E. I9.7 I9.7 I9.7 I!S1 !1 C S8.- ;here& as in the case at bar& the municipality of 1anauan enacted +rdinance !o. 20 imposin' a ta( of one centa)o on each 'allon of )olume capacity while in the pre)ious +rdinance !o. 2,& it was ./." of a centa)o for e)ery bottle cor-ed& it is clear that the intention of the municipal council was to substitute +rdinance !o. 20 to that of +rdinance !o. 2,& repealin' the latter. ...I 9.7 1 6 L8<I89 +! PR+95C8& !+1 P8RC8!1 :8 1 6.-1he imposition of >a ta( of one centa)o $PE.E.% on each 'allon $.2C fluid ounces& 5.S.% of )olume capacity> on all soft drin-s produced or manufactured under +rdinance !o. 20 does not parta-e of a nature of a percenta'e ta( on sales& or other ta(es in any form based thereon. 1he ta( is le)ied on the produce $whether sold or not% and not on the sales. 1he )olume capacity of the ta(payer=s production of soft drin-s is considered solely for purposes of determinin' the ta( rate on the products& but there is no set ratio between the )olume of sales and the amount of ta(. .2. I9.? I9.7 I9.7 *5!ICIP LI13 LL+;89 1+ I!CR8 S8 1 6 S L+!: S *+5!1 IS R8 S+! 4L8.- 1he ta( of one centa)o $PE.E.% on each 'allon $.2C fluid ounces& 5.S.% of )olume capacity of all soft drin-s& produced or manufactured& or an e2ui)alent of .-./2 centa)os per case& cannot be considered unjust and unfair. n increase in the ta( alone would not support the claim that the ta( is oppressi)e& unjust and confiscatory. *unicipal corporations are allowed much discretion in determinin' the rates of imposable ta(es. 1his is in line with the constitutional policy of accordin' the widest possible autonomy to local 'o)ernment in matters of ta(ation& an aspect that is 'i)en e(pression in the Local 1a( Code $P9 !o. 2,.& Fuly .& .D0,%. .,. I9.7 SP8CIFIC 1 68S7 R1ICL8S S54F8C1 1+ SP8CIFIC 1 6.Specific ta(es are those imposed on specified articles& such as distilled spirits& wines& fermented li2uors& products of tobacco other than ci'ars and ci'arettes& matches& firecrac-ers& manufactured oils and other fuels& coal& bun-er fuel oil& cinemato'raphic films& playin' cards& saccharine& opium and other habit formin' dru's. F8R! !9+& F.& concurrin'. .. C+!S1I151I+! L L ;7 1 6 1I+!7 P+;8R +F *5!ICIP L C+RP+R 1I+! 1+ 1 6 5!98R 1A8 !8; C+!S1I151I+!.-1he present Constitution is 2uite e(plicit as to the power of ta(ation )ested in local and municipal corporations. It is therein

specifically pro)ided? >8ach local 'o)ernment unit shall ha)e the power to create its own sources of re)enue and to le)y ta(es& subject to such limitations as may be pro)ided by law.> 2. I9.7 I9.7 LI*I1 1I+! +! P+;8R 1+ 1 6 5!98R 1A8 .D,@ C+!S1I151I+!.- 1he only limitation on the authority to ta( under the .D,@ Constitution was that while the President of the Philippines was )ested with the power of control o)er all e(ecuti)e departments& bureaus& or offices& he could only >e(ercise 'eneral super)ision o)er all local 'o)ernments as may be pro)ided by law.> s far as le'islati)e power o)er local 'o)ernment was concerned& no restriction whatsoe)er was placed in the Con'ress of the Philippines. It would appear therefore that the e(tent of the ta(in' power was solely for the le'islati)e body to decide. ,. I9.7I9.7 *5!ICIP L C+RP+R 1I+!=S P+;8R 1+ 1 6 *5S1 48 CL8 RL3 SA+;!.- lthou'h the scope of municipal ta(in' power had been enlar'ed by subse2uent le'islations& the Court& in :olden Ribbon Lumber Co. )s. City of 4utuan& L.C@,#& 9ecember 2#& .D"#& reaffirmed the traditional concept& thus? >1he rule is wellsettled that municipal corporations& unli-e so)erei'n states& are clothed with no power of ta(ation that its charter or a statute must clearly show an intent to confer thar power or the municipal corporation cannot assume and e(ercise it& and that any such power 'ranted must be construed strictly& any doubt or ambi'uity arisin' from the terms of the 'rant to be resol)ed a'ainst the municipality.