ORMOC SUGAR COMPANY, INC. v.

ORMOC
CITY
L-23794
Plaintiff-appellant: Ormoc Sugar Company, Inc.
Defendants-appellees: The Treasurer of Ormoc City,
The Municipal Board of Ormoc City, Hon. Esteban C.
Conejos, as Mayor of Ormoc City, and Ormoc City
Date: February 17, 1968

TOPIC Equal Protection Clause

DOCTRINE
The Constitution in the Bill of Rights provides:
x x x nor shall any person be denied of the equal
protection of the laws. (Sec. 1[1], Art. III)
(SHORT VERSION)
Municipal Board of Ormoc City taxed
production of Ormoc Sugar Company, Inc. in Ordinance
No. 4, Section 1 (See FACTS for provision).
It is unconstitutional and violates the equal
protection clause for specifically pointing out ONLY
Ormoc Sugar Company, Inc. to be taxed.
FACTS
The Municipal Board of Ormoc City passed
Ordinance No. 4, imposing a municipal tax of 1% on all
productions of centrifugal sugar made by Ormoc Sugar
Company, Inc, for export sale to United States and other
foreign countries. The relevant provision states:
Section 1. There shall be paid to the City
Treasurer on any and all productions of centrifugal
sugar milled at the Ormoc Sugar Company,
Incorporated, in Ormoc City, a municipal tax
equivalent to one per centum (1%) per export sale to
the United States of America and other foreign
countries.
Ormoc Sugar Company, Inc. made payments
under protest on March 20, 1964 (for P7,087.50) and on
April 20, 1964 (for P5,000) for a total of P12,087.50. It
then filed a complaint against the Cit of Ormoc, its
Treasurer, Municipal Board, and Mayor.
PLAINTIFF'S ARGUMENTS
The ordinance is unconstitutional due to the
following:
It violates the Equal Protection Clause of the
Constitution (Sec. 1[1], Art. III, Constitution)
It violates the rule of uniformity on taxation
(Sec. 22[1], Art. VI, Constitution)

It is a forbidden export tax. (Section 2287 1,

Revised Administrative Code)
Ormoc City is not allowed to impose such a tax,
because this tax is not a production nor a license
tax. (Section 2, RA 2264 or the Local Autonomy
Act)
The tax amounts to a customs duty, fee or charge
on the sale and export of sugar, which is
violating (Sec. 2, RA 2264)

DEFENDANT'S ARGUMENTS
The tax ordinance is within the city's power to
enact under RA 2264 or the Local Autonomy Act and
does not violate any constitutional limitation.
ISSUES/HELD
(1) WoN it was within the authority of Ormoc to impose
such a tax - YES
(2) WoN Ordinance No. 4 violates EPC anyway YES
[TOPIC IN CLASS]
RATIO
(1) Ormoc City is authorized to impose such a tax.
Section 2, RA 2264, or the Local Autonomy Act gives
chartered cities, municipalities, and municipal districts
authority to levy for public purposes just and uniform
taxes, licenses or fees. The inconsistency of this
particular law with Section 2287 of the Revised
Administrative Code (which does not give such
authority to municipalities) was resolved when the case
of Nin Bay Mining Co. v. Municipality of Roxas held that
RA 2264 repealed Sec. 2287 of the Revised
Administrative Code.
(2) The Ordinance violates the Equal Protection Clause.
The Ordinance taxes only Ormoc Sugar Company,
Inc., and not the other sugar companies also exporting to
foreign countries. At the time the law was enacted, it was
constitutional, for at that time, Ormoc Sugar Company,
Inc. was the only sugar central in the City of Ormoc.
However, the classification should be applicable in terms
of future application as well. The taxing Ordinance
should not be in such a way that it only applies to
Ormoc Sugar Company, Inc., and must not be
established as to exclude from taxing any other sugar
company which may exist in the future. The
1 It shall not be in the power of municipal council to
impose a rax in any form whatever, upon goods and
merchandise carried into the municipality, or out of the
same, and any attempt to impose an import or export
tax upon such goods in the guise of any unreasonable
charge for wharfage, use of bridges or otherwise shall
be void. (Section 2287, Revised Administrative Code)

Ordinance expressly points at Ormoc Sugar Company,

Inc. as the only company to be taxed.
The Constitution in the Bill of Rights provides:
x x x nor shall any person be denied of the equal
protection of the laws. (Sec. 1[1], Art. III) The equal
protection clause applies only to persons or things
identically situated and does not bar a reasonable
classification of the subject of legislation. A
classification is reasonable where:
(1) it is based on substantial distinctions which
make real differences;
(2) these are germane to the purpose of law;
(3) the classification applies not only to present
conditions but also to future conditions which
are substantially identical to those of the present;
(4) the classification applies only to those who
belong in the same class.
In short: if the Ordinance makes a classification
by making the tax imposed on sugar central
companies, the Ordinance violates EPC by
differentiating this particular sugar company, Ormoc
Sugar Company, Inc., from the other sugar companies
identical to it by that classification, by levying a tax only
on it.
DECISION Decision reversed and Ordinance is
declared unconstitutional. Ormoc City required to refund
the amount of P12,087.50 to Ormoc Sugar Company,
Inc. but without interest as at the time of collection, there
was sufficient basis by the ordinance to preclude
arbitrariness of collection.
M1