PUNSALAN VS. MUNICIPAL BOARD OF MANILA [95 PHIL 46; NO.

L-4817; 26 MAY 1954] Facts: Petitioners, who are professionals in the city, assail Ordinance No. 3398 together with the law authorizing it (Section 18 of the Revised Charter of the City of Manila). The ordinance imposes a municipal occupation tax on persons exercising various professions in the city and penalizes nonpayment of the same. The law authorizing said ordinance empowers the Municipal Board of the city to impose a municipal occupation tax on persons engaged in various professions. Petitioners, having already paid their occupation tax under section 201 of the National Internal Revenue Code, paid the tax under protest as imposed by Ordinance No. 3398. The lower court declared the ordinance invalid and affirmed the validity of the law authorizing it.

Issue: Whether or Not the ordinance and law authorizing it constitute class legislation, and authorize what amounts to double taxation.

Held: The Legislature may, in its discretion, select what occupations shall be taxed, and in its discretion may tax all, or select classes of occupation for taxation, and leave others untaxed. It is not for the courts to judge which cities or municipalities should be empowered to impose occupation taxes aside from that imposed by the National Government. That matter is within the domain of political departments. The argument against double taxation may not be invoked if one tax is imposed by the state and the other is imposed by the city. It is widely recognized that there is nothing inherently terrible in the requirement that taxes be exacted with respect to the same occupation by both the state and the political subdivisions thereof. Judgment of the lower court is reversed with regards to the ordinance d affirmed as to the law authorizing it. Manila Electric Company v. A.L. Yatco 69 Phil. 89 G.R. No. 45697 November 1, 1939 Moran, J.: Doctrine: Where the insured against is within the Philippines, the risk insured against also within the Philippines, and certain incidents of the contract are to be attended to in the Philippines, such as, payment of dividends when received in cash, sending of an unjuster into the Philippines in case of dispute, or making of proof of loss, the Commonwealth of the Philippines has the power to impose the tax upon the insured, regardless of whether the contract is executed in a foreign country and with a foreign corporation. Under such circumstances, substantial elements of the contract may be said to be so situated in the Philippines as to give its government the power to tax.

Facts: In 1935, plaintiff Manila Electric Company insured with the City of New York Insurance Company and the United States Guaranty Company, foreign corporations not licensed to do business in the Philippines and having no agents therein, certain real and personal properties situated

in the Philippines. The insurance was entered into in behalf of said plaintiff by its broker in New York City. Plaintiff through its broker paid, in New York, to said insurance company premiums in the sum of P91,696. The Collector of Internal Revenue, under the authority of section 192 of act No. 2427, as amended, assessed and levied a tax of one per centum on said premiums, which plaintiff paid under protest. The protest having been overruled, plaintiff instituted the present action to recover the tax. The trial court dismissed the complaint, and from the judgment thus rendered, plaintiff took the instant appeal. Issue: Whether or not the disputed tax is one imposed by the Commonwealth of the Philippines upon a contract beyond its jurisdiction. Held: We are of the opinion and so hold that where the insured against also within the Philippines, the risk insured against also within the Philippines, and certain incidents of the contract are to be attended to in the Philippines, such as, payment of dividends when received in cash, sending of an unjuster into the Philippines in case of dispute, or making of proof of loss, the Commonwealth of the Philippines has the power to impose the tax upon the insured, regardless of whether the contract is executed in a foreign country and with a foreign corporation. Under such circumstances, substantial elements of the contract may be said to be so situated in the Philippines as to give its government the power to tax. And, even if it be assumed that the tax imposed upon the insured will ultimately be passed on the insurer, thus constituting an indirect tax upon the foreign corporation, it would still be valid, because the foreign corporation, by the stipulations of its contract, has subjected itself to the taxing jurisdiction of the Philippines. After all, Commonwealth of the Philippines, by protecting the properties insured, benefits the foreign corporation, and it is but reasonable that the latter should pay a just contribution therefor. It would certainly be a discrimination against domestic corporations to hold the tax valid when the policy is given by them and invalid when issued by foreign corporations. Judgment affirmed, with costs against appellant.

