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RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.L22814August28,1968
PEPSICOLABOTTLINGCO.OFTHEPHILIPPINES,INC.,plaintiffappellant,
vs.
CITYOFBUTUAN,MEMBERSOFTHEMUNICIPALBOARD,
THECITYMAYORandTHECITYTREASURER,alloftheCITYOFBUTUAN,defendantsappellees.
Sabido,SabidoandAssociatesforplaintiffappellant.
TheCityAttorneyofButuanCityfordefendantsappellees.
CONCEPCION,C.J.:
Direct appeal to this Court, from a decision of the Court of First Instance of Agusan, dismissing plaintiff's
complaint,withcosts.
Plaintiff,PepsiColaBottlingCompanyofthePhilippines,isadomesticcorporationwithofficesandprincipalplace
ofbusinessinQuezonCity.ThedefendantsaretheCityofButuan,itsCityMayor,themembersofitsmunicipal
boardanditsCityTreasurer.PlaintiffseekstorecoverthesumspaidbyittotheCityofButuanhereinafter
referredtoastheCityandcollectedbythelatter,pursuanttoitsMunicipalOrdinanceNo.110,asamendedby
Municipal Ordinance No. 122, both series of 1960, which plaintiff assails as null and void, and to prevent the
enforcement thereof. Both parties submitted the case for decision in the lower court upon a stipulation to the
effect:
1.Thatplaintiff'swarehouseintheCityofButuanservesasastorageforitsproductsthe"PepsiCola"soft
drinksforsaletocustomersintheCityofButuanandallthemunicipalitiesintheProvinceofAgusan.These
"PepsiColaCola"softdrinksarebottledinCebuCityandshippedtotheButuanCitywarehouseofplaintiff
fordistributionandsaleintheCityofButuanandallmunicipalitiesofAgusan..
2. That on August 16, 1960, the City of Butuan enacted Ordinance No. 110 which was subsequently
amendedbyOrdinanceNo.122andeffectiveNovember28,1960.AcopyofOrdinanceNo.110,Seriesof
1960andOrdinanceNo.122areincorporatedhereinasExhibits"A"and"B",respectively.
3.ThatOrdinanceNo.110asamended,imposesataxonanyperson,association,etc.,ofP0.10percase
of24bottlesofPepsiColaandtheplaintiffpaidunderprotesttheamountofP4,926.63fromAugust16to
December31,1960andtheamountofP9,250.40fromJanuary1toJuly30,1961.
4. That the plaintiff filed the foregoing complaint for the recovery of the total amount of P14,177.03 paid
under protest and those that if may later on pay until the termination of this case on the ground that
OrdinanceNo.110asamendedoftheCityofButuanisillegal,thatthetaximposedisexcessiveandthatit
isunconstitutional.
5.ThatpursuanttoOrdinanceNo.110asamended,theCityTreasurerofButuanCity,haspreparedaform
tobeaccomplishedbytheplaintiffforthecomputationofthetax.Acopyoftheformisenclosedherewith
asExhibit"C".
6.ThattheProfitandLossStatementoftheplaintifffortheperiodfromJanuary1,1961toJuly30,1961of
itswarehouseinButuanCityisincorporatedhereinasExhibits"D"to"D1"to"D5".InthisProfitandLoss
Statement, the defendants claim that the plaintiff is not entitled to a depreciation of P3,052.63 but only
P1,202.55 in which case the profit of plaintiff will be increased from P1,254.44 to P3,104.52. The plaintiff
differsonlyontheclaimofdepreciationwhichthecompanyclaimstobeP3,052.62.Thisisinaccordance
with the findings of the representative of the undersigned City Attorney who verified the records of the
plaintiff.

