FACTS
Pursuant to Sec. 2 of the Local Autonomy Act, the Municipal Council of Malabang in Lanao del Sur enacted in 1966 Municipal Ordinance No. 45-46, which imposed a “police inspection fee” of P.30 per sack of cassava starch or flour produced and shipped out of the municipality.
Matalin Coconut, Inc. challenged the validity of the ordinance and filed a petition for declaratory relief, alleging that said ordinance was not only ultra vires for being violative of RA 2263, but also unreasonable, oppressive, and confiscatory.
RULING
The Supreme Court ruled in favor of Matalin Coconut, Inc.
The tax imposed under the ordinance in question is unjust and unreasonable.
The SC held that the pretention of the Municipal Council of Malabang that the police, aside from counting the number of bags shipped out, is also inspecting the cassava flour starch contained in the bags to find out if the said cassava flour starch is fit for human consumption could not be given credence because, aside from the fact that said purpose is not so stated in the ordinance in question, the policemen of said municipality are not competent to determine if the cassava flour starch is fit for human consumption.
The further imposition of the tax of P0.30 per bag would also force the petitioner to close or stop its cassava flour starch milling business, considering that it merely realizes a marginal average profit of P0.40 per bag of cassava flour starch while it maintains a big labor force in its operation.
The ordinance, therefore, has an adverse effect on the economic growth of the Municipality of Malabang, in particular, and of the nation, in general, and is contrary to the economic policy of the government.