> #. I9.7 I9.7 9+54L8 1 6 1I+!.- 1he objection to the ta(ation as double may be laid down on one side. 1he .#th mendment $the due process clause% no more forbids double ta(ation than it does doublin' the amount of a ta(& short of confiscation or proceedin's unconstitutional on other 'rounds. * R1I!& F.? 1his is an appeal from the decision of the Court of First Instance of Leyte in its Ci)il Case !o. ,2D#& which was certified to 5s by the Court of ppeals on +ctober "& .D"D& as in)ol)in' only pure 2uestions of law& challen'in' the power of ta(ation dele'ated to municipalities under the Local utonomy ct $Republic ct !o. 22"#& as amended& Fune .D& .D@D%. +n February .#& .D",& the plaintiff-appellant& Pepsi-Cola 4ottlin' Company of the Philippines& Inc.& commenced a complaint with preliminary injunction before the Court of First Instance of Leyte for that court to declare Section 2 of Republic ct !o. 22"#& otherwise -nown as the Local utonomy ct& unconstitutional as an undue dele'ation of ta(in' authority as well as to declare +rdinances !os. 2, and 20& series of .D"2& of the *unicipality of 1anauan& Leyte& null and )oid. +n Fuly 2,& .D",& the parties entered into a Stipulation of Facts& the material portions of which state that& first& both +rdinances !os. 2, and 20 embrace or co)er the same subject matter and the production ta( rates imposed therein are practically the same&

and second that on Fanuary .0& .D",& the actin' *unicipal 1reasurer of 1anauan& Leyte& as per his letter addressed to the *ana'er of the Pepsi-Cola 4ottlin' Plant in said municipality& sou'ht to enforce compliance by the latter of the pro)isions of said +rdinance !o. 20& series of .D"2. *unicipal +rdinance !o. 2,& of 1anauan& Leyte& which was appro)ed on September 2@& .D"2& le)ies and collects >from soft drin-s producers and manufacturers a ta( of onesi(teenth $./."% of a centa)o for e)ery bottle of soft drin- cor-ed.> For the purpose of computin' the ta(es due& the person& firm& company or corporation producin' soft drin-s shall submit to the *unicipal 1reasurer a monthly report of the total number of bottles produced and cor-ed durin' the month. +n the other hand& *unicipal +rdinance !o. 20& which was appro)ed on +ctober 2C& .D"2& le)ies and collects >on soft drin-s produced or manufactured within the territorial jurisdiction of this municipality a ta( of +!8 C8!1 <+ $PE.E.% on each 'allon $.2C fluid ounces& 5.S.% of )olume capacity.> For the purpose of computin' the ta(es due& the person& firm& company& partnership the 'o)ernment without infrin'in' upon the theory of separation of powers. 1he e(ception& howe)er& lies in the case of municipal corporations& to which& said theory does not apply. Le'islati)e powers may be dele'ated to local 'o)ernments in respect of matters of local concern. 1his is sanctioned by immemorial practice. 4y necessary implication& the le'islati)e power to create political corporations for purposes of local self-'o)ernment carries with it the power to confer on such local 'o)ernmental a'encies the power to ta(. 5nder the !ew Constitution& local 'o)ernments are 'ranted the autonomous authority to create their own sources of re)enue and to le)y ta(es. Section @& rticle 6I pro)ides? >8ach local 'o)ernment unit shall ha)e the power to create its sources of re)enue and to le)y ta(es& subject to such limitations as may be pro)ided by law.> ;ithal& it cannot be said that Section 2 of Republic ct !o. 22"# emanated from beyond the sphere of the le'islati)e power to enact and )est in local 'o)ernments the power of local ta(ation. 