Pepsi Cola Bottling Company vs Municipality of Tanauan Tanauan
69 SCRA 460 – Taxation – Delegation to Local Governments – Double Taxation Pepsi Pepsi Cola Cola has a bottli bottling ng plant plant in the Municipa Municipalit lity y of Tanaua anauan, n, Leyte. Leyte. In Septem September ber 196, 196, the Municipality appro!e" #r"inance $o. % &hich le!ies an" collects 'from soft "rin(s pro"ucers an" manufacturers a tai of one)si*teenth +116- of a centa!o f or e!ery bottle of soft "rin( cor(e". In /ecember 196, the Municipality also appro!e" #r"inance $o. 0 &hich le!ies an" collects 'on soft "rin(s pro"uce" or manufacture" &ithin the territorial uris"iction of this municipality a ta* of one centa!o P2.21- on each gallon of !olume capacity. Pepsi Cola assaile" the !ali"ity of the or"inances as it allege" that they constitute "ouble ta*ation in t&o instances3 a- "ouble ta*ation because #r"inance $o. 0 co!ers the same subect matter an" impose practically the same ta* rate as &ith #r"inance $o. %, b- "ouble ta*ation because the t&o or"inances impose percentage or specific ta*es. Pepsi Cola also 4uestions the constitutionality of 5epublic ct 67 &hich allo&s for the "elegation of ta*ing po&ers to local go!ernment units8 that allo&ing local go!ernments to ta* companies li(e Pepsi Cola is confiscatory an" oppressi!e. The Municipality assaile" the arguments presente" by Pepsi Cola. It argue", among others, that only #r"inance $o. 0 is being enforce" an" that the latter la& is an amen"ment of #r"inance $o. %, hence there is no "ouble ta*ation. ISSU ISSUE: E: hether or not there is un"ue "elegation of ta*ing po&ers. hether or not there is "ouble ta*ation. HELD: $o. There is no un"ue "elegation. The Constitution e!en allo&s such "elegation. Legislati!e HELD: po&ers may be "elegate" to local go!ernments in respect of matters of local concern. :y necessary implication, the legislati!e po&er to create political corporations for purposes of local self)go!ernment carries &ith it the po&er to confer on such local go!ernmental agencies the po&er to ta*. ;n"er the $e& Constitution, local go!ernments are grante" the autonomous authority to create their o&n sources of re!enue an" to le!y ta*es . Section ! "#ticle $I pro!i"es3 '
There is no "ouble ta*ation. The argument of the Municipality is &ell ta(en. =urther, Pepsi Cola>s assertion that the "elegation of ta*ing po&er in itself constitutes "ouble ta*ation cannot be merite". It must be obser!e" that the "elegating authority specifies the limitations an" enumerates the ta*es o!er &hich local ta*ation may not be e*ercise". The reason is that the State has e*clusi!ely reser!e" the same for its o&n prerogati!e. Moreo!er, "ouble ta*ation, in general, is not forbi""en by our fun"amental la& unli(e in other uris"ictions. /ouble ta*ation becomes obno*ious only &here the ta*payer is ta*e" t&ice for the benefit of the same go!ernmental entity or by the same uris"iction for the same purpose, but not in a case &here one ta* is impose" by the State an" the other by the city or municipality. municipality.
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