Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 1968 > February 1968 Decisions > G.R. No. L-23794 February 17, 1968 - ORMOC SUGAR COMPANY, INC. v. TREASURER OF ORMOC CITY, ET AL.:




PHILIPPINE SUPREME COURT DECISIONS

EN BANC

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

ORMOC SUGAR COMPANY, INC., Plaintiff-Appellant, v. THE TREASURER OF ORMOC CITY, THE MUNICIPAL BOARD OF ORMOC CITY, HON. ESTEBAN C. CONEJOS, as Mayor of Ormoc City and ORMOC CITY, Defendants-Appellees.

Ponce Enrile, Siguion Reyna, Montecillo & Belo and Teehankee, Carreon & Tañada, for Plaintiff-Appellant.

Ramon O. de Veyra for Defendants-Appellees.


SYLLABUS


1. MUNICIPAL CORPORATIONS; POWER TO IMPOSE EXPORT OR IMPORT TAX; REP. ACT 2264, SEC. 2; EFFECT ON SEC. 2287 OF REVISED ADMINISTRATIVE CODE. — Section 2 of Rep. Act 2264 which became effective on June 19, 1959, gave chartered cities, municipalities and municipal districts authority to levy for public purposes just and uniform taxes, licenses or fees. This provision of law has repealed Sec. 2287 of the Revised Administrative Code (Nin Bay Mining Co. v. Municipality of Roxas, L-20125, July 20, 1965), which withheld from municipalities the power to impose an import or export tax upon such goods in the guise of an unreasonable charge for wharfage.

2. CONSTITUTIONAL LAW; EQUAL PROTECTION OF LAW; REASONABLE CLASSIFICATION; REQUISITES. — The equal protection clause applies only to persons or things identically situated and does not bar a reasonable classification of the subject of legislation. 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.

3. ID.; ID.; ID.; TAX ORDINANCE SHOULD NOT BE SINGULAR AND EXCLUSIVE. — When the taxing ordinance was enacted, Ormoc Sugar Co,, Inc. was the only sugar central in the City. A reasonable classification 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.

4. TAXATION; TAX, REFUND OF; NO INTEREST CAN BE CLAIMED; REASONS. — Appellant is not entitled to interest on the refund because the taxes were not arbitrarily collected. There is sufficient basis to preclude arbitrariness. The constitutionality of the statute is presumed until declared otherwise.


D E C I S I O N


BENGZON, J.P., J.:


On January 29, 1964, the Municipal Board of Ormoc City passed 1 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." 2

Payments for said tax were made, under protest, by Ormoc Sugar Company, Inc. on March 20, 1964 for P7,087.50 and on April 20, 1964 for P5,000.00, or a total of P12,087.50.

On June 1, 1964, Ormoc Sugar Company, Inc. filed before the Court of First Instance of Leyte, with service of a copy upon the Solicitor General, a complaint 3 against the City of Ormoc as well as its Treasurer, Municipal Board and Mayor, alleging that the afore-stated ordinance is unconstitutional for being violative of the equal protection clause (Sec. 1[1], Art. III, Constitution) and the rule of uniformity of taxation (Sec. 22[1], Art. VI, Constitution), aside from being an export tax forbidden under Section 2287 of the Revised Administrative Code. It further alleged that the tax is neither a production nor a license tax which Ormoc City under Section 15-kk of its charter and under Section 2 of Republic Act 2264, otherwise known as the Local Autonomy Act, is authorized to impose; and that the tax amounts to a customs duty, fee or charge in violation of paragraph 1 of Section 2 of Republic Act 2264 because the tax is on both the sale and export of sugar.

Answering, the defendants asserted that the tax ordinance was within defendant city’s power to enact under the Local Autonomy Act and that the same did not violate the afore-cited constitutional limitations. After pre-trial and submission of the case on memoranda, the Court of First Instance, on August 6, 1964, rendered a decision that upheld the constitutionality of the ordinance and declared the taxing power of defendant chartered city broadened by the Local Autonomy Act to include all other forms of taxes, licenses or fees not excluded in its charter.

Appeal therefrom was directly taken to Us by plaintiff Ormoc Sugar Company, Inc. Appellant alleges the same statutory and constitutional violations in the aforesaid taxing ordinance mentioned earlier.

