Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

L-28896 February 17, 1988 COMMISSIONER OF INTERN L RE!ENUE, petitioner, vs. LGUE, INC., a"# T$E COURT OF T % PPE LS, respondents. CRU&, J.: Ta es are the lifeblood of the !overn"ent and so should be collected #ithout unnecessar$ hindrance On the other hand, such collection should be "ade in accordance #ith la# as an$ arbitrariness #ill ne!ate the ver$ reason for !overn"ent itself. It is therefore necessar$ to reconcile the apparentl$ conflictin! interests of the authorities and the ta pa$ers so that the real purpose of ta ation, #hich is the pro"otion of the co""on !ood, "a$ be achieved. The "ain issue in this case is #hether or not the %ollector of Internal Revenue correctl$ disallo#ed the P&',(((.(( deduction clai"ed b$ private respondent )l!ue as le!iti"ate business e penses in its inco"e ta returns. The corollar$ issue is #hether or not the appeal of the private respondent fro" the decision of the %ollector of Internal Revenue #as "ade on ti"e and in accordance #ith la#. *e deal first #ith the procedural +uestion. The record sho#s that on ,anuar$ -., -/0', the private respondent, a do"estic corporation en!a!ed in en!ineerin!, construction and other allied activities, received a letter fro" the petitioner assessin! it in the total a"ount of P12,-12.1' as delin+uenc$ inco"e ta es for the $ears -/'1 and -/'/. 1 On ,anuar$ -1, -/0', )l!ue flied a letter of protest or re+uest for reconsideration, #hich letter #as sta"p received on the sa"e da$ in the office of the petitioner. 2 On March -3, -/0', a #arrant of distraint and lev$ #as presented to the private respondent, throu!h its counsel, )tt$. )lberto 4uevara, ,r., #ho refused to receive it on the !round of the pendin! protest. ' ) search of the protest in the doc5ets of the case proved fruitless. )tt$. 4uevara produced his file cop$ and !ave a photostat to 6IR a!ent Ra"on Re$es, #ho deferred service of the #arrant. ( On )pril &, -/0', )tt$. 4uevara #as finall$ infor"ed that the 6IR #as not ta5in! an$ action on the protest and it #as onl$ then that he accepted the #arrant of distraint and lev$ earlier sou!ht to be served. ) Si teen da$s later, on )pril 32, -/0', )l!ue filed a petition for revie# of the decision of the %o""issioner of Internal Revenue #ith the %ourt of Ta )ppeals. 6 The above chronolo!$ sho#s that the petition #as filed seasonabl$. )ccordin! to Rep. )ct No. --3', the appeal "a$ be "ade #ithin thirt$ da$s after receipt of the decision or rulin! challen!ed. 7 It is true that as a rule the #arrant of distraint and lev$ is 7proof of the finalit$ of the assess"ent7 8 and renders hopeless a re+uest for reconsideration,7 9 bein! 7tanta"ount to an outri!ht denial thereof and "a5es the said re+uest dee"ed re8ected.7 1* 6ut there is a special circu"stance in the case at bar that prevents application of this accepted doctrine. The proven fact is that four da$s after the private respondent received the petitioner9s notice of assess"ent, it filed its letter of protest. This #as apparentl$ not ta5en into account before the #arrant of distraint and lev$ #as issued: indeed, such protest could not be located in the office of the petitioner. It #as onl$ after )tt$. 4uevara !ave the 6IR a cop$ of the protest that it #as, if at all, considered b$ the ta authorities. Durin! the intervenin! period, the #arrant #as pre"ature and could therefore not be served. )s the %ourt of Ta )ppeals correctl$ noted,7 11 the protest filed b$ private respondent #as not pro forma and #as based on stron! le!al considerations. It thus had the effect of suspendin! on ,anuar$ -1, -/0', #hen it #as filed, the re!le"entar$ period #hich started on the date the assess"ent #as received, vi;., ,anuar$ -., -/0'. The period started runnin! a!ain onl$ on )pril &, -/0', #hen the private respondent #as definitel$ infor"ed of the i"plied re8ection of the said protest and the #arrant #as finall$ served on it. <ence, #hen the appeal #as filed on )pril 32, -/0', onl$ 3( da$s of the re!le"entar$ period had been consu"ed. No# for the substantive +uestion. The petitioner contends that the clai"ed deduction of P&',(((.(( #as properl$ disallo#ed because it #as not an ordinar$ reasonable or necessar$ business e pense. The %ourt of Ta )ppeals had seen it differentl$. )!reein! #ith )l!ue, it held that the said a"ount had been

le!iti"atel$ paid b$ the private respondent for actual services rendered. The pa$"ent #as in the for" of pro"otional fees. These #ere collected b$ the Pa$ees for their #or5 in the creation of the Ve!etable Oil Invest"ent %orporation of the Philippines and its subse+uent purchase of the properties of the Philippine Su!ar =state Develop"ent %o"pan$. Parentheticall$, it "a$ be observed that the petitioner had Ori!inall$ clai"ed these pro"otional fees to be personal holdin! co"pan$ inco"e 12 but later confor"ed to the decision of the respondent court re8ectin! this assertion. 1' In fact, as the said court found, the a"ount #as earned throu!h the 8oint efforts of the persons a"on! #ho" it #as distributed It has been established that the Philippine Su!ar =state Develop"ent %o"pan$ had earlier appointed )l!ue as its a!ent, authori;in! it to sell its land, factories and oil "anufacturin! process. Pursuant to such authorit$, )lberto 4uevara, ,r., =duardo 4uevara, Isabel 4uevara, =dith, O9Farell, and Pablo Sanche;, #or5ed for the for"ation of the Ve!etable Oil Invest"ent %orporation, inducin! other persons to invest in it. 1( >lti"atel$, after its incorporation lar!el$ throu!h the pro"otion of the said persons, this ne# corporation purchased the PS=D% properties. 1) For this sale, )l!ue received as a!ent a co""ission of P-30,(((.((, and it #as fro" this co""ission that the P&',(((.(( pro"otional fees #ere paid to the aforena"ed individuals. 16 There is no dispute that the pa$ees dul$ reported their respective shares of the fees in their inco"e ta returns and paid the correspondin! ta es thereon. 17 The %ourt of Ta )ppeals also found, after e a"inin! the evidence, that no distribution of dividends #as involved. 18 The petitioner clai"s that these pa$"ents are fictitious because "ost of the pa$ees are "e"bers of the sa"e fa"il$ in control of )l!ue. It is ar!ued that no indication #as "ade as to ho# such pa$"ents #ere "ade, #hether b$ chec5 or in cash, and there is not enou!h substantiation of such pa$"ents. In short, the petitioner su!!ests a ta dod!e, an atte"pt to evade a le!iti"ate assess"ent b$ involvin! an i"a!inar$ deduction. *e find that these suspicions #ere ade+uatel$ "et b$ the private respondent #hen its President, )lberto 4uevara, and the accountant, %ecilia V. de ,esus, testified that the pa$"ents #ere not "ade in one lu"p su" but periodicall$ and in different a"ounts as each pa$ee9s need arose. 19 It should be re"e"bered that this #as a fa"il$ corporation #here strict business procedures #ere not applied and i""ediate issuance of receipts #as not re+uired. =ven so, at the end of the $ear, #hen the boo5s #ere to be closed, each pa$ee "ade an accountin! of all of the fees received b$ hi" or her, to "a5e up the total of P&',(((.((. 2* )d"ittedl$, ever$thin! see"ed to be infor"al. This arran!e"ent #as understandable, ho#ever, in vie# of the close relationship a"on! the persons in the fa"il$ corporation. *e a!ree #ith the respondent court that the a"ount of the pro"otional fees #as not e cessive. The total co""ission paid b$ the Philippine Su!ar =state Develop"ent %o. to the private respondent #as P-3',(((.((. 21 )fter deductin! the said fees, )l!ue still had a balance of P'(,(((.(( as clear profit fro" the transaction. The a"ount of P&',(((.(( #as 0(? of the total co""ission. This #as a reasonable proportion, considerin! that it #as the pa$ees #ho did practicall$ ever$thin!, fro" the for"ation of the Ve!etable Oil Invest"ent %orporation to the actual purchase b$ it of the Su!ar =state properties. This findin! of the respondent court is in accord #ith the follo#in! provision of the Ta %ode@ S=%. 2(. Deductions from gross income.AAIn co"putin! net inco"e there shall be allo#ed as deductions B CaD = penses@ C-D In general.AA)ll the ordinar$ and necessar$ e penses paid or incurred durin! the ta able $ear in carr$in! on an$ trade or business, includin! a reasonable allo#ance for salaries or other co"pensation for personal services actuall$ rendered: ... 22 and Revenue Re!ulations No. 3, Section &( C-D, readin! as follo#s@ S=%. &(. Compensation for personal services.AA )"on! the ordinar$ and necessar$ e penses paid or incurred in carr$in! on an$ trade or business "a$ be included a reasonable allo#ance for salaries or other co"pensation for personal services actuall$ rendered. The test of deductibilit$ in the case of co"pensation pa$"ents is #hether the$ are reasonable and are, in fact, pa$"ents purel$ for service. This test and deductibilit$ in the

case of co"pensation pa$"ents is #hether the$ are reasonable and are, in fact, pa$"ents purel$ for service. This test and its practical application "a$ be further stated and illustrated as follo#s@ )n$ a"ount paid in the for" of co"pensation, but not in fact as the purchase price of services, is not deductible. CaD )n ostensible salar$ paid b$ a corporation "a$ be a distribution of a dividend on stoc5. This is li5el$ to occur in the case of a corporation havin! fe# stoc5holders, Practicall$ all of #ho" dra# salaries. If in such a case the salaries are in e cess of those ordinaril$ paid for si"ilar services, and the e cessive pa$"ent correspond or bear a close relationship to the stoc5holdin!s of the officers of e"plo$ees, it #ould see" li5el$ that the salaries are not paid #holl$ for services rendered, but the e cessive pa$"ents are a distribution of earnin!s upon the stoc5. . . . CPro"ul!ated Feb. --, -/2-, 2( O.4. No. -1, 23'.D It is #orth notin! at this point that "ost of the pa$ees #ere not in the re!ular e"plo$ of )l!ue nor #ere the$ its controllin! stoc5holders. 2' The Solicitor 4eneral is correct #hen he sa$s that the burden is on the ta pa$er to prove the validit$ of the clai"ed deduction. In the present case, ho#ever, #e find that the onus has been dischar!ed satisfactoril$. The private respondent has proved that the pa$"ent of the fees #as necessar$ and reasonable in the li!ht of the efforts e erted b$ the pa$ees in inducin! investors and pro"inent business"en to venture in an e peri"ental enterprise and involve the"selves in a ne# business re+uirin! "illions of pesos. This #as no "ean feat and should be, as it #as, sufficientl$ reco"pensed. It is said that ta es are #hat #e pa$ for civili;ation societ$. *ithout ta es, the !overn"ent #ould be paral$;ed for lac5 of the "otive po#er to activate and operate it. <ence, despite the natural reluctance to surrender part of one9s hard earned inco"e to the ta in! authorities, ever$ person #ho is able to "ust contribute his share in the runnin! of the !overn"ent. The !overn"ent for its part, is e pected to respond in the for" of tan!ible and intan!ible benefits intended to i"prove the lives of the people and enhance their "oral and "aterial values. This s$"biotic relationship is the rationale of ta ation and should dispel the erroneous notion that it is an arbitrar$ "ethod of e action b$ those in the seat of po#er. 6ut even as #e concede the inevitabilit$ and indispensabilit$ of ta ation, it is a re+uire"ent in all de"ocratic re!i"es that it be e ercised reasonabl$ and in accordance #ith the prescribed procedure. If it is not, then the ta pa$er has a ri!ht to co"plain and the courts #ill then co"e to his succor. For all the a#eso"e po#er of the ta collector, he "a$ still be stopped in his trac5s if the ta pa$er can de"onstrate, as it has here, that the la# has not been observed. *e hold that the appeal of the private respondent fro" the decision of the petitioner #as filed on ti"e #ith the respondent court in accordance #ith Rep. )ct No. --3'. )nd #e also find that the clai"ed deduction b$ the private respondent #as per"itted under the Internal Revenue %ode and should therefore not have been disallo#ed b$ the petitioner. )%%ORDIN4EF, the appealed decision of the %ourt of Ta )ppeals is )FFIRM=D in toto, #ithout costs. SO ORD=R=D Republic of the Philippines SUPREME COURT Manila T<IRD DIVISION G.R. No. 79'*7 u+u,- 29, 1989 COMMISSIONER OF CUSTOMS, petitioner, vs. T$E $ON. R MON P. M . SI R, RTC /u#+e, 0ra"12 '), Ma"34a a"# T$E 5ISTILLERS CO. LT5. OF ENGL N5, respondents. Quasha, Asperilla, Ancheta, Pena & Nolasco for private respondent.

Petitioner %o""issioner of %usto"s see5s the reversal of respondent 8ud!e9s decision dated 3( ,ul$ -/1& in %ivil %ase No. 13A-313- entitled 7The Distillers %o. Etd., of =n!land v. Victorio Francisco, et al.,7 the dispositive portion of #hich reads as follo#s@ *<=R=FOR=, havin! been issued b$ the %ollector of %usto"s in e cess of his 8urisdiction the disputed *arrant of Sei;ure and Detention dated ,anuar$ 3, -/&/, in Sei;ure Identification No. 3A&/ of the 6ureau of %usto"s, as #ell as all the proceedin!s ta5en thereon are declared N>EE and VOID, and the #rit of prohibition pra$ed for is 4R)NT=D. The public respondent is ordered to R=FR)IN and D=SIST fro" conductin! an$ proceedin!s for the sei;ure and forfeiture of the articles in +uestion until after the %ourt havin! ta5en co!ni;ance and le!al custod$ thereof has rendered its final 8ud!"ent in the cri"inal cases #hich involve the sa"e articles. *ithout costs. SO ORD=R=D. GRT% Decision, p. &: Rollo, p. 30H. The undisputed acts are as follo#s@ On & Dece"ber -/&1, the then %ourt of First Instance of Manila Cherein referred to as %FIAM)NIE)D issued Search and Sei;ure *arrants in %ri"inal %ase Nos. 10(3 and 10(2 entitled 7People of the Philippines vs. <o#ard ,. Sosis,, et al.,7 for violation of Section -- CaD andIor --CeD of Republic )ct No. 2&3(, 6 and violation of )rticle -11 of the Revised Penal %ode Ccaptioned as 7Substitutin! and alterin! trade"ar5s, tradena"es, or service "ar5s7D, respectivel$, and orderin! the sei;ure of the follo#in!@ aD Materials: )ll #his5$, bottles, labels, caps, cartons, bo es, "achiner$ e+uip"ent or other "aterials used or intended to be used, or suitable for use, in connection #ith counterAfeitin! or i"itation of ,ohnnie *al5er Scotch *his5$ C="phasis suppliedD bD Documents:

under the control and possession of@ -. <o#ard ,. Sosis 3. 4eor!e Morrison Eonie 2. <ercules 6ottlin! %o. .. Eauro Villanueva '. Vicente Velasco 0. Manuel =steban &. =u!enio Mauricio GRollo, pp. -(0A-(&H. On 1 Dece"ber -/&1, a co"posite tea" fro" the Ministr$ of Finance 6ureau of Investi!ation and Intelli!ence Cherein referred to as 6IID, the 6ureau of %usto"s and the Inte!rated National Police enforced the search and sei;ure #arrants, and sei;ed and confiscated the follo#in! articles, a"on! others, found in the pre"ises of the <ercules 6ottlin! %o., Inc. Cherein referred to as <=R%>E=SD at Isla de Provisor, Paco, Manila@ Si C0D Tan5s of Scotch *his5$: .-& cartons each containin! I do;. bottles of 7,ohnnie *al5er 6lac5 Eabel *his5$7: -(/ e"pt$ bottles: ="pt$ %artons of 7,ohnnie *al5er 6lac5 Eabel Scotch *his5$7 nu"ber /((A3(.. e"pt$ cartons. GRollo, p. 3-H. The articles sei;ed re"ained in the pre"ises of <=R%>E=S !uarded and secured b$ 6II personnel.