Pepsi-Cola Bottling Co., vs. City of Butuan [August 28, 1968, L-22814]

Facts: Plaintiff, Pepsi-Cola Bottling Company of the Philippines, is a domestic corporation with offices and principal place of business in Quezon City. Plaintiff's warehouse in the City of Butuan serves as storage for its products the "Pepsi-Cola" soft drinks for sale to customers in the City of Butuan and all the municipalities in the Province of Agusan. These "Pepsi-Cola" soft drinks are bottled in Cebu City and shipped to the Butuan City warehouse of plaintiff for distribution and sale in the City of Butuan and all municipalities of Agusan. On August 16, 1960, the City of Butuan enacted Ordinance No. 110 which was subsequently amended by Ordinance No. 122 and effective November 28, 1960. Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case of 24 bottles of Pepsi-Cola. The plaintiff paid

under protest the amount of P4.926.63 from August 16 to December 31, 1960 and the amount of P9,250.40 from January 1 to July 30, 1961. The plaintiff filed a complaint for the recovery of the total amount of P14,177.03 paid under protest, on the ground that Ordinance No. 110 as amended of the City of Butuan is illegal, that the tax imposed is excessive and that it is unconstitutional. The Court of First Instance ruled in favor of the defendant. Issue: Whether or not the disputed ordinance is void because it is highly unjust and discriminatory Held: Yes. Even if the burden in question were regarded as a tax on the sale of said beverages, it would still be invalid, as discriminatory, and hence, violative of the uniformity required by the Constitution and the law, since only sales by "agents or consignees" of outside dealers would be subject to the tax. Sales by local dealers, not acting for or on behalf of other merchants, regardless of the volume of their sales, and even if the same exceeded those made by said agents or consignees of producers or merchants established outside the City of Butuan, would be exempt from the disputed tax. It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality under all circumstances, or negate the authority to classify the objects of taxation. The classification made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless: (1) it is based upon substantial distinctions which make real differences; (2) these are germane to the purpose of the legislation or ordinance; (3) the classification applies, not only to present conditions, but, also, to future conditions substantially identical to those of the present; and (4) the classification applies equally to all those who belong to the same class. These conditions are not fully met by the ordinance in question. Indeed, if its purpose was merely to levy a burden upon the sale of soft drinks or carbonated beverages, there is no reason why sales thereof by dealers other than agents or consignees of producers or merchants established outside the City of Butuan should be exempt from the tax. Hence, decision appealed from is reversed. City of Butuan is sentenced to refund plaintiff and is restrained and prohibited permanently from enforcing said Ordinance, as amended. Pepsi-Cola vs. City of Butuan

PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. vs. CITY OF BUTUAN 24 SCRA 789 GR No. L-22814, August 28, 1968

"The classification made in the exercise of power to tax, to be valid, must be reasonable ." FACTS: Plaintiff-appellant Pepsi-Cola sought to recover the sums paid by it under protest, to the City of Butuan, and collected by the latter, pursuant to its Municipal Ordinance No. 110 which plaintiff assails as null and void because it partakes of the nature of an import tax, amounts to double taxation, highly unjust and discriminatory, excessive, oppressive and confiscatory, and constitutes an invlaid delegation of the power to tax. The ordinance imposes taxes for every case of softdrinks, liquors and other carbonated beverages, regardless of the volume of sales, shipped to the agents and/or consignees by outside dealers or any person or company having its actual business outside the City. ISSUE: Does the tax ordinance violate the uniformity requirement of taxation? HELD: Yes. The tax levied is discriminatory. Even if the burden in question were regarded as a tax on the sale of said beverages, it would still be invalid, as discriminatory, and hence, violative of the uniformity required by the Constitution and the law therefor, since only sales by "agents or consignees" of outside dealers would be subject to the tax. Sales by local dealers, not acting for or on behalf of other merchants, regardless of the volume of their sales, and even if the same exceeded those made by said agents or consignees of producers or merchants established outside the City of Butuan, would be exempt from the disputed tax.

It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality under all circumstances, or negate the authority to classify the objects of taxation. The classification made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless: (1) it is based upon substantial distinctions which make real differences; (2) these are germane to the purpose of the legislation or ordinance; (3) the classification applies, not only to present conditions, but, also, to future conditions substantially identical to those of the present; and (4) the classification applies equally to all those who belong to the same class. CASSANOVAS VS. HORD [8 Phil 125; No. 3473; 22 Mar 1907] Facts: The Spanish Govt. by virtue of a royal decree granted the plaintiff certain mines. The plaintiff is now the owner of those mines. The Collector of Internal Revenue imposed tax on the properties, contending that they were valid perfected mine concessions and it falls within the provisions of sec.134 of Act No. 1189 known as Internal Revenue Act. The plaintiff paid under protest. He brought an action against the defendant Collector of Internal Revenue to recover the sum of Php. 9, 600 paid by him as taxes. Judgment was rendered in favor of the defendant, so the plaintiff appealed. Issue: Whether or Not Sec. 164 is void or valid.

Held: The deed constituted a contract between the Spanish Government and the plaintiff. The obligation of which contract was impaired by the enactment of sec. 134 of the Internal Revenue Law infringing sec. 5 of the Act of Congress which provides that no law impairing the obligation of contracts shall be enacted. Sec. 134 of the Internal Revenue Law of 1904 is void

because it impairs the obligation of contracts contained in the concessions of mine made by the Spanish Government. Judgment reversed.