ORMOC SUGAR COMPANY, INC. vs.

THE TREASURER OF ORMOC CITY

G.R. No. L-23794 | February 17, 1968 / BENGZON, J.P., J.
SUBJECT: Tax; sugar; Equal Protection
FACTS:

Ordinance 4 (1964) passed by Ormoc Municipal Board imposing "on any and all
productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc
City a municipal tax equivalent to (1%) per export sale to the United States of America
and other foreign countries."
Ormoc Sugar Company, Inc. paid under protest P12,087.50
Ormoc contentions:
1. Ordinance 4 is unconstitutional:
a. Violative of equal protection clause
b. Violative of Rule of uniformity of taxation
c. Forbidden to impose export tax (Sec. 2287 Revised Administrative Code)
d. Tax is neither a production nor a license tax which Ormoc City is authorized to
impose (Local Autonomy Act + Ormoc Charter)
e. Tax amounts to a customs duty, fee or charge - violation of RA 2264 for tax is on
both the sale and export of sugar
Treasurer contentions:
1. Tax ordinance within city's power to enact (Local Autonomy Act)
2. No violation of the constitutional limitations
CFI - ordinance 4 is constitutional and taxing power of Ormoc City broadened by Local
Autonomy Act to include all other forms of taxes, licenses or fees not excluded in its charter.
HELD:
1. The only time the tax applies is when the sugar produced at Ormoc Sugar
Company, Inc is exported.
2. Section 2287 (municipal council no power to impose import or export tax) vs. Sec. 2
RA 2264 (chartered cities authority to levy for public purposes just and
uniform taxes, licenses or fees)
a. Nin Bay Mining Co. v. Municipality of Roxas - RA 2264 repealed Section 2287
3. Ordinance 4 violated Equal protection clause:
a. Applies only to persons or things identically situated and does not bar a
reasonable classification of the subject of legislation
b. Reasonable classification:
(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.
4. Failed to meet requisites of reasonable classification:
a. Ordinance 4 - taxes only centrifugal sugar produced and exported by the Ormoc
Sugar Company, Inc. and none other.

b. It does not apply to future conditions - the taxing ordinance should not be
singular and exclusive as to exclude any subsequently established sugar central,
from the coverage of the tax.
c. 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 Company, Inc. as the
entity to be levied upon.
5. Ordinance 4 is unconstitutional
6. Refund - P12,087.50