G.R. No. L-23794 Case Digest

G.R. No. L-23794 February 17, 1968

Ormoc Sugar Company, Inc., plaintiff-appellant

vs The Treasurer of Ormoc City, etc., defendants-appellees

Ponente: Bengzon

Facts:

January 29, 1964, the municipal board of Ormoc City passed Ordinance No. 4 Series of 1964 imposing a municipal tax for all productions of centrifugal sugar milled equivalent to 1

% per export sale to USA and other foreign countries. Payments were made under protest by Ormoc sugar Company.

Sugar Company filed before CFI of Leyte a complaint against the City of Ormoc alleging that the ordinance is unconstitutional for being violative of the equal protection clause and the rule of uniformity of taxation. In response, defendants asserted that the tax ordinance was within the city's power to enact under Local Autonomy Act and the same did not violate constitutional limitations.

After pre-trial and submission of case memoranda, CFI declared the ordinance constitutional, that it is within the charter of the city.

Appeal was then taken to SC by the Ormoc Sugar Company alleging the same statutory and constitutional violations. Appellant questions the authority of the Municipal Board to levy such tax in view of the Revised dministrative Code which denies municipal councils to impose export tax.

Issue: Whether constitutional limits on the power of taxation, and equal protection clause and rule of uniform taxation were infringed?

Held:

We ruled that the equal protection clause applies only to persons or things identically situated and does not bar a reasonable classification of the subject of legislation, and 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.

          A perusal of the requisites instantly shows that the questioned ordinance does not meet them, for it taxes only 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 taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central, 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 cannot be subject to the tax because the ordinance expressly points only to Ormoc City Sugar Company, Inc. as the entity to be levied upon.

The ordinance is unconstitutional.