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G.R.No.L23794

TodayisFriday,January08,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.L23794February17,1968
ORMOCSUGARCOMPANY,INC.,plaintiffappellant,
vs.
THETREASUREROFORMOCCITY,THEMUNICIPALBOARDOFORMOCCITY,HON.ESTEBANC.
CONEJOSasMayorofOrmocCityandORMOCCITY,defendantsappellees.
PonceEnrile,SiguionReyna,Montecillo&BeloandTeehankee,Carreon&Taadaforplaintiffappellant.
RamonO.deVeyrafordefendantsappellees.
BENGZON,J.P.,J.:
OnJanuary29,1964,theMunicipalBoardofOrmocCitypassed1OrdinanceNo.4,Seriesof1964,imposing
"onanyandallproductionsofcentrifugalsugarmilledattheOrmocSugarCompany,Inc.,inOrmocCityamunicipal
taxequivalenttoonepercentum(1%)perexportsaletotheUnitedStatesofAmericaandotherforeigncountries."
2

Payments for said tax were made, under protest, by Ormoc Sugar Company, Inc. on March 20, 1964 for
P7,087.50andonApril20,1964forP5,000,oratotalofP12,087.50.
OnJune1,1964,OrmocSugarCompany,Inc.filedbeforetheCourtofFirstInstanceofLeyte,withserviceof
acopyupontheSolicitorGeneral,acomplaint3againsttheCityofOrmocaswellasitsTreasurer,MunicipalBoard
and Mayor, alleging that the aforestated ordinance is unconstitutional for being violative of the equal protection
clause(Sec.1[1],Art.III,Constitution)andtheruleofuniformityoftaxation(Sec.22[1]),Art.VI,Constitution),aside
frombeinganexporttaxforbiddenunderSection2287oftheRevisedAdministrativeCode.Itfurtherallegedthat
the tax is neither a production nor a license tax which Ormoc City under Section 15kk of its charter and under
Section2ofRepublicAct2264,otherwiseknownastheLocalAutonomyAct,isauthorizedtoimposeandthatthe
taxamountstoacustomsduty,feeorchargeinviolationofparagraph1ofSection2ofRepublicAct2264because
thetaxisonboththesaleandexportofsugar.
Answering,thedefendantsassertedthatthetaxordinancewaswithindefendantcity'spowertoenactunder
theLocalAutonomyActandthatthesamedidnotviolatetheaforecitedconstitutionallimitations.Afterpretrialand
submission of the case on memoranda, the Court of First Instance, on August 6, 1964, rendered a decision that
upheldtheconstitutionalityoftheordinanceanddeclaredthetaxingpowerofdefendantcharteredcitybroadenedby
theLocalAutonomyActtoincludeallotherformsoftaxes,licensesorfeesnotexcludedinitscharter.
AppealtherefromwasdirectlytakentoUsbyplaintiffOrmocSugarCompany,Inc.Appellantallegesthesame
statutoryandconstitutionalviolationsintheaforesaidtaxingordinancementionedearlier.
Section1oftheordinancestates:"ThereshallbepaidtotheCityTreasureronanyandallproductionsof
centrifugalsugarmilledattheOrmocSugarCompany,Incorporated,inOrmocCity,amunicipaltaxequivalentto
onepercentum(1%)perexportsaletotheUnitedStatesofAmericaandotherforeigncountries."Thoughreferred
toasataxontheexportofcentrifugalsugarproducedatOrmocSugarCompany,Inc.Forproductionofsugaralone
isnottaxabletheonlytimethetaxappliesiswhenthesugarproducedisexported.
Appellant questions the authority of the defendant Municipal Board to levy such an export tax, in view of
Section 2287 of the Revised Administrative Code which denies from municipal councils the power to impose an
exporttax.Section2287inpartstates:"Itshallnotbeinthepowerofthemunicipalcounciltoimposeataxinany
formwhatever,upongoodsandmerchandisecarriedintothemunicipality,oroutofthesame,andanyattemptto
imposeanimportorexporttaxuponsuchgoodsintheguiseofanunreasonablechargeforwharfageuseofbridges
orotherwise,shallbevoid."
Subsequently, however, Section 2 of Republic Act 2264 effective June 19, 1959, gave chartered cities,
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G.R.No.L23794

municipalitiesandmunicipaldistrictsauthoritytolevyforpublicpurposesjustanduniformtaxes,licensesorfees.
AnenttheinconsistencybetweenSection2287oftheRevisedAdministrativeCodeandSection2ofRepublicAct
2264, this Court, in Nin Bay Mining Co. v. Municipality of Roxas 4 held the former to have been repealed by the
latter.AndexpressingOurawarenessofthetranscendentaleffectsthatmunicipalexportorimporttaxesorlicenses
will have on the national economy, due to Section 2 of Republic Act 2264, We stated that there was no other
alternativeuntilCongressactstoprovideremedialmeasurestoforestallanyunfavorableresults.
The point remains to be determined, however, whether constitutional limits on the power of taxation,
specificallytheequalprotectionclauseandruleofuniformityoftaxation,wereinfringed.
TheConstitutioninthebillofrightsprovides:"...norshallanypersonbedeniedtheequalprotectionofthe
laws."(Sec.1[1],Art.III)InFelwavs.Salas,5Weruledthattheequalprotectionclauseappliesonlytopersonsor
things identically situated and does not bar a reasonable classification of the subject of legislation, and a
classificationisreasonablewhere(1)itisbasedonsubstantialdistinctionswhichmakerealdifferences(2)these
aregermanetothepurposeofthelaw(3)theclassificationappliesnotonlytopresentconditionsbutalsotofuture
conditionswhicharesubstantiallyidenticaltothoseofthepresent(4)theclassificationappliesonlytothosewho
belongtothesameclass.
Aperusaloftherequisitesinstantlyshowsthatthequestionedordinancedoesnotmeetthem,forittaxesonly
centrifugal sugar produced and exported by the Ormoc Sugar Company, Inc. and none other. At the time of the
taxing ordinance's enactment, Ormoc Sugar Company, Inc., it is true, was the only sugar central in the city of
Ormoc. Still, the classification, to be reasonable, should be in terms applicable to future conditions as well. The
taxingordinanceshouldnotbesingularandexclusiveastoexcludeanysubsequentlyestablishedsugarcentral,of
the same class as plaintiff, for the coverage of the tax. As it is now, even if later a similar company is set up, it
cannotbesubjecttothetaxbecausetheordinanceexpresslypointsonlytoOrmocCitySugarCompany,Inc.asthe
entitytobeleviedupon.
Appellant,however,isnotentitledtointerestontherefundbecausethetaxeswerenotarbitrarilycollected
(CollectorofInternalRevenuev.Binalbagan).6Atthetimeofcollection,theordinanceprovidedasufficientbasisto
precludearbitrariness,thesamebeingthenpresumedconstitutionaluntildeclaredotherwise.
WHEREFORE, the decision appealed from is hereby reversed, the challenged ordinance is declared
unconstitutionalandthedefendantsappelleesareherebyorderedtorefundtheP12,087.50plaintiffappellantpaid
underprotest.Nocosts.Soordered.
Concepcion,C.J.,Reyes,J.B.L.,Dizon,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando,JJ.,concur.

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Footnotes
1ResolutionNo.30,Seriesof1964.
2Section1,emphasissupplied.
3AnactionfordeclaratoryjudgmentwasalsofiledonMay23,1964(CivilCaseNo.6650)butthisandthe

presentcaseweretriedjointly.
4L20125,July20,1965.
5L26511,Oct.29,1966.
6L12752,Jan.30,1965.
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