Case Summary (G.R. No. 169228)
Key Dates
• August 16, 1960 – Enactment of Ordinance No. 110.
• November 28, 1960 – Effective date of Ordinance No. 122 (amendment defining “agent or consignee” and limiting application).
• August 16–December 31, 1960 – P4,926.63 paid under protest.
• January 1–July 30, 1961 – P9,250.40 paid under protest.
• August 28, 1968 – Decision of the Supreme Court reversing the lower court.
Applicable Law
• 1935 Philippine Constitution (operative at time of decision).
• Republic Act No. 2264 (granting taxing authority to local governments).
• Doctrines on double taxation, separation of legislative powers, and uniformity in taxation.
Facts and Procedural History
Pepsi-Cola ships bottled soft drinks from Cebu City to its Butuan warehouse for distribution throughout Agusan. Under protest, it paid local taxes computed from cargo manifests, as required by the City Treasurer’s form. The complaint sought annulment of the ordinances and refund of amounts paid. The trial court dismissed the complaint, prompting direct appeal.
Ordinance No. 110 (Series 1960) and Amendment by No. 122
• Section 1 defines “liquors,” including soft drinks and carbonated beverages.
• Section 2 imposes taxes on agents or consignees of dealers “engaged in selling liquors.”
• Section 3 levies P0.10 per 24-bottle case.
• Section 3-A (Ordinance 122) restricts “agent or consignee” to those receiving ≥1,000 cases monthly.
• Sections 4–5 set monthly payment deadlines and base computation on cargo manifests or bills of lading.
• Sections 6–9 prescribe surcharges and penalties for delinquency or nondisclosure.
• Section 10 allocates revenue: 40% Roads and Bridges Fund, 40% General Fund, 20% School Fund.
Plaintiff’s Contentions
- Ordinance constitutes an import tax beyond municipal authority.
- It effects double taxation.
- It is excessive, oppressive, and confiscatory.
- It is unjustly discriminatory.
- Section 2 of RA 2264 unlawfully delegates legislative power.
Supreme Court Analysis – Double Taxation and Delegation
• Double taxation per se is not prohibited under the 1935 Constitution; U.S. prohibitions are not adopted.
• Delegation of legislative power to local government on matters of local concern is permissible.
Excessiveness of the Tax
At less than P0.0042 per bottle, the P0.10 per case levy is de minimis and cannot be deemed excessive, oppressive, or confiscatory.
Nature of the Tax as an Import Duty
The amendment confines the tax to agents/consignees receiving over 1,000 cases from outside the city, and computation relies on inbound cargo manifests rather than sales. This reveals an import‐duty character, which municipalities lack authority to impose.
Discriminatory Classification and Uniformity Requirement
Even if treated as a sales tax, exemption of local dealers (not acting as agents/consignees of out
...continue readingCase Syllabus (G.R. No. 169228)
Facts of the Case
- Pepsi-Cola Bottling Co. of the Philippines, Inc. is a domestic corporation with principal office in Quezon City and maintains a warehouse in Butuan City for distribution of its “Pepsi-Cola” soft drinks throughout Butuan and the Province of Agusan.
- On August 16, 1960, the City of Butuan enacted Municipal Ordinance No. 110, Series of 1960, later amended by Ordinance No. 122, effective November 28, 1960, imposing a tax of ₱0.10 per case of 24 bottles on soft drinks, carbonated beverages, liquors, and “all other soft drinks or carbonated drinks.”
- The tax was computed based on cargo manifests, bills of lading, or other records showing cases “received” by any agent or consignee, with payment due monthly and penalties for late or non-payment.
- Plaintiff paid ₱4,926.63 under protest for the period August 16–December 31, 1960, and ₱9,250.40 for January 1–July 30, 1961, totaling ₱14,177.03, and filed suit to recover these amounts and to enjoin enforcement of the ordinance.
Procedural History
- The Court of First Instance of Agusan dismissed plaintiff’s complaint with costs after both parties submitted on a stipulated record.
- Plaintiff directly appealed to the Supreme Court of the Philippines.
Stipulated Matters
- Exhibits A & B: Copies of Ordinance No. 110 (Series of 1960) and Ordinance No. 122 (Series of 1960).
- Exhibit C: Tax computation form prepared by the City Treasurer.
- Exhibits D–D-5: Plaintiff’s Profit and Loss Statement (Jan. 1–Jul. 30, 1961) for its Butuan warehouse, reflecting a depreciation dispute (plaintiff claims ₱3,052.62; defendants allow ₱1,202.55).
- Price of a case increased uniformly to ₱1.92 on November 21, 1960, due to higher production cost.
- Parties reserved their rights to argue the ordinance’s constitutionality and legality in memoranda.