GR L 23794; (February, 1968) (Digest)
G.R. No. L-23794 February 17, 1968
ORMOC SUGAR COMPANY, INC., plaintiff-appellant, vs. THE TREASURER OF ORMOC CITY, THE MUNICIPAL BOARD OF ORMOC CITY, HON. ESTEBAN C. CONEJOS as Mayor of Ormoc City and ORMOC CITY, defendants-appellees.
FACTS
On January 29, 1964, the Municipal Board of Ormoc City passed Ordinance No. 4, Series of 1964, imposing a municipal tax equivalent to one percent (1%) on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc City per export sale to the United States of America and other foreign countries. The Ormoc Sugar Company, Inc. made payments for this tax under protest, totaling P12,087.50. The company subsequently filed a complaint before the Court of First Instance of Leyte, alleging the ordinance was unconstitutional for violating the equal protection clause and the rule of uniformity of taxation, and that it was an export tax forbidden under the Revised Administrative Code. The company also argued the tax was neither a production nor a license tax authorized by the city’s charter or the Local Autonomy Act, and that it amounted to a prohibited customs duty. The lower court upheld the ordinance’s constitutionality, prompting a direct appeal to the Supreme Court.
ISSUE
Whether Ordinance No. 4, Series of 1964 of Ormoc City is unconstitutional for violating the equal protection clause and the rule of uniformity of taxation.
RULING
Yes, the ordinance is unconstitutional. The Supreme Court reversed the lower court’s decision. The Court held that while the Local Autonomy Act (Republic Act 2264) repealed the prohibition in the Revised Administrative Code against municipal export taxes, the ordinance in question violated the constitutional guarantee of equal protection of the laws. The ordinance imposed a tax only on centrifugal sugar produced and exported by the Ormoc Sugar Company, Inc., and no other. This classification was not reasonable because it was not based on substantial distinctions germane to the law’s purpose, and it was not applicable to future conditions or others belonging to the same class. The tax was singular and exclusive to one company, and even if a similar company were later established, it would not be subject to the tax. The Court ordered the defendants to refund the P12,087.50 paid under protest, but denied the plaintiff’s claim for interest on the refund because the taxes were not arbitrarily collected at the time, the ordinance being presumed constitutional until declared otherwise.