Pepsi-Cola Bottling Co. v. City of Butuan G.R. L-22814 (1968) PARTIES Pepsi Cola is a domestic corporation with offices and principal place in the Quezon City, City Butuan is a municipal corporation headed by the City Mayor—also defendant in this case. FACTS Pepsi Cola asserts that Ordinance 122 (amended version of Ordinance 110) is void; hence, they are entitled to a refund. Ordinance 110 Taxed is imposed upon dealers engaged in the selling of softdrinks. (sale tax of a merchandise) Taxed is imposed upon agent or consignee—merchants engaged in sale of softdrinks are not subject to tax unless they are agents or consignee of another dealer, who must be engaged in the business outside the city. Ordinance 122 In this case, Pepsi Cola is engaged in the business outside the city (Quezon City) so their consignees are compelled to pay taxes. ISSUES & RULING Is it an import tax? Is it unjust and discriminatory? The intention to limit the softdrinks bought inside the city from outside is apparent. The tax partakes of an import duty, which is beyond the Butuan’s authority to impose by express provision of a law. (RA 2264) Yes. Uniformity is essential to the valid exercise of power to tax. In this case, there is no substantial distinctions and it does not apply to the same class because only the consignees from outside the city are required to pay tax.

G.R. L-22814 Pepsi Cola v. City of Butuan

Download PDF Report

Upload
cecille-carmela-t-de-los-reyes
View
28
Download
1

Embed Size (px)

DESCRIPTION

G.R. L-22814 Pepsi Cola v. City of Butuan* Same; Conditions for a valid classification of the objects of taxation; Municipal Ordinance No. 122 of the City of Butuan is null and void; Case at bar.—In the present case the tax prescribed in section 3 of Ordinance No. 110 of the City of Butuan, 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 of tax upon the sale of said merchandise. As amended by Ordinance No. 122, the tax is, however, imposed oriLy 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."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 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. 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. The classification made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless: (1) it is based upon substantial distinctions which make the 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 to all those who belong to the same class.These conditions are not fully met by the ordinance in question. If its purpose were merely to levy a burden upon the sale of softdrinks or carbonated drinks, there is no reason why sales by dealers other than agents should be exempt from tax.

Citation preview

Pepsi-Cola Bottling Co.

v.

City of Butuan

G.R. L-22814 (1968)

PARTIES

Pepsi Cola is a domestic

corporation with offices and

principal place in the Quezon

City,

City Butuan is a municipal

corporation headed by the City

Mayoralso defendant in this case.

FACTS

Pepsi Cola asserts that

Ordinance 122 (amended

version of Ordinance 110) is

void; hence, they are entitled

to a refund.

Ordinance 110

Taxed is imposed upon

dealers engaged in the selling

of softdrinks. (sale tax of a

merchandise)

Taxed is imposed upon agent

or consigneemerchants engaged in sale of softdrinks

are not subject to tax unless

they are agents or consignee

of another dealer, who must

be engaged in the business

outside the city.

Ordinance 122

In this case, Pepsi Cola is engaged in the

business outside the city (Quezon City) so

their consignees are compelled to pay

taxes.

ISSUES &

RULING

Is it an import

tax?

Is it unjust and

discriminatory?

The intention to limit the

softdrinks bought inside the

city from outside is apparent.

The tax partakes of an import

duty, which is beyond the

Butuans authority to impose by express provision of a law.

(RA 2264)

Yes. Uniformity is essential to

the valid exercise of power to

tax.

In this case, there is no

substantial distinctions and it

does not apply to the same

class because only the

consignees from outside the

city are required to pay tax.

Pepsi v. Butuan.vsdPage-1