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Pepsi-Cola Vs Butuan

The plaintiff operated a warehouse in Butuan City to store and distribute soft drinks for sale in Butuan City and surrounding municipalities. Butuan City enacted an ordinance imposing a tax of P0.10 per case of 24 bottles of soft drinks. The plaintiff paid the tax under protest. The Supreme Court ruled that (1) the tax was in the nature of an import tax, which the city did not have authority to impose, as the tax applied only to agents/consignees of dealers outside the city; and (2) the tax was unjustly discriminatory as it did not apply equally to all soft drink sellers, only exempting local dealers not acting on behalf of outside companies. The classification in the ordinance

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105 views2 pages

Pepsi-Cola Vs Butuan

The plaintiff operated a warehouse in Butuan City to store and distribute soft drinks for sale in Butuan City and surrounding municipalities. Butuan City enacted an ordinance imposing a tax of P0.10 per case of 24 bottles of soft drinks. The plaintiff paid the tax under protest. The Supreme Court ruled that (1) the tax was in the nature of an import tax, which the city did not have authority to impose, as the tax applied only to agents/consignees of dealers outside the city; and (2) the tax was unjustly discriminatory as it did not apply equally to all soft drink sellers, only exempting local dealers not acting on behalf of outside companies. The classification in the ordinance

Uploaded by

Kim Cajucom
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PEPSI-COLA BOTTLING CO. OF THE PHIL., INC. VS.

CITY OF BUTUAN
No. L-22814. August 28, 1968

FACTS: Plaintiff's warehouse in the City of Butuan serves as a 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. On August 16, 1960, the City of Butuan enacted
Ordinance No. 110 which imposes a P0.10 per case of 24 bottles of Pepsi-Cola tax on
any person, association, etc., engaged in selling such soft drinks or carbonated drinks.
The plaintiff paid under protest the amount 
 P14, 177.03 from August 1960 to July 1961
and now files this complaint for its recovery alleging that 1) it is the nature of an import
tax, 2) it amounts to double taxation, 3) the tax imposed is excessive, oppressive and
confiscatory, 4) it is highly unjust and discriminatory and that 5) section 2 of R.A. 2264 is
an unconstitutional delegation of legislative power.

ISSUE: (SC held that only 1st and 4th objections need serious consideration)
1) Whether the tax imposed is in the nature of an import tax.
2) Whether the tax is highly unjust and discriminatory.

RULING:
1) Yes. As amended by Ordinance No. 122, the tax is imposed is only upon "any
agent and/or consignee of any person, association, partnership, company or
corporation engaged in selling x x x soft drinks or carbonated drinks." Because of
this, only those which are agents and/or consignees of another dealer, who, in the
very nature of things, must be one engaged in business outside the City, are taxed.
Also, according to Sec.3-A1, the tax would not be applicable to such agent and/or
consignee, if less than 1,000 cases of soft drinks are consigned or shipped to him
every month. Also, since the tax "shall be based and computed from the cargo
manifest or bill of lading. . .showing the number of cases"—not sold—but
"received" by the taxpayer, the intention to limit the application of the ordinance to
soft drinks and carbonated drinks brought into the City from outside thereof
becomes apparent. Therefore, the tax partakes of the nature of an import duty,
which is beyond defendant's authority to impose by express provision of law.

2) Yes. Since only sales by "agents or consignees" of outside dealers would be


subject to the tax it would be violative of the uniformity required by the Constitution.
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.
a. Note: Requirements of a valid classification made in the exercise of an
authority:

1 "x x—Definition of the Term Consignee or Agent.—For purposes of this Ordinance, a consignee of agent shall mean any person,
association, partnership, company or corporation who acts in the place of another by authority from him or one entrusted with the
business of another or to whom is consigned or shipped no less than 1,000 cases of hard liquors or soft drinks every month for resale,
either retail or wholesale."
i. (1) it is based upon substantial distinctions which make real
differences;
ii. (2) these are germane to the purpose of the legislation or ordinance;
iii. (3) the classification applies equally all those who belong to the same
class

Since these conditions are not met since if the purpose of the ordinance was to
levy burden upon the sale of soft drinks, both dealers from within and outside of
the City of Butuan should be taxed.

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