Eastern Theatrical Co.

Vs Alfonso Pepsi-Cola Bottling vs City of Butuan

Facts: Plaintiff, Pepsi-Cola Bottling Company of the Philippines, is a domestic corporation with offices and principal place of business in Quezon City. Plaintiff's warehouse in the City of Butuan serves as storage for its products the "Pepsi-Cola" soft drinks for sale to customers in the City of Butuan and all the municipalities in the Province of Agusan. These "Pepsi-Cola" soft drinks are bottled in Cebu City and shipped to the Butuan City warehouse of plaintiff for distribution and sale in the City of Butuan and all municipalities of Agusan. On August 16, 1960, the City of Butuan enacted OrdinanceNo. 110 which was subsequently amended by Ordinance No. 122 and effective November 28, 1960. Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case of 24 bottles of Pepsi-Cola. The plaintiff paid under protest the amount of P4.926.63 from August 16 to December 31, 1960 and the amount of P9,250.40 from January 1 to July 30, 1961. The plaintiff filed a complaint for the recovery of the total amount of P14,177.03 paid under protest, on the ground thatOrdinance No. 110 as amended of the City of Butuan is illegal, that the tax imposed is excessive and that it is unconstitutional. The Court of First Instance ruled in favor of the defendant.

Issue: Whether or not the disputed ordinance is void because it is highly unjust and discriminatory Held: Yes. Even if the burden in question were regarded as a tax on the sale of said beverages, it would still be invalid, as discriminatory, and hence, violative of the uniformity required by the Constitution and the law, since only sales by "agents or consignees" of outside dealers would be subject to the tax. Sales by local dealers, not acting for or on behalf of other merchants, regardless of the volume of their sales, and even if the same exceeded those made by said agents or consignees of producers or merchants established outside the City of Butuan, would be exempt from the disputed tax. It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality under all circumstances, or negate the authority to classify the objects of taxation. The classification made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless: (1) it is based upon substantial distinctions which make real differences; (2) these are germane to the purpose of the legislation orordinance; (3) the classification applies, not only to present conditions, but, also, to future conditions substantially identical to those of the present; and (4) the classification applies equally to all those who belong to the same class. These conditions are not fully met by the ordinance in question. Indeed, if its purpose was merely to levy a

burden upon the sale of soft drinks or carbonated beverages, there is no reason why sales thereof by dealers other than agents or consignees of producers or merchants established outside the City of Butuan should be exempt from the tax. Hence, decision appealed from is reversed. City of Butuan is sentenced to refund plaintiff and is restrained and prohibited permanently from enforcing said Ordinance, as amended.
British American Tobacco vs Camacho and Parayno
BRITISH AMERICAN TOBACCO, vs. JOSE ISIDRO N. CAMACHO, in his capacity as Secretary of the Department of Finance and GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of the Bureau of Internal Revenues. PHILIP MORRIS PHILIPPINES MANUFACTURING, INC., FORTUNE TOBACCO CORP., MIGHTY CORPORATION, and JT INTERNATIONAL [G.R. No. 163583. April 15, 2009.] (Motion for Reconsideration of the 2008 case) Facts: To implement RA 8240, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 1-97, 2 which classified the existing brands of cigarettes as those duly registered or active brands prior to January 1, 1997. New brands, or those registered after January 1, 1997, shall be initially assessed at their suggested retail price until such time that the appropriate survey to determine their current net retail price is conducted. In June 2001 British American Tobacco introduced into the market Lucky Strike Filter, Lucky Strike Lights and Lucky Strike Menthol Lights cigarettes, with a suggested retail price of P9.90 per pack. 3 Pursuant to Sec. 145 (c) quoted above, the Lucky Strike brands were initially assessed the excise tax at P8.96 per pack. On February 17, 2003, Revenue Regulations No. 9-2003, amended Revenue Regulations No. 1-97 by providing, among others, a periodic review every two years or earlier of the current net retail price of new brands and variants thereof for the purpose of establishing and updating their tax classification. Pursuant thereto, Revenue Memorandum Order No. 62003 5 was issued on March 11, 2003, prescribing the guidelines and procedures in establishing current net retail prices of new brands of cigarettes and alcohol products. Subsequently, Revenue Regulations No. 22-2003 6 was issued on August 8, 2003 to implement the revised tax classification of certain new brands introduced in the market after January 1, 1997, based on the survey of their current net retail price. The survey revealed that Lucky Strike Filter, Lucky Strike Lights, and Lucky Strike Menthol Lights, are sold at the current net retail price of P22.54, P22.61 and P21.23, per pack, respectively. Respondent Commissioner of the Bureau of Internal Revenue thus recommended the applicable tax rate of P13.44 per pack inasmuch as Lucky Strike's average net retail price is above P10.00 per pack. Thus filed before the Regional Trial Court (RTC) of Makati, Branch 61, a petition for injunction with prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction, docketed as Civil Case No. 03-1032. Said petition sought to enjoin the implementation of Section 145 of the NIRC, Revenue Regulations Nos. 1-97, 9-2003, 22-2003 and Revenue Memorandum Order No. 6-2003 on the ground that they discriminate against new brands of cigarettes, in violation of the equal protection and uniformity provisions of the Constitution. The trial court rendered a decision upholding the constitutionality of Section 145 of the NIRC, Revenue Regulations Nos. 1-97, 9-2003, 22-2003 and Revenue Memorandum Order No. 6-2003 Issue/ Held: W/N the classification freeze provision violates the equal protection and uniformity of taxation clauses of the Constitution.- NO Ratio: In the instant case, there is no question that the classification freeze provision meets the geographical uniformity requirement because the assailed law applies to all cigarette brands in the Philippines. And, for reasons already adverted

