G.R. No. L-22814. August 28, 1968
PEPSI-COLA BOTTLING CO. OF THE PHILIPPINES, INC., PLAINTIFF-APPELLANT, VS. CITY OF BUT UAN, MEMBERS OF THE MUNICIPAL BOARD, THE CITY MAYOR AND THE CITY TREASURER, ALL OF THE CIT…
CONCEPCION, C.J.:
Direct appeal to this Court, from a decision of the Court of
First Instance of Agusan, dismissing plaintiff’s
complaint, with costs.
Plaintiff, Pepsi-Cola Bottling Company of the Philippines,
is a domestic corporation with offices and principal place of business in Quezon City. The defendants are the City of Butuan, its City Mayor, the
members of its municipal board and its City Treasurer. Plaintiff seeks to recover the sums paid by
it to the City of Butuan – hereinafter referred to as
the City – and collected by the latter, pursuant to its Municipal Ordinance No.
110, as amended by 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. That
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. These “Pepsi-Cola” soft drinks are
bottled in Cebu
City and shipped to the Butuan City
warehouse of plaintiff for distribution and sale in the City of Butuan and all municipalities of Agusan.
“2. That on August 16, 1960, the City of Butuan enacted Ordinance No. 110
which was subsequently amended by Ordinance No. 122 and effective November 28, 1960. A copy of Ordinance No. 110, Series of 1960
and Ordinance No. 122 are incorporated herein as Exhibits “A” and
“B”, respectively.
“3. That Ordinance
No. 110 as amended, imposes a tax on any person, association, etc., of P0.10
per case of 24 bottles of Pepsi Cola and the plaintiff paid under protest the
amount of P4,926.63 from August 16 to December
31, 1960 and the amount of P9,250.40 from January 1 to July 30, 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 it may later on pay until the
termination of this case on the ground that Ordinance No. 110 as amended of the
City of Butuan is illegal, that the tax imposed is
excessive and that it is unconstitutional.
“5. That pursuant
to Ordinance No. 110 as amended, the City Treasurer of Butuan
City, has prepared a form to be accomplished by the plaintiff for the
computation of the tax. A cop(y) of the
form is enclosed herewith as Exhibit “C”.
“6. That the
Profit and Loss Statement of the plaintiff for the period from January 1, 1961
to July 30, 1961 of its warehouse in Butuan City is
incorporated herein as Exhibits “D” to “D-1” to
“D-5”. In this Profit and Loss
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 differs only on the claim of
depreciation which the company claims to be P3,052.62. This is in
accordance 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 Pepsi-Cola per case of 24 bottles was increased to P1.92 which price
is uniform throughout the Philippines. Said increase was made due to the increase in
the production cost of its manufacture.
“8. That the
parties reserve the right to submit arguments on the constitutionality and
illegality of Ordinance No. 110, as amended of the City of Butuan in their respective
memoranda.
“ x x x x x x ”
Section 1 of said Ordinance No. 110, as amended, states what
products are “liquors”, within the purview thereof. 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.” Section 3-A, defines the meaning of the term “consignee or
agent” for purposes of the ordinance.
Section 4 provides that said taxes “shall be paid at the end of
every calendar month.” Pursuant to Section 5, the taxes “shall be
based and computed from the cargo manifest or bill of lading or any other
record showing the number of cases of soft drinks, liquors or all other soft
drinks or carbonated drinks received within the month.” Sections 6, 7 and
8 specify the surcharge to be added for failure to pay the taxes within the
period prescribed and the penalties imposable for “deliberate and willful
refusal to pay the tax mentioned in Sections 2 and 3” or for failure
“to furnish 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 Fund and 20% for the School Fund.”
Plaintiff maintains that the disputed ordinance is null and void
because: (1) it partakes of the nature
of an import tax; (2) it amounts to double taxation; (3) it is excessive,
oppressive and confiscatory; (4) it is highly unjust and discriminatory; and
(5) section 2 of Republic Act No. 2264, upon the authority of which it was
enacted, is an unconstitutional delegation of legislative powers.
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 powers[2]
is subject to one well-established exception, namely: legislative powers may be delegated to local
governments – to which said theory does not apply[3] –
in respect of matters of local concern.
The third objection is, likewise, untenable. The tax of “P0.10 per case of 24
bottles” of soft drinks or carbonated drinks – in the production and sale
of which plaintiff is engaged – or less than P0.0042 per bottle, is manifestly
too small to be excessive, oppressive, or confiscatory.