CORTES, J.:

On 3 ,anuar$ -/&/, the %ollector of %usto"s for the Port of Manila, after bein! infor"ed of the sei;ure of the sub8ect !oods and upon verification that the sa"e #ere i"ported contrar$ to la#, issued a #arrant of sei;ure and detention, in Sei;ure Identification No. 3A&/, and ordered the i""ediate sei;ure and turnover of the sei;ed ite"s to its )uction and %ar!o Disposal Division at the Port of Manila. Sei;ure and forfeiture proceedin!s #ere then initiated a!ainst the aboveA enu"erated articles for alle!ed violation of Section 3'2( CfD of the Tariff and %usto"s %ode, in relation to Republic )ct 2&3(, to #it@ Sec. 3'2(. Propert$ sub8ect to forfeiture under Tariff and %usto"s la#@

,ul$ -/1&, respondent 8ud!e rendered a decision holdin! that the %ollector of %usto"s acted in e cess of its 8urisdiction in issuin! the #arrant of sei;ure and detention considerin! that the sub8ect !oods had alread$ co"e under the le!al custod$ of the %FIAM)NIE). <ence, petitioner represented b$ the Solicitor 4eneral, filed the instant petition on -- )u!ust -/1&. In the "eanti"e, <o#ard Sosis and co"pan$ #ere char!ed for violation of %hapter VI, Sec. --CaD J CeD of Republic )ct 2&3( in %ri"inal %ase No. 11A02-'& and for violation of )rticle -11 of the Revised Penal %ode in %ri"inal %ase No. 11A02-'0 before the Re!ional Trial %ourt and the Metropolitan Trial %ourt of Manila, respectivel$ GRollo, p. 12H. In his petition, the %o""issioner of %usto"s assi!ns as errors the follo#in!@ I. R=SPOND=NT ,>D4= =RR=D IN ISS>IN4 ) T=MPOR)RF R=STR)ININ4 ORD=R )ND S>6S=K>=NTEF ) *RIT OF IN,>N%TION IN %IVIE %)S= NO. 13A-3&3- NOT*IT<ST)NDIN4 T<= F)%T T<)T PRIV)T= R=SPOND=NT, T<= DISTIEE=RS %O., ETD., OF =N4E)ND <)S NO V)EID %)>S= OF )%TION )4)INST <=R=IN P=TITION=R: II. R=SPOND=NT RT% ,>D4= 4R)V=EF =RR=D IN T)LIN4 %O4NIM)N%= OF T<= P=TITION )ND IN PRO%==DIN4 TO <=)R )ND R=ND=R ) D=%ISION IN %IVIE %)S= NO. 13A -3&3- NOT*IT<ST)NDIN4 T<= F)%T T<)T T<= TRI)E %O>RT <)S NO ,>RISDI%TION OV=R T<= %)S= GRollo, pp. -(A--H. Petitioner contends that the authorit$ of the 6ureau of %usto"s over sei;ure and forfeiture cases is be$ond the 8udicial interference of the Re!ional Trial %ourt, even in the for" of certiorari, prohibition or "anda"us #hich are reall$ atte"pts to revie# the %o""issioner9s actions GRollo, p. /1H. Petitioner ar!ues that 8udicial recourse fro" the decision of the 6ureau of %usto"s on sei;ure and forfeiture cases can onl$ be sou!ht in the %ourt of Ta )ppeals and eventuall$ in this %ourt. Private respondent ho#ever contends that #hile the la# "a$ have vested e clusive 8urisdiction in the 6ureau of %usto"s over forfeiture and sei;ure cases, in this case respondent 8ud!e had 8urisdiction to en8oin the 6ureau of %usto"s fro" continuin! #ith its sei;ure and forfeiture proceedin!s since the articles here #ere alread$ in custodia legis, b$ virtue of the search #arrants issued b$ the %FIAM)NIE). Private respondent contends that respondent 8ud!e "a$ properl$ ta5e co!ni;ance of the instant case since unli5e the cases cited b$ petitioner, the action for prohibition #as brou!ht not to clai" o#nership or possession over the !oods but onl$ to preserve the sa"e and to prevent the 6ureau of %usto"s fro" doin! an$thin! pre8udicial to the successful prosecution of the cri"inal cases GRollo, p. -32H. The issue thus presented is #hether or not respondent 8ud!e "a$ en8oin the %ollector of %usto"s fro" continuin! #ith its sei;ure and forfeiture proceedin!s over !oods earlier sei;ed b$ virtue of search #arrants issued b$ the %FIAM)NIE). The instant petition is i"pressed #ith "erit. This %ourt finds that respondentA8ud!e has failed to adhere to the prevailin! rule #hich denies hi" 8urisdiction to en8oin the 6ureau of %usto"s fro" ta5in! further action in the sei;ure and forfeiture proceedin!s over the sub8ect !oods. ,urisprudence is replete #ith cases #hich have held that re!ional trial courts are devoid of an$ co"petence to pass upon the validit$ or re!ularit$ of sei;ure and forfeiture proceedin!s conducted in the 6ureau of %usto"s, and to en8oin, or other#ise interfere #ith, these proceedin!s. The %ollector of %usto"s sittin! in sei;ure and forfeiture proceedin!s has e clusive 8urisdiction to hear and deter"ine all +uestions touchin! on the sei;ure and forfeiture of dutiable !oods. The re!ional trial courts are precluded fro" assu"in! co!ni;ance over such "atters even throu!h petitions of certiorari, prohibition or "anda"us G#ee 4eneral Travel Service v. David, 4.R. No. EA-/3'/, Septe"ber 32, -/00, -1 S%R) '/: Pacis v. )veria, 4.R. No. EA33'30, Nove"ber 3/, -/00, -1 S%R) /(&: De ,o$a v. Eantin, 4.R. No. EA 3.(2&, )pril 3&, -/0&, -/ S%R) 1/2: Ponce =nrile v. Vinu$a 4.R. No. EA3/(.2, ,anuar$ 2(, -/&-, 2& S%R) 21-: %ollector of %usto"s v. Torres, 4.R. No. EA33/&&, Ma$ 2-, -/&3, .' S%R) 3&3: Pacis v. 4eroni"o, 4.R. No. EA3.(01, )pril 32, -/&.,'0 S%R) '12: %o""issioner of %usto"s v. Navarro, 4.R. No. EA22-.0, Ma$ 2-, -/&&, && S%R) 30.: Republic v. 6ocar, 4.R. No. EA2'30(, Septe"ber ., -/&/,/2 S%R) &1: De la Fuente v. De Ve$ra, 4.R. No. EA2'21', ,anuar$ 2-, -/12, -3( S%R) .'-H.

CfD )n$ article the i"portation or e portation of #hich is effected or atte"pted contrar$ to la#, or an$ article of prohibited i"portation or e portation, and all other articles #hich, in the opinion of the collector have been used, are or #ere entered to be used as instru"ents in the i"portation or e portation of the for"er.

On 3/ ,anuar$ -/&/, the %FIAM)NIE) issued an order authori;in! the transfer and deliver$ of the sei;ed articles to the custo"s #arehouse located at South <arbor, Port of Manila, sub8ect to the follo#in! conditions@ -. The %o""issioner of %usto"s is #illin! to have custod$ of the sa"e and !uarantees their safe5eepin! at all ti"es in the sa"e +uantit$, +ualit$, "anner and condition #hen the articles shall be turned over to and received b$ the 6ureau of %usto"s in custodia legis, sub8ect to the further orders fro" the %ourt: 3. No article shall be transferred #ithout the presence of a representative of the applicant, the defendants, the %o""issioner of %usto"s and the %ourt: these representatives to secure the necessar$ escort as !uarantee that nothin! #ill happen durin! the transfer of the articles. 2. The %o""issioner of %usto"s to issue the proper and necessar$ receipt for each and ever$ article transferred to and received b$ the 6ureau of %usto"s pursuant to this order GRollo, p. 33H. Mean#hile, the validit$ and constitutionalit$ of the issuance and service of the search and sei;ure #arrants issued b$ the %FIA M)NIE) #ere contested in and upheld b$ the %ourt of )ppeals in %)A4.R. No. SPA(/-'2AR entitled 7<ercules 6ottlin! %o. Inc., et al., v. Victoriano Savellano, et al.7 <=R%>E=S filed a petition for certiorari in the Supre"e %ourt but in a resolution dated 30 Nove"ber -/10 in 4.R. No. ''(0- captioned as ercules !ottling Co., Inc. v. "he Court of Appeals, the %ourt dis"issed the petition. %onse+uentl$, the %it$ Fiscal of Manila proceeded #ith the preli"inar$ investi!ation of the cri"inal cases, #here private respondent, The Distillers %o. Etd. of =n!land, clai"in! to be the o#ner and e clusive "anufacturer of ,ohnnie *al5er Scotch *his5e$ #as the private co"plainant GRollo, p. 0-H, *ith the dis"issal of <=R%>E=S9 petition, the 6ureau of %usto"s also resu"ed hearin! the sei;ure and forfeiture proceedin!s over the said articles. The present controvers$ arose #hen private respondent, on -- ,une -/13, ob8ected to the continuation b$ the %ollector of %usto"s of the sei;ure proceedin!s clai"in!, a"on! others, that these proceedin!s #ould ha"per or even 8eopardi;e the preli"inar$ investi!ation bein! conducted b$ the fiscal. The %ollector of %usto"s i!nored the ob8ections. In order to stop and en8oin the <earin! Officer of the 6ureau of %usto"s fro" ta5in! further action in the sei;ure proceedin!s of the sub8ect !oods, private respondent on 3. Septe"ber -/13 filed a petition for prohibition #ith preli"inar$ in8unction andIor te"porar$ restrainin! order, doc5eted as %ivil %ase No. 13A-3&3-. It "ust be noted at this 8uncture that the petition #as heard not before the %FIA M)NIE) #hich ori!inall$ issued the search #arrants, but before another sala, that of respondent 8ud!e of the Re!ional Trial %ourt, 6ranch 2', Manila. Respondent 8ud!e issued a te"porar$ restrainin! order on 3/ Septe"ber -/13. Subse+uentl$, a #rit for preli"inar$ in8unction #as issued as #ell. Petitioner filed an ans#er on -3 Nove"ber -/13. On 3(

It is li5e#ise #ellAsettled that the provisions of the Tariff and %usto"s %ode and that of Republic )ct No. --3', as a"ended 66 specif$ the proper fora for the ventilation of an$ le!al ob8ections or issues raised concernin! these proceedin!s. )ctions of the %ollector of %usto"s are appealable to the %o""issioner of %usto"s, #hose decisions, in turn, are sub8ect to the e clusive appellate 8urisdiction of the %ourt of Ta )ppeals. Thereafter, an appeal lies to this %ourt throu!h the appropriate petition for revie# b$ #rit of certiorari. >ndeniabl$, re!ional trial courts do not share these revie# po#ers. The above rule is anchored upon the polic$ of placin! no unnecessar$ hindrance on the !overn"ent9s drive not onl$ to prevent s"u!!lin! and other frauds upon custo"s, but also, and "ore i"portantl$, to render effective and efficient the collection of i"port and e port duties due the state. For tariff and custo"s duties are ta es constitutin! a si!nificant portion of the public revenue #hich are the lifeblood that enables the !overn"ent to carr$ out functions it has been instituted to perfor". Not#ithstandin! these considerations, respondent 8ud!e entertained private respondent9s petition for prohibition holdin! that the sei;ure and forfeiture proceedin!s instituted in the 6ureau of %usto"s #as null and void because the sub8ect !oods #ere earlier sei;ed b$ virtue of the #arrants issued b$ the %FIAM)NIE) in %ri"inal %ases Nos. 10(3 and 10(2. This holdin! is erroneous. =ven if it be assu"ed that a taint of irre!ularit$ "a$ be i"puted to the e ercise b$ the %ollector of %usto"s of his 8urisdiction to institute sei;ure and forfeiture proceedin!s over the sub8ect !oods because he had accepted custod$ of the sa"e under conditions specified in the %FIAManila order dated ,anuar$ 3/, -/&/, it #ould not "ean that respondent 8ud!e #as correspondin!l$ vested #ith the 8urisdiction to interfere #ith such proceedin!s CSee Ponce =nrile v. Vinu$a supraH. It bears repeatin! that la# and settled 8urisprudence clearl$ deprive the re!ional trial courts of 8urisdiction to en8oin the %ollector of %usto"s fro" e ercisin! his e clusive authorit$ to order sei;ure and forfeiture proceedin!s over i"ported !oods. Moreover, there is no le!al basis for respondent 8ud!e9s conclusion that the %ollector of %usto"s is deprived of his 8urisdiction to issue the assailed #arrant of sei;ure and detention, and to institute sei;ure and forfeiture proceedin!s for the sub8ect !oods si"pl$ because the sa"e #ere first ta5en in custodia legis. >ndeniabl$, the sub8ect !oods have been brou!ht under the le!al control of the %FIAM)NIE) b$ virtue of its search and sei;ure #arrants and are, therefore, in custodia legis. !ut this fact merel$ serves to deprive an$ other court or tri%unal, e&cept one having supervisor$ control or superior 'urisdiction in the premises, of the right to divest the C(I)MANI*A of its custod$ and control of the said propert$ G%ollector of Internal Revenue v. Flores Vda. de %odinera 4.R. No. EA/0&', Septe"ber 31, -/'&H, or to interfere +ith and change its possession +ithout its consent GNational Po#er %orporation v. De Ve$ra, 4.R. No. EA-'&02, Dece"ber 33, -/0-, 2 S%R) 0.0: De Eeon v. Salvador, 4.R. Nos. EA2(1&- J EA2-0(2, Dece"ber 31, -/&(, 20 S%R) '0&: Vlasons =nterprises %orporation v. %ourt of )ppeals, 4.R. No. 0-011, October 31, -/1&, -'' S%R) -10H. In the instant case, the %FIAManila #as not divested of its 8urisdiction over the sub8ect !oods, nor #ere its processes interfered #ith b$ the %ollector of %usto"s. It, in fact, authori;ed the transfer and deliver$ of the sub8ect !oods fro" the pre"ises of <=R%>E=S to the 6ureau of %usto"s #arehouseIbode!a at the South <arbor, Port of Manila thereb$ entrustin! the 6ureau of %usto"s #ith the actual possession and control of the sa"e. On the other hand, since the %ollector of %usto"s herein had actual possession and control over the sub8ect !oods, his 8urisdiction over the !oods #as secured for the purpose of institutin! sei;ure and forfeiture proceedin!s to deter"ine #hether or not the sa"e #ere i"ported into the countr$ contrar$ to la# G#ee Papa v. Ma!o, 4.R. No. EA3&20(, Februar$ 31, -/01, 33 S%R) 1'&H. This is consistent #ith the principle that the basic operative fact for the institution and perfection of proceedin!s in rem li5e the sei;ure and forfeiture proceedin!s pursuant to the Tariff and %usto"s %ode, is the actual or constructive possession of the res b$ the tribunal e"po#ered b$ la# to conduct the proceedin!s G#ee Dod!e v. >S, &- E. ed. 2/3 C-/30D: >S v. Mac5, &/ E. ed. -''/ C-/2'D citin! The )nn, 2 E. ed. &2. C-1-'D: Fetti! %annin! %o. v. Stec5ler, -11 F. 3d &-' C-/'-D citin! Stron! v. >S, .0 F. 3d 3'&, &/ )ER -'( C-/2-DH. Therefore, contrar$ to the i"port of respondent 8ud!e9s decision, the %ollector of %usto"s #as not precluded b$ la# or le!al principle fro" assu"in! 8urisdiction over the sub8ect !oods. No le!al infir"it$ attended the sei;ure and forfeiture proceedin!s over the sub8ect !oods.

