DOCTRINE: Taxing power is purely legislative. It cannot be delegated.
XPN: It can be delegated to municipal corporations. Under the Constitution, local governments are granted the autonomous authority to create their own sources of revenue and to levy taxes.
FACTS: Pepsi-Cola sought to declare Section 2 of the Local Autonomy Act (RA 2264) 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.
Ordinance No. 23 levies and collects “from soft drinks producers and manufacturers a tax of 1/16 of a centavo for every bottle of soft drink corked.” On the other hand, Ordinance No. 27 levies and collects “on soft drinks produced or manufactured within the territorial jurisdiction of the municipality a tax of 1 centavo on each gallon of volume capacity.” Both taxes under the ordinances are denominated as “municipal production tax.”
Pepsi-Cola contended that the ordinances cover the same subject matter and the rates imposed are practically the same. However, Section 2 of RA 2264 upheld the constitutionality of the ordinances.
ISSUE: Whether or not Section 2, Republic Act No. 2264 constitutes an undue delegation of power?
DECISION: No, it does not. The power of taxation is purely legislative which cannot be delegated. The exception, however, lies in the case of municipal corporations. Under the Constitution, local governments are granted the autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article X provides: “Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law.” With that, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to enact and vest in local governments the power of local taxation.
Moreover, when it is said that the taxing power may be delegated to municipalities and the like, it means that such a measure of power may be delegated to impose and collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes.
Section 2 of RA 2264 is upheld as well as Ordinance No. 27 which repealed Ordinance No. 23.
Read the full case here.
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