1he plenary nature of the ta(in' power thus dele'ated& contrary to plaintiff-appellant=s pretense& would not suffice to in)alidate the said law as confiscatory and oppressi)e. In dele'atin' the authority& the State is not limited to the e(act measure of that which is e(ercised by itself. ;hen it is said that the ta(in' power may be dele'ated to in municipalities and the li-e& it is meant that there may be dele'ated such measure of power to impose and collect ta(es as the le'islature may deem e(pedient. 1hus& municipalities may be permitted to ta( subjects which for reasons of public policy the State has not deemed wise to ta( for more 'eneral purposes. 1his is not to say thou'h that the constitutional injunction a'ainst depri)ation of property without due process of law may be passed o)er under the 'uise of the ta(in' power& e(cept when the ta-in' of the property is in the lawful e(ercise of the ta(in' power& as when $.% the ta( is for a public purpose7 $2% the rule on uniformity of ta(ation is obser)ed7 $,% either the person or property ta(ed is within the jurisdiction of the 'o)ernment le)yin' the ta(7 and $#% in the assessment and collection of certain -inds of ta(es notice and opportunity for hearin'

am pro)ided. 9ue process is usually )iolated where the ta( imposed is for a pri)ate as distin'uished from a public purpose7 a ta( is imposed on property outside the State& i.e.& e(tra-territorial ta(ation7 and arbitrary or oppressi)e methods are used in assessin' and collectin' ta(es. 4ut& a ta( does not )iolate the due process clause& as applied to a particular ta(payer& althou'h the purpose of the ta( will result in an injury rather than a benefit to such ta(payer. 9ue process does not re2uire that the property subject to the ta( or the amount of ta( to be raised should be determined by judicial in2uiry& and a notice and hearin' as to the amount of the ta( and the manner in which it shall be apportioned are 'enerally not necessary to due process of law. 1here is no )alidity to the assertion that the dele'ated authority can be declared unconstitutional on the theory of double ta(ation. It must be obser)ed that the dele'atin' authority specifies the limitations and enumerates the ta(es o)er which local ta(ation may not be e(ercised. 1he reason is that the State has e(clusi)ely reser)ed the same for its own prero'ati)e. *oreo)er& double ta(ation& in 'eneral& is not forbidden by our fundamental law& since ;e ha)e not adopted as part thereof the injunction a'ainst double ta(ation found in the Constitution of the 5nited States and some states of the 5nion. 9ouble ta(ation becomes obno(ious only where the ta(payer is ta(ed twice for the benefit of the same 'o)ernmental entity& is or by the same jurisdiction for the same purpose& but not in a case where one ta( is imposed by the State and the other by the city or municipality. 1he plaintiff-appellant submits that +rdinance !os. 2, and 20 constitute double ta(ation& because these two ordinances co)er the same subject matter and impose practically the same ta( rate. 1he thesis proceeds =from its assumption that both ordinances are )alid and le'ally enforceable. 1his is not so. s earlier 2uoted&= +rdinance !o. 2,& which was appro)ed on September 2@& .D"2& le)ies or collects from soft drin-s producers or manufacturers a ta( of one-si(teen $./."% of a centa)o for e)ery bottle cor-ed& irrespecti)e of the )olume contents of the bottle used. ;hen it was disco)ered that the producer or manufacturer could increase the )olume contents of the bottle and still pay the same ta( rate& the *unicipality of 1anauan enacted +rdinance !o. 20& appro)ed on +ctober 2C& .D"2& imposin' a ta( of one centa)o $PE.E.% on each 'allon $.2C fluid ounces& 5.S.% of )olume capacity. 1he difference between the two ordinances clearly lies in the ta( rate of the soft drin-s produced? in +rdinance !o. 2,& it was ./ ." of a centa)o for e)ery bottle cor-ed7 in +rdinance !o. 20& it is one centa)o $P%.E.% on each 'allon $.2C fluid ounces& 5.S.% of )olume capacity. 