(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 3A 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
Butuans 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.