Section 1 of the ordinance states: "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.

Appellant questions the authority of the defendant Municipal Board to levy such an export tax, in view of Section 2287 of the Revised Administrative Code which denies from municipal councils the power to impose an export tax. Section 2287 in part states: "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."cralaw virtua1aw library

Subsequently, however, Section 2 of Republic Act 2264, effective June 19, 1959, gave chartered cities, municipalities and municipal districts authority to levy for public purposes just and uniform taxes, licenses or fees. Anent the inconsistency between Section 2287 of the Revised Administrative Code and Section 2 of Republic Act 2264, this Court, in Nin Bay Mining Co. v. Municipality of Roxas, 4 held the former to have been repealed by the latter. And expressing Our awareness of the transcendental effects that municipal export or import taxes or licenses will have on the national economy, due to Section 2 of Republic Act 2264, We stated that there was no other alternative until Congress acts to provide remedial measures to forestall any unfavorable results.

The point remains to be determined, however, whether constitutional limits on the power of taxation, specifically the equal protection clause and rule of uniformity of taxation, were infringed.

The Constitution in the bill of rights provides: ". . . nor shall any person be denied the equal protection of the laws." (Sec. 1[1], Art. 111) In Felwa v. Salas 5 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, 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.

Appellant, however, is not entitled to interest on the refund because the taxes were not arbitrarily collected (Collector of Internal Revenue v. Binalbagan).6 At the time of collection, the ordinance provided a sufficient basis to preclude arbitrariness, the same being then presumed constitutional until declared otherwise.

WHEREFORE, the decision appealed from is hereby reversed, the challenged ordinance is declared unconstitutional and the defendants- appellees are hereby ordered to refund the P12,087.50 plaintiff- appellant paid under protest. No. costs. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

Endnotes:



1. Resolution No. 30, Series of 1964.

2. Section 1, Italics supplied.

3. An action for declaratory judgment was also filed on May 23, 1964 (Civil Case No. 665-0) out this and the present case were tried jointly.

4. L-20125, July 20, 1965.

5. L-26511, Oct. 29, 1966.

6. L-12752, Jan. 30, 1965.




Back to Home | Back to Main




















chanrobles.com





ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review : www.chanroblesbar.com

ChanRobles MCLE On-line

ChanRobles Lawnet Inc. - ChanRobles MCLE On-line : www.chanroblesmcleonline.com






February-1968 Jurisprudence                 

  • A.C. No. 381 February 10, 1968 - EMILIO CAPULONG, ET AL. v. MANUEL G. ALIÑO

  • G.R. No. L-23342 February 10, 1968 - MACARIO ALQUIZA, ET AL. v. PLACIDO ALQUIZA, ET AL.

  • G.R. No. L-22944 February 10, 1968 - PEOPLE OF THE PHIL. v. CLAUDIA SAN JUAN, ET AL.

  • G.R. No. L-22067 February 10, 1968 - LAGUNA TAYABAS BUS CO., INC. v. JOSE SOTOMAYOR

  • G.R. No. L-24147 February 10, 1968 - FEDERICO R. CASTRO, ET AL. v. MATILDE PARA-ON, ET AL.

  • G.R. No. L-24319 February 10, 1968 - LONDON ASSURANCE v. REPUBLIC OF THE PHIL., ET AL.

  • G.R. No. L-24950 February 10, 1968 - IN RE: JAO KING YOG v. REPUBLIC OF THE PHIL.

  • G.R. No. L-25314 February 10, 1968 - MUNICIPALITY OF TACURONG v. ROSARIO ABRAGAN, ET AL., Defendants-Appellees.

  • G.R. No. L-23433 February 10, 1968 - GLORIA G. JOCSON v. RICARDO R. ROBLES

  • G.R. No. L-28455 February 10, 1968 - PANTALEON PACIS v. COMMISSION ON ELECTIONS, ET AL.

  • G.R. No. L-23882 February 17, 1968 - M.D. TRANSIT & TAXI CO., INC. v. COURT OF APPEALS, ET AL.