The %ourt "ust e"phasi;e at this point that the instant case does not involve a conflict of 8urisdictions. Proceedin!s before the re!ular courts for cri"inal prosecutions a!ainst <o#ard Sosis, et al., and sei;ure and forfeiture proceedin!s for the sub8ect !oods conducted b$ the 6ureau of %usto"s "a$ be "aintained si"ultaneousl$ and independentl$ of each other. For the nature of the t#o proceedin!s are entirel$ different such that a resolution in one is not decisive of the issue in the other. The latter, #hich is ad"inistrative and civil in nature, is directed a!ainst the res or articles i"ported and entails a deter"ination of the le!alit$ of its i"portation. The for"er is directed a!ainst those persons #ho "a$ be held liable for violatin! the penal la#s in connection #ith the i"portation GSee Diosa"ito v. 6alan+ue, 4.R. No. EA2(&2., ,ul$ 31,-/0/,31 S%R) 120: People v. %FI, 4.R. No. EA.-010, Nove"ber -&, -/1(, -(- S%R) 10H. Private respondent, ho#ever, ar!ues that conflict "a$ arise re!ardin! the disposition of the sub8ect !oods if the proceedin!s before the %ollector of %usto"s and the re!ular courts #ere allo#ed to proceed si"ultaneousl$. Private respondent contends that in vie# of the nature of the sei;ure and forfeiture proceedin!s, a 8ud!"ent in favor of <=R%>E=S #ill result in the release of the sub8ect !oods to the clai"ants thereof, #hile an unfavorable decision #ill entail their destruction or sale. It is asserted that either of the t#o outco"es #ill ha"per or even 8eopardi;e the on!oin! cri"inal prosecutions, said !oods co"prisin! the substantial part of the evidence for the People of the Philippines. Proper adherence b$ both tribunals to the rules of co"it$ as defined in the leadin! case of "he ,overnment of the Philippines v. ,ale G3. Phil. /' C-/2-DH #ill forestall the conflict feared. In that case the %ourt had established the rule that #here the preservation and safe5eepin! of the sub8ect "atter of an action is de"anded, as it is "ade to appear that these articles "a$ prove to be of vital i"portance as e hibits in the prosecution of other char!es in another proceedin!, the rules for the orderl$ course of proceedin!s in courts and tribunals forbid the disposition or destruction thereof in one action #hich #ould pre8udice the other, and vice versa GId. at pp. /1A//H. The State in the instant case "ust be !iven reasonable opportunit$ to present its cases for the proper enforce"ent of the applicable provisions of the Revised Penal %ode, Republic )ct No. 2&3(, and the Tariff and %usto"s %ode, and the prosecution of the violators thereof. It follo#s then that the e ecution of an$ final decision in the sei;ure and forfeiture case before the 6ureau of %usto"s, #hether it re+uires the destruction, sale or the release of the sub8ect !oods, should not frustrate the prosecution9s tas5 of dul$ presentin! and offerin! its evidence in %ri"inal %ases Nos. 11A02-'0 and 11A02-'&. It is apropos to note that for evidentiar$ purposes, it #ould not be necessar$ to present each and ever$ ite" of the !oods in +uestion before the courts tr$in! the cri"inal cases. Thus, a representative +uantit$ of the !oods, as "a$ be a!reed upon b$ the authori;ed custo"s officials and fiscals prosecutin! the cri"inal cases, shall be set aside as evidence to be presented in the above cri"inal cases and retained in custodia legis until final 8ud!"ent is secured in these cases. The rest of the !oods "a$ be disposed of in accordance #ith the final decision rendered in the sei;ure and forfeiture proceedin!s pursuant to the Tariff and %usto"s %ode. *<=R=FOR=, in vie# of the fore!oin!, the respondent 8ud!e9s decision dated 3( ,ul$ -/1& is R=V=RS=D. The sei;ure and forfeiture proceedin!s involvin! the !oods in +uestion before the 6ureau of %usto"s "a$ proceed sub8ect to the above pronounce"ents relative to the settin! aside of so "uch of the !oods as "a$ be re+uired for evidentiar$ purposes. SO ORD=R=D. ,utierre-, .r., (eliciano and !idin, ..., concur. (ernan, C..., too/ no part.

Foo-"o-e, N )N )%T TO =NS>R= T<= S)F=TF )ND P>RITF OF FOODS, DR>4S, )ND %OSM=TI%S 6=IN4 M)D= )V)IE)6E= TO T<= P>6EI% 6F %R=)TIN4 T<= FOOD )ND DR>4 )DMINISTR)TION *<I%< S<)EE )DMINIST=R )ND =NFOR%= T<= E)*S P=RT)ININ4 T<=R=TO C-/02D. NN )N )%T %R=)TIN4 T<= %O>RT OF T)O )PP=)ES C-/'.D

%ase@ FM%) vs. %IR, 22 Phil. 3-& C-/-0D % O M M I S S I O N = R O F I N T = R N ) E R = V = N > = v . F M % ) 4 . R . N o . 3 . ( . 2 O c t o b e r . , / / 1 Pan!aniban, , . Doctrine @A Rentalinco"ederivedb$ata Ae e"ptor!ani;ationfro"theleaseofitsproperties,realor personal,is note e"ptfro"inco"eta ation,evenifsuchinco"eise clusivel$usedfortheacco"plish"entofits ob8ectives. A )clai"ofstatutor$e e"ptionfro"ta ationshouldbe"anifestandun"ista5ablefro"thelan!ua!eof thela#on#hichitisbased.Thus,it"uste pressl$be!rantedinastatutestatedinalan!ua!etooclearto be"ista5en. Verbale!isnonestrecedendu" B #herethela#doesnot distin!uish,neithershould#e.AThebarealle!ationalonethatoneisanonA stoc5,nonAprofiteducationalinstitutionisinsufficient to8ustif$itse e"ptionfro"thepa$"entofinco"eta .It "ustprove#ithsubstantialevidencethat C-DitfallsundertheclassificationnonAstoc5,nonAprofiteducational institution:andC3Dtheinco"eitsee5stobee e"ptedfro"ta ationisusedactuall$,directl$,ande clusivel$ foreducational purposes.AThe%ourtcannotchan!ethela#orbendittosuititss$"pathiesand appreciations.Other#ise,it #ouldbeoverspilin!itsroleandinvadin!thereal"ofle!islation.The%ourt, !ivenitsli"ited constitutionalauthorit$,cannotruleonthe#isdo"orpropriet$ofle!islation.That prero!ativebelon!stothepoliticaldepart"entsof!overn"ent. Facts @Private Respondent FM%) is a nonAstoc5, nonAprofit institution, #hich conducts various pro!ra"sand activities that are beneficial to the public, especiall$ the $oun! people, pursuant to its reli!ious,educational and charitable ob8ectives.FM%) earned inco"e fro" leasin! out a portion of its pre"ises to s"all shop o#ners, li5erestaurants and canteen operators, and fro" par5in! fees collected fro" nonA"e"bers. Petitioner issued an assess"ent to private respondent for deficienc$ ta es. Private respondent for"all$ protested the assess"ent. In repl$, the %IR denied the clai"s of FM%). Issue @*hether or not the inco"e derived fro" rentals of real propert$ o#ned b$ FM%) sub8ect toinco"e ta <eld @Fes. Inco"e of #hatever 5ind and character of nonAstoc5 nonAprofit or!ani;ations fro" an$ of their properties, real or personal, or fro" an$ of their activities conducted for profit, re!ardless of thedisposition "ade of such inco"e, shall be sub8ect to the ta i"posed under the NIR%.Rental inco"e derived b$ a ta Ae e"pt or!ani;ation fro" the lease of its properties, real or personal, is not e e"pt fro" inco"e ta ation, even if such inco"e is e clusivel$ used for theacco"plish"ent of its ob8ectives.6ecause ta es are the lifeblood of the nation, the %ourt has al#a$s applied the doctrine of strict ininterpretation in construin! ta e e"ptions C %o""issionerofInternalRevenuev.%ourtof)ppeals,3&-S%R)0(',0-2,)pril-1,-//& D. Further"ore, a clai" of statutor$ e e"ption fro" ta ationshould be "anifest and un"ista5able fro" the lan!ua!e of the la# on #hich it is based. Thus, theclai"ed e e"ption P"ust e pressl$ be !ranted in a statute stated in a lan!ua!e too clear to be"ista5enQ C Davao4ulfEu"ber%orporationv.%o""issionerofInternalRevenueand%ourtof )ppeals,4.R. No.--&2'/,p.-',ul$32,-//1 D. Verbale!isnonestrecedendu" . The la# does not "a5e a distinction. The rental inco"e is ta ablere!ardless of #hence such inco"e is derived and ho# it is used or disposed of. *here the la# doesnot distin!uish, neither should #e.Private respondent also invo5es )rticle OIV, Section ., par. 2 of the %onstitution, clai"in! that itPis a nonAstoc5, nonAprofit educational institution #hose revenues and assets are used actuall$,directl$ and e clusivel$ for educational purposes so it is e e"pt fro" ta es on its properties andinco"e.Q This is #ithout "erit since the e e"ption provided lies on the pa$"ent of propert$ ta ,and not on the inco"e ta on the rentals of its propert$. The bare alle!ation alone that one is a nonAstoc5, nonAprofit educational institution is insufficient to 8ustif$ its e e"ption fro" the pa$"ent of inco"e ta .

appellant, vs. T$E PRO!INCI L 0O R5 OF ILOCOS NORTE, ET L., defendantsAappellants. 0icente *lanes and Proceso Coloma for plaintiff)appellant. Provincial (iscal #antos for defendant)appellants.

! NCE; , J.: The plaintiff, the Ro"an %atholic )postolic %hurch, represented b$ the 6ishop of Nueva Se!ovia, possesses and is the o#ner of a parcel of land in the "unicipalit$ of San Nicolas, Ilocos Norte, all four sides of #hich face on public streets. On the south side is a part of the church$ard, the convent and an ad8acent lot used for a ve!etable !arden, containin! an area off -,03. s+uare "eters, in #hich there is a stable and a #ell for the use of the convent. In the center is the re"ainder of the church$ard and the church. On the north is an old ce"eter$ #ith t#o of its #alls still standin!, and a portion #here for"erl$ stood a to#er, the base of #hich still be seen, containin! a total area of 1,/'' s+uare "eters. )s re+uired b$ the defendants, on ,ul$ 2, -/3' the plaintiff paid, under protest, the land ta on the lot ad8oinin! the convent and the lot #hich for"erl$ #as the ce"eter$ #ith the portion #here the to#er stood. The plaintiff filed this action for the recover$ of the su" paid b$ to the defendants b$ #a$ of land ta , alle!in! that the collection of this ta is ille!al. The lo#er court absolved the defendants fro" the co"plaint in re!ard to the lot ad8oinin! convent and declared that the ta collected on the lot, #hich for"erl$ #as the ce"eter$ and on the portion #here the lo#er stood, #as ille!al. 6oth parties appealed fro" this 8ud!"ent. The e e"ption in favor of the convent in the pa$"ent of the land ta Csec. 2.. GcH )d"inistrative %odeD refers to the ho"e of the parties #ho presides over the church and #ho has to ta5e care of hi"self in order to dischar!e his duties. In therefore "ust, in the sense, include not onl$ the land actuall$ occupied b$ the church, but also the ad8acent !round destined to the ordinar$ incidental uses of "an. = cept in lar!e cities #here the densit$ of the population and the develop"ent of co""erce re+uire the use of lar!er tracts of land for buildin!s, a ve!etable !arden belon!s to a house and, in the case of a convent, it use is li"ited to the necessities of the priest, #hich co"es under the e e"ption.la+phi1.net In re!ard to the lot #hich for"erl$ #as the ce"eter$, #hile it is no lon!er used as such, neither is it used for co""ercial purposes and, accordin! to the evidence, is no# bein! used as a lod!in! house b$ the people #ho participate in reli!ious festivities, #hich constitutes an incidental use in reli!ious functions, #hich also co"es #ithin the e e"ption. The 8ud!"ent appealed fro" is reversed in all it parts and it is held that both lots are e e"pt fro" land ta and the defendants are ordered to refund to plaintiff #hatever #as paid as such ta , #ithout an$ special pronounce"ent as to costs. So ordered. .ohnson, #treet, 0illamor, 2strand, .ohns and 0illa)3eal, ..., concur. Republic of the Philippines SUPREME COURT Manila =N 6)N% G.R. No. L-192*1 /u"e 16, 196)

RE!. FR. C SIMIRO LL 5OC, petitioner, vs. T2e COMMISSIONER OF INTERN L RE!ENUE a"# T2e COURT o: T % PPE LS, respondents. ilado and ilado for petitioner. 2ffice of the #olicitor ,eneral for respondents. P RE5ES, J.: So"eti"e in -/'&, the M.6. =state, Inc., of 6acolod %it$, donated P-(,(((.(( in cash to Rev. Fr. %rispin Rui;, then parish priest of Victorias, Ne!ros Occidental, and predecessor of herein petitioner, for the construction of a ne# %atholic %hurch in the localit$. The total a"ount #as actuall$ spent for the purpose intended.

Republic of the Philippines SUPREME COURT Manila =N 6)N% G.R. No. L-27)88 5e1e7ber '1, 1927 T$E ROM N C T$OLIC 0IS$OP OF NUE! SEGO!I , a, re8re,e"-a-39e o: -2e Ro7a" Ca-2o431 8o,-o431 C2ur12, plaintiffA

On March 2, -/'1, the donor M.6. =state, Inc., filed the donor9s !ift ta return. >nder date of )pril 3/, -/0(, the respondent %o""issioner of Internal Revenue issued an assess"ent for donee9s !ift ta a!ainst the %atholic Parish of Victorias, Ne!ros Occidental, of #hich petitioner #as the priest. The ta a"ounted to P-,2&(.(( includin! surchar!es, interests of -? "onthl$ fro" Ma$ -', -/'1 to ,une -', -/0(, and the co"pro"ise for the late filin! of the return. Petitioner lod!ed a protest to the assess"ent and re+uested the #ithdra#al thereof. The protest and the "otion for reconsideration presented to the %o""issioner of Internal Revenue #ere denied. The petitioner appealed to the %ourt of Ta )ppeals on Nove"ber 3, -/0(. In the petition for revie#, the Rev. Fr. %asi"iro Eladoc clai"ed, a"on! others, that at the ti"e of the donation, he #as not the parish priest in Victorias: that there is no le!al entit$ or 8uridical person 5no#n as the 7%atholic Parish Priest of Victorias,7 and, therefore, he should not be liable for the donee9s !ift ta . It #as also asserted that the assess"ent of the !ift ta , even a!ainst the Ro"an %atholic %hurch, #ould not be valid, for such #ould be a clear violation of the provisions of the %onstitution. )fter hearin!, the %T) rendered 8ud!"ent, the pertinent portions of #hich are +uoted belo#@ ... . Parish priests of the Ro"an %atholic %hurch under canon la#s are si"ilarl$ situated as its )rchbishops and 6ishops #ith respect to the properties of the church #ithin their parish. The$ are the !uardians, superintendents or ad"inistrators of these properties, #ith the ri!ht of succession and "a$ sue and be sued.

actual pa$"ent. The surchar!e of 3'? provided in Section -3( for failure to file a return "a$ not be i"posed as the failure to file a return #as not due to #illful ne!lect.C ... D No costs. The above 8ud!"ent is no# before us on appeal, petitioner assi!nin! t#o C3D errors alle!edl$ co""itted b$ the Ta %ourt, all of #hich conver!e on the sin!ular issue of #hether or not petitioner should be liable for the assessed donee9s !ift ta on the P-(,(((.(( donated for the construction of the Victorias Parish %hurch. Section 33 C2D, )rt. VI of the %onstitution of the Philippines, e e"pts fro" ta ation ce"eteries, churches and parsona!es or convents, appurtenant thereto, and all lands, %uildings, and i"prove"ents used e clusivel$ for reli!ious purposes. The e e"ption is onl$ fro" the pa$"ent of ta es assessed on such properties enu"erated, as propert$ ta es, as contra distin!uished fro" e cise ta es. In the present case, #hat the %ollector assessed #as a donee9s !ift ta : the assess"ent #as not on the properties the"selves. It did not rest upon !eneral o#nership: it #as an e cise upon the use "ade of the properties, upon the e ercise of the privile!e of receivin! the properties CPhipps vs. %o". of Int. Rec. /- F 3d 03&D. Manifestl$, !ift ta is not #ithin the e e"ptin! provisions of the section 8ust "entioned. ) !ift ta is not a propert$ ta , but an e cise ta i"posed on the transfer of propert$ b$ #a$ of !ift inter vivos, the i"position of #hich on propert$ used e clusivel$ for reli!ious purposes, does not constitute an i"pair"ent of the %onstitution. )s #ell observed b$ the learned respondent %ourt, the phrase 7e e"pt fro" ta ation,7 as e"plo$ed in the %onstitution CsupraD should not be interpreted to "ean e e"ption fro" all 5inds of ta es. )nd there bein! no clear, positive or e press !rant of such privile!e b$ la#, in favor of petitioner, the e e"ption herein "ust be denied. The ne t issue #hich readil$ presents itself, in vie# of petitioner9s thesis, and Our findin! that a ta liabilit$ e ists, is, #ho should be called upon to pa$ the !ift ta R Petitioner postulates that he should not be liable, because at the ti"e of the donation he #as not the priest of Victorias. *e note the "erit of the above clai", and in order to put thin!s in their proper li!ht, this %ourt, in its Resolution of March -', -/0', ordered the parties to sho# cause #h$ the <ead of the Diocese to #hich the parish of Victorias pertains, should not be substituted in lieu of petitioner Rev. Fr. %asi"iro Eladoc it appearin! that the <ead of such Diocese is the real part$ in interest. The Solicitor 4eneral, in representation of the %o""issioner of Internal Revenue, interposed no ob8ection to such a substitution. %ounsel for the petitioner did not also offer ob8ection thereto. On )pril 2(, -/0', in a resolution, *e ordered the <ead of the Diocese to present #hatever le!al issues andIor defenses he "i!ht #ish to raise, to #hich resolution counsel for petitioner, #ho also appeared as counsel for the <ead of the Diocese, the Ro"an %atholic 6ishop of 6acolod, "anifested that it #as sub"ittin! itself to the 8urisdiction and orders of this %ourt and that it #as presentin!, b$ reference, the brief of petitioner Rev. Fr. %asi"iro Eladoc as its o#n and for all purposes. In vie# here of and considerin! that as heretofore stated, the assess"ent at bar had been properl$ "ade and the i"position of the ta is not a violation of the constitutional provision e e"ptin! churches, parsona!es or convents, etc. C)rt VI, sec. 33 G2H, %onstitutionD, the <ead of the Diocese, to #hich the parish Victorias Pertains, is liable for the pa$"ent thereof. The decision appealed fro" should be, as it is hereb$ affir"ed insofar as ta liabilit$ is concerned: it is "odified, in the sense that petitioner herein is not personall$ liable for the said !ift ta , and that the <ead of the Diocese, herein substitute petitioner, should pa$, as he is presentl$ ordered to pa$, the said !ift ta , #ithout special, pronounce"ent as to costs. !eng-on, C..., !autista Angelo, Concepcion, 3e$es, ..!.*., Di-on, 3egala, Ma/alintal, !eng-on, ..P., and 4aldivar, ..., concur. !arrera, .., too/ no par Republic of the Philippines SUPREME COURT Manila S=%OND DIVISION

The petitioner i"pu!ns the, fairness of the assess"ent #ith the ar!u"ent that he should not be held liable for !ift ta es on donation #hich he did not receive personall$ since he #as not $et the parish priest of Victorias in the $ear -/'& #hen said donation #as !iven. It is inti"ated that if so"eone has to pa$ at all, it should be petitioner9s predecessor, the Rev. Fr. %rispin Rui;, #ho received the donation in behalf of the %atholic parish of Victorias or the Ro"an %atholic %hurch. Follo#in! petitioner9s line of thin5in!, #e should be e+uall$ unfair to hold that the assess"ent no# in +uestion should have been addressed to, and collected fro", the Rev. Fr. %rispin Rui; to be paid fro" inco"e derived fro" his present parish #here ever it "a$ be. It does not see" ri!ht to indirectl$ burden the present parishioners of Rev. Fr. Rui; for donee9s !ift ta on a donation to #hich the$ #ere not benefited.

