In 1964, Ormoc City passed an ordinance which provides: “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) under 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 of equal protection as it singled out Ormoc Sugar as being liable for such tax impost for no other sugar mill is found in the city.
ISSUE: Whether or not there has been a violation of equal protection.
HELD: Yes. The SC held in favor of Ormoc Sugar, Inc.. The SC noted that even if Sec 2287 of the RAC had already been repealed by a latter statute (Sec 2 RA 2264) which effectively authorized LGUs to tax goods and merchandise carried in and out of their turf, the act of Ormoc City is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 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, 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.