to in our August 20, 2008 Decision, the four-fold test has been met in the present case. As held in the assailed Decision, the instant case neither involves a suspect classification nor impinges on a fundamental right. Consequently, the rational basis test was properly applied to gauge the constitutionality of the assailed law in the face of an equal protection challenge. It has been held that "in the areas of social and economic policy, a statutory classification that neither proceeds along suspect lines nor infringes constitutional rights must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification." Under the rational basis test, it is sufficient that the legislative classification is rationally related to achieving some legitimate State interest. Petitioner's reliance on Ormoc Sugar Co. is misplaced. In said case, the controverted municipal ordinance specifically named and taxed only the Ormoc Sugar Company, and excluded any subsequently established sugar central from its coverage. Thus, the ordinance was found unconstitutional on equal protection grounds because its terms do not apply to future conditions as well. This is not the case here. The classification freeze provision uniformly applies to all cigarette brands whether existing or to be introduced in the market at some future time. It does not purport to exempt any brand from its operation nor single out a brand for the purpose of imposition of excise taxes.

Commissioner on Internal Revenue vs Fortune Tobacco Corporation ABAKADA Guro Party List vs Ermita

Facts: On May 24, 2005, the President signed into law Republic Act 9337 or the VAT Reform Act. Before the lawtook effect on July 1, 2005, the Court issued a TRO enjoining government from implementing the law in response to a slew of petitions for certiorari and prohibition questioning the constitutionality of the new law. The challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and 6: That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to 12%, after any of the following conditions has been satisfied: (i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%);

or (ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1%) Petitioners allege that the grant of stand-by authority to the President to increase the VAT rate is an abdication byCongress of its exclusive power to tax because such delegation is not covered by Section 28 (2), Article VI Consti. They argue that VAT is a tax levied on the sale or exchange ofgoods and services which cant be included within the purview of tariffs under the exemption delegation since this refers to customs duties, tolls or tribute payable upon merchandise to the government and usually imposed on imported/exported goods. They also said that the President has powers to cause, influence or create the conditions provided by law to bring about the conditions precedent. Moreover, they allege that no guiding standards are made by law as to how the Secretary of Finance will make the recommendation. Issue: Whether or not the RA 9337's stand-by authority to the Executive to increase the VAT rate, especially on account of the recommendatory power granted to the Secretary of Finance, constitutes undue delegation of legislative power? NO Issue 2:
Whether or not there is a violation of the due process and equal protection under Article III Sec. 1 of the Constitution.

