Gloria, Patricia Gwyneth C.

BSA 1 - 3
G.R. No. L-31156
February 27, 1976
PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant,
vs.
MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant
appellees.
MARTIN, J.

Facts:
Pepsi commenced a complaint with preliminary injunction before the CFI of Leyte for that court to
declare Section 2 of R.A. 2264 (Local Autonomy Act) unconstitutional as an unduedelegation of
taxing authority as well as declare Municipal Ordinance Nos. 23 & 27 series of 1962 of Municipality
ofTanauan, Leyte null and void. Municipal Ordinance 23 levies and collects from softdrinks
producers and manufacturers a tax of one-sixteenth (1/6) of a centavo for every bottle of softdrink
corked. On the other hand, Municipal Ordinance 27 levies and collects on softdrinks produced or
manufactured within the territorial jurisdiction of the municipality a tax of 1 centavoon each gallon
of volume capacity. Both are denominated as “municipal production tax”.

Issues:
1. Whether section 2 of R.A. 2264 is an undue delegation of power.
2. Whether Ordinances 23 & 27 constitute double taxation and impose percentage or specific
tax.
3. Whether Ordinances 23 and 27 are unjust and unfair.

Held:
1. No, it is true that power of taxation is purely legislative and which the central legislative
body cannot delegate either to the executive or judicial department of the government
without infringing upon the theory of separation of powers but the exception lies in the
case of municipal corporations to which the said theory does not apply. Legislative
concerns may be delegated to local governments in respect of matters of local concerns.
By necessary implication, the legislative power to create political corporations for purposes
of local self-government courts with it the power to confer on such local government
agencies the power to tax. The constitution grants local government the autonomous
authority to create their own sources of revenue and to levy taxes.
2. No, the difference between the two ordinances clearly lies in the tax rate of the soft drinks
produced: in Ordinance No.23, it was 1/16 of a centavo for every bottle corked; in
Ordinance No. 27, it is one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of
volume capacity. 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. Plaintiff-appellant
in its brief admitted that defendants-appellees are only seeking to enforce Ordinance No.
27, series of 1962. Undoubtedly, the taxing authority conferred on local governments
 under Section 2, Republic Act No. 2264, is broad enough as to extend to almost
"everything, accepting those which are mentioned therein."

The limitation applies, particularly to the prohibition against municipalities and municipal
districts to impose "any percentage tax or other taxes in any form based thereon nor
impose taxes on articles subject to specific tax except gasoline, under the provisions of
the National Internal Revenue Code." For purposes of this particular limitation, a municipal
ordinance which prescribes a set ratio between the amount of the tax and the volume of
sale of the taxpayer imposes a sales tax and is null and void for being outside the power
of the municipality to enact. But, the imposition of "a tax of one centavo (P0.01) on each
gallon 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 produced (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 not set ratio
between the volume of sales and the amount of the tax.

Nor can the tax levied betreated as a specific tax. Specific taxes are those imposed on
specified articles, such as distilled spirits, wines, fermented liquors, products of tobacco
other than cigars and cigarettes, matches firecrackers, manufactured oils and other fuels,
coal, bunker fuel oil, diesel fuel oil, cinematographic films, playing cards, saccharine,
opium and other habit-forming drugs. Soft drink is not one of those specified.

3. The tax of one (P0.01) on each gallon (128 fluid ounces,U.S.) of volume capacity on all
softdrinks, produced or manufactured, or an equivalent of 1-½ centavos percase, 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. Reluctance should not deter
compliance with an ordinance such as Ordinance No. 27 if the purpose of the law to further
strengthen local autonomy were to be realized.
Gloria, Patricia Gwyneth C. BSA 1 – 3

G.R. No. L-41631

December 17, 1976
HON. RAMON D. BAGATSING, as Mayor of the Cityof Manila; ROMAN G. GARGANTIEL,
as Secretary to the Mayor; THE MARKET ADMINISTRATOR; and THE MUNICIPAL BOARD
OF MANILA, petitioners,
vs.
HON. PEDRO A. RAMIREZ, in his capacity as Presiding Judge of the Court of First
Instance Oo Manila, Branch XXX and the FEDERATION OF MANILA MARKET VENDORS,
INC., respondents.

Facts: In 1974, the Municipal Board of Manila enacted Ordinance 7522, regulating the operation
of public markets and prescribing fees for the rentals of stalls and providing penalties for violation
thereof. The Federation of Manila Market Vendors Inc. assailed the validity of the ordinance,
alleging among others the noncompliance to the publication requirement under the Revised
Charter of the City of Manila. CFI-Manila declared the ordinance void. Thus, the present petition.

Issue:
1) What law should govern the publication of a tax ordinance, the Revised City Charter, which
requires publication of the ordinance before its enactment and after its approval, or the
Local Tax Code, which only demands publication after approval?
2) Is the ordinance valid?

Held:
The Local Tax Code prevails. There is no question that the Revised Charter of the City of Manila
is a special act since it relates only to the City of Manila whereas the Local Tax Code is a general
law because it applies universally to all local governments. The fact that one is special and the
other general creates a presumption that the special is to be considered as remaining an
exception of the general, one as a general law of the land, the other as the law of a particular
case. However, the rule readily yields to a situation where the special statute refers to a subject
in general, which the general statute treats in particular. The Revised Charter of the City
prescribes a rule for the publication of “ordinance” in general, while the Local Tax Code
establishes a rule for the publication of “ordinance levying or imposing taxes fees or other charges”
in particular.

The ordinance is valid.