Saturday, February 04, 2012

Procter & Gamble vs. Municipality of Jagna

Facts: Petitioner domestic corporation owns a Bodega within the jurisdiction of respondent.

Respondent issued a Municipal Ordinance charging 10 centavos for every 100 kilos of stored copra with a fine/imprisonment if not followed.

For 6 years after, petitioner paid under protest.

Petitioner then claimed that ordinance should be ruled inapplicable to it and that a refund be made. Petitioner claims it is not really in the business of trading copra, but only uses it in connection to its business, and that it is an export tax. Petitioner also alleges that it would lead to double taxation because it is not involved in the business of copra.

(1) Whether or not respondent has the authority to issue the Municipal Order.

(2) Whether or not there is double taxation.

(3) Whether or not it is an export tax which is prohibited.

(1) YES. Broad authority has been granted to municipalities, including the power to exercise license taxes. In this case, the ordinance is charging a license  tax for the privilege of storing copra. This is valid because copra is highly flammable, and safety of the public is the intent of charging the tax. Also the rate is not oppressive or unreasonable.

(2) NO. It is immaterial what the business of the petitioner is. The tax is, as said, for the privilege to store copra in their bodega which is entirely different from a tax on petitioner’s products. For double taxation to exist, the same thing must be taxed twice within the same jurisdiction, which is not the case here.

(3) NO. Only where there is a clear showing that what is being taxed is an export to any foreign country would the prohibition come into play. When the Ordinance itself speaks of "exportable" copra, the meaning is not exclusively export to a foreign country but shipment out of the municipality. The storage fee impugned is not a tax on export because it is imposed not only upon copra to be exported but also upon copra sold and to be used for domestic purposes if stored in any warehouse in the Municipality and the weight thereof is 100 kilos or more.

The action has not yet prescribed because in the case of Municipality of Opon v. Caltex, the period to recover municipal license taxes is 6 years, and therefore the claim here is within the prescriptive period.

Ordinance sustained.

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