Held: The powers which Congress is prohibited from delegating are those which are strictly, or inherently and

exclusively, legislative. Purely legislative power which can never be delegated is the authority to make a complete law- complete as to the time when it shall take effect and as to whom it shall be applicable, and to determine the expediency of its enactment. It is the nature of the power and not the liability of its use or the manner of its exercise which determines the validity of its delegation. The exceptions are: (a) delegation of tariff powers to President under Constitution (b) delegation of emergency powers to President under Constitution (c) delegation to the people at large (d) delegation to local governments (e) delegation to administrative bodies For the delegation to be valid, it must be complete and it must fix a standard. A sufficient standard is one which defines legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it. In this case, it is not a delegation of legislative power BUT a delegation of ascertainment of facts upon which enforcement and administration of the increased rate under the law is contingent. The legislature has made the operation of the 12% rate effective January 1, 2006,

contingent upon a specified fact or condition. It leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the control of the executive. No discretion would be exercised by the President. Highlighting the absence of discretion is the fact that the word SHALL is used in the common proviso. The use of the word SHALL connotes a mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of discretion. Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any of the conditions specified by Congress. This is a duty, which cannot be evaded by the President. It is a clear directive to impose the 12% VAT rate when the specified conditions are present. Congress just granted the Secretary of Finance the authority to ascertain the existence of a fact--- whether by December 31, 2005, the VAT collection as a percentage of GDP of the previous year exceeds 2 4/5 % or the national governmentdeficit as a percentage of GDP of the previous year exceeds one and 1%. If either of these two instances has occurred,the Secretary of Finance, by legislative mandate, must submit such information to the President. In making his recommendation to the President on the existence of either of the two conditions, the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. He is acting as the agent of the

legislative department, to determine and declare the event upon which its expressed will is to take effect. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented, considering that he possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate them. His function is to gather and collate statistical data and other pertinent information and verify if any of the two conditions laid out by Congress is present. Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it, and what is the scope of his authority; in our complex economy that is frequently the only way in which the legislative process can go forward. There is no undue delegation of legislative power but only of the discretion as to the execution of a law. This is constitutionally permissible. Congress did not delegate the power to tax but the mere implementation of the law.
Held ISSUE 2:
The power of the State to make reasonable and natural classifications for the purposes of taxation has long been established. Whether it relates to the subject of taxation, the kind of property, the rates to be levied, or the amounts to be raised, the methods of assessment, valuation and collection, the States power is entitled to presumption of validity. As a rule, the judiciary will not interfere with such power absent a clear showing of unreasonableness, discrimination, or arbitrariness. D. Non-Impairments of Contracts

Section 10. No law impairing the obligation of contracts shall be passed.

Republic of the Philippines vs Caguioa Meralco vs Province of Laguna Cagayan Electric Power and Light Co., Inc. Vs Commissioner on Internal Revenue

Cagayan Electric vs. Commissioner

Facts: Cagayan Electric Power & Light Co., Inc is the holder of a legislative franchise, Republic Act No. 3247, under which its payment of 3% tax on its gross earnings from the sale of electric current is "in lieu of all taxes and assessments of whatever authority upon privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly exempted. On June 27, 1968, Republic Act No. 5431 amended section 24 of the Tax Code by making liable for income tax all corporate taxpayers not specifically exempt under paragraph (c) (1) of said section and section 27 of the Tax Code notwithstanding the "provisions of existing special or general laws to the contrary". Thus, franchise companies were subjected to income tax in addition to franchise tax. On August 4, 1969, petitioners franchise was amended thereby reenacting the tax exemption in its original charter. By reason of the amendment to section 24 of the Tax Code, the Commissioner of Internal Revenue required the petitioner to pay deficiency income taxes for 1968-to 1971. The petitioner contested the assessments. The Commissioner cancelled the assessments for 1970 and 1971 but insisted on those for 1968 and 1969. The petitioner filed a petition for review with the Tax Court, which on February 26, 1982 held the petitioner liable only for the income tax for the period from January 1 to August 3, 1969 or before the passage of Republic Act No. 6020 which reiterated its tax exemption. The petitioner appealed to the Supreme Court.

