(2) Pepsi vs. City of Butuan, G.R. No.

L-22814
August 28, 1986
Ponente: Concepcion, C.J.:

Facts: The City of Butuan enacted Ordinance No. 110 which imposed a tax of
P0.10 per case of 24 bottles of soft drinks and carbonated beverages. This tax
was imposed upon dealers engaged in selling soft drinks or carbonated drinks.
However, as amended by Ordinance No. 122, he tax imposed only upon any agent
and/or consignee of any person, association, partnership, company or
corporation engaged in selling soft drinks and carbonated drinks; the term “agent
or consignee” being particularly defined by the inserted provision Section 3–A by
Ordinance No. 122. In effect, 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 must be one engaged in business outside the
City of Butuan. Petitioners now seek to recover the amounts paid, assailing that
Ordinance No. 110 is null and void.

Issue: (1) Whether or not there was invalid delegation of legislative powers.

(2) Whether or not the Ordinance is discrimatory.

Held: (1) No. There was no invalid delegation of legislative powers. The general
principle of delegation of legislative powers, in consequence of the theory of
separation of powers is subject to one well-established exception, namely:
legislative powers may be delegated to local governments, in respect of matters
of local concern.

(2) Yes. It is discriminatory, since only sales by agents and/or consignees of

outside dealers would be subject to the tax. The tax partakes of an import duty,
which is beyond the City of Butuan’s authority to impose.

It is true that the uniformity essential to a 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. To be valid it must satisfy the
following:

(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 to all those who belong to the same
class.