1. Victorias Milling vs Munic.

Of Victorias
The disputed ordinance was approved by the municipal Council of Victorias on September 22,
1956 by way of an amendment to two municipal ordinances separately imposing license taxes on
operators of sugar centrals 1 and sugar refineries. 2 The changes were: with respect to sugar
centrals, by increasing the rates of license taxes; and as to sugar refineries, by increasing the rates
of license taxes as well as the range of graduated schedule of annual output capacity.
Issue: Plaintiff finally impleads double taxation. Its reason is that in computing the amount of
taxes to be paid by the sugar refinery the cost of the raw sugar coming from the sugar central is
not deducted; ergo, plaintiff is taxed twice on the raw sugar.
Double taxation has been otherwise described as "direct duplicate taxation." 48 For double
taxation to exist, "the same property must be taxed twice, when it should be taxed but
once." 49 Double taxation has also been "defined as taxing the same person twice by the same
jurisdiction for the same thing." 50 As stated in Manila Motor Company, Inc. vs. Ciudad de
Manila, 51 there is double taxation "cuando la misma propiedad se sujeta a dos impuestos por la
misma entidad o Gobierno, para el mismo fin y durante el mismo periodo de tiempo."
With the foregoing precepts in mind, we find no difficulty in saying that plaintiff's argument on
double taxation does not inspire assent. First. The two taxes cover two different objects. Section
1 of the ordinance taxes a person operating sugar centrals or engaged in the manufacture of
centrifugal sugar. While under Section 2, those taxed are the operators of sugar refinery mills.
One occupation or business is different from the other. Second. The disputed taxes are imposed
on occupation or business. Both taxes are not on sugar. The amount thereof depends on the
annual output capacity of the mills concerned, regardless of the actual sugar milled. Plaintiff's
argument perhaps could make out a point if the object of taxation here were the sugar it
produces, not the business of producing it.
There is no double taxation.
2. Pepsi vs Butuan
Ordinance number 10 as amended
Section 3 prescribes a tax of P0.10 per case of 24 bottles of the soft drinks and carbonated
beverages therein named, and "all other soft drinks or carbonated drinks."
Section 9 makes the ordinance applicable to soft drinks, liquors or carbonated drinks "received
outside" but "sold within" the City. Section 10 of the ordinance provides that the revenue derived
therefrom "shall be alloted as follows: 40% for Roads and Bridges Fund; 40% for the General
Fund and 20% for the School Fund."
The second and last objections are manifestly devoid of merit. Indeed independently of
whether or not the tax in question, when considered in relation to the sales tax prescribed by Acts
of Congress, amounts to double taxation, on which we need not and do not express any opinion double taxation, in general, is not forbidden by our fundamental law. We have not adopted, as
part thereof, the injunction against double taxation found in the Constitution of the United States
and of some States of the Union.1 Then, again, the general principle against delegation of
legislative powers, in consequence of the theory of separation of powers2 is subject to one wellestablished exception, namely: legislative powers may be delegated to local governments to
which said theory does not apply3 in respect of matters of local concern.
3. CIR vs Hawaiian Philippine Co.
The petitioner, a corporation duly organized in accordance with law, is operating a sugar central
in the City of Silay, Occidental Negros. It produces centrifugal sugar from sugarcane supplied by
planters. The processed sugar is divided between the planters and the petitioner in the proportion
stipulated in the milling contracts, and thereafter is deposited in the warehouses of the latter. No
charges for deposit in the warehouse but pays charges after the lapse of 90 days.

The only issue to be resolved in the case at bar is whether or not, upon the facts stated above,
petitioner is a warehouseman liable for the payment of the fixed and percentage taxes prescribed
in Sections 182 and 191 of the National Internal Revenue Code
Lastly, respondent's contention that the imposition of the tax under consideration would amount
to double taxation is likewise without merit. As is clear from the facts, respondent's warehousing
business, although carried on in relation to the operation of its sugar central, is a distinct and
separate business taxable under a different provision of the Tax Code. There can be no double
taxation where the State merely imposes a tax on every separate and distinct business in which a
party is engaged. Moreover, in Manufacturers Life insurance Co. vs. Meer, G.R. No. L-2910,
June 29, 1951; City of Manila vs. Inter-Island Gas service, G.R. L-8799, August 31, 1956, We
have ruled that there is no prohibition against double or multiple taxation in this jurisdiction.