*e sa# no le!al basis then as #e see none no#, to include #ithin the %onstitutional e e"ption, ta es #hich parta5e of the nature of an e cise upon the use "ade of the properties or upon the e ercise of the privile!e of receivin! the properties. CPhipps vs. %o""issioner of Internal Revenue, /- F G3dH 03&: -/21, 2(3 >.S. &.3.D It is a cardinal rule in ta ation that e e"ptions fro" pa$"ent thereof are hi!hl$ disfavored b$ la#, and the part$ clai"in! e e"ption "ust 8ustif$ his clai" b$ a clear, positive, or e&press grant of such privile!e b$ la#. C%ollector vs. Manila ,oc5e$ %lub, 4.R. No. EA1&'', March 32, -/'0: '2 O.4. 2&03.D The phrase 7e e"pt fro" ta ation7 as e"plo$ed in Section 33C2D, )rticle VI of the %onstitution of the Philippines, should not be interpreted to "ean e e"ption fro" all 5inds of ta es. Statutes e e"ptin! charitable and reli!ious propert$ fro" ta ation should be construed fairl$ thou!h strictl$ and in such "anner as to !ive effect to the "ain intent of the la#"a5ers. CRo"an %atholic %hurch vs. <astrin!s ' Phil. &(-.D

*<=R=FOR=, in vie# of the fore!oin! considerations, the decision of the respondent %o""issioner of Internal Revenue appealed fro", is hereb$ affir"ed e cept #ith re!ard to the i"position of the co"pro"ise penalt$ in the a"ount of P3(.(( C%ollector of Internal Revenue v. >.S.T., 4.R. No. EA--3&., Nov. 31, -/'1D: ..., and the petitioner, the Rev. Fr. %asi"iro Eladoc is hereb$ ordered to pa$ to the respondent the a"ount of P/((.(( as donee9s !ift ta , plus the surchar!e of five per centum C'?D as ad valorem penalt$ under Section --/ CcD of the Ta %ode, and one per centu" C-?D "onthl$ interest fro" Ma$ -', -/'1 to the date of

G.R. No. L-(9''6 u+u,- '1, 1981 T$E PRO!INCE OF 0R , re8re,e"-e# by L 5ISL O NC$ET , Pro93"13a4 ,,e,,or, petitioner, vs. $ONOR 0LE $ ROL5 M. $ERN N5O, 3" 23, 1a8a13-y a, Pre,3#3"+ /u#+e o: 0ra"12 I, Cour- o: F3r,- I",-a"1e bra< T$E ROM N C T$OLIC 0IS$OP OF 0 NGUE5, INC., re8re,e"-e# by 03,2o8 O#34o e-,8ue4er a"# Re9ere"# Fe438e F4ore,, respondents.

FERN N5O, C.J.: On the face of this certiorari and "anda"us petition filed b$ the Province of )bra, 1 it clearl$ appears that the actuation of respondent ,ud!e <arold M. <ernando of the %ourt of First Instance of )bra left "uch to be desired. First, there #as a denial of a "otion to dis"iss 2 an action for declarator$ relief b$ private respondent Ro"an %atholic 6ishop of 6an!ued desirous of bein! e e"pted fro" a real estate ta follo#ed b$ a su""ar$ 8ud!"ent ' !rantin! such e e"ption, #ithout even hearin! the side of petitioner. In the rather vi!orous lan!ua!e of the )ctin! Provincial Fiscal, as counsel for petitioner, respondent ,ud!e 7virtuall$ i!nored the pertinent provisions of the Rules of %ourt: ... #antonl$ violated the ri!hts of petitioner to due process, b$ !ivin! due course to the petition of private respondent for declarator$ relief, and thereafter #ithout allo#in! petitioner to ans#er and #ithout an$ hearin!, ad8ud!ed the case: all in total disre!ard of basic la#s of procedure and basic provisions of due process in the constitution, thereb$ indicatin! a failure to !rasp and understand the la#, #hich !oes into the co"petence of the <onorable Presidin! ,ud!e.7 ( It #as the sub"ission of counsel that an action for declarator$ relief #ould be proper onl$ before a breach or violation of an$ statute, e ecutive order or re!ulation. ) Moreover, there bein! a ta assess"ent "ade b$ the Provincial )ssessor on the properties of respondent Ro"an %atholic 6ishop, petitioner failed to e haust the ad"inistrative re"edies available under Presidential Decree No. .0. before filin! such court action. Further, it #as pointed out to respondent ,ud!e that he failed to abide b$ the pertinent provision of such Presidential Decree #hich provides as follo#s@ 7No court shall entertain an$ suit assailin! the validit$ of a ta assessed under this %ode until the ta pa$er, shall have paid, under protest, the ta assessed a!ainst hi" nor shall an$ court declare an$ ta invalid b$ reason of irre!ularities or infor"alities in the proceedin!s of the officers char!ed #ith the assess"ent or collection of ta es, or of failure to perfor" their duties #ithin this ti"e herein specified for their perfor"ance unless such irre!ularities, infor"alities or failure shall have i"paired the substantial ri!hts of the ta pa$er: nor shall an$ court declare an$ portion of the ta assessed under the provisions of this %ode invalid e cept upon condition that the ta pa$er shall pa$ the 8ust a"ount of the ta , as deter"ined b$ the court in the pendin! proceedin!.7 6 *hen as5ed to co""ent, respondent ,ud!e be!an #ith the alle!ation that there 7is no +uestion that the real properties sou!ht to be ta ed b$ the Province of )bra are properties of the respondent Ro"an %atholic 6ishop of 6an!ued, Inc.7 7 The ver$ ne t sentence assu"ed the ver$ point it as5ed #hen he cate!oricall$ stated@ 7Ei5e#ise, there is no dispute that the properties includin! their procedure are actuall$, directl$ and e&clusivel$ used %$ the 3oman Catholic !ishop of !angued, Inc. for religious or charita%le purposes.7 8 For hi" then@ 7The proper re"ed$ of the petitioner is appeal and not this special civil action.7 9 ) "ore e haustive co""ent #as sub"itted b$ private respondent Ro"an %atholic 6ishop of 6an!ued, Inc. It #as, ho#ever, unable to lessen the force of the ob8ection raised b$ petitioner Province of )bra, especiall$ the due process aspect. it is to be ad"itted that his opposition to the petition, pressed #ith vi!or, ostensibl$ finds a se"blance of support fro" the authorities cited. It is thus i"pressed #ith a scholarl$ aspect. It suffers, ho#ever, fro" the !rave infir"it$ of statin! that onl$ a pure +uestion of la# is presented #hen a clai" for e e"ption is "ade. The petition "ust be !ranted. -. Respondent ,ud!e #ould not have erred so !rievousl$ had he "erel$ co"pared the provisions of the present %onstitution #ith that appearin! in the -/2' %harter on the ta e e"ption of 7lands, buildin!s, and i"prove"ents.7 There is a "ar5ed difference. >nder the -/2' %onstitution@ 7%e"eteries, churches, and parsona!es or convents appurtenant thereto, and all lands, buildin!s, and i"prove"ents used e clusivel$ for reli!ious, charitable, or educational purposes shall be e e"pt fro" ta ation.7 1* The present %onstitution added 7charitable institutions, "os+ues, and nonAprofit ce"eteries7 and re+uired that for the e e"ption of 7@lands, buildin!s, and i"prove"ents,7 the$ should not onl$ be 7e clusivel$7 but also 7actuall$ and 7directl$7 used for reli!ious or charitable purposes. 11 The %onstitution is #orded differentl$. The chan!e should not be i!nored. It "ust be dul$ ta5en into consideration. Reliance on past decisions #ould have sufficed #ere the #ords 7actuall$7 as #ell as 7directl$7 not added. There "ust be proof therefore of the actual and direct use of the lands, buildin!s, and i"prove"ents for reli!ious or charitable purposes to be e e"pt fro" ta ation. )ccordin! to Commissioner of Internal 3evenue v. ,uerrero@ 12 7Fro" -/(0, in Catholic Church v. astings to -/00, in 5sso #tandard 5astern, Inc. v. Acting Commissioner of Customs, it has been the constant and unifor" holdin! that e e"ption fro" ta ation is not favored and is never presu"ed, so that if !ranted it "ust be strictl$ construed a!ainst the ta pa$er. )ffir"ativel$ put, the la# fro#ns on e e"ption fro" ta ation, hence, an e e"ptin! provision should be construed strictissimi 'uris.7 1'

In Manila 5lectric Compan$ v. 0era, 1( a -/&' decision, such principle #as reiterated, reference bein! "ade to 3epu%lic (lour Mills, Inc. v. Commissioner of Internal 3evenue: 1) Commissioner of Customs v. Philippine Acet$lene Co. & C"A: 16 and Davao *ight and Po+er Co., Inc. v. Commissioner of Customs. 17 3. Petitioner Province of )bra is therefore full$ 8ustified in invo5in! the protection of procedural due process. If there is an$ case #here proof is necessar$ to de"onstrate that there is co"pliance #ith the constitutional provision that allo#s an e e"ption, this is it. Instead, respondent ,ud!e accepted at its face the alle!ation of private respondent. )ll that #as alle!ed in the petition for declarator$ relief filed b$ private respondents, after "entionin! certain parcels of land o#ned b$ it, are that the$ are used 7actuall$, directl$ and e clusivel$7 as sources of support of the parish priest and his helpers and also of private respondent 6ishop. 18 In the "otion to dis"iss filed on behalf of petitioner Province of )bra, the ob8ection #as based pri"aril$ on the lac5 of 8urisdiction, as the validit$ of a ta assess"ent "a$ be +uestioned before the Eocal 6oard of )ssess"ent )ppeals and not #ith a court. There #as also "ention of a lac5 of a cause of action, but onl$ because, in its vie#, declarator$ relief is not proper, as there had been breach or violation of the ri!ht of !overn"ent to assess and collect ta es on such propert$. It clearl$ appears, therefore, that in failin! to accord a hearin! to petitioner Province of )bra and decidin! the case i""ediatel$ in favor of private respondent, respondent ,ud!e failed to abide b$ the constitutional co""and of procedural due process. *<=R=FOR=, the petition is !ranted and the resolution of ,une -/, -/&1 is set aside. Respondent ,ud!e, or #ho ever is actin! on his behalf, is ordered to hear the case on the "erit. No costs. Republic of the Philippines SUPREME COURT Manila S=%OND DIVISION G.R. No. L-'9*86 /u"e 1), 1988 0R ! LLE= COLLEGE, INC., re8re,e"-e# by PE5RO !. 0ORGONI , petitioner, vs. $ON. /U N P. >UINO, /u#+e, Cour- o: F3r,- I",-a"1e, bra< RMIN M. C RI G , Pro93"13a4 Trea,urer, bra< G SP R !. 0OS>UE, Mu"3138a4 Trea,urer, 0a"+ue#, bra< $EIRS OF P TERNO MILL RE, respondents.

P R S, J.: This is a petition for revie# on certiorari of the decision 6 of the defunct %ourt of First Instance of )bra, 6ranch I, dated ,une -., -/&., rendered in %ivil %ase No. 0'0, entitled 7)bra Valle$ ,unior %olle!e, Inc., represented b$ Pedro V. 6or!onia, plaintiff vs. )r"in M. %aria!a as Provincial Treasurer of )bra, 4aspar V. 6os+ue as Municipal Treasurer of 6an!ued, )bra and Paterno Millare, defendants,7 the decretal portion of #hich reads@ IN VI=* OF )EE T<= FOR=4OIN4, the %ourt hereb$ declares@ That the distraint sei;ure and sale b$ the Municipal Treasurer of 6an!ued, )bra, the Provincial Treasurer of said province a!ainst the lot and buildin! of the )bra Valle$ ,unior %olle!e, Inc., represented b$ Director Pedro 6or!onia located at 6an!ued, )bra, is valid: That since the school is not e e"pt fro" pa$in! ta es, it should therefore pa$ all bac5 ta es in the a"ount of P',-.(.2- and bac5 ta es and penalties fro" the pro"ul!ation of this decision: That the a"ount deposited b$ the plaintaff hi" the su" of P0(,(((.(( before the trial, be confiscated to appl$ for the pa$"ent of the bac5 ta es and for the rede"ption of the propert$ in +uestion, if the a"ount is less than P0,(((.((, the re"ainder "ust be returned to the Director of Pedro 6or!onia, #ho represents the plaintiff herein: That the deposit of the Municipal Treasurer in the a"ount of P0,(((.(( also before the trial "ust be

returned to said Municipal Treasurer of 6an!ued, )bra: )nd finall$ the case is hereb$ ordered dis"issed #ith costs a!ainst the plaintiff. SO ORD=R=D. CRollo, pp. 33A32D Petitioner, an educational corporation and institution of hi!her learnin! dul$ incorporated #ith the Securities and = chan!e %o""ission in -/.1, filed a co"plaint C)nne 7-7 of )ns#er b$ the respondents <eirs of Paterno Millare: Rollo, pp. /'A/&D on ,ul$ -(, -/&3 in the court a 6uo to annul and declare void the 7Notice of Sei;ure9 and the 7Notice of Sale7 of its lot and buildin! located at 6an!ued, )bra, for nonApa$"ent of real estate ta es and penalties a"ountin! to P',-.(.2-. Said 7Notice of Sei;ure7 of the colle!e lot and buildin! covered b$ Ori!inal %ertificate of Title No. KA12 dul$ re!istered in the na"e of petitioner, plaintiff belo#, on ,ul$ 0, -/&3, b$ respondents Municipal Treasurer and Provincial Treasurer, defendants belo#, #as issued for the satisfaction of the said ta es thereon. The 7Notice of Sale7 #as caused to be served upon the petitioner b$ the respondent treasurers on ,ul$ 1, -/&3 for the sale at public auction of said colle!e lot and buildin!, #hich sale #as held on the sa"e date. Dr. Paterno Millare, then Municipal Ma$or of 6an!ued, )bra, offered the hi!hest bid of P0,(((.(( #hich #as dul$ accepted. The certificate of sale #as correspondin!l$ issued to hi". On )u!ust -(, -/&3, the respondent Paterno Millare Cno# deceasedD filed throu!h counstel a "otion to dis"iss the co"plaint. On )u!ust 32, -/&3, the respondent Provincial Treasurer and Municipal Treasurer, throu!h then Provincial Fiscal Eoreto %. Roldan, filed their ans#er C)nne 737 of )ns#er b$ the respondents <eirs of Pate"o Millare: Rollo, pp. /1A-((D to the co"plaint. This #as follo#ed b$ an a"ended ans#er C)nne 72,7 i%id, Rollo, pp. -(-A-(2D on )u!ust 2-, -/&3. On Septe"ber -, -/&3 the respondent Paterno Millare filed his ans#er C)nne 7',7 i%id: Rollo, pp. -(0A-(1D. On October -3, -/&3, #ith the aforesaid sale of the school pre"ises at public auction, the respondent ,ud!e, <on. ,uan P. )+uino of the %ourt of First Instance of )bra, 6ranch I, ordered C)nne 70,7 i%id: Rollo, pp. -(/A--(D the respondents provincial and "unicipal treasurers to deliver to the %ler5 of %ourt the proceeds of the auction sale. <ence, on Dece"ber -., -/&3, petitioner, throu!h Director 6or!onia, deposited #ith the trial court the su" of P0,(((.(( evidenced b$ PN6 %hec5 No. /(.20/. On )pril -3, -/&2, the parties entered into a stipulation of facts adopted and e"bodied b$ the trial court in its +uestioned decision. Said Stipulations reads@ STIP>E)TION OF F)%TS %OM= NO* the parties, assisted b$ counsels, and to this <onorable %ourt respectfull$ enter into the follo#in! a!reed stipulation of facts@ -. That the personal circu"stances of the parties as stated in para!raph - of the co"plaint is ad"itted: but the particular person of Mr. )r"in M. %aria!a is to be substituted, ho#ever, b$ an$one #ho is actuall$ holdin! the position of Provincial Treasurer of the Province of )bra: 3. That the plaintiff )bra Valle$ ,unior %olle!e, Inc. is the o#ner of the lot and buildin!s thereon located in 6an!ued, )bra under Ori!inal %ertificate of Title No. (A12: 2. That the defendant 4aspar V. 6os+ue, as Municipal treasurer of 6an!ued, )bra caused to be served upon the )bra Valle$ ,unior %olle!e, Inc. a Notice of Sei;ure on the propert$ of said school under Ori!inal %ertificate of Title No. (A12 for the satisfaction of real propert$ ta es thereon, a"ountin! to P',-.(.2-: the Notice of Sei;ure bein! the one attached to the co"plaint as = hibit ): .. That on ,une 1, -/&3 the above properties of the )bra Valle$ ,unior %olle!e, Inc. #as sold at public auction for the satisfaction of the unpaid real propert$ ta es thereon and the sa"e #as sold to defendant Paterno Millare #ho offered the hi!hest bid of P0,(((.(( and a %ertificate of Sale in his favor #as issued b$ the defendant Municipal Treasurer. '. That all other "atters not particularl$ and speciall$ covered b$ this stipulation of facts #ill be the sub8ect of evidence b$ the parties.