Issue: WON Cagayan Electric is liable for income tax (aside from franchise tax) from January to August 1969. No. Ratio: The petitioners exemption was restored by the subsequent enactment of Republic Act No. 6020 on August 4, 1969. The Tax Court thus acted correctly in holding petitioner liable for income tax from January 1 to August 3, 1969, the period when its tax exemption was modified by Republic Act No. 5431. The SC however noted that the 1969 assessment was highly controversial. The Commissioner at the outset was not certain as to petitioner's income tax liability. For this reason, the Court held that Cagayan Electric should be liable only for tax proper and should not be held liable for the surcharge and interest.

Issue 2 : Whether the withdrawal of the franchises tax exemption violates the non-impairment

clause of the Constitution. Congress could impair the companys legislative franchise by making it liable for income tax. The Constitution provides that a franchise is subject to amendment, alteration or repeal by the Congress when the public interest so requires. RA 3247 itself provides that the franchise is subject to amendment, etc. By Congress.

The enactment of RA 5431 had the effect of withdrawing the companys exemption from income tax. The exemption was restored by the enactment of RA 6020. The company is liable only for the income tax for the period of 1 January to 3 August 1969.

Casanovas vs Hord

Facts:

The Spanish Govt. by virtue of a royal decree granted the

plaintiff certain mines. The plaintiff is now the owner of those mines.The Collector of Internal Revenue imposed tax on the properties, contending that they were valid perfected mine concessions and it falls within the provisions of sec.134 of Act No. 1189 known as Internal Revenue Act. The plaintiff paid under protest. He brought an action against the defendant Collector of Internal Revenue to recover the sum of Php. 9, 600 paid by him as taxes. Judgment was rendered in favor of the defendant, so the plaintiff appealed.

Issue: Held:

Whether or Not Sec. 164 is void or valid.

The deed constituted a contract between the Spanish Government

and the plaintiff. The obligation of which contract was impaired by the enactment of sec. 134 of the Internal Revenue Law infringing sec. 5 of the Act of Congress which provides that no law impairing the obligation of contracts shall be enacted. Sec. 134 of the Internal Revenue Law of 1904 is void because it impairs the obligation of contracts contained in the concessions of mine made by the Spanish Government. Judgment reversed.

Philippine Rural Electric Cooperatives Association vs DILG and DOF Philippine Rural Electric Cooperative Association Inc. (PHILRECA), et. al. vs. Secretary of Department of Interior and Local Government (DILG) [GR 143076, 10 June 2003] En Banc, Puno (J): 13 concur Facts: Under Presidential Decree (PD) 269, as amended, or the National Electrification Administration Decree, it is the declared policy of the State to provide the total electrification of the Philippines on an area coverage basis the same being vital to the people and the sound development of the nation. Pursuant to this policy, PD 269 aims to promote, encourage and assist all public service entities engaged in supplying electric service, particularly electric cooperatives by giving every tenable support and assistance to the electric cooperatives coming within the purview of the law. From 1971 to 1978, in order to finance the electrification projects envisioned by PD 269, as amended, the