  • A.C. No. 106 February 17, 1968 - IRINEO A. MERCADO v. ENRIQUE MEDINA

  • G.R. No. L-19227 February 17, 1968 - DIOSDADO YULIONGSIU v. PHILIPPINE NATIONAL BANK

  • G.R. No. L-20411 February 17, 1968 - BARTOLOME E. SAN DIEGO v. SALVADOR R. VILLAGRACIA, ET AL.

  • G.R. No. L-22138 February 17, 1968 - ANG CHING GI v. DELGADO BROTHERS, INC., ET AL.

  • G.R. No. L-23794 February 17, 1968 - ORMOC SUGAR COMPANY, INC. v. TREASURER OF ORMOC CITY, ET AL.

  • G.R. No. L-23861 February 17, 1968 - EMILIANA CRUZ v. ERNESTO OPPEN, INC., ET AL.

  • G.R. No. L-24289 February 17, 1968 - CENTRAL TAXICAB CORPORATION v. PUBLIC SERVICE COMMISSION, ET AL.

  • G.R. No. L-24529 February 17, 1968 - EDUARDO JIMENEZ v. REPUBLIC OF THE PHIL., ET AL.

  • G.R. No. L-24910 February 17, 1968 - CALTEX (PHILIPPINES), INC. v. MANILA PORT SERVICE, ET AL.

  • G.R. Nos. L-28170 & L-28200 February 17, 1968 - CARMEN PARDO DE TAVERA v. DEMETRIO B. ENCARNACION, ET AL.

  • G.R. No. L-28519 February 17, 1968 - RICARDO PARULAN v. DIRECTOR OF PRISONS

  • G.R. No. L-26934 February 19, 1968 - WISE & COMPANY, INC. v. REPUBLIC OF THE PHIL., ET AL.

  • G.R. No. L-20722 February 20, 1968 - PEOPLE OF THE PHIL. v. TEOTIMO ALEGARME, ET AL.

  • G.R. No. L-23595 February 20, 1968 - IN RE: ANTONIO ANG GUI, ET AL. v. REPUBLIC OF THE PHIL.

  • G.R. No. L-28596 February 21, 1968 - PEOPLE OF THE PHIL. v. SANTIAGO TILOS

  • G.R. No. L-28517 February 21, 1968 - AMELITO R. MUTUC, ET AL. v. COMMISSION ON ELECTIONS, ET AL.

  • G.R. No. L-23539 February 22, 1968 - PEOPLE OF THE PHIL. v. PEDRO DALTON

  • G.R. No. L-24033 February 22, 1968 - PHOENIX ASSURANCE CO., LTD. v. UNITED STATES LINES

  • G.R. No. L-24146 February 22, 1968 - MIGUEL MABILIN, ET AL. v. EUSEBIO S. MILLAR

  • G.R. No. L-24223 February 22, 1968 - CORNELIO AGUILA, ET AL. v. J. M. TUASON & CO., INC., ET AL.

  • G.R. No. L-24225 February 22, 1968 - MANUEL CUDIAMAT, ET AL. v. GUILLERMO E. TORRES

  • G.R. No. L-24546 February 22, 1968 - PEOPLE OF THE PHIL. v. ISAIAS MACALISANG

  • G.R. No. L-24364 February 22, 1968 - BIENVENIDO MEDRANO v. FILEMON MENDOZA

  • G.R. No. L-25529 February 22, 1968 - BENJAMIN PANGANIBAN, ET AL. v. ARACELI VDA. DE STA. MARIA, ET AL.

  • G.R. No. L-26767 February 22, 1968 - ANG TIONG v. LORENZO TING, ET AL.

  • G.R. No. L-23859 February 22, 1968 - CONSOLIDATED TEXTILE MILLS, INC. v. REPARATIONS COMMISSION, ET AL.

  • G.R. No. L-22579 February 23, 1968 - ROLANDO LANDICHO v. LORENZO RELOVA

  • G.R. No. L-23793 February 23, 1968 - ORMOC SUGARCANE PLANTERS ASSOCIATION, INC. v. MUNICIPAL BOARD OF ORMOC CITY, ET AL.

  • G.R. Nos. L-23960 & L-23961 February 26, 1968 - DIWA NG PAGKAKAISA-PAFLU v. FILTEX INTERNATIONAL CORPORATION

  • G.R. No. L-23425 February 26, 1968 - COMMISSIONER OF CUSTOMS, ET AL. v. MIGUEL FORTICH CELDRAN, ET AL.