*<=R=FOR=, it is respectfull$ pra$ed of the <onorable %ourt to consider and ad"it this stipulation of facts on the point a!reed upon b$ the parties. 6an!ued, )bra, )pril -3, -/&2.

S!d. )!rip T$p )4RIP )ttorne$ fo

S!d. Eoreto T$p EOR= Provincial F %ounsel fo Provincial T )bra and th Treasurer o

S!d. De"e T$p. D=M= )ttorne$ fo Paterno Mi )side fro" the Stipulation of Facts, the trial court a"on! others, found the follo#in!@ CaD that the school is reco!ni;ed b$ the !overn"ent and is offerin! Pri"ar$, <i!h School and %olle!e %ourses, and has a school population of "ore than one thousand students all in all: CbD that it is located ri!ht in the heart of the to#n of 6an!ued, a fe# "eters fro" the pla;a and about -3( "eters fro" the %ourt of First Instance buildin!: CcD that the ele"entar$ pupils are housed in a t#oAstore$ buildin! across the street: CdD that the hi!h school and colle!e students are housed in the "ain buildin!: CeD that the Director #ith his fa"il$ is in the second floor of the "ain buildin!: and CfD that the annual !ross inco"e of the school reaches "ore than one hundred thousand pesos. Fro" all the fore!oin!, the onl$ issue left for the %ourt to deter"ine and as a!reed b$ the parties, is #hether or not the lot and buildin! in +uestion are used e&clusivel$ for educational purposes. CRollo, p. 3(D The succeedin! Provincial Fiscal, <on. ,ose ). Solo"on and his )ssistant, <on. =usta+uio M. Montero, filed a Me"orandu" for the 4overn"ent on March 3', -/&., and a Supple"ental Me"orandu" on Ma$ &, -/&., #herein the$ opined 7that based on the evidence, the la#s applicable, court decisions and 8urisprudence, the school buildin! and school lot used for educational purposes of the )bra Valle$ %olle!e, Inc., are e e"pted fro" the pa$"ent of ta es.7 C)nne es 76,7 76A-7 of Petition: Rollo, pp. 3.A./: .. and ./D. Nonetheless, the trial court disa!reed because of the use of the second floor b$ the Director of petitioner school for residential purposes. <e thus ruled for the !overn"ent and rendered the assailed decision. )fter havin! been !ranted b$ the trial court ten C-(D da$s fro" )u!ust 0, -/&. #ithin #hich to perfect its appeal CPer Order dated )u!ust 0, -/&.: )nne 747 of Petition: Rollo, p. '&D petitioner instead availed of the instant petition for revie# on certiorari #ith pra$er for preli"inar$ in8unction before this %ourt, #hich petition #as filed on )u!ust -&, -/&. CRollo, p.3D. In the resolution dated )u!ust -0, -/&., this %ourt resolved to !ive D>= %O>RS= to the petition CRollo, p. '1D. Respondents #ere re+uired to ans#er said petition CRollo, p. &.D. Petitioner raised the follo#in! assi!n"ents of error@ I T<= %O>RT A Q72 =RR=D IN S>ST)ININ4 )S V)EID T<= S=IM>R= )ND S)E= OF T<= %OEE=4= EOT )ND 6>IEDIN4 >S=D FOR =D>%)TION)E P>RPOS=S OF T<= P=TITION=R. II T<= %O>RT A Q72 =RR=D IN D=%E)RIN4 T<)T T<= %OEE=4= EOT )ND 6>IEDIN4 OF T<= P=TITION=R )R= NOT >S=D =O%E>SIV=EF FOR =D>%)TION)E P>RPOS=S M=R=EF 6=%)>S= T<= %OEE=4= PR=SID=NT R=SID=S IN ON= ROOM OF T<= %OEE=4= 6>IEDIN4. III T<= %O>RT A Q72 =RR=D IN D=%E)RIN4 T<)T T<= %OEE=4= EOT )ND 6>IEDIN4 OF T<= P=TITION=R )R= NOT =O=MPT

FROM PROP=RTF T)O=S )ND IN ORD=RIN4 P=TITION=R TO P)F P',-.(.2- )S R=)ETF T)O=S. IV T<= %O>RT A Q72 =RR=D IN ORD=RIN4 T<= %ONFIS%)TION OF T<= P0,(((.(( D=POSIT M)D= IN T<= %O>RT 6F P=TITION=R )S P)FM=NT OF T<= P',-.(.2- R=)ETF T)O=S. CSee 6rief for the Petitioner, pp. -A3D The "ain issue in this case is the proper interpretation of the phrase 7used e clusivel$ for educational purposes.7 Petitioner contends that the pri"ar$ use of the lot and buildin! for educational purposes, and not the incidental use thereof, deter"ines and e e"ption fro" propert$ ta es under Section 33 C2D, )rticle VI of the -/2' %onstitution. <ence, the sei;ure and sale of sub8ect colle!e lot and buildin!, #hich are contrar$ thereto as #ell as to the provision of %o""on#ealth )ct No. .&(, other#ise 5no#n as the )ssess"ent Ea#, are #ithout le!al basis and therefore void. On the other hand, private respondents "aintain that the colle!e lot and buildin! in +uestion #hich #ere sub8ected to sei;ure and sale to ans#er for the unpaid ta are used@ C-D for the educational purposes of the colle!e: C3D as the per"anent residence of the President and Director thereof, Mr. Pedro V. 6or!onia, and his fa"il$ includin! the inA la#s and !randchildren: and C2D for co""ercial purposes because the !round floor of the colle!e buildin! is bein! used and rented b$ a co""ercial establish"ent, the Northern Mar5etin! %orporation CSee photo!raph attached as )nne 717 C%o""ent: Rollo, p. /(HD. Due to its ti"e fra"e, the constitutional provision #hich finds application in the case at bar is Section 33, para!raph 2, )rticle VI, of the then -/2' Philippine %onstitution, #hich e pressl$ !rants e e"ption fro" realt$ ta es for 7%e"eteries, churches and parsona!es or convents appurtenant thereto, and all lands, buildin!s, and i"prove"ents used e&clusivel$ for reli!ious, charitable or educational purposes ... Relative thereto, Section '., para!raph c, %o""on#ealth )ct No. .&( as a"ended b$ Republic )ct No. .(/, other#ise 5no#n as the )ssess"ent Ea#, provides@ The follo#in! are e e"pted fro" real propert$ ta under the )ssess"ent Ea#@

Moreover, the e e"ption in favor of propert$ used e clusivel$ for charitable or educational purposes is 9not li"ited to propert$ actuall$ indispensable9 therefor C%oole$ on Ta ation, Vol. 3, p. -.2(D, but e tends to facilities #hich are incidental to and reasonabl$ necessar$ for the acco"plish"ent of said purposes, such as in the case of hospitals, 7a school for trainin! nurses, a nurses9 ho"e, propert$ use to provide housin! facilities for interns, resident doctors, superintendents, and other "e"bers of the hospital staff, and recreational facilities for student nurses, interns, and residents9 C1. %,S 003-D, such as 7)thletic fields7 includin! 7a fir" used for the in"ates of the institution. C%oole$ on Ta ation, Vol. 3, p. -.2(D. The test of e e"ption fro" ta ation is the use of the propert$ for purposes "entioned in the %onstitution C)postolic Prefect v. %it$ Treasurer of 6a!uio, &- Phil, '.& G-/.-HD. It "ust be stressed ho#ever, that #hile this %ourt allo#s a "ore liberal and nonArestrictive interpretation of the phrase 7e clusivel$ used for educational purposes7 as provided for in )rticle VI, Section 33, para!raph 2 of the -/2' Philippine %onstitution, reasonable e"phasis has al#a$s been "ade that e e"ption e tends to facilities #hich are incidental to and reasonabl$ necessar$ for the acco"plish"ent of the "ain purposes. Other#ise stated, the use of the school buildin! or lot for co""ercial purposes is neither conte"plated b$ la#, nor b$ 8urisprudence. Thus, #hile the use of the second floor of the "ain buildin! in the case at bar for residential purposes of the Director and his fa"il$, "a$ find 8ustification under the concept of incidental use, #hich is co"pli"entar$ to the "ain or pri"ar$ purposeBeducational, the lease of the first floor thereof to the Northern Mar5etin! %orporation cannot b$ an$ stretch of the i"a!ination be considered incidental to the purpose of education. It #ill be noted ho#ever that the afore"entioned lease appears to have been raised for the first ti"e in this %ourt. That the "atter #as not ta5en up in the to court is reall$ apparent in the decision of respondent ,ud!e. No "ention thereof #as "ade in the stipulation of facts, not even in the description of the school buildin! b$ the trial 8ud!e, both e"bodied in the decision nor as one of the issues to resolve in order to deter"ine #hether or not said properl$ "a$ be e e"pted fro" pa$"ent of real estate ta es CRollo, pp. -&A32D. On the other hand, it is note#orth$ that such fact #as not disputed even after it #as raised in this %ourt. Indeed, it is a io"atic that facts not raised in the lo#er court cannot be ta5en up for the first ti"e on appeal. Nonetheless, as an e ception to the rule, this %ourt has held that althou!h a factual issue is not s+uarel$ raised belo#, still in the interest of substantial 8ustice, this %ourt is not prevented fro" considerin! a pivotal factual "atter. 7The Supre"e %ourt is clothed #ith a"ple authorit$ to revie# palpable errors not assi!ned as such if it finds that their consideration is necessar$ in arrivin! at a 8ust decision.7 CPere; vs. %ourt of )ppeals, -3& S%R) 0.' G-/1.HD. >nder the -/2' %onstitution, the trial court correctl$ arrived at the conclusion that the school buildin! as #ell as the lot #here it is built, should be ta ed, not because the second floor of the sa"e is bein! used b$ the Director and his fa"il$ for residential purposes, but because the first floor thereof is bein! used for co""ercial purposes. <o#ever, since onl$ a portion is used for purposes of co""erce, it is onl$ fair that half of the assessed ta be returned to the school involved. PR=MIS=S %ONSID=R=D, the decision of the %ourt of First Instance of )bra, 6ranch I, is hereb$ )FFIRM=D sub8ect to the "odification that half of the assessed ta be returned to the petitioner. SO ORD=R=D. Republic of the Philippines SUPREME COURT Manila =N 6)N% G.R. No. L-96'7 8r34 '*, 19)7

CcD churches and parsona!es or convents appurtenant thereto, and all lands, buildin!s, and i"prove"ents used e&clusivel$ for reli!ious, charitable, scientific or educational purposes.

In this re!ard petitioner ar!ues that the pri"ar$ use of the school lot and buildin! is the basic and controllin! !uide, nor" and standard to deter"ine ta e e"ption, and not the "ere incidental use thereof. )s earl$ as -/-0 in 8MCA of Manila vs. Collector of lnternal 3evenue, 22 Phil. 3-& G-/-0H, this %ourt ruled that #hile it "a$ be true that the FM%) 5eeps a lod!in! and a boardin! house and "aintains a restaurant for its "e"bers, still these do not constitute business in the ordinar$ acceptance of the #ord, but an institution used e clusivel$ for reli!ious, charitable and educational purposes, and as such, it is entitled to be e e"pted fro" ta ation. In the case of 6ishop of Nueva #egovia v. Provincial !oard of Ilocos Norte, '- Phil. 2'3 G-/&3H, this %ourt included in the e e"ption a ve!etable !arden in an ad8acent lot and another lot for"erl$ used as a ce"eter$. It #as clarified that the ter" 7used e clusivel$7 considers incidental use also. Thus, the e e"ption fro" pa$"ent of land ta in favor of the convent includes, not onl$ the land actuall$ occupied b$ the buildin! but also the ad8acent !arden devoted to the incidental use of the parish priest. The lot #hich is not used for co""ercial purposes but serves solel$ as a sort of lod!in! place, also +ualifies for e e"ption because this constitutes incidental use in reli!ious functions. The phrase 7e clusivel$ used for educational purposes7 #as further clarified b$ this %ourt in the cases of errera vs. Que-on Cit$ !oard of assessment Appeals, 2 S%R) -10 G-/0-H and Commissioner of Internal 3evenue vs. !ishop of the Missionar$ District, -. S%R) //G-/0'H, thus B

MERIC N 0I0LE SOCIET=, plaintiffAappellant, vs. CIT= OF M NIL , defendantAappellee. Cit$ (iscal 5ugenio Angeles and .uan Na%ong for appellant. Assistant Cit$ (iscal Arsenio Na9a+a for appellee.

FELI%, J.? PlaintiffAappellant is a forei!n, nonAstoc5, nonAprofit, reli!ious, "issionar$ corporation dul$ re!istered and doin! business in the Philippines throu!h its Philippine a!enc$ established in Manila in Nove"ber, -1/1, #ith its principal office at 020 Isaac Peral in said %it$. The defendant appellee is a "unicipal corporation #ith po#ers that are to be e ercised in confor"it$ #ith the provisions of Republic )ct No. .(/, 5no#n as the Revised %harter of the %it$ of Manila. In the course of its "inistr$, plaintiff9s Philippine a!enc$ has been distributin! and sellin! bibles andIor !ospel portions thereof Ce cept durin! the ,apanese occupationD throu!hout the Philippines and translatin! the sa"e into several Philippine dialects. On Ma$ 3/ -/'2, the actin! %it$ Treasurer of the %it$ of Manila infor"ed plaintiff that it #as conductin! the business of !eneral "erchandise since Nove"ber, -/.', #ithout providin! itself #ith the necessar$ Ma$or9s per"it and "unicipal license, in violation of Ordinance No. 2(((, as a"ended, and Ordinances Nos. 3'3/, 2(31 and 220., and re+uired plaintiff to secure, #ithin three da$s, the correspondin! per"it and license fees, to!ether #ith co"pro"ise coverin! the period fro" the .th +uarter of -/.' to the 3nd +uarter of -/'2, in the total su" of P',13-..' C)nne )D. Plaintiff protested a!ainst this re+uire"ent, but the %it$ Treasurer de"anded that plaintiff deposit and pa$ under protest the su" of P',1/-..', if suit #as to be ta5en in court re!ardin! the sa"e C)nne 6D. To avoid the closin! of its business as #ell as further fines and penalties in the pre"ises on October 3., -/'2, plaintiff paid to the defendant under protest the said per"it and license fees in the afore"entioned a"ount, !ivin! at the sa"e ti"e notice to the %it$ Treasurer that suit #ould be ta5en in court to +uestion the le!alit$ of the ordinances under #hich, the said fees #ere bein! collected C)nne %D, #hich #as done on the sa"e date b$ filin! the co"plaint that !ave rise to this action. In its co"plaint plaintiff pra$s that 8ud!"ent be rendered declarin! the said Municipal Ordinance No. 2(((, as a"ended, and Ordinances Nos. 3'3/, 2(31 and 220. ille!al and unconstitutional, and that the defendant be ordered to refund to the plaintiff the su" of P',1/-..' paid under protest, to!ether #ith le!al interest thereon, and the costs, plaintiff further pra$in! for such other relief and re"ed$ as the court "a$ dee" 8ust e+uitable. Defendant ans#ered the co"plaint, "aintainin! in turn that said ordinances #ere enacted b$ the Municipal 6oard of the %it$ of Manila b$ virtue of the po#er !ranted to it b$ section 3..., subsection C"A3D of the Revised )d"inistrative %ode, superseded on ,une -1, -/./, b$ section -1, subsection C-D of Republic )ct No. .(/, 5no#n as the Revised %harter of the %it$ of Manila, and pra$in! that the co"plaint be dis"issed, #ith costs a!ainst plaintiff. This ans#er #as replied b$ the plaintiff reiteratin! the unconstitutionalit$ of the oftenArepeated ordinances. 6efore trial the parties sub"itted the follo#in! stipulation of facts@ %OM= NO* the parties in the aboveAentitled case, thru their undersi!ned attorne$s and respectfull$ sub"it the follo#in! stipulation of facts@ -. That the plaintiff sold for the use of the purchasers at its principal office at 020 Isaac Peral, Manila, 6ibles, Ne# Testa"ents, bible portions and bible concordance in =n!lish and other forei!n lan!ua!es i"ported b$ it fro" the >nited States as #ell as 6ibles, Ne# Testa"ents and bible portions in the local dialects i"ported andIor purchased locall$: that fro" the fourth +uarter of -/.' to the first +uarter of -/'2 inclusive the sales "ade b$ the plaintiff #ere as follo#s@ Quarter .th +uarter -/.' -st +uarter -/.0 3nd +uarter -/.0 2rd +uarter -/.0 .th +uarter -/.0 -st +uarter -/.& 3nd +uarter -/.& 2rd +uarter -/.& .th +uarter -/.& Amount of #ales P-,3...33,3(0.1' -,/'(.21 3,32'.// 2,3'0.(. -2,3.-.(& -',&&..'' -.,0'..-2 -3,'/(./.

