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Ormoc Sugar Co. v. Treasurer of Ormoc City – Bengzon,

JP, J.

Petitioner: Ormoc Sugar Co.

Respondent: Treasurer, Municipal Board, and Mayor of

Ormoc City

Concept: Constitutional Limitations: Equal Process Clause

Brief Facts: An ordinance was passed in Ormoc City,

imposing on any and all productions of centrifugal sugar

milled at the Ormoc Sugar Co. a municipal tax equivalent

to 1% per export sale to the US. Ormoc Sugar paid the

taxes under protest, and assailed the constitutionality of

the ordinance, for being violative of the equal protection

clause.

Doctrine: Classification, to be reasonable, should be in

terms applicable to future conditions as well. The taxing

ordinance should not be singular and exclusive as to

exclude any subsequently established sugar central, of

the class of the plaintiff, for the coverage of the tax.

FACTS:

1. In 1964, the Ormoc City Municipal Board passed

a municipal tax ordinance (Ordinance No. 4, s.

1964) imposing on any and all productions of

centrifugal sugar milled at the Ormoc Sugar Co.

1% per export sale to the US and other foreign

countries.

2. Though referred to as a “production tax”, the

imposition actually amounts to a tax on the

export of centrifugal sugar produced at Ormoc

Sugar Co.

3. For production of sugar alone is not taxable; the

only time the tax applies is when the sugar

produced is exported.

4. Ormoc Sugar paid under protest Php 7, 087.50.

5. The company then filed before CFI Leyte.

Ormoc Sugar: The ordinance is violative of the equal

protection clause and the rule of uniformity of taxation,

among other things.

o It singled out Ormoc Sugar Co. as being

liable.

o Ormoc Sugar Co. was the only sugar central

in Ormoc City at the time.

The CFI upheld the Ormoc City Ordinance.

CFI Leyte: Ordinance No. 4, s. 1964 is constitutional.

o The taxing power of Ormoc City is

broadened by the Local Autonomy Act to

include all other forms of taxes, licenses or

fees not excluded in its charter.

Hence this appeal at the SC.

ISSUES:

1. WON the Ordinance violates the Equal Protection

Clause and the Uniformity of Taxation. (YES)

RATIO:

1. YES. The ordinance is discriminatory for it taxes only

centrifugal sugar milled at the Ormoc Sugar Company,

Inc. and no other.

The ordinance shouldn’t be singular and

exclusive as to exclude any subsequently

established sugar central, of the same class as

plaintiff, for coverage of the tax.

o Although Ormoc Sugar Co. is the only sugar

central in Ormoc City at the time, the

classification, to be reasonable, should be in

terms applicable to future conditions as well.

o In the case at bar, even if later a similar

company is set up, it cannot be subject to

the tax because the ordinance expressly

points only to Ormoc Sugar Co. as the entity

to be levied upon.

A classification is reasonable where:

(1) It is based on substantial distinctions which

make real differences;

(2) These are germane to the purpose of the

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 to the same class.

The questioned ordinance does not meet the

requisites.

DISPOSITIVE: Decision appealed is REVERSED. Challenged

Ordinance is UNCONSTITUTIONAL.

NOTES:

Digested by: André