  • G.R. No. L-24241 February 26, 1968 - HATIB ABBAIN v. TONGHAM CHUA, ET AL.

  • G.R. No. L-21853 February 26, 1968 - MUNICIPALITY OF OPON v. CALTEX (PHILIPPINES) INC.

  • G.R. No. L-23803 February 26, 1968 - C.F. SHARP & COMPANY, INC. v. COMMISSIONER OF CUSTOMS

  • G.R. No. L-23687 February 26, 1968 - GO LEA CHU, ET AL. v. CORAZON GONZALES, ET AL.

  • G.R. No. L-24362 February 26, 1968 - TACLOBAN ELECTRIC & ICE PLANTS CO., INC. v. ENRIQUE MEDINA, ET AL.

  • G.R. No. L-24619 February 26, 1968 - CALTEX (PHILIPPINES) INC. v. ACTING COMMISSIONER OF CUSTOMS

  • G.R. No. L-24864 February 26, 1968 - FORTUNATO F. HALILI v. COURT OF INDUSTRIAL RELATIONS, ET AL.

  • G.R. No. L-25035 February 26, 1968 - EDUARDA S. VDA. DE GENUINO v. COURT OF AGRARIAN RELATIONS

  • G.R. No. L-25152 February 26, 1968 - PROVINCIAL SHERIFF OF PAMPANGA, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. L-25335 February 26, 1968 - SUN BROS. APPLIANCES v. TRINITY LUNCHEONETTE, ET AL.

  • G.R. No. L-25383 February 26, 1968 - COMMISSIONER OF IMMIGRATION v. FRANCISCO ARCA

  • G.R. No. L-19347 February 27, 1968 - PEOPLE OF THE PHIL. v. MIGUEL GAMAO, ET AL.

  • G.R. No. L-22476 February 27, 1968 - PEOPLE OF THE PHIL. v. SENANDO PANGANIBAN, ET AL.

  • G.R. No. L-25491 February 27, 1968 - BIENVENIDO F. REYES v. ROMEO G. ABELEDA, ET AL.

  • G.R. No. L-28651 February 27, 1968 - DOMESTIC INSURANCE COMPANY OF THE PHILIPPINES v. AMERICAN PIONEER LINE, ET AL.

  • G.R. No. L-19200 February 27, 1968 - EMILIO SY v. MANUEL DALMAN, ET AL.

  • G.R. No. L-20081 February 27, 1968 - MELQUIADES RAAGAS, ET AL. v. OCTAVIO TRAYA, ET AL.

  • G.R. No. L-23385 February 27, 1968 - IN RE: SANTIAGO YAP v. REPUBLIC OF THE PHIL.

  • G.R. No. L-21624 February 27, 1968 - SEGUNDO SANTOS v. SECRETARY OF LABOR, ET AL.

  • G.R. No. L-25176 February 27, 1968 - PEOPLE OF THE PHIL. v. AGAPITO YAP, JR.

  • G.R. No. L-27360 February 28, 1968 - RICARDO G. PAPA v. REMEDIOS MAGO, ET AL.

  • G.R. No. L-24284 February 28, 1968 - JAIME LIM v. LOCAL REGISTRAR OF MANILA, ET AL.

  • G.R. No. L-2849 February 28, 1968 - DOMACAO ALONTO, ET AL. v. COMMISSION ON ELECTIONS, ET AL.

  • G.R. Nos. L-23335 & L-23452 February 29, 1968 - ROSITA C. DE LA CRUZ, ET AL. v. COURT OF TAX APPEALS, ET AL.

  • G.R. No. L-22390 February 29, 1968 - IN RE: TAN KHE SHING v. REPUBLIC OF THE PHIL.

  • G.R. No. L-24064 February 29, 1968 - RIZAL SURETY & INSURANCE CO. v. MACONDRAY & CO., INC.

  • G.R. No. L-28597 February 29, 1968 - NATIONAL WATERWORKS & SEWERAGE AUTHORITY v. ANDRES REYES

  • G.R. No. L-20990 February 29, 1968 - PHILIPPINE NATIONAL BAN v. AGUSTIN PARIÑA