4. Villanueva vs Iloilo
Appeal by the defendant City of Iloilo from the decision of the Court of First Instance of Iloilo
declaring illegal Ordinance 11, series of 1960, entitled, "An Ordinance Imposing Municipal
License Tax On Persons Engaged In The Business Of Operating Tenement Houses," and ordering
the City to refund to the plaintiffs-appellees the sums of collected from them under the said
ordinance. The trial court condemned the ordinance as constituting "not only double taxation but
treble at that," because "buildings pay real estate taxes and also income taxes as provided for in
Sec. 182 (A) (3) (s) of the National Internal Revenue Code, besides the tenement tax under the
said ordinance." Obviously, what the trial court refers to as "income taxes" are the fixed taxes on
business and occupation provided for in section 182, Title V, of the National Internal Revenue
Code, by virtue of which persons engaged in "leasing or renting property, whether on their
account as principals or as owners of rental property or properties," are considered "real estate
dealers" and are taxed according to the amount of their annual income.20.
While it is true that the plaintiffs-appellees are taxable under the aforesaid provisions of the
National Internal Revenue Code as real estate dealers, and still taxable under the ordinance in
question, the argument against double taxation may not be invoked. The same tax may be
imposed by the national government as well as by the local government. There is nothing
inherently obnoxious in the exaction of license fees or taxes with respect to the same occupation,
calling or activity by both the State and a political subdivision thereof.
"In order to constitute double taxation in the objectionable or prohibited sense the same
property must be taxed twice when it should be taxed but once; both taxes must be
imposed on the same property or subject-matter, for the same purpose, by the same State,
Government, or taxing authority, within the same jurisdiction or taxing district, during the
same taxing period, and they must be the same kind or character of tax."23 It has been
shown that a real estate tax and the tenement tax imposed by the ordinance, although
imposed by the sametaxing authority, are not of the same kind or character.
At all events, there is no constitutional prohibition against double taxation in the Philippines.24 It
is something not favored, but is permissible, provided some other constitutional requirement is
not thereby violated, such as the requirement that taxes must be uniform."
5. Compania vs City of Manila
Appellee Compania General de Tabacos de Filipinas hereinafter referred to simply as
Tabacalera filed this action in the Court of First Instance of Manila to recover from appellants,
City of Manila and its Treasurer, Marcelino Sarmiento also hereinafter referred to as the City
the sum of P15,280.00 allegedly overpaid by it as taxes on its wholesale and retail sales of
liquor for the period from the third quarter of 1954 to the second quarter of 1957, inclusive,
under Ordinances Nos. 3634, 3301, and 3816.
Tabacalera, as a duly licensed first class wholesale and retail liquor dealer paid the City the
fixed license feesprescribed by Ordinance No. 3358 for the years 1954 to 1957, inclusive, and, as

a wholesale and retail dealer of general merchandise, it also paid the sales taxes required by
Ordinances Nos. 3634, 3301, and 3816.1w
That Tabacalera is being subjected to double taxation is more apparent than real. As already
stated what is collected under Ordinance No. 3358 is a license fee for the privilege of engaging
in the sale of liquor, a calling in which it is obvious not anyone or anybody may freely
engage, considering that the sale of liquor indiscriminately may endanger public health and
morals. On the other hand, what the three ordinances mentioned heretofore impose is a tax for
revenue purposes based on the sales made of the same article or merchandise. It is already settled
in this connection that both a license fee and a tax may be imposed on the same business or
occupation, or for selling the same article, this not being in violation of the rule against double
taxation (Bentley Gray Dry Goods Co. vs. City of Tampa, 137 Fla. 641, 188 So. 758;
MacQuillin, Municipal Corporations, Vol. 9, 3rd Edition, p. 83). This is precisely the case with
the ordinances involved in the case at bar.