-st +uarter -/.1 3nd +uarter -/.1 2rd +uarter -/.1 .th +uarter -/.1 -st +uarter -/./ 3nd +uarter -/./ 2rd +uarter -/./ .th +uarter -/./ -st +uarter -/'( 3nd +uarter -/'( 2rd +uarter -/'( .th +uarter -/'( -st +uarter -/'3nd +uarter -/'2rd +uarter -/'.th +uarter -/'-st +uarter -/'3 3nd +uarter -/'3 2rd +uarter -/'3 .th +uarter -/'3 -st +uarter -/'2

--,-.2./( -.,&-'.30 21,222.12 -0,-&/./( 32,/&'.-( -&,1(3.(1 -0,0.(.&/ -',/0-.21 -1,'03..0 3-,1-0.23 3',((..'' .',31&./3 2&,1.-.33/,-(2./1 3(,-1-.-( 33,/01./32,((3.0' -&,030./0 -&,/3-.(3.,-1(.&3 3/,'-0.3-

3. That the parties hereb$ reserve the ri!ht to present evidence of other facts not herein stipulated. *<=R=FOR=, it is respectfull$ pra$ed that this case be set for hearin! so that the parties "a$ present further evidence on their behalf. CRecord on )ppeal, pp. -'A-0D. *hen the case #as set for hearin!, plaintiff proved, a"on! other thin!s, that it has been in e istence in the Philippines since -1//, and that its parent societ$ is in Ne# For5, >nited States of )"erica: that its, conti!uous real properties located at Isaac Peral are e e"pt fro" real estate ta es: and that it #as never re+uired to pa$ an$ "unicipal license fee or ta before the #ar, nor does the )"erican 6ible Societ$ in the >nited States pa$ an$ license fee or sales ta for the sale of bible therein. Plaintiff further tried to establish that it never "ade an$ profit fro" the sale of its bibles, #hich are disposed of for as lo# as one third of the cost, and that in order to "aintain its operatin! cost it obtains substantial re"ittances fro" its Ne# For5 office and voluntar$ contributions and !ifts fro" certain churches, both in the >nited States and in the Philippines, #hich are interested in its "issionar$ #or5. Re!ardin! plaintiff9s contention of lac5 of profit in the sale of bibles, defendant retorts that the ad"issions of plaintiffAappellant9s lone #itness #ho testified on crossAe a"ination that bibles bearin! the price of &( cents each fro" plaintiffAappellant9s Ne# For5 office are sold here b$ plaintiffAappellant at P-.2( each: those bearin! the price of S..'( each are sold here at P-( each: those bearin! the price of S& each are sold here at P-' each: and those bearin! the price of S-each are sold here at P33 each, clearl$ sho# that plaintiff9s contention that it never "a5es an$ profit fro" the sale of its bible, is evidentl$ untenable. )fter hearin! the %ourt rendered 8ud!"ent, the last part of #hich is as follo#s@ )s "a$ be seen fro" the repealed section C"A3D of the Revised )d"inistrative %ode and the repealin! portions CoD of section -1 of Republic )ct No. .(/, althou!h the$ see"in!l$ differ in the #a$ the le!islative intent is e pressed, $et their "eanin! is practicall$ the sa"e for the purpose of ta in! the "erchandise "entioned in said le!al provisions, and that the ta es to be levied b$ said ordinances is in the nature of percenta!e !raduated ta es CSec. 2 of Ordinance No. 2(((, as a"ended, and Sec. -, 4roup 3, of Ordinance No. 3'3/, as a"ended b$ Ordinance No. 220.D.

IN VI=* OF T<= FOR=4OIN4 %ONSID=R)TIONS, this %ourt is of the opinion and so holds that this case should be dis"issed, as it is hereb$ dis"issed, for lac5 of "erits, #ith costs a!ainst the plaintiff. Not satisfied #ith this verdict plaintiff too5 up the "atter to the %ourt of )ppeals #hich certified the case to >s for the reason that the errors assi!ned to the lo#er %ourt involved onl$ +uestions of la#. )ppellant contends that the lo#er %ourt erred@ -. In holdin! that Ordinances Nos. 3'3/ and 2(((, as respectivel$ a"ended, are not unconstitutional: 3. In holdin! that subsection "A3 of Section 3... of the Revised )d"inistrative %ode under #hich Ordinances Nos. 3'/3 and 2((( #ere pro"ul!ated, #as not repealed b$ Section -1 of Republic )ct No. .(/: 2. In not holdin! that an ordinance providin! for ta es based on !ross sales or receipts, in order to be valid under the ne# %harter of the %it$ of Manila, "ust first be approved b$ the President of the Philippines: and .. In holdin! that, as the sales "ade b$ the plaintiffAappellant have assu"ed co""ercial proportions, it cannot escape fro" the operation of said "unicipal ordinances under the cloa5 of reli!ious privile!e. "he issues. B )s "a$ be seen fro" the proceedin! state"ent of the case, the issues involved in the present controvers$ "a$ be reduced to the follo#in!@ C-D #hether or not the ordinances of the %it$ of Manila, Nos. 2(((, as a"ended, and 3'3/, 2(31 and 220., are constitutional and valid: and C3D #hether the provisions of said ordinances are applicable or not to the case at bar. Section -, subsection C&D of )rticle III of the %onstitution of the Republic of the Philippines, provides that@ C&D No la# shall be "ade respectin! an establish"ent of reli!ion, or prohibitin! the free e ercise thereof, and the free e ercise and en8o$"ent of reli!ious profession and #orship, #ithout discri"ination or preference, shall forever be allo#ed. No reli!ion test shall be re+uired for the e ercise of civil or political ri!hts. Predicated on this constitutional "andate, plaintiffAappellant contends that Ordinances Nos. 3'3/ and 2(((, as respectivel$ a"ended, are unconstitutional and ille!al in so far as its societ$ is concerned, because the$ provide for reli!ious censorship and restrain the free e ercise and en8o$"ent of its reli!ious profession, to #it@ the distribution and sale of bibles and other reli!ious literature to the people of the Philippines. 6efore enterin! into a discussion of the constitutional aspect of the case, *e shall first consider the provisions of the +uestioned ordinances in relation to their application to the sale of bibles, etc. b$ appellant. The records, sho# that b$ letter of Ma$ 3/, -/'2 C)nne )D, the %it$ Treasurer re+uired plaintiff to secure a Ma$or9s per"it in connection #ith the societ$9s alle!ed business of distributin! and sellin! bibles, etc. and to pa$ per"it dues in the su" of P2' for the period covered in this liti!ation, plus the su" of P2' for co"pro"ise on account of plaintiff9s failure to secure the per"it re+uired b$ Ordinance No. 2((( of the %it$ of Manila, as a"ended. This Ordinance is of !eneral application and not particularl$ directed a!ainst institutions li5e the plaintiff, and it does not contain an$ provisions #hatever prescribin! reli!ious censorship nor restrainin! the free e ercise and en8o$"ent of an$ reli!ious profession. Section - of Ordinance No. 2((( reads as follo#s@ S=%. -. P=RMITS N=%=SS)RF. B It shall be unla#ful for an$ person or entit$ to conduct or en!a!e in an$ of the businesses, trades, or occupations enumerated in #ection : of this 2rdinance or other %usinesses, trades, or occupations for +hich a permit is re6uired for the proper supervision and enforcement of e&isting la+s and ordinances governing the sanitation, securit$, and +elfare of the pu%lic and the health of the emplo$ees engaged in the %usiness specified in said section : hereof, *IT<O>T FIRST <)VIN4 O6T)IN=D ) P=RMIT T<=R=FOR FROM T<= M)FOR )ND T<= N=%=SS)RF EI%=NS= FROM T<= %ITF TR=)S>R=R. The business, trade or occupation of the plaintiff involved in this case is not particularl$ "entioned in Section 2 of the Ordinance, and the record does not sho# that a per"it is re+uired therefor under e istin! la#s and ordinances for the proper supervision and enforce"ent of

their provisions !overnin! the sanitation, securit$ and #elfare of the public and the health of the e"plo$ees en!a!ed in the business of the plaintiff. <o#ever, sections 2 of Ordinance 2((( contains ite" No. &/, #hich reads as follo#s@ &/. )ll other businesses, trades or occupations not "entioned in this Ordinance, e cept those upon #hich the %it$ is not e"po#ered to license or to ta P'.(( Therefore, the necessit$ of the per"it is "ade to depend upon the po#er of the %it$ to license or ta said business, trade or occupation. )s to the license fees that the Treasurer of the %it$ of Manila re+uired the societ$ to pa$ fro" the .th +uarter of -/.' to the -st +uarter of -/'2 in the su" of P',13-..', includin! the su" of P'( as co"pro"ise, Ordinance No. 3'3/, as a"ended b$ Ordinances Nos. 3&&/, 313- and 2(31 prescribes the follo#in!@ S=%. -. F==S. B Sub8ect to the provisions of section '&1 of the Revised Ordinances of the %it$ of Manila, as a"ended, there shall be paid to the %it$ Treasurer for en!a!in! in an$ of the businesses or occupations belo# enu"erated, +uarterl$, license fees based on !ross sales or receipts reali;ed durin! the precedin! +uarter in accordance #ith the rates herein prescribed@ PROVID=D, <O*=V=R, That a person en!a!ed in an$ businesses or occupation for the first ti"e shall pa$ the initial license fee based on the probable !ross sales or receipts for the first +uarter be!innin! fro" the date of the openin! of the business as indicated herein for the correspondin! business or occupation.

4RO>P 3. B Retail dealers in ne# Cnot $et usedD "erchandise, #hich dealers are not $et sub8ect to the pa$"ent of an$ "unicipal ta , such as C-D retail dealers in general merchandise: C3D retail dealers e clusivel$ en!a!ed in the sale of . . . boo5s, includin! stationer$.

)s "a$ be seen, the license fees re+uired to be paid +uarterl$ in Section - of said Ordinance No. 3'3/, as a"ended, are not i"posed directl$ upon an$ reli!ious institution but upon those en!a!ed in an$ of the business or occupations therein enu"erated, such as retail 7dealers in !eneral "erchandise7 #hich, it is alle!ed, cover the business or occupation of sellin! bibles, boo5s, etc. %hapter 0( of the Revised )d"inistrative %ode #hich includes section 3..., subsection C"A3D of said le!al bod$, as a"ended b$ )ct No. 20'/, approved on Decem%er ;, 1<=<, e"po#ers the Municipal 6oard of the %it$ of Manila@ CMA3D To ta and fi the license fee on CaD dealers in ne# auto"obiles or accessories or both, and CbD retail dealers in ne# Cnot $et usedD "erchandise, #hich dealers are not $et sub8ect to the pa$"ent of an$ "unicipal ta . For the purpose of ta ation, these retail dealers shall be classified as C-D retail dealers in !eneral "erchandise, and C3D retail dealers e clusivel$ en!a!ed in the sale of CaD te tiles . . . CeD boo5s, includin! stationer$, paper and office supplies, . . .@ PROVID=D, <O*=V=R, "hat the com%ined total ta& of an$ de%tor or manufacturer, or %oth, enumerated under these su%sections >m)1? and >m)=?, +hether dealing in one or all of the articles mentioned herein, # A** N2" !5 IN 5@C5## 2( (I05 7ND35D P5#2# P53 ANN7M. and appellee9s counsel "aintains that %it$ Ordinances Nos. 3'3/ and 2(((, as a"ended, #ere enacted in virtue of the po#er that said )ct No. 200/ conferred upon the %it$ of Manila. )ppellant, ho#ever, contends that said ordinances are lon!er in force and effect as the la# under #hich the$ #ere pro"ul!ated has been e pressl$ repealed b$ Section -(3 of Republic )ct No. .(/ passed on .une 1;, 1<A<, 5no#n as the Revised Manila %harter. Passin! upon this point the lo#er %ourt cate!oricall$ stated that Republic )ct No. .(/ e pressl$ repealed the provisions of %hapter 0( of the Revised )d"inistrative %ode but in the opinion of the trial ,ud!e, althou!h Section 3... C"A3D of the for"er Manila %harter and section -1 CoD of the ne# see"in!l$ differ in the #a$ the le!islative intent #as e pressed, $et their "eanin! is practicall$ the sa"e for the purpose of ta in! the "erchandise "entioned in both le!al provisions and, conse+uentl$, Ordinances Nos. 3'3/ and 2(((, as a"ended, are to be considered as still in full force and effect uninterruptedl$ up to the present.