Philippine Government, acting through the National Economic Council (now National Economic Development Authority) and the NEA (National Electrification Administration), entered into 6 loan agreements with the government of the United States of America through the United States Agency for International Development (USAID) with electric cooperatives, including Agusan Del Norte Electric Cooperative, Inc. (ANECO); Iloilo I Electric Cooperative, Inc. (ILECO I); and Isabela I Electric Cooperative, Inc. (ISELCO I), as beneficiaries. The 6 loan agreements involved a total amount of approximately US$86,000,000.00. These loan agreements are existing until today. The loan agreements contain similarly worded provisions on the tax application of the loan and any property or commodity acquired through the proceeds of the loan. On 23 May 2000, a class suit was filed by the Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA); ANECO, ILECO I and ISELCO I; in their own behalf and in behalf of other electric cooperatives organized and existing under PD 269, against the Secretary of the Department of Interior and Local Government (DILG) and the Secretary of the Department of Finance, through a petition for prohibition, contending that pursuant to the provisions of PD 269, as amended, and the provision in the loan agreements, they are exempt from payment of local taxes, including payment of real property tax. With the passage of the Local Government Code, however, they allege that their tax exemptions have been invalidly withdrawn, in violation of the equal protection clause and impairing the obligation of contracts between the Philippine Government and the United States Government. Issue: Whether the Local Government Code unduly discriminated against electric cooperatives organized and existing under PD 269, in violation of the equal protection clause, by providing a different tax treatment between the former and cooperatives created under RA 6938. Held: The equal protection clause under the Constitution means that no person or class of persons shall be deprived of the same protection of laws which is enjoyed by other persons or other classes in the same place and in like circumstances. Thus, the guaranty of the equal protection of the laws is not violated by a law based on reasonable classification. Classification, to be reasonable, must (1) rest on substantial distinctions; (2) be germane to the purposes of the law; (3) not be limited to existing conditions only; and (4) apply equally to all members of the same class. There is reasonable classification under the Local Government Code to justify the different tax treatment between electric cooperatives covered by PD 269, as amended, and electric cooperatives under RA 6938 (Cooperative Code of the Philippines). First, nowhere in PD 269, as amended, does it require cooperatives to make equitable contributions to capital. Under the Cooperative Code, the articles of cooperation of a cooperative applying for registration must be accompanied with the bonds of the accountable officers and a sworn statement of the treasurer elected by the subscribers showing that at least 25% of the authorized share capital has been subscribed and at least 25% of the total subscription has been paid and in no case shall the paid-up share capital be less than P2,000.00. Second, another principle adhered to by the Cooperative Code is the principle of subsidiarity. Pursuant to this principle, the government may only engage in development activities where cooperatives do not possess the capability nor the resources to do so and only upon the request of such cooperatives. In contrast, PD 269, as amended by PD 1645, is replete with provisions which grant the NEA, upon the happening of certain events, the power to control and take over the management and operations of cooperatives registered under it. The extent of government control over electric cooperatives covered by PD 269, as amended, is largely a function of the role of the NEA as a primary source of funds of these electric cooperatives. It is crystal clear that NEA incurred loans from various sources to finance the development and operations of the electric cooperatives. Consequently,

amendments to PD 269 were primarily geared to expand the powers of the NEA over the electric cooperatives to ensure that loans granted to them would be repaid to the government. In contrast, cooperatives under RA 6938 are envisioned to be self-sufficient and independent organizations with minimal government intervention or regulation. Lastly, the transitory provisions of RA 6938 are indicative of the recognition by Congress of the fundamental distinctions between electric cooperatives organized under PD 269, as amended, and cooperatives under the new Cooperative Code. Article 128 of the Cooperative Code provides that all cooperatives registered under previous laws shall be deemed registered with the CDA upon submission of certain requirements within one year. However, cooperatives created under PD 269, as amended, are given three years within which to qualify and register with the CDA, after which, provisions of PD 1645 which expand the powers of the NEA over electric cooperatives, would no longer apply. Non-Imprisonment for non-payment of poll tax
Section 20. No person shall be imprisoned for debt or non-payment of a poll tax.

Freedom of Religion American Bible Society vs City of Manila

American Bible Society vs. City of Manila GR No. L-9637 | April 30, 1957 Facts: American Bible Society is a foreign, non-stock, non-profit, religious, missionary corporation duly registered and doing business in the Philippines through its Philippine agency established in Manila in November, 1898 City of Manila is a municipal corporation with powers that are to be exercised in conformity with the provisions of Republic Act No. 409, known as the Revised Charter of the City of Manila American Bible Society has been distributing and selling bibles and/or gospel portions throughout the Philippines and translating the same into several Philippine dialect City Treasurer of Manila informed American Bible Society that it was violating several Ordinances for operating without the necessary permit and license, thereby requiring the corporation to secure the permit and license fees covering the period from 4Q 1945-2Q 1953 To avoid closing of its business, American Bible Society paid the City of Manila its permit and license fees under protest American Bible filed a complaint, questioning the constitutionality and legality of the Ordinances 2529 and 3000, and prayed for a refund of the payment made to the City of Manila. They contended: a. They had been in the Philippines since 1899 and were not required to pay any license fee or sales tax b. it never made any profit from the sale of its bibles City of Manila prayed that the complaint be dismissed, reiterating the constitutionality of the Ordinances in question Trial Court dismissed the complaint American Bible Society appealed to the Court of Appeals