6. San Miguel vs City of Cebu
In L-20312, plaintiff San Miguel Brewery, Inc. hereinafter referred to as SMB assails the
validity of Ordinance No. 298, as amended by Ordinance No. 300, both series of 1960, of the
City of Cebu, providing that "(t)here shall be collected on any sale or disposal of liquor or
intoxicating beverages of any form in the City of Cebu by manufacturers and wholesalers for
purposes of a municipal tax
Pursuant to said ordinance, the SMB which is engaged in the manufacture, bottling, distribution
and sale of beer throughout the Philippines, including the defendant Cebu City, paid thereto,
under protest, on April 20, 1961, the sum of P29,874.69, the refund of which is prayed for in the
complaint herein, upon the ground that said ordinance isultra vires, for imposing a sales tax,
which is allegedly beyond defendant's power to levy, apart from resulting in illegal double
taxation, since SMB already pays the defendant a business license tax of P600 per annum. The
Court of First Instance of Manila having rendered judgment dismissing the complaint, with costs,
plaintiff seeks a review by record on appeal.
Appellant in L-20312 questions the conclusions reached in the decision appealed from, to the
effect that the first proviso in the above-quoted provision, prohibiting "municipalities and
municipal districts" from imposing "any percentage tax on sales or other taxes in any form based
thereon," implies that cities, like appellee therein, are not subject to said restriction, and that the
contested ordinance is not invalid upon the ground of double taxation.
We find no merit in this pretense, for: (a) double taxation is not prohibited by the Constitution 5;
(b) there is double taxation when the same person is taxed by the same jurisdiction for the same
purpose, 6 which is not the case in L-20312, for the ordinance in question imposes a tax on the
sale or disposal of every "bottle or container" of "liquor intoxicating beverages," and, as such, is
a typical tax or revenue measure, whereas the sum of P600 it pays annually is for a "second-class
wholesale liquor license," which is a license to engage in the business of wholesale liquor in
Cebu City, and, accordingly, constitutes a regulatory measure, in the exercise of the police
power; 7 and (c) the authority of cities under the above -- quoted section 2 of Rep. Act No. 2264,
to impose a sales tax has already been upheld in City of Bacolod vs. Gruet 8and Pepsi-Cola
Bottling Co. of the Philippines, Inc. vs. City of Butuan, 9 and We find no plausible reason to
depart from said view.
7. People vs Mendaros
Santiago Mendaros, Vidal Canondon, Anastacio Cuevas, Angel Pagador, Federico Feria,
Simplicio Streeter and Cenon Mendaros were accused in separate informations before the Justice
of the Peace Court of Palauig, Zambales, of a violation of Municipal Ordinance No. 5, S. 1946,
of the municipal council of Palauig for their failure to pay the occupation tax for the year 1952 as
prescribed in said ordinance.
The ground on which the trial court declared the municipal ordinance invalid would seem to be
that, since the land on which the fishpond is situated is already subject to land tax, it would be

unfair and discriminatory to levy another tax on the owner of the fishpond because that would
amount to double taxation. This view is erroneous because it is a well settled rule that a license
tax may be levied upon a business or occupation although the land or property used therein is
subject to property tax. It was also held that "the state may collect an ad. valorem tax on property
fused in a calling, and at the same time impose a license tax on the pursuit of that calling," The
imposition of this kind of tax "is in no sense called a double tax."
"24. Double Taxation.- In general, the same property cannot be taxed twice by the same taxing
authority. This rule, however does not preclude the imposition of a "license tax upon a business
or calling although the property used therein has been subjected to a property tax. It is a wellsettled rule that the state may collect an ad valorem tax on property used in a calling, "and at the
same time impose a license tax on the pursuit of that calling. This is in no sense a double tax; the
state does not tax the calling as property, but simply requires a license for the privilege of
engaging in it, or for enjoying advantages incident to its exercise. The same principle applies to
the imposition of a privilege tax upon property which has been subjected to a property tax. For
example, the imposition of license and privilege taxes upon automobiles, upon which property
taxes have also been imposed, is not double taxation. It is not necessarily double taxation where
an occupation tax is imposed upon a particular business and a license tax is imposed upon a
particular article sold in such business. "
As to whether the municipal council of Palauig has the power to impose an occupation or
business tax on owners of fishponds, it cannot be denied, for such power is expressly vested by
Commonwealth Act No. 472
8. Procter and Gamble vs Municipality of Jagna
On March 3, 1964, plaintiff filed this suit in the Court of First Instance of Manila, Branch VI,
wherein it prayed that 1) Ordinance No. 4 be declared inapplicable to it, or in the alter. native,
that it be pronounced ultra-vires and void for being beyond the power of the Municipality to
enact; and 2) that defendant Municipality be ordered to refund to it the amount of P42,265.13
which it had paid under protest; and costs.
