Case Brief 1

(Nature of the Power of Taxation)

I. FACTS
Pepsi Cola Bottling filed a complaint to the Municipality of Tanauan. Nagpapasa ng
batas na nagpapataw ng buwis na hindi legal sa Local Autonomy Act.

II. ISSUE
Question: May kapangyarihan ba na magpataw ng buwis ang Municipality of
Tanauan sa Pepsi Cola?

III. RULING

The power of taxation is essential and inherent attribute of sovereignity, belonging

as a matter of right to every independent government, without being expressly conferred by
the people. It is a power that 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. The exception, however lies in the case
of municipal corporations, to which, said theory does not apply. 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.
Also, there is no validity to the assertion that the delegated authority can be declared
unconstitutional on the theory of double taxation. 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,
so that 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.
On the last issue raised, the ordinances do 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 produce
(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.
 Case Brief 2

IV. FACTS
Algue Inc. engaged in engineering, construction etc. was appointed as agent by Ph.
Sugar Estate Developmend Company to sell latter’s land, factories and oil manufacturing
process.Pursuant to that, 5 individuals were hired for the formation of the Vegetable Oil
Investment Corporation, inducing others to invest in it. By promoting, this corporation
purchased the PSEDC properties. Algue then received as agent commission of P125k and it
was from this commission that the P75k promotional fees were paid to the five individuals.
There is no dispute that they reported their respective income tax returns and paid tax.
Algue was assessed of P83k as delinquency income taxes. Upon inaction to the protest,
Algue filed a petition with CTA.
CTA: taxes were legitimately payed for actual services rendered.

V. ISSUE
Question: Nararapat ba na hingiin ni Algue ang deduction na ₱75,000 na ibinayad
sa 5 tao bilang business expense?

VI. RULING
No. The amount of promotional fees was not excessive. Findings of CTA is accord
with Sec. 30 and 70 of Tax Code. Algue has proved that the payment of the fees was
necessary and reasonable in the light of the efforts exerted by the payees in inducing
investors to venture in an experimental enterprise.

It is true that taxes are the lifeblood of the Government hence every oersin who is able to
must contribute his share in the running of the government. The government for its part, is
expected to respond in the form of tangible and intangible benefits intended to improve the
lives of the people and enhance their moral and material values.
This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion
that it is an arbitrary method of exaction by those in the seat of power.
It is a requirement that it be exercised reasonably and in accordance with the prescribed
procedure.
 Case Brief 3

I. FACTS
Ordinance 1 (1956) was approved by the municipal council of Victorias by way of an
amendment to 2 municipal ordinances separately imposing license taxes on operators of
sugar centrals and sugar refineries. The changes were: (1) with respect to sugar centrals, by
increasing the rates of license taxes; and (2) as to sugar refineries, by increasing the rates of
license taxes as well as teh range of graduated schedule of annual output capacity. Victorias
Milling questioned the validity of Ordinance 1 as it, among others, allegedly singled out
Victorias Milling Co. since it is the only operator of a sugar central and a sugar refinery
within the jurisdiction of the municipality.

VII. ISS
Whether Ordinance 1 is discriminatory.

VIII. RULING
The ordinance does not single out Victorias as the only object of the ordinance but
is made to
apply to any sugar central or sugar refinery which may happen to operate in the municipality.
The
fact that Victorias Milling is actually the sole operator of a sugar central and a sugar refinery
does not
make the ordinance discriminatory. The ordinance is unlike that in Ormoc Sugar Company
vs.
Municipal Board of Ormoc City, which specifically spelled out Ormoc Sugar as the subject of
the
taxation, the name of the company herein was never mentioned in the ordinance.