Whether or not the said ordinances are constitutional and valid (contention: it restrains the free exercise and enjoyment of the religious profession and worship of
Issue 1:

appellant). Held: Section 1, subsection (7) of Article III of the Constitution, provides that: (7) No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religion test shall be required for the exercise of civil or political rights. The provision aforequoted is a constitutional guaranty of the free exercise and enjoyment of religious profession and worship, which carries with it the right to disseminate religious information. It may be true that in the case at bar the price asked for the bibles and other religious pamphlets was in some instances a little bit higher than the actual cost of the same but this cannot mean that appellant was engaged in the business or occupation of selling said "merchandise" for profit. For this reason. The Court believe that the provisions of City of ManilaOrdinance No. 2529, as amended, cannot be applied to appellant, for in doing so it would impair its free exercise and enjoyment of its religious profession and worship as well as its rights of dissemination of religious beliefs. With respect to Ordinance No. 3000, as amended, the Court do not find that it imposes any charge upon the

enjoyment of a right granted by the Constitution, nor tax the exercise of religious practices. It seems clear, therefore, that Ordinance No. 3000 cannot be considered unconstitutional, however inapplicable to said business, trade or occupation of the plaintiff. As to OrdinanceNo. 2529 of the City of Manila, as amended, is also not applicable, so defendant is powerless to license or tax the business of plaintiff Society.
Issue 2: WON American Bible Society liable to pay sales tax for the distribution and sale of bibles Ruling: NO Under Sec. 1 of Ordinance 3000, one of the ordinance in question, person or entity engaged in any of the business, trades or occupation enumerated under Sec. 3 must obtain a Mayors permit and license from the City Treasurer. American Bible Societys business is not among those enumerated However, item 79 of Sec. 3 of the Ordinance provides that all other businesses, trade or occupation not mentioned, except those upon which the City is not empowered to license or to tax P5.00 Therefore, the necessity of the permit is made to depend upon the power of the City to license or tax said business, trade or occupation. 2 provisions of law that may have bearing on this case: a. Chapter 60 of the Revised Administrative Code, the Municipal Board of the City of Manila is empowered to tax and fix the license fees on retail dealers engaged in the sale of books b. Sec. 18(o) of RA 409: to tax and fix the license fee on dealers in general merchandise, including importers and indentors, except those dealers who may be expressly subject to the payment of some other municipal tax. Further, Dealers in general merchandise shall be classified as ( a) wholesale dealers and (b) retail dealers. For purposes of the tax on retail dealers, general merchandise shall be classified into four main classes: namely (1) luxury articles, (2) semi-luxury articles, (3) essential commodities, and (4) miscellaneous articles. A separate license shall be prescribed for each class but where commodities of different classes are sold in the same establishment, it shall not be compulsory for the owner to secure more than one license if he pays the higher or highest rate of tax prescribed by ordinance. Wholesale dealers shall pay the license tax as such, as may be provided by ordinance The only difference between the 2 provisions is the limitation as to the amount of tax or license fee that a retail dealer has to pay per annum As held in Murdock vs. Pennsylvania, The power to impose a license tax on the exercise of these freedoms provided for in the Bill of Rights, is indeed as potent as the power of censorship which this Court has repeatedly struck down. It is not a nominal fee imposed as a regulatory measure to defray the expenses of policing the activities in question. It is in no way apportioned. It is flat license tax levied and collected as a condition to the pursuit of activities whose enjoyment is guaranteed by the constitutional liberties of press and religion and inevitably tends to suppress their exercise. That is almost uniformly recognized as the inherent vice and evil of this flat license tax. Further, the case also mentioned that the power to tax the exercise of a privilege is the power to control or suppress its enjoyment. Those who can tax the exercise of this religious practice can make