Plaintiff's averment that the Ordinance, even if presumed valid, is inapplicable to it because it is
not engaged in the business or occupation of buying or selling of copra but is only storing copra
in connection with its main business of manufacturing soap and other similar products, and that
to be compelled to pay the storage fees would amount to double taxation, does not inspire assent.
The question of whether appellant is engaged in that business or not is irrelevant because the
storage fee, as previously mentioned, is an imposition on the privilege of storing copra in a
bodega within defendant municipality by persons, firms or corporations. Section 1 of the
Ordinance in question does not state that said persons, firms or corporations should be engaged
in the business or occupation of buying or selling copra. Moreover, by plaintiff's own admission
that it is a consolidated corporation with its trading company, it will be hard to segregate the
copra it uses for trading from that it utilizes for manufacturing.
Thus, it can be said that plaintiff's payment of storage fees imposed by the Ordinance in question
does not amount to double taxation. For double taxation to exist, the same property must be
taxed twice, when it should be taxed but once. Double taxation has also been defined as taxing
the same person twice by the same jurisdiction for the same thing. 9 Surely, a tax on plaintiff's
products is different from a tax on the privilege of storing copra in a bodega situated within the
territorial boundary of defendant municipality.
9. Republica vs CTA & CIR
TAXATION; DOUBLE TAXATION DEFINED; NOT PRESENT WHEN ONE IS A PENALTY
AND THE OTHER IS A TAX; CASE AT BAR. The wisdom of this is not the province of the
Court. It is clear from the statutes then in force that there was no double taxation involved one
was a penalty and the other was a tax. At any rate, We have upheld the validity of double
taxation. (Double taxation: when the same person is taxed by the same jurisdiction for the same

purpose. [San Miguel Brewery, Inc. v. City of Cebu 43 SCRA 275, 280]) The payment of 1/10 of
1% for incurring reserve deficiencies (Section 106, Central Bank Act) is a penalty as the primary
purpose involved is regulation, while the payment of 1% for the same violation (Second
Paragraph, Section 249, NIRC) is a tax for the generation of revenue which is the primary
purpose in this instance. Petitioner should not complain that it is being asked to pay twice for
incurring reserve deficiencies. It can always avoid this predicament by not having reserve
deficiencies. Petitioners case is covered by two special laws one a banking law and the other,
a tax law. These two laws should receive such construction as to make them harmonize with each
other and with the other body of pre-existing laws.
10. CIR vs P&G
Sec 24 (b) (1) of the NIRC states that an ordinary 35% tax rate will be applied to dividend
remittances to non-resident corporate stockholders of a Philippine corporation. This rate goes
down to 15% ONLY IF the country of domicile of the foreign stockholder corporation shall
allow such foreign corporation a tax credit for taxes deemed paid in the Philippines,
applicable against the tax payable to the domiciliary country by the foreign stockholder
corporation. However, such tax credit for taxes deemed paid in the Philippines MUST, as a
minimum, reach an amount equivalent to 20 percentage points
FACTS:
Procter and Gamble Philippines declared dividends payable to its parent company and sole
stockholder, P&G USA. Such dividends amounted to Php 24.1M. P&G Phil paid a 35% dividend
withholding tax to the BIR which amounted to Php 8.3M It subsequently filed a claim with the
Commissioner of Internal Revenue for a refund or tax credit, claiming that pursuant to Section
24(b)(1) of the National Internal Revenue Code, as amended by Presidential Decree No. 369, the
applicable rate of withholding tax on the dividends remitted was only 15%.
MAIN ISSUE:
Whether or not P&G Philippines is entitled to the refund or tax credit.
HELD:
YES. P&G Philippines is entitled.
