MATALIN COCONUT CO., INC. vs.

MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR

Facts:
1. The Municipal Council of Malabang, Lanao del Sur enacted the Municipal Ordinance No.
45-46 imposing a police inspection fee of P0.30 per sack of Cassava Starch produced and
shipped out of the said Municipality where penalties are imposed for violations thereof.

It made unlawful for any company, person, or group of persons to ship out goods
specifically Cassava Starch or Flour without paying to the Municipal Treasurer (or his
duly authorized representatives) a fee fixed by the Ordinance and a police inspection fee
of P0.30 (shouldered by the shipper if moving the goods outside the Municipality).

In case of violations, the Ordinance prescribed the payment of a fine of P100 < P1,000;
an additional payment of P1.00 per sack that was illegally shipped; or imprisonment of
20 days, or both, depends in the discretion of the Court.

2. Validity of the Ordinance was challenged by Matalin Coconut Inc., alleging being
violative of R.A. 2264, unreasonable, oppressive and confiscatory.

Purakan Plantation Companty is also affected, crippling its operations to transport its
goods to the port through the said Municipality.

3. Trial Court decided the Municipal Ordinance is null and void; ordered the Municipal
Treasurer refund the payments it made from the period of: Sept. 27, 66 to May 2, 67
with a total amount of: P25,000.00 and subsequent payments; and, prohibiting the
collection of P0.30 police inspection fees.

Issue: Whether the said Ordinance is valid.

Held: Invalid.

The Court ruled that tax should be based on sales, not in the quantity of goods that have
yet to be sold. Moreover, for taxes to be valid, it should be levied for public purposes,
just, and uniform.

The imposition of a police inspection fee of P0.30 per bag was found to be unjust and
unreasonable.