Often the le!islature, instead of si"pl$ a"endin! the preA e istin! statute, #ill repeal the old statute in its entiret$ and b$ the sa"e enact"ent reAenact all or certain portions of the pree istin! la#. Of course, the proble" created b$ this sort of le!islative action involves "ainl$ the effect of the repeal upon ri!hts and liabilities #hich accrued under the ori!inal statute. )re those ri!hts and liabilities destro$ed or preservedR The authorities are divided as to the effect of si"ultaneous repeals and reAenact"ents. So"e adhere to the vie# that the ri!hts and liabilities accrued under the repealed act are destro$ed, since the statutes fro" #hich the$ spran! are actuall$ ter"inated, even thou!h for onl$ a ver$ short period of ti"e. 2thers, and the$ seem to %e in the ma'orit$, refuse to accept this vie+ of the situation, and conse6uentl$ maintain that all rights an lia%ilities +hich have accrued under the original statute are preserved and ma$ %e enforced, since the re)enactment neutrali-es the repeal, therefore, continuing the la+ in force +ithout interruption. C%ra#fordAStatutor$ %onstruction, Sec. 233D. )ppellant9s counsel states that section -1 CoD of Republic )ct No, .(/ introduces a ne# and #ider concept of ta ation and is different fro" the provisions of Section 3...C"A3D that the for"er cannot be considered as a substantial reAenact"ent of the provisions of the latter. *e have +uoted above the provisions of section 3...C"A3D of the Revised )d"inistrative %ode and *e shall no# cop$ hereunder the provisions of Section -1, subdivision CoD of Republic )ct No. .(/, #hich reads as follo#s@ CoD To ta and fi the license fee on dealers in !eneral "erchandise, includin! i"porters and indentors, e cept those dealers #ho "a$ be e pressl$ sub8ect to the pa$"ent of so"e other "unicipal ta under the provisions of this section. Dealers in !eneral "erchandise shall be classified as CaD #holesale dealers and C%D retail dealers. For purposes of the ta on retail dealers, !eneral "erchandise shall be classified into four "ain classes@ na"el$ C-D lu ur$ articles, C3D se"iA lu ur$ articles, C2D essential co""odities, and C.D "iscellaneous articles. ) separate license shall be prescribed for each class but #here co""odities of different classes are sold in the sa"e establish"ent, it shall not be co"pulsor$ for the o#ner to secure "ore than one license if he pa$s the hi!her or hi!hest rate of ta prescribed b$ ordinance. *holesale dealers shall pa$ the license ta as such, as "a$ be provided b$ ordinance. For purposes of this section, the ter" 74eneral "erchandise7 shall include poultr$ and livestoc5, a!ricultural products, fish and other allied products. The onl$ essential difference that *e find bet#een these t#o provisions that "a$ have an$ bearin! on the case at bar, is that, #hile subsection C"A3D prescribes that the co"bined total ta of an$ dealer or "anufacturer, or both, enu"erated under subsections C"A-D and C"A 3D, #hether dealin! in one or all of the articles "entioned therein, shall not %e in e&cess of PBCC per annum, the correspondin! section -1, subsection CoD of Republic )ct No. .(/, does not contain an$ li"itation as to the a"ount of ta or license fee that the retail dealer has to pa$ per annu". <ence, and in accordance #ith the #ei!ht of the authorities above referred to that "aintain that 7all ri!hts and liabilities #hich have accrued under the ori!inal statute are preserved and "a$ be enforced, since the reenact"ent neutrali;es the repeal, therefore continuin! the la# in force #ithout interruption7, *e hold that the +uestioned ordinances of the %it$ of Manila are still in force and effect. Plaintiff, ho#ever, ar!ues that the +uestioned ordinances, to be valid, "ust first be approved b$ the President of the Philippines as per section -1, subsection CiiD of Republic )ct No. .(/, #hich reads as follo#s@ CiiD To ta , license and re!ulate an$ business, trade or occupation bein! conducted #ithin the %it$ of Manila, not other+ise enumerated in the preceding su%sections, including percentage ta&es %ased on gross sales or receipts, su%'ect to the approval of the P35#ID5N", e&cept amusement ta&es. but this re+uire"ent of the President9s approval #as not contained in section 3... of the for"er %harter of the %it$ of Manila under #hich Ordinance No. 3'3/ #as pro"ul!ated. )n$#a$, as stated b$ appellee9s counsel, the business of 7retail dealers in !eneral "erchandise7 is e pressl$ enu"erated in subsection CoD, section -1 of Republic )ct No. .(/: hence, an ordinance prescribin! a "unicipal ta on said business does not have to be approved b$ the President to be effective, as it is not a"on! those referred to in said subsection CiiD. Moreover, the +uestioned ordinances are still in force, havin! been

pro"ul!ated b$ the Municipal 6oard of the %it$ of Manila under the authorit$ !ranted to it b$ la#. The +uestion that no# re"ains to be deter"ined is #hether said ordinances are inapplicable, invalid or unconstitutional if applied to the alle!ed business of distribution and sale of bibles to the people of the Philippines b$ a reli!ious corporation li5e the )"erican 6ible Societ$, plaintiff herein. *ith re!ard to Ordinance No. 3'3/, as a"ended b$ Ordinances Nos. 3&&/, 313- and 2(31, appellant contends that it is unconstitutional and ille!al because it restrains the free e ercise and en8o$"ent of the reli!ious profession and #orship of appellant. )rticle III, section -, clause C&D of the %onstitution of the Philippines afore+uoted, !uarantees the freedo" of reli!ious profession and #orship. 7Reli!ion has been spo5en of as a profession of faith to an active po#er that binds and elevates "an to its %reator7 C)!lipa$ vs. Rui;, 0. Phil., 3(-D.It has reference to one9s vie#s of his relations to <is %reator and to the obli!ations the$ i"pose of reverence to <is bein! and character, and obedience to <is *ill CDavis vs. 6eason, -22 >.S., 2.3D. The constitutional !uarant$ of the free e ercise and en8o$"ent of reli!ious profession and #orship carries #ith it the ri!ht to disse"inate reli!ious infor"ation. )n$ restraints of such ri!ht can onl$ be 8ustified li5e other restraints of freedo" of e pression on the !rounds that there is a clear and present dan!er of an$ substantive evil #hich the State has the ri!ht to prevent7. CTaTada and Fernando on the %onstitution of the Philippines, Vol. -, .th ed., p. 3/&D. In the case at bar the license fee herein involved is i"posed upon appellant for its distribution and sale of bibles and other reli!ious literature@ In the case of Murdoc/ vs. Penns$lvania, it #as held that an ordinance re+uirin! that a license be obtained before a person could canvass or solicit orders for !oods, paintin!s, pictures, #ares or "erchandise cannot be "ade to appl$ to "e"bers of ,ehovah9s *itnesses #ho #ent about fro" door to door distributin! literature and solicitin! people to 7purchase7 certain reli!ious boo5s and pa"phlets, all published b$ the *atch To#er 6ible J Tract Societ$. The 7price7 of the boo5s #as t#ent$Afive cents each, the 7price7 of the pa"phlets five cents each. It #as sho#n that in "a5in! the solicitations there #as a re+uest for additional 7contribution7 of t#ent$Afive cents each for the boo5s and five cents each for the pa"phlets. Eesser su" #ere accepted, ho#ever, and boo5s #ere even donated in case interested persons #ere #ithout funds. On the above facts the Supre"e %ourt held that it could not be said that petitioners #ere en!a!ed in co""ercial rather than a reli!ious venture. Their activities could not be described as e"braced in the occupation of sellin! boo5s and pa"phlets. Then the %ourt continued@ 7*e do not "ean to sa$ that reli!ious !roups and the press are free fro" all financial burdens of !overn"ent. See ,ros'ean vs. American Press Co., 3/& >.S., 322, 3'(, 1( E. ed. 00(, 001, '0 S. %t. .... *e have here so"ethin! +uite different, for e a"ple, fro" a ta on the inco"e of one #ho en!a!es in reli!ious activities or a ta on propert$ used or e"plo$ed in connection #ith activities. It is one thin! to i"pose a ta on the inco"e or propert$ of a preacher. It is +uite another to e act a ta fro" hi" for the privile!e of deliverin! a ser"on. The ta i"posed b$ the %it$ of ,eannette is a flat license ta , pa$"ent of #hich is a condition of the e ercise of these constitutional privile!es. The po#er to ta the e ercise of a privile!e is the po#er to control or suppress its en8o$"ent. . . . Those #ho can ta the e ercise of this reli!ious practice can "a5e its e ercise so costl$ as to deprive it of the resources necessar$ for its "aintenance. Those #ho can ta the privile!e of en!a!in! in this for" of "issionar$ evan!elis" can close all its doors to all those #ho do not have a full purse. Spreadin! reli!ious beliefs in this ancient and honorable "anner #ould thus be denied the need$. . . . It is contended ho#ever that the fact that the license ta can suppress or control this activit$ is uni"portant if it does not do so. 6ut that is to disre!ard the nature of this ta . It is a license ta B a flat ta i"posed on the e ercise of a privile!e !ranted b$ the 6ill of Ri!hts . . . The po#er to i"pose a license ta on the e ercise of these freedo" is indeed as potent as the po#er of censorship #hich this %ourt has repeatedl$ struc5 do#n. . . . It is not a no"inal fee i"posed as a re!ulator$ "easure to defra$ the e penses of policin! the activities in +uestion. It is in no #a$ apportioned. It is flat license ta levied and collected as a condition to the pursuit of activities #hose en8o$"ent is !uaranteed b$ the constitutional liberties of press and reli!ion and inevitabl$ tends to suppress their e ercise. That is al"ost unifor"l$

reco!ni;ed as the inherent vice and evil of this flat license ta .7 Nor could disse"ination of reli!ious infor"ation be conditioned upon the approval of an official or "ana!er even if the to#n #ere o#ned b$ a corporation as held in the case of Marsh vs. #tate of Ala%ama C230 >.S. '(-D, or b$ the >nited States itself as held in the case of Tuc5er vs. Te as C230 >.S. '-&D. In the for"er case the Supre"e %ourt e pressed the opinion that the ri!ht to en8o$ freedo" of the press and reli!ion occupies a preferred position as a!ainst the constitutional ri!ht of propert$ o#ners. 7*hen #e balance the constitutional ri!hts of o#ners of propert$ a!ainst those of the people to en8o$ freedo" of press and reli!ion, as #e "ust here, #e re"ain "indful of the fact that the latter occup$ a preferred position. . . . In our vie# the circu"stance that the propert$ ri!hts to the pre"ises #here the deprivation of propert$ here involved, too5 place, #ere held b$ others than the public, is not sufficient to 8ustif$ the State9s per"ittin! a corporation to !overn a co""unit$ of citi;ens so as to restrict their funda"ental liberties and the enforce"ent of such restraint b$ the application of a State statute.7 CTaTada and Fernando on the %onstitution of the Philippines, Vol. -, .th ed., p. 2(.A 2(0D. Section 3& of %o""on#ealth )ct No. .00, other#ise 5no#n as the National Internal Revenue %ode, provides@ S=%. 3&. =O=MPTIONS FROM T)O ON %ORPOR)TIONS. B The follo#in! or!ani;ations shall not be ta ed under this Title in respect to inco"e received b$ the" as such B CeD %orporations or associations or!ani;ed and operated e clusivel$ for religious, charitable, . . . or educational purposes, . . .@ Provided, ho#ever, That the inco"e of #hatever 5ind and character fro" an$ of its properties, real or personal, or fro" an$ activit$ conducted for profit, re!ardless of the disposition "ade of such inco"e, shall be liable to the ta i"posed under this %ode: )ppellant9s counsel clai"s that the %ollector of Internal Revenue has e e"pted the plaintiff fro" this ta and sa$s that such e e"ption clearl$ indicates that the act of distributin! and sellin! bibles, etc. is purel$ reli!ious and does not fall under the above le!al provisions. It "a$ be true that in the case at bar the price as5ed for the bibles and other reli!ious pa"phlets #as in so"e instances a little bit hi!her than the actual cost of the sa"e but this cannot "ean that appellant #as en!a!ed in the business or occupation of sellin! said 7"erchandise7 for profit. For this reason *e believe that the provisions of %it$ of Manila Ordinance No. 3'3/, as a"ended, cannot be applied to appellant, for in doin! so it #ould i"pair its free e ercise and en8o$"ent of its reli!ious profession and #orship as #ell as its ri!hts of disse"ination of reli!ious beliefs. *ith respect to Ordinance No. 2(((, as a"ended, #hich re+uires the obtention the Ma$or9s per"it before an$ person can en!a!e in an$ of the businesses, trades or occupations enu"erated therein, *e do not find that it i"poses an$ char!e upon the en8o$"ent of a ri!ht !ranted b$ the %onstitution, nor ta the e ercise of reli!ious practices. In the case of Coleman vs. Cit$ of ,riffin, -1/ S.=. .3&, this point #as elucidated as follo#s@ )n ordinance b$ the %it$ of 4riffin, declarin! that the practice of distributin! either b$ hand or other#ise, circulars, handboo5s, advertisin!, or literature of an$ 5ind, #hether said articles are bein! delivered free, or #hether sa"e are bein! sold #ithin the cit$ li"its of the %it$ of 4riffin, #ithout first obtainin! #ritten per"ission fro" the cit$ "ana!er of the %it$ of 4riffin, shall be dee"ed a nuisance and punishable as an offense a!ainst the %it$ of 4riffin, does not deprive defendant of his constitutional right of the free e&ercise and en'o$ment of religious profession and +orship, even though it prohi%its him from introducing and carr$ing out a scheme or purpose +hich he sees fit to claim as a part of his religious s$stem. It see"s clear, therefore, that Ordinance No. 2((( cannot be considered unconstitutional, even if applied to plaintiff Societ$. 6ut as Ordinance No. 3'3/ of the %it$ of Manila, as a"ended, is not applicable to plaintiffAappellant and defendantAappellee is po#erless to license or ta the business of plaintiff Societ$ involved herein for, as stated before, it #ould i"pair plaintiff9s ri!ht to the free e ercise and en8o$"ent of its reli!ious profession and #orship, as #ell as its ri!hts of disse"ination of reli!ious beliefs, *e find that Ordinance No. 2(((,

as a"ended is also inapplicable to said business, trade or occupation of the plaintiff. *herefore, and on the stren!th of the fore!oin! considerations, *e hereb$ reverse the decision appealed fro", sentencin! defendant return to plaintiff the su" of P',1/-..' undul$ collected fro" it. *ithout pronounce"ent as to costs. It is so ordered. !eng-on, Padilla, Montema$or, !autista Angelo, *a%rador, Concepcion and 5ndencia, ..., concur Republic of the Philippines SUPREME COURT Manila =N 6)N% G.R. No. L-1*((8 u+u,- '*, 19)7

IN T$E M TTER OF PETITION FOR 5ECL R TOR= /U5GMENT REG R5ING T$E ! LI5IT= OF MUNICIP L OR5IN NCE NO. '6)9 OF T$E CIT= OF M NIL . P$=SIC L T$ER P= ORG NI& TION OF T$E P$ILIPPINES, INC., petitionerAappellant, vs. T$E MUNICIP L 0O R5 OF T$E CIT= OF M NIL a"# RSENIO $. L CSON, a, Mayor o: -2e C3-y o: Ma"34a, respondentsAappellees. Mariano M. de .o$a for appellant. Cit$ (iscal 5ugenio Angeles and Assistant (iscal Arsenio Na9a+a for appellees. MONTEM =OR, J.? The petitionerAappellant, an association of re!istered "assa!ists and licensed operators of "assa!e clinics in the %it$ of Manila and other parts of the countr$, filed an action in the %ourt of First Instance of Manila for declarator$ 8ud!"ent re!ardin! the validit$ of Municipal Ordinance No. 20'/, pro"ul!ated b$ the Municipal 6oard and approved b$ the %it$ Ma$or. To stop the %it$ fro" enforcin! said ordinance, the petitioner secured an in8unction upon filin! of a bond in the su" of P-,(((.((. ) hearin! #as held, but the parties #ithout introducin! an$ evidence sub"itted the case for decision on the pleadin!s, althou!h the$ sub"itted #ritten "e"oranda. Thereafter, the trial court dis"issed the petition and later dissolved the #rit of in8unction previousl$ issued. The petitioner appealed said order of dis"issal directl$ to this %ourt. In support of its appeal, petitionerAappellant contends a"on! other thin!s that the trial court erred in holdin! that the Ordinance in +uestion has not restricted the practice of "assotherap$ in "assa!e clinics to h$!ienic and aesthetic "assa!e, that the Ordinance is valid as it does not re!ulate the practice of "assa!e, that the Municipal 6oard of Manila has the po#er to enact the Ordinance in +uestion b$ virtue of Section -1, Subsection C55D, Republic )ct .(/, and that per"it fee of P-((.(( is "oderate and not unreasonable. Inas"uch as the appellant assails and discuss certain provisions re!ardin! the ordinance in +uestion, and it is necessar$ to pass upon the sa"e, for purposes of read$ reference, #e are reproducin! said ordinance in toto. ORDIN)N%= No. 20'/ )N ORDIN)N%= R=4>E)TIN4 T<= OP=R)TION OF M)SS)4= %EINI%S IN T<= %ITF OF M)NIE) )ND PROVIDIN4 P=N)ETI=S FOR VIOE)TIONS T<=R=OF. !e it ordained %$ the Municipal !oard of the Cit$ of Manila, that: Section -. Definition. B For the purpose of this Ordinance the follo#in! #ords and phrases shall be ta5en in the sense hereinbelo# indicated@ CaD Massa!e clinic shall include an$ place or establish"ent used in the practice of h$!ienic and aesthetic "assa!e: CbD <$!ienic and aesthetic "assa!e shall include an$ s$ste" of "anipulation of treat"ent of the superficial parts of the hu"an bod$ of h$!ienic and aesthetic purposes b$ rubbin!, stro5in!, 5neadin!, or tappin! #ith the hand or an instru"ent: CcD Massa!ist shall include an$ person #ho shall have passed the re+uired e a"ination and shall have been issued a "assa!ist certificate b$ the %o""ittee of = a"iners of

Massa!ist, or b$ the Director of <ealth or his authori;ed representative: CdD )ttendant or helper shall include an$ person e"plo$ed b$ a dul$ +ualified "assa!ist in an$ "essa!e clinic to assist the latter in the practice of h$!ienic and aesthethic "assa!e: CeD Operator shall include the o#ner, "ana!er, ad"inistrator, or an$ person #ho operates or is responsible for the operation of a "essa!e clinic. S=%. 3. Permit (ees. B No person shall en!a!e in the operation of a "assa!e clinic or in the occupation of attendant or helper therein #ithout first havin! obtained a per"it therefor fro" the Ma$or. For ever$ per"it !ranted under the provisions of this Ordinance, there shall be paid to the %it$ Treasurer the follo#in! annual fees@ CaD Operator of a "assa!e CbD )ttendant or helper P-((.((

open to inspection at all ti"es b$ the police, health officers, and other la# enforce"ent a!encies of the !overn"ent, shall be held liable for an$thin! #hich "a$ happen #ith the pre"ises of the "assa!e clinic. S=%. &. Penalt$. B )n$ person violatin! an$ of the provisions of this Ordinance shall upon conviction, be punished b$ a fine of not less than fift$ pesos nor "ore than t#o hundred pesos or b$ i"prison"ent for not less than si da$s nor "ore than si "onths, or both such fine and i"prison"ent, at the discretion of the court. S=%. 1. 3epealing Clause. B )ll ordinances or parts of ordinances, #hich are inconsistent here#ith, are hereb$ repealed. S=%. /. 5ffectivit$. B This Ordinance shall ta5e effect upon its approval. =nacted, )u!ust 3&, -/'..