Sec 24 (b) (1) of the NIRC states that an ordinary 35% tax rate will be applied to dividend
remittances to non-resident corporate stockholders of a Philippine corporation. This rate goes
down to 15% ONLY IF he country of domicile of the foreign stockholder corporation shall
allow such foreign corporation a tax credit for taxes deemed paid in the Philippines,
applicable against the tax payable to the domiciliary country by the foreign stockholder
corporation. However, such tax credit for taxes deemed paid in the Philippines MUST, as a
minimum, reach an amount equivalent to 20 percentage points which represents the difference
between the regular 35% dividend tax rate and the reduced 15% tax rate. Thus, the test is if USA
shall allow P&G USA a tax credit for taxes deemed paid in the Philippines applicable
against the US taxes of P&G USA, and such tax credit must reach at least 20 percentage points.
Requirements were met.
NOTES: Breakdown:
a) Deemed paid requirement: US Internal Revenue Code, Sec 902: a domestic corporation
(owning 10% of remitting foreign corporation) shall be deemed to have paid a proportionate
extent of taxes paid by such foreign corporation upon its remittance of dividends to domestic
corporation.
b) 20 percentage points requirement: (computation is as follows)

P 100.00 -- corporate income earned by P&G Phils

x 35% -- Philippine income tax rate
P 35.00 -- paid by P&G Phil as corporate income tax
P 100.00
- 35.00
65. 00 -- available for remittance
P 65. 00
x 35% -- Regular Philippine dividend tax rate
P 22.75 -- regular dividend tax
P 65.0o
x 15% -- Reduced dividend tax rate
P 9.75 -- reduced dividend tax
P 65.00 -- dividends remittable
- 9.75 -- dividend tax withheld at reduced rate
P 55.25 -- dividends actually remitted to P&G USA
Dividends actually
remitted by P&G Phil = P 55.25
---------------------------------- ------------- x P35 = P29.75
Amount of accumulated P 65.00
profits earned
P35 is the income tax paid.
P29.75 is the tax credit allowed by Sec 902 of US Tax Code for Phil corporate income tax
deemed paid by the parent company. Since P29.75 is much higher than P13, Sec 902 US Tax
Code complies with the requirements of sec 24 NIRC. (I did not understand why these were
divided and multiplied. Point is, requirements were met)
Reason behind the law:
Since the US Congress desires to avoid or reduce double taxation of the same income stream, it
allows a tax credit of both (i) the Philippine dividend tax actually withheld, and (ii) the tax credit
for the Philippine corporate income tax actually paid by P&G Philippines but deemed paid by
P&G USA.
Moreover, under the Philippines-United States Convention With Respect to Taxes on Income,
the Philippines, by treaty commitment, reduced the regular rate of dividend tax to a maximum of
20% of he gross amount of dividends paid to US parent corporations, and established a treaty
obligation on the part of the United States that it shall allow to a US parent corporation
receiving dividends from its Philippine subsidiary a [tax] credit for the appropriate amount of
taxes paid or accrued to the Philippines by the Philippine [subsidiary].
Note:
The NIRC does not require that the US tax law deem the parent corporation to have paid the 20
percentage points of dividend tax waived by the Philippines. It only requires that the US shall
allow P&G-USA a deemed paid tax credit in an amount equivalent to the 20 percentage
points waived by the Philippines. Section 24(b)(1) does not create a tax exemption nor does it
provide a tax credit; it is a provision which specifies when a particular (reduced) tax rate is

legally applicable.
Section 24(b)(1) of the NIRC seeks to promote the in-flow of foreign equity investment in the
Philippines by reducing the tax cost of earning profits here and thereby increasing the net
dividends remittable to the investor. The foreign investor, however, would not benefit from the
reduction of the Philippine dividend tax rate unless its home country gives it some relief from
double taxation by allowing the investor additional tax credits which would be applicable against
the tax payable to such home country. Accordingly Section 24(b)(1) of the NIRC requires the
home or domiciliary country to give the investor corporation a deemed paid tax credit at least
equal in amount to the 20 percentage points of dividend tax foregone by the Philippines, in the
assumption that a positive incentive effect would thereby be felt by the investor.