The first and the fourth objections merit, however, serious
consideration. In this connection, it is
noteworthy that the tax prescribed in section 3 of Ordinance No. 110, as
originally approved, was imposed upon dealers “engaged in selling”
soft drinks or carbonated drinks. Thus,
it would seem that the intent was then to levy a tax upon the sale of
said merchandise. As amended by
Ordinance No. 122, the tax is, however, imposed only upon “any
agent and/or consignee of any person, association, partnership, company or
corporation engaged in selling x x soft drinks or
carbonated drinks.” And, pursuant to section 3-A, which was inserted by
said Ordinance No. 122:
” x x – Definition of the Term
Consignee or Agent. – For purposes of
this Ordinance, a consignee or 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.”
As a consequence, merchants engaged in the sale of soft drinks or
carbonated drinks, are not subject to the tax, unless they are agents
and/or consignees of another dealer, who, in the very nature of things,
must be one engaged in business outside the City. Besides, 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. When we consider, also, that the tax
“shall be based and computed from the cargo manifest or bill
of lading x x 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. Viewed from this angle, the
tax partakes of the nature of an import duty, which is beyond defendant’s
authority to impose by express provision of law.[4]
Even, however, if the burden in question were regarded as a tax
on the sale of said beverages, it would still be invalid, as discriminatory,
and hence, violative of the uniformity required by
the Constitution and the law therefor, since only
sales by “agents or consignees” of outside dealers would be
subject to the tax. 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.
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 reasonable[6]
and this requirement is not deemed satisfied unless: (1) it is based upon substantial distinctions
which make real differences; (2) these are germane to the purpose of the
legislation or ordinance; (3) the classification applies, not only to present
conditions, but, also, to future conditions substantially identical to those
of the present; and (4) the classification applies equally all those who belong
to the same class.[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 dealers
other than agents or consignees of producers or merchants established outside
the City of Butuan
should be exempt from the tax.
WHEREFORE, the decision appealed from is hereby reversed,
and another one shall be entered annulling Ordinance No. 110, as amended by
Ordinance No. 122, and sentencing the City of Butuan
to refund to plaintiff herein the amounts collected from and paid under protest
by the latter, with interest thereon at the legal rate from the date of the
promulgation of this decision, in addition to the costs, and defendants herein
are, accordingly, restrained and prohibited permanently from enforcing said
Ordinance, as amended.
IT IS SO ORDERED.
Reyes, Dizon, Makalintal,
Zaldivar, Sanchez, Castro, Angeles, and Fernando, JJ., concur.
[1]
De Villata v. Stanley, 32 Phil. 541; City of Manila
v. Inter-Island Gas Service, 99 Phil. 847, 854; Syjuco
v. Municipality of Parañaque, G.R. No. L-11265, Nov. 27, 1959; City of Bacolod v. Gruet, G.R. No. L-18290, Jan. 31, 1963.
[2] U.S.
v. Bull, 15 Phil. 7, 27; Kilbourn v.
Thompson, 103 U.S.
168, 26 L. ed. 377.
[3]
State v. City of Mankato,
136 N.W. 264; People v. Provinces, 34 Cal.
520; Stoutenburgh v. Hennick,
129 U.S. 141,
32 L. ed. 637.
[4]
Section 2(i), Republic Act No. 2264; Panaligan v. City of Tacloban, G.R. No. L-9319, Sept. 27, 1957, 102 Phil. 1162-1163;
East Asiatic Co. v. City of Davao, G.R. No. L-16253, August 21, 1962.
[5]
Tan Tim Kee v. Court of Tax Appeals, G.R. No. L-18080,
April 22, 1963; Nin Bay Mining Co. v. Municipality
of Roxas,
G.R. No. L-20125, July 20, 1965.
[6] Felwa v. Salas, G.R. No. L-26511, October 29, 1966; Aleja v. GSIS, G.R. No. L-18529, February 26, 1965; People v.
Solon, G.R. No. L-14864, November 23,
1960; People v. Cayat, 68 Phil.
12; People v. Vera, 65 Phil. 56; Laurel
v. Misa, 42 O.G. 2847.
[7]
Commissioner of Int. Rev. v. Botelho Shipping
Corp., G.R. No. L-21633-34, June 29,
1967; Ermita-Malate Hotel & Motel
Operators Ass’n. v. City Mayor, G.R. No. L-24693,
October 23, 1967; Rafael v.
Embroidery & Apparel Control & Inspection Board, G.R. No. L-19978, September 29, 1967; Meralco v. Public Utilities Employees’ Ass’n., 79 Phil. 409.
[8] Viray v. City of Caloocan, G.R. No. L-23118, July 26, 1967; PHILCONSA v. Gimenez, G.R. No. L-23326, December 18, 1965; Ormoc Sugar
Co. v. Treasurer of Ormoc
City, G.R. No. L-23794, February 17, 1968.