1he intention of the *unicipal Council of 1anauan in enactin' +rdinance !o. 20 is thus clear? it was intended as a plain substitute for the prior +rdinance !o. 2,& and operates as a repeal of the latter& e)en without words to that effect. Plaintiff-appellant in its brief admitted that defendants-appellees are only see-in' to enforce +rdinance !o. 20& series of .D"2. 8)en the stipulation of facts confirms the fact that the ctin' *unicipal 1reasurer of 1anauan& Leyte sou'ht to compel compliance by the plaintiff-appellant of the pro)isions of said +rdinance !o. 20& series of .D"2. 1he aforementioned admission shows that only +rdinance !o. 20& series of .D"2 is bein' enforced by defendants-appellees. 8)en the Pro)incial Fiscal& counsel for defendants-appellees admits in his brief >that Section 0 of +rdinance !o. 20& series of .D"2 clearly repeals +rdinance !o. 2, as the pro)isions

of the latter are inconsistent with the pro)isions of the former.> 1hat brin's 5s to the 2uestion of whether the remainin' +rdinance !o. 20 imposes a percenta'e or a specific ta(. 5ndoubtedly& the ta(in' authority conferred on local 'o)ernments under Section 2& Republic ct !o. 22"#& is broad enou'h as to e(tend to almost >e)erythin'& e(ceptin' those which are mentioned therein.> s lon' as the ta( le)ied under the authority of a city or municipal ordinance is not within the e(ceptions and limitations in the law& the same comes within the ambit of the 'eneral as distilled spirits& wines& fermented li2uors& products of tobacco other than ci'ars and ci'arettes& matches& firecrac-ers& manufactured oils and other fuels& coal& bun-er fuel oil& diesel fuel oil& cinemato'raphic films& playin' cards& saccharine& opium and other habit-formin' dru's& soft drin- is not one of those specified. ,. 1he ta( of one centa)o $PE.E.% on each 'allon $.2C fluid ounces& 5.S.% of )olume capacity on all soft drin-s& produced or manufactured& or an e2ui)alent of .-./2 centa)os per case& cannot be considered unjust and unfair. n increase in the ta( alone would not support the claim that the ta( is oppressi)e& unjust and confiscatory. *unicipal corporations are allowed much discretion in determinin' the rates of imposable ta(es. 1his is in line with the constitutional policy of accordin' the widest possible autonomy to local 'o)ernments in matters of local ta(ation& an aspect that is 'i)en e(pression in the Local 1a( Code $P9 !o. 2, .& Fuly .& .D0, %. 5nless the amount is so e(cessi)e as to be prohibiti)e& courts will 'o slow in writin' off an ordinance as unreasonable . Reluctance should not deter compliance with an ordinance such as +rdinance !o. 20 if the purpose of the law to further stren'then local autonomy were to be realiGed. Finally& the municipal license ta( of P.&EEE.EE per cor-in' machine with fi)e but not more than ten crowners or P2&EEE.EE with ten but not more than twenty crowners imposed on manufacturers& producers& importers and dealers of soft drin-s and/or mineral waters under +rdinance !o. @#& series of .D"#& as amended by +rdinance !o. #.& series of .D"C& of defendant *unicipality& appears not to affect the resolution of the )alidity of +rdinance !o. 20. *unicipalities are empowered to impose& not only municipal license ta(es upon persons en'a'ed in any business or occupation but also to le)y for public purposes& just and uniform ta(es. 1he ordinance in 2uestion $+rdinance !o. 20% comes within the second power of a municipality. ccordin'ly& the constitutionality of Section 2 of Republic ct !o. 22"#& otherwise -nown as the Local utonomy ct& as amended& is hereby upheld and *unicipal +rdinance !o. 20 of the *unicipality of 1anauan& Leyte& series of .D"2& repealin' *unicipal +rdinance !o. 2,& same series& is hereby declared )alid and le'al effect. Costs a'ainst petitioner-appellant. So ordered. 9ecision affirmed.