Pepsi Cola Bottling Company vs Municipality of Tanauan to create its sources of revenue and to levy taxes, subject to such

limitations as may be provided by law.” Withal, it cannot be said that

Pepsi Cola has a bottling plant in the Municipality of Tanauan, Leyte. In
September 1962, the Municipality approved Ordinance No. 23 which
levies and collects “from soft drinks producers and manufacturers a tai
of one-sixteenth (1/16) of a centavo for every bottle of soft drink
corked.”
In December 1962, the Municipality also approved Ordinance No. 27
which levies and collects “on soft drinks produced or manufactured
within the territorial jurisdiction of this municipality a tax of one centavo
P0.01) on each gallon of volume capacity.”
Pepsi Cola assailed the validity of the ordinances as it alleged that they
constitute double taxation in two instances: a) double taxation because
Ordinance No. 27 covers the same subject matter and impose
practically the same tax rate as with Ordinance No. 23, b) double
taxation because the two ordinances impose percentage or specific
taxes.
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.
There is no double taxation. The argument of the Municipality is well
taken. Further, Pepsi Cola’s assertion that the delegation of taxing
power in itself constitutes double taxation cannot be merited. It must be
observed that the delegating authority specifies the limitations and
enumerates the taxes over which local taxation may not be exercised.
The reason is that the State has exclusively reserved the same for its
own prerogative. Moreover, double taxation, in general, is not forbidden
by our fundamental law unlike in other jurisdictions. Double taxation
becomes obnoxious only where the taxpayer is taxed twice for the
benefit of the same governmental entity or by the same jurisdiction for
the same purpose, but not in a case where one tax is imposed by the
State and the other by the city or municipality.

Pepsi Cola also questions the constitutionality of Republic Act 2264

which allows for the delegation of taxing powers to local government
units; that allowing local governments to tax companies like Pepsi Cola
is confiscatory and oppressive.

The Municipality assailed the arguments presented by Pepsi Cola. It

argued, among others, that only Ordinance No. 27 is being enforced
and that the latter law is an amendment of Ordinance No. 23, hence
there is no double taxation.

ISSUE: Whether or not there is undue delegation of taxing powers.

Whether or not there is double taxation.

HELD: No. There is no undue delegation. The Constitution even allows

such delegation. Legislative powers may be delegated to local
governments in respect of matters of local concern. By necessary
implication, the legislative power to create political corporations for
purposes of local self-government carries with it the power to confer on
such local governmental agencies the power to tax. Under the New
Constitution, local governments are granted the autonomous authority
to create their own sources of revenue and to levy taxes. Section 5,
Article XI provides: “Each local government unit shall have the power