7. That beginning November 21, 1960, the price of PepsiCola per case of 24 bottles was increased to
P1.92whichpriceisuniformthroughoutthePhilippines.Saidincreasewasmadeduetotheincreaseinthe
productioncostofitsmanufacture.
8.ThatthepartiesreservetherighttosubmitargumentsontheconstitutionalityandillegalityofOrdinance
No.110,asamendedoftheCityofButuanintheirrespectivememoranda.
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Section1ofsaidOrdinanceNo.110,asamended,stateswhatproductsare"liquors",withinthepurviewthereof.
Section 2 provides for the payment by "any agent and/or consignee" of any dealer "engaged in selling liquors,
imported or local, in the City," of taxes at specified rates. 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."Section3A,definesthemeaningoftheterm"consigneeoragent"forpurposesoftheordinance.Section
4 provides that said taxes "shall be paid at the end of every calendar month." Pursuant to Section 5, the taxes
"shallbebasedandcomputedfromthecargomanifestorbillofladingoranyotherrecordshowingthenumberof
casesofsoftdrinks,liquorsorallothersoftdrinksorcarbonateddrinksreceivedwithinthemonth."Sections6,7
and8specifythesurchargetobeaddedforfailuretopaythetaxeswithintheperiodprescribedandthepenalties
imposablefor"deliberateandwillfulrefusaltopaythetaxmentionedinSections2and3"orforfailure"tofurnish
the office of the City Treasurer a copy of the bill of lading or cargo manifest or record of soft drinks, liquors or
carbonated drinks for sale in the City." 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
Fundand20%fortheSchoolFund."
Plaintiffmaintainsthatthedisputedordinanceisnullandvoidbecause:(1)itpartakesofthenatureofanimport
tax(2)itamountstodoubletaxation(3)itisexcessive,oppressiveandconfiscatory(4)itishighlyunjustand
discriminatory and (5) section 2 of Republic Act No. 2264, upon the authority of which it was enacted, is an
unconstitutionaldelegationoflegislativepowers.
Thesecondandlastobjectionsaremanifestlydevoidofmerit.Indeedindependentlyofwhetherornotthetax
in question, when considered in relation to the sales tax prescribed by Acts of Congress, amounts to double
taxation,onwhichweneednotanddonotexpressanyopiniondoubletaxation,ingeneral,isnotforbiddenby
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 well
establishedexception,namely:legislativepowersmaybedelegatedtolocalgovernmentstowhichsaidtheory
doesnotapply3inrespectofmattersoflocalconcern.
Thethirdobjectionis,likewise,untenable.Thetaxof"P0.10percaseof24bottles,"ofsoftdrinksorcarbonated
drinksintheproductionandsaleofwhichplaintiffisengagedorlessthanP0.0042perbottle,ismanifestly
toosmalltobeexcessive,oppressive,orconfiscatory.
Thefirstandthefourthobjectionsmerit,however,seriousconsideration.Inthisconnection,itisnoteworthythat
thetaxprescribedinsection3ofOrdinanceNo.110,asoriginallyapproved,wasimposedupondealers"engaged
in selling" soft drinks or carbonated drinks. Thus, it would seem that the intent was then to levy a tax upon the
saleofsaidmerchandise.AsamendedbyOrdinanceNo.122,thetaxis,however,imposedonlyupon"anyagent
and/or consignee of any person, association, partnership, company or corporation engaged in selling ... soft
drinksorcarbonateddrinks."And,pursuanttosection3A,whichwasinsertedbysaidOrdinanceNo.122:
...DefinitionoftheTermConsigneeorAgent.ForpurposesofthisOrdinance,aconsigneeofagent
shallmeananyperson,association,partnership,companyorcorporationwhoactsintheplaceofanother
byauthorityfromhimoroneentrustedwiththebusinessofanotherortowhomisconsignedorshippedno
lessthan1,000casesofhardliquorsorsoftdrinkseverymonthforresale,eitherretailorwholesale.
Asaconsequence,merchantsengagedinthesaleofsoftdrinkorcarbonateddrinks,arenotsubjecttothetax,
unless they are agents and/or consignees of another dealer, who, in the very nature of things, must be one
engagedinbusinessoutsidetheCity.Besides,thetaxwouldnotbeapplicabletosuchagentand/orconsignee,if
lessthan1,000casesofsoftdrinksareconsignedorshippedtohimeverymonth.Whenweconsider,also,that
thetax"shallbebasedandcomputedfromthecargomanifestorbilloflading...showingthenumberofcases"
notsoldbut"received"bythetaxpayer,theintentiontolimittheapplicationoftheordinancetosoftdrinksand
carbonateddrinksbroughtintotheCityfromoutsidethereofbecomesapparent.Viewedfromthisangle,thetax
partakesofthenatureofanimportduty,whichisbeyonddefendant'sauthoritytoimposebyexpressprovisionof
law.4
Evenhowever,iftheburdeninquestionwereregardedasataxonthesaleofsaidbeverages,itwouldstillbe

