Case Digest: Pepsi-Cola Bottling Co. v.

Municipality of Tanauan

Facts:

Pepsi-Cola Bottling Company of the Philippines, Inc. appealed the decision of the
Court of First Instance of Leyte in Civil Case No. 3294. The case involved a challenge to
the constitutionality of Section 2 of Republic Act No. 2264, also known as the Local
Autonomy Act, as well as the validity of Municipal Ordinances Nos. 23 and 27 of
Tanauan, Leyte. The ordinances imposed taxes on soft drink producers and
manufacturers within the municipality. Pepsi-Cola argued that the delegation of
taxing power to municipalities under the Local Autonomy Act was unconstitutional
and that the ordinances constituted double taxation.

Issues:

Whether or not, Section 2 of Republic Act No. 2264 an undue delegation of power?

Ruling:

The Court upheld the constitutionality of Section 2 of Republic Act No. 2264, affirming
the delegation of taxing power to municipalities. The delegation was deemed
constitutional as it falls within the legislative authority to create political corporations
for local self-government. The Court emphasized that the power to tax is inherent in
sovereignty and may be delegated to local governments for matters of local concern.