Case Summary (G.R. No. L-31156)
Constitutional Limits and Due Process
The Court reaffirmed that valid taxation must satisfy: 1) a public purpose; 2) uniformity in imposition; 3) territorial jurisdiction over person or property; and 4), where required, notice and opportunity to be heard. A tax that injures rather than benefits a particular taxpayer does not by itself violate due process, nor is judicial determination of tax levels constitutionally mandated.
Double Taxation Doctrine
Absence of a constitutional prohibition against double taxation in the Philippines distinguishes it from U.S. doctrine. Double taxation is objectionable only when the same jurisdiction levies two distinct taxes on the same subject for the same purpose. State and municipal taxes on different bases do not offend due process.
Repeal and Double-Taxation Challenge to Ordinances 23 and 27
Although Ordinances 23 and 27 cover the same subject, the Court found that Ordinance 27 (volume-based tax) was intended as and operates as a repeal of Ordinance 23 (per-bottle tax). Only Ordinance 27 remained enforceable. Consequently, there was no concurrent imposition of two production taxes.
Specific versus Percentage Tax Analysis
Municipalities are expressly barred from imposing percentage taxes on sales or specific excise taxes enumerated in the National Internal Revenue Code. The tax under Ordinance 27 (P0.01 per gallon of production capacity) was levied on output, not on sales revenue, and is not one of the listed specific excise items. It is therefore a valid municipal production tax.
Reasonableness and Fairness of the Tax Rate
Municipalities enjoy broad discretion in setting local tax rates. A tax increase, even if burdensome to a particular taxpayer, does not render it confiscat
...continue readingCase Syllabus (G.R. No. L-31156)
Jurisdiction and Procedural Posture
- Appeal from the decision of the Court of First Instance of Leyte in Civil Case No. 3294
- Certified by the Court of Appeals (October 6, 1969) as involving pure questions of law under Section 31, Judiciary Act of 1948
- Challenge to:
• Constitutionality of Section 2, Republic Act No. 2264 (Local Autonomy Act)
• Validity of Municipal Ordinances Nos. 23 and 27, series of 1962
Factual Background and Stipulated Facts
- Complaint with preliminary injunction filed February 14, 1963 by Pepsi-Cola Bottling Company
- Stipulation of Facts (July 23, 1963) provides that:
• Ordinances Nos. 23 and 27 cover the same subject and impose practically the same production-tax rates
• On January 17, 1963, the Acting Municipal Treasurer sought enforcement of Ordinance No. 27 against Pepsi-Cola - Ordinance No. 23 (approved September 25, 1962):
• Municipal production tax of 1/16 centavo for every bottle corked
• Monthly report of total bottles produced and corked - Ordinance No. 27 (approved October 28, 1962):
• Municipal production tax of one centavo (P0.01) on each gallon (128 fl. oz.) of capacity
• Monthly report of total gallons produced or manufactured - Both ordinances label the levy as a “municipal production tax”
Lower Court Decision
- Court of First Instance (October 7, 1963):
• Dismissed plaintiff’s complaint
• Upheld constitutionality of Section 2, RA 2264
• Declared Ordinances Nos. 23 and 27 valid and constitutional
• Ordered plaintiff to pay the taxes due under the ordinances and costs - Appeal to Court of Appeals; case elevated to the Supreme Court
Issues Presented
- Whether Section 2, RA 2264 is an undue delegation of taxing power, confiscatory or oppressive
- Whether Ordinances Nos. 23 and 27 constitute double taxation and impo