invalid,asdiscriminatory,andhence,violativeoftheuniformityrequiredbytheConstitutionandthelawtherefor,
sinceonlysalesby"agentsorconsignees"ofoutsidedealerswouldbesubjecttothetax.Salesbylocaldealers,
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,wouldbeexemptfromthedisputedtax.
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.5 The classification
made in the exercise of this authority, to be valid, must, however, be reasonable6 and this requirement is not
deemedsatisfiedunless:(1)itisbaseduponsubstantialdistinctionswhichmakerealdifferences(2)theseare
germane to the purpose of the legislation or ordinance (3) the classification applies, not only to present
conditions,but,also,tofutureconditionssubstantiallyidenticaltothoseofthepresentand(4)theclassification
appliesequallyallthosewhobelongtothesameclass.7
These conditions are not fully met by the ordinance in question.8 Indeed, if its purpose were merely to levy a
burden upon the sale of soft drinks or carbonated beverages, there is no reason why sales thereof by sealers
other than agents or consignees of producers or merchants established outside the City of Butuan should be
exemptfromthetax.
WHEREFORE, the decision appealed from is hereby reversed, and another one shall be entered annulling
OrdinanceNo.110,asamendedbyOrdinanceNo.122,andsentencingtheCityofButuantorefundtoplaintiff
hereintheamountscollectedfromandpaidunderprotestbythelatter,withinterestthereonatthelegalratefrom
the date of the promulgation of this decision, in addition to the costs, and defendants herein are, accordingly,
restrainedandprohibitedpermanentlyfromenforcingsaidOrdinance,asamended.Itissoordered.
Reyes,J.B.L.,Dizon,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando,JJ.,concur.

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Footnotes
1DeVillatav.Stanley,32Phil.541CityofManilav.InterIslandGasService,99Phil.847,854Syjucov.

MunicipalityofParaaque,L11265,Nov.27,1959CityofBacolodv.Gruet,L18290,Jan.31,1963.
2U.S.v.Bull,15Phil.7,27Kilbournv.Thompson,103U.S.168,26L.ed.377.
3State v. City of Mankato, 136 N.W. 264 People v. Provinces, 34 Cal. 520 Stoutenburgh v. Hennick 129

U.S.141,32L.ed.637.
4Section2(i),RepublicActNo.2264Panaliganv.CityofTacloban,L9319,Sept.27,1957,102Phil.1162

1163EastAsiaticCo.v.CityofDavao,L16253,August21,1962..
5TanTimKeev.CourtofTaxAppeals,L18080,April22,1963NinBayMiningCo.v.MunicipalityofRoxas,

L20125,July20,1965..
6Felwav.Salas,L26511,October29,1966Alejav.GSIS,L18529,February26,1965Peoplev.Solon,

L14864,November23,1960Peoplev.Cayat,68Phil.12Peoplev.Vera,65Phil.56Laurelv.Misa,42
O.G.2847.
7CommissionerofInt.Rev.v.BotelhoShippingCorp.,L2163334,June29,1967ErmitaMalateHotel&

MotelOperatorsAss'n.v.CityMayor,L24693,October23,1967Rafaelv.Embroidery&ApparelControl&
InspectionBoard,L19978,September29,1967Meralcov.PublicUtilitiesEmployeeAss'n.,79Phil.409..
8Virayv.CityofCaloocan,L23118,July26,1967PHILCONSAv.Gimenez,L23326,December18,1965

OrmocSugarCo.v.TreasurerofOrmocCity,L23794,February17,1968.
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