its exercise so costly as to deprive it of the resources necessary for its maintenance. Those who can tax the privilege of engaging in this form of missionary evangelism can close all its doors to all those who do not have a full purse Under Sec. 27(e) of Commonwealth Act No. 466 or the National Internal Revenue Code,Corporations or associations organized and operated exclusively for religious, charitable, . . . or educational purposes, . . .: Provided, however, That the income of whatever kind and character from any of its properties, real or personal, or from any activity conducted for profit, regardless of the disposition made of such income, shall be liable to the tax imposed under this Code shall not be taxed The price asked for the bibles and other religious pamphlets was in some instances a little bit higher than the actual cost of the same but this cannot mean that American Bible Society was engaged in the business or occupation of selling said "merchandise" for profit Therefore, the Ordinance cannot be applied for in doing so it would impair American Bible Societys free exercise and enjoyment of its religious profession and worship as well as its rights of dissemination of religious beliefs. Wherefore, and on the strength of the foregoing considerations, We hereby reverse the decision appealed from, sentencing defendant return to plaintiff the sum of P5,891.45 unduly collected from it

Prohibition against Taxation of Real Property of Charitable institutions, churches, parsonages or convents, mosques and non-profit cemeteries
Section 28. 1. The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. 2. The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. 3. Charitable institutions, churches and personages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. 4. No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress.

LLADOC vs COMMISSIONER OF INTERNAL REVENUE

Facts: In 1957, the MB Estate Inc. of Bacolod City donated P10,000 in cash to the parish priest of Victorias, Negros Occidental; the amount spent for the construction of a new Catholic Church in the locality,m as intended. In1958, MB Estate filed the donors gift tax return. In 1960, the Commissioner issued an assessment for donees gift tax against the parish. The priest lodged a protest to the assessment and requested the withdrawal thereof. Issue: Whether the Catholic Parish is tax exempt.

Held: The phrase exempt from taxation should not be interpreted to mean exemption from all kinds of taxes. The exemption is only from the payment of taxes assessed on such properties as property taxes as contradistinguished from excise taxes. A donees gift tax is not a property tax but an excise tax imposed on the transfer of property by way of gift inter vivos. It does not rest upon general ownership, but an excise upon the use made of the properties, upon the exercise of the privilege of receiving the properties. The imposition of such excise tax on property used for religious purpose do not constitute an impairment of the Constitution. The tax exemption of the parish, thus, does not extend to excise taxes.

Abra Valley College Inc. vs Aquino

FACTS: Petitioner, an educational corporation and institution of higher learning duly incorporated with the Securities and Exchange Commission in 1948, filed a complaint to annul and declare void the Notice of Seizure and the Notice of Sale of its lot and building located a t Bangued, Abra, for non-payment of real estate taxes and penalties amounting to P5,140.31. Said Notice of Seizure by respondents Municipal Treasurer and Provincial Treasurer, defendants below, was issued for the satisfaction of the said taxes thereon. The parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned decision. The trial court ruled for the government, holding that the second floor of the building is being used by the director for residential purposes and that the ground floor used and rented by Northern Marketing Corporation, a commercial establishment, and thus the property is not being used exclusively for educational purposes. Instead of perfecting an appeal, petitioner availed of the instant petition for review on certiorari with prayer for preliminary injunction before the Supreme Court, by filing said petition on 17 August 1974. ISSUE: Whether or not the lot and building are used exclusively for educational purposes. HELD: Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, expressly grants exemption from realty taxes for cemeteries, churches and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious, charitable or educational purposes. Reasonable emphasis has always been made that the exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purposes. The use of the school building or lot for commercial purposes is neither contemplated by law, nor by jurisprudence. In the case at bar, the lease of the first floor of the building to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purpose of education. The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution. The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the assessed tax be returned to the petitioner. The modification is derived from the fact that the ground floor is being used for commercial purposes (leased) and the second floor being used as incidental to education (residence of the director).

HERRERA vs QUEZON CITY BOARD OF ASSESSMENT APPEALS