Ormoc Sugar Central vs. Ormoc City (G.R. No. L-23794)

Facts: 

The Municipal Board of Ormoc City passed Ordinance No. 4 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 USA and other foreign countries.” Payments for said tax were made, under protest, by Ormoc Sugar Company, Inc. Ormoc Sugar Company, Inc. filed before the Court of First Instance of Leyte a complaint against the City of Ormoc as well as its Treasurer, Municipal Board and Mayor alleging that the ordinance is unconstitutional for being violative of the equal protection clause and the rule of uniformity of taxation. The court rendered a decision that upheld the constitutionality of the ordinance. Hence, this appeal. 

Issue: 

Whether or not constitutional limits on the power of taxation, specifically the equal protection clause and rule of uniformity of taxation, were infringed? 

Held:

Yes. 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 upon substantial distinctions; 2) these are germane to the purpose of the law; 3) the classification applies not only to present conditions, but also to future conditions substantially identical to those present; and 4) the classification applies only to those who belong to the same class. A perusal of the requisites 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 the ordinance was enacted, Ormoc Sugar Company, Inc. 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 for the coverage of the tax. As it is now, even if later a similar company is set up, it cannot be subject to a tax because the ordinance expressly points only to Ormoc City Sugar Company, Inc. As the entity to be levied upon.

Wherefore, the decision appealed was reversed.