Ormoc Sugarcane Planters Association v. Municipal Board of Ormoc City
REITERATIONFacts
The Antecedents: The underlying dispute concerns Municipal Ordinance No. 4, Series of 1964, enacted by the Municipal Board of Ormoc City. This ordinance imposed a municipal tax equivalent to one percentum (1%) on all productions of centrifugal sugar milled at the Ormoc Sugar Company, Incorporated, specifically when such sugar was sold for export to the United States or other foreign countries. The ordinance was challenged for infringing upon constitutional provisions. Procedural History: The case originated with a petition for declaratory judgment filed by the Ormoc Sugarcane Planters Association, Inc., seeking to have Municipal Ordinance No. 4, Series of 1964, declared unconstitutional and void. This action is a companion case to G.R. No. L-23794, where Ormoc Sugar Co., Inc. had previously sued for a refund of taxes paid under the same ordinance. The Supreme Court had already ruled in the companion case that the ordinance was unconstitutional and void. The Petition: The Ormoc Sugarcane Planters Association, Inc. filed this petition for declaratory judgment, seeking a judicial declaration of the nullity of Municipal Ordinance No. 4, Series of 1964. The petition argued that the ordinance was unconstitutional, primarily on the grounds previously established in the companion case, namely, that it imposed a tax on exports and violated the equal protection clause by exclusively targeting Ormoc Sugar Company. Additionally, the petition highlighted that Republic Act No. 4497, enacted on June 19, 1965, amended Section 2 of Republic Act No. 2264 by adding a provision explicitly prohibiting chartered cities, municipalities, and municipal districts from levying taxes that, in effect, impose a burden on exports, thereby rendering the ordinance void.
Issue(s)
Whether Ordinance No. 4, Series of 1964, enacted by the Municipal Board of Ormoc City, is unconstitutional and void. Whether the ordinance infringes upon the equal protection clause of the Constitution. Whether the ordinance is rendered void by subsequent amendments to the Local Autonomy Act.
Ruling
The Supreme Court declared Ordinance No. 4, Series of 1964, unconstitutional and void, and no longer of any effect. No costs were awarded.
Ratio Decidendi
On whether Ordinance No. 4, Series of 1964, is unconstitutional and void: The Court reiterated its holding in the companion case, G.R. No. L-23794, that the ordinance is unconstitutional and void. The ordinance imposed a tax on export sales, which is a matter that falls under the exclusive power of Congress to regulate. Local government units are not granted the authority to impose such taxes, especially when they affect foreign commerce. On whether the ordinance infringes upon the equal protection clause of the Constitution: The ordinance was found to violate the equal protection clause because it specifically referred exclusively to the Ormoc Sugar Company. This discriminatory application, singling out one entity for taxation while others similarly situated might be exempt, contravenes the constitutional guarantee that all persons similarly circumstanced shall be treated alike both in privileges and in liabilities. On whether the ordinance is rendered void by subsequent amendments to the Local Autonomy Act: The Court noted that Section 2 of Republic Act No. 2264, which granted taxing powers to chartered cities, municipalities, and municipal districts, was amended by Republic Act No. 4497 on June 19, 1965. The amendment explicitly added a provision prohibiting any city, municipality, or municipal district from levying or imposing taxes, fees, or levies of any kind that, in effect, impose a burden on exports of Philippine finished, manufactured, or processed products. This amendment effectively repealed the Ormoc City ordinance, which imposed a tax on export sales, thereby rendering it void.
Main Doctrine
An ordinance imposing a municipal tax on export sales, particularly when it singles out a specific entity, violates the equal protection clause. Furthermore, amendments to the Local Autonomy Act, such as Republic Act No. 4497, can expressly prohibit or repeal the power of local government units to impose export taxes, rendering such ordinances void.