Ormoc Sugar Company Inc.

vs Ormoc City et al

In 1964, Ormoc City passed a bill which read: 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.
Though referred to as a production tax, the imposition actually
amounts to a tax on the export of centrifugal sugar produced at
Ormoc Sugar Company, Inc. For production of sugar alone is not
taxable; the only time the tax applies is when the sugar produced
is exported. Ormoc Sugar paid the tax (P7,087.50) in protest
averring that the same is violative of Sec 2287 of the Revised
Administrative Code which provides: It shall not be in the power
of the municipal council to impose a tax 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 an unreasonable charge for
wharfage, use of bridges or otherwise, shall be void. And that the
ordinance is violative to equal protection as it singled out Ormoc
Sugar As being liable for such tax impost for noother sugar mill is
found in the city.
ISSUE: Whether or not there has been a violation of equal
protection.
HELD: The SC held in favor of Ormoc Sugar. The SC noted that
even if Sec 2287 of the RAC had already been repealed by a latter
statute (Sec 2 RA 2264) which effectively authorized LGUs to tax
goods and merchandise carried in and out of their turf, the act of
Ormoc City is still violative of equal protection. The ordinance is
discriminatory for it taxes only centrifugal sugar produced and
exported by the Ormoc Sugar Company, Inc. and none other. At
the time of the taxing ordinances 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, from 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 Sugar Company,
Inc. as the entity to be levied upon.
In Ormoc Sugar Co. v. Treasurer of Ormoc City, 22 SCRA 603, the
ordinance was declared invalid because it taxes
only centrifugal sugar produced and exported by the Ormoc Sugar
Company, and
none other, such that if a new sugar central is established in Ormoc, it
would not
be subject to the ordinance.