Case Summary (G.R. No. L-23794)
Facts and Procedural History
• January 29, 1964: Municipal Board of Ormoc City enacts Ordinance No. 4, Series of 1964, imposing “a municipal tax equivalent to one per centum (1%) per export sale” on centrifugal sugar milled at Ormoc Sugar Company, Inc.
• March 20 and April 20, 1964: Petitioner pays P12,087.50 under protest.
• June 1, 1964: Petitioner files a complaint in the Court of First Instance of Leyte for refund and declaratory relief, challenging the ordinance as unconstitutional under the 1935 Constitution (equal protection and uniformity clauses) and as an export tax barred by Revised Administrative Code Section 2287.
• August 6, 1964: Trial court upholds the ordinance, finding that Republic Act 2264 (Local Autonomy Act) broadens chartered cities’ taxing powers.
• February 17, 1968: Decision appealed directly to the Supreme Court.
Applicable Law
• 1935 Philippine Constitution
– Art. III, Sec. 1(1): Equal protection of the laws
– Art. VI, Sec. 22(1): Uniformity of taxation
• Revised Administrative Code, Sec. 2287: Prohibits municipal export taxes
• Republic Act 2264 (Local Autonomy Act), Sec. 2: Grants chartered cities authority to levy just and uniform taxes, licenses, or fees
Authority to Impose Export Tax
• Ordinance styled as a “production tax” but functionally targets only sugar exported by the petitioner.
• Section 2287 of the Revised Administrative Code bars any municipal export tax; however, the Court in Nin Bay Mining Co. v. Municipality of Roxas (1965) held that RA 2264 repealed that prohibition, thereby affirming cities’ broad taxing power subject to constitutional limits.
Equal Protection and Uniformity Analysis
• Classification under the ordinance is limited exclusively to Ormoc Sugar Company, Inc., despite its language suggesting applicability to all centrifugal sugar producers.
• Under Felwa v. Salas (1966), a reasonable classification must satisfy:
1. Substantial distinctions creating real differences;
2. Germane to the law’s purpose;
3. Applicability to present and future identical conditions;
4. Consistency within the same class.
• Although petitioner was the only sugar central when the ordinance passed, singling out a single entity vi
Case Syllabus (G.R. No. L-23794)
Facts
- On January 29, 1964, the Municipal Board of Ormoc City enacted Ordinance No. 4, Series of 1964, imposing “on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., 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.”
- Though labeled a “production tax,” it applied only to sugar when exported, effectively functioning as an export tax.
- Ormoc Sugar Company, Inc. paid the tax under protest: P7,087.50 on March 20, 1964, and P5,000 on April 20, 1964, totaling P12,087.50.
- On June 1, 1964, the Company filed a complaint for refund and declaratory relief before the Court of First Instance of Leyte, with service on the Solicitor General, naming as defendants the City of Ormoc, its Treasurer, the Municipal Board, and the Mayor.
Procedural History
- The complaint alleged the ordinance violated the equal protection clause (Sec. 1[1], Art. III) and rule of uniformity of taxation (Sec. 22[1], Art. VI) of the 1935 Constitution, and constituted an export tax prohibited by Sec. 2287 of the Revised Administrative Code.
- Plaintiff further contended the tax was neither a production nor license tax authorized under Section 15-kk of Ormoc City’s charter nor under Section 2 of Republic Act 2264 (Local Autonomy Act), and that it operated as a customs duty in contravention of RA 2264, Sec. 2(1).
- Defendants maintained the Local Autonomy Act broadened the city’s taxing power and that no constitutional or statutory prohibitions were breached.
- After pretrial and submission of memora