City of Bacolod v. Gruet
REITERATIONFacts
The Antecedents: The City of Bacolod, through its Assistant City Treasurer, filed a complaint against Leandro Gruet, manager of the San Miguel Brewery's Coca-Cola Plant in Bacolod City, for the recovery of unpaid taxes amounting to P26,306.54. These taxes were levied by Bacolod City Ordinances Nos. 66 and 150, which imposed an additional P0.02 tax per case of Coca-Cola, on top of the P0.01 tax already paid under Ordinance No. 66. The defendant had refused to pay the additional levy, protesting that it constituted illegal double taxation, as the plant was already paying an annual P100.00 tax as a "manufacturer of aerated water" under Ordinance No. 48. Procedural History: The Court of First Instance of Negros Occidental rendered a decision ordering San Miguel Brewery, Inc. (as the employer and principal of Gruet) to pay the unpaid taxes. The defendant appealed this decision. The Petition: The case was initially appealed by Leandro Gruet. However, it was later clarified that San Miguel Brewery, Inc. was the real party in interest. The Supreme Court, in a prior resolution, had remanded the case to allow San Miguel Brewery, Inc. to be impleaded. Subsequently, San Miguel Brewery, Inc. voluntarily submitted itself to the jurisdiction of the Supreme Court, adopting all defenses presented by Gruet, and the case was resubmitted for decision on the merits.
Issue(s)
Whether Ordinance No. 66, as amended by Ordinance No. 150, of the Bacolod City Council, imposing a tax of P0.03 on every case of bottled Coca-Cola manufactured by San Miguel Brewery, Inc., is valid. Whether the said ordinance constitutes illegal double taxation. Whether the said ordinance is ultra vires and void.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, ordering San Miguel Brewery, Inc. to pay the City of Bacolod the sum of P26,306.54 and the tax at the rate of three centavos per case from March 1960 onwards. Costs were against the defendant.
Ratio Decidendi
On the validity of Ordinance No. 66, as amended by Ordinance No. 150: The Court held that the ordinance is legal and valid. Section 2 of Republic Act No. 2264, the Local Autonomy Act, expressly grants chartered cities the authority to impose municipal license taxes or fees upon persons engaged in any occupation or business, and "otherwise to levy for public purposes, just and uniform taxes, licenses or fees." The P0.03 tax on every case of bottled Coca-Cola falls within this broad power granted to chartered cities. The Court noted that the proviso in Section 2, which restricts municipalities and municipal districts from imposing certain taxes, does not apply to chartered cities like Bacolod. On the issue of illegal double taxation: The Court found no double taxation. It explained that the P100.00 annual tax paid under Ordinance No. 48 is levied upon the business of being a "manufacturer of aerated water." In contrast, the tax imposed by Ordinance Nos. 66 and 150 is on the output or the bottled product of such a manufacturer. These are distinct subjects of taxation, one on the business activity itself and the other on the specific product manufactured and sold, thus not constituting double taxation. On whether the ordinance is ultra vires and void: The Court ruled that the ordinance is not ultra vires. The enactment of Republic Act No. 2264 on June 19, 1959, expressly granted chartered cities the power to levy taxes beyond what was previously allowed under Commonwealth Act No. 472. Unlike the previous law, which qualified the power to levy taxes by excluding "taxes on specified articles," Republic Act No. 2264 removed this qualification for chartered cities. Therefore, the City Council of Bacolod had the authority to enact the ordinance imposing a tax on the bottled product.
Main Doctrine
A chartered city, empowered by Republic Act No. 2264 (Local Autonomy Act), may impose a tax on the output of a business, such as a tax per case of bottled soft drinks, in addition to a business or manufacturer's tax, provided it is just and uniform, and not prohibited by law. The prohibition against taxing articles subject to specific tax applies only to municipalities and municipal districts, not to chartered cities.