'.(( )pproved, Septe"ber &, -/'..

Said per"it, #hich shall be rene#ed ever$ $ear, "a$ be revo5ed b$ the Ma$or at an$ ti"e for the violation of this Ordinance. S=%. 2. !uilding re6uirement. B CaD In each "assa!e clinic, there shall be separate roo"s for the "ale and fe"ale custo"ers. Roo"s #here "assa!e operations are perfor"ed shall be provided #ith slidin! curtains onl$ instead of s#in!in! doors. The clinic shall be properl$ ventilated, #ell li!hted and "aintained under sanitar$ conditions at all ti"es #hile the establish"ent is open for business and shall be provided #ith the necessar$ toilet and #ashin! facilities. CbD In ever$ clinic there shall be no private roo"s or separated co"part"ent e cept those assi!ned for toilet, lavatories, dressin! roo", office or 5itchen. CcD =ver$ "assa!e clinic shall 7provided #ith onl$ one entrance and it shall have no direct or indirect co""unication #hatsoever #ith an$ d#ellin! place, house or buildin!. S=%. .. 3egulations for the operation of massage clinics. B CaD It shall be unla#ful for an$ operator "assa!ist, attendant or helper to use, or allo# the use of, a "assa!e clinic as a place of assi!nation or per"it the co""ission therein of an$ incident or i""oral act. Massa!e clinics shall be used onl$ for h$!ienic and aesthetic "assa!e. CbD Massa!e clinics shall open at ei!ht o9cloc5 a.". and shall close at eleven o9cloc5 p.". CcD *hile en!a!ed in the actual perfor"ance of their duties, "assa!ists, attendants and helpers in a "assa!e clinic shall be as properl$ and sufficientl$ clad as to avoid suspicion of intent to co""it an indecent or i""oral act: CdD )ttendants or helpers "a$ render service to an$ individual custo"er onl$ for h$!ienic and aesthetic purposes under the order, direction, supervision, control and responsibilit$ of a +ualified "assa!ist. S=%. '. Qualifications B No person #ho has previousl$ been convicted b$ final 8ud!"ent of co"petent court of an$ violation of the provisions of para!raphs 2 and ' of )rt. 3(3 and )rts. 22', 220, 2.( and 2.3 of the Revised Penal %ode, or Secs. 1-/ of the %it$ of Manila, or #ho is sufferin! fro" an$ venereal or co""unicable disease shall en!a!e in the occupation of "assa!ist, attendant or helper in an$ "assa!e clinic. )pplicants for Ma$or9s per"it shall attach to their application a police clearance and health certificate dul$ issued b$ the %it$ <ealth Officers as #ell as a "assa!ist certificate dul$ issued b$ the %o""ittee or = a"iners for Massa!ists or b$ the Director of <ealth or his authori;ed representatives, in case of "assa!ists. S=%. 0. Dut$ of operator of massage clinic. B No operator of "assa!e clinic shall allo# such clinic to operate #ithout a dul$ +ualified "assa!ist nor allo#, an$ "an or #o"an to act as "assa!ist, attendant or helper therein #ithout the Ma$or9s per"it provided for in the precedin! sections. <e shall sub"it #henever re+uired b$ the Ma$or or his authori;ed representative the persons actin! as "assa!ists, attendants or helpers in his clinic. <e shall place the "assa!e clinic

The "ain contention of the appellant in its appeal and the principal !round of its petition for declarator$ 8ud!"ent is that the %it$ of Manila is #ithout authorit$ to re!ulate the operation of "assa!ists and the operation of "assa!e clinics #ithin its 8urisdiction: that #hereas under the Old %it$ %harter, particularl$, Section 3... CeD of the Revised )d"inistrative %ode, the Municipal 6oard #as e pressl$ !ranted the po#er to re!ulate and fi the license fee for the occupation of "assa!ists, under the Ne# %harter of Manila, Republic )ct .(/, said po#er has been #ithdra#n or o"itted and that no# the Director of <ealth, pursuant to authorit$ conferred b$ Section /21 of the Revised )d"inistrative %ode and = ecutive Order No. 2-&, series of -/.-, as a"ended b$ = ecutive Order No. 2/3, series, -/'-, is the one #ho e ercises supervision over the practice of "assa!e and over "assa!e clinics in the Philippines: that the Director of <ealth has issued )d"inistrative Order No. -(, dated Ma$ ', -/'2, prescribin! 7rules and re!ulations !overnin! the e a"ination for ad"ission to the practice of "assa!e, and the operation of "assa!e clinics, offices, or establish"ents in the Philippines7, #hich order #as approved b$ the Secretar$ of <ealth and dul$ published in the Official 4a;ette: that Section - CaD of Ordinance No. 20'/ has restricted the practice of "assa!e to onl$ h$!ienic and aesthetic "assa!e prohibits or does not allo# +ualified "assa!ists to practice therapeutic "assa!e in their "assa!e clinics. )ppellant also contends that the license fee of P-((.(( for operator in Section 3 of the Ordinance is unreasonable, na$, unconscionable. If #e can ascertain the intention of the Manila Municipal 6oard in pro"ul!atin! the Ordinance in +uestion, "uch of the ob8ection of appellant to its le!alit$ "a$ be solved. It #ould appear to us that the purpose of the Ordinance is not to re!ulate the practice of "assa!e, "uch less to restrict the practice of licensed and +ualified "assa!ists of therapeutic "assa!e in the Philippines. The end sou!ht to be attained in the Ordinance is to prevent the co""ission of i""oralit$ and the practice of prostitution in an establish"ent "as+ueradin! as a "assa!e clinic #here the operators thereof offer to "assa!e or "anipulate superficial parts of the bodies of custo"ers for h$!ienic and aesthetic purposes. This intention can readil$ be understood b$ the buildin! re+uire"ents in Section 2 of the Ordinance, re+uirin! that there be separate roo"s for "ale and fe"ale custo"ers: that instead of said roo"s bein! separated b$ per"anent partitions and s#in!in! doors, there should onl$ be slidin! curtains bet#een the": that there should be 7no private roo"s or separated co"part"ents, e cept those assi!ned for toilet, lavatories, dressin! roo", office or 5itchen7: that ever$ "assa!e clinic should be provided #ith onl$ one entrance and shall have no direct or indirect co""unication #hatsoever #ith an$ d#ellin! place, house or buildin!: and that no operator, "assa!ists, attendant or helper #ill be allo#ed 7to use or allo# the use of a "assa!e clinic as a place of assi!nation or per"it the co""ission therein of an$ i""oral or incident act7, and in fi in! the operatin! hours of such clinic bet#een 1@(( a.". and --@(( p.". This intention of the Ordinance #as correctl$ ascertained b$ ,ud!e <er"o!enes %oncepcion, presidin! in the trial court, in his order of dis"issal #here he said@ 7*hat the Ordinance tries to avoid is that the "assa!e clinic run b$ an operator #ho "a$ not be a "asseur or massagista "a$ be used as cover for the runnin! or "aintainin! a house of prostitution.7 Ordinance No. 20'/, particularl$, Sections - to ., should be considered as li"ited to "assa!e clinics used in the practice of h$!ienic and aesthetic "assa!e. *e do not believe that Municipal 6oard of the %it$ of Manila and the Ma$or #anted or intended to re!ulate the practice of "assa!e in !eneral or restrict the sa"e to h$!ienic and aesthetic onl$. )s to the authorit$ of the %it$ 6oard to enact the Ordinance in +uestion, the %it$ Fiscal, in representation of the appellees, calls our attention to Section -1 of the Ne# %harter of the %it$ of Manila, )ct

No. .(/, #hich !ives le!islative po#ers to the Municipal 6oard to enact all ordinances it "a$ dee" necessar$ and proper for the pro"otion of the "oralit$, peace, !ood order, co"fort, convenience and !eneral #elfare of the %it$ and its inhabitants. This is !enerall$ referred to as the 4eneral *elfare %lause, a dele!ation in statutor$ for" of the police po#er, under #hich "unicipal corporations, are authori;ed to enact ordinances to provide for the health and safet$, and pro"ote the "oralit$, peace and !eneral #elfare of its inhabitants. *e a!ree #ith the %it$ Fiscal. )s re!ards the per"it fee of P-((.((, it #ill be seen that said fee is "ade pa$able not b$ the "asseur or "assa!ist, but b$ the operator of a "assa!e clinic #ho "a$ not be a "assa!ist hi"self. %o"pared to per"it fees re+uired in other operations, P-((.(( "a$ appear to be too lar!e and rather unreasonable. <o#ever, "uch discretion is !iven to "unicipal corporations in deter"inin! the a"ount of said fee #ithout considerin! it as a ta for revenue purposes@ The a"ount of the fee or char!e is properl$ considered in deter"inin! #hether it is a ta or an e ercise of the police po#er. The a"ount "a$ be so lar!e as to itself sho# that the purpose #as to raise revenue and not to re!ulate, but in re!ard to this "atter there is a "ar5ed distinction bet#een license fees i"posed upon useful and beneficial occupations #hich the soverei!n #ishes to re!ulate but not restrict, and those #hich are inimical and dangerous to pu%lic health, morals or safet$. In the latter case the fee ma$ %e ver$ large +ithout necessaril$ %eing a ta&. C%oole$ on Ta ation, Vol. IV, pp. 2'-0A-&: underlinin! supplied.D =videntl$, the Manila Municipal 6oard considered the practice of h$!ienic and aesthetic "assa!e not as a useful and beneficial occupation #hich #ill pro"ote and is conducive to public "orals, and conse+uentl$, i"posed the said per"it fee for its re!ulation. In conclusion, #e find and hold that the Ordinance in +uestion as #e interpret it and as intended b$ the appellees is valid. *e dee" it unnecessar$ to discuss and pass upon the other points raised in the appeal. The order appealed fro" is hereb$ affir"ed. No costs. Paras, C..., !eng-on, Padilla, 3e$es, A., !autista Angelo, *a%rador, Concepcion, 3e$es, ..!.*., 5ndencia and (eli&, ..., concur. Republic of the Philippines SUPREME COURT Manila =N 6)N% G.R. No. L-(817 May 26, 19)(

the additional ta prescribed in the ordinance, paid the sa"e under protest and then brou!ht the present suit for the purpose alread$ stated. The lo#er court upheld the validit$ of the provision of la# authori;in! the enact"ent of the ordinance but declared the ordinance itself ille!al and void on the !round that the penalt$ there in provided for nonApa$"ent of the ta #as not le!all$ authori;ed. Fro" this decision both parties appealed to this %ourt, and the onl$ +uestion the$ have presented for our deter"ination is #hether this rulin! is correct or not, for thou!h the decision is silent on the refund of ta es paid plaintiffs "a5e no assi!n"ent of error on this point. To be!in #ith defendants9 appeal, #e find that the lo#er court #as in error in sa$in! that the i"position of the penalt$ provided for in the ordinance #as #ithout the authorit$ of la#. The last para!raph C//D of the ver$ section that authori;es the enact"ent of this ta ordinance Csection -1 of the Manila %harterD in e press ter"s also e"po#ers the Municipal 6oard Dto fi& penalties for the violation of ordinances +hich shall not e&ceed to>sic? t+o hundred pesos fine or si& monthsD imprisonment, or %oth such fine and imprisonment, for a single offense.D <ence, the pronounce"ent belo# that the ordinance in +uestion is ille!al and void because it i"poses a penalt$ not authori;ed b$ la# is clearl$ #ithout basis. )s to plaintiffs9 appeal, the contention in substance is that this ordinance and the la# authori;in! it constitute class le!islation, are un8ust and oppressive, and authori;e #hat a"ounts to double ta ation. In raisin! the hue and cr$ of 7class le!islation7, the burden of plaintiffs9 co"plaint is not that the professions to #hich the$ respectivel$ belon! have been sin!led out for the i"position of this "unicipal occupation ta : and in an$ event, the Ee!islature "a$, in its discretion, select #hat occupations shall be ta ed, and in the e ercise of that discretion it "a$ ta all, or it "a$ select for ta ation certain classes and leave the others unta ed. C%oole$ on Ta ation, Vol. ., .th ed., pp. 22/2A22/'.D Plaintiffs9 co"plaint is that #hile the la# has authori;ed the %it$ of Manila to i"pose the said ta , it has #ithheld that authorit$ fro" other chartered cities, not to "ention "unicipalities. *e do not thin5 it is for the courts to 8ud!e #hat particular cities or "unicipalities should be e"po#ered to i"pose occupation ta es in addition to those i"posed b$ the National 4overn"ent. That "atter is peculiarl$ #ithin the do"ain of the political depart"ents and the courts #ould do #ell not to encroach upon it. Moreover, as the seat of the National 4overn"ent and #ith a population and volu"e of trade "an$ ti"es that of an$ other Philippine cit$ or "unicipalit$, Manila, no doubt, offers a "ore lucrative field for the practice of the professions, so that it is but fair that the professionals in Manila be "ade to pa$ a hi!her occupation ta than their brethren in the provinces. Plaintiffs brand the ordinance un8ust and oppressive because the$ sa$ that it creates discri"ination #ithin a class in that #hile professionals #ith offices in Manila have to pa$ the ta , outsiders #ho have no offices in the cit$ but practice their profession therein are not sub8ect to the ta . Plaintiffs "a5e a distinction that is not found in the ordinance. The ordinance i"poses the ta upon ever$ person 7e ercisin!7 or 7pursuin!7 B in the %it$ of Manila naturall$ B an$ one of the occupations na"ed, but does not sa$ that such person "ust have his office in Manila. *hat constitutes e ercise or pursuit of a profession in the cit$ is a "atter of 8udicial deter"ination. The ar!u"ent a!ainst double ta ation "a$ not be invo5ed #here one ta is i"posed b$ the state and the other is i"posed b$ the cit$ C- %oole$ on Ta ation, .th ed., p. ./3D, it bein! #idel$ reco!ni;ed that there is nothin! inherentl$ obno ious in the re+uire"ent that license fees or ta es be e acted #ith respect to the sa"e occupation, callin! or activit$ b$ both the state and the political subdivisions thereof. C'- )". ,ur., 2.-.D In vie# of the fore!oin!, the 8ud!"ent appealed fro" is reversed in so far as it declares Ordinance No. 22/1 of the %it$ of Manila ille!al and void and affir"ed in so far as it holds the validit$ of the provision of the Manila charter authori;in! it. *ith costs a!ainst plaintiffsAappellants. Pablo, 6en!;on, Monte"a$or, ,u!o, 6autista )n!elo, Eabrador, and %oncepcion, ,,., concur.

SIL!ESTER M. PUNS L N, ET L., plaintiffsAappellants, vs. T$E MUNICIP L 0O R5 OF T$E CIT= OF M NIL , ET L., defendantsAappellants. Calanog and Alafri- for plaintiffs)appellants. Cit$ (iscal 5ugenio Angeles and Assistant (iscal 5ulogio #. #erreno for defendants)appellants. RE=ES, J.? This suit #as co""enced in the %ourt of First Instance of Manila b$ t#o la#$ers, a "edical practitioner, a public accountant, a dental sur!eon and a phar"acist, purportedl$ 7in their o#n behalf and in behalf of other professionals practisin! in the %it$ of Manila #ho "a$ desire to 8oin it.7 Ob8ect of the suit is the annul"ent of Ordinance No. 22/1 of the %it$ of Manila to!ether #ith the provision of the Manila charter authori;in! it and the refund of ta es collected under the ordinance but paid under protest. The ordinance in +uestion, #hich #as approved b$ the "unicipal board of the %it$ of Manila on ,ul$ 3', -/'(, i"poses a "unicipal occupation ta on persons e ercisin! various professions in the cit$ and penali;es nonApa$"ent of the ta 7b$ a fine of not "ore than t#o hundred pesos or b$ i"prison"ent of not "ore than si "onths, or b$ both such fine and i"prison"ent in the discretion of the court.7 )"on! the professions ta ed #ere those to #hich plaintiffs belon!. The ordinance #as enacted pursuant to para!raph C-D of section -1 of the Revised %harter of the %it$ of Manila Cas a"ended b$ Republic )ct No. .(/D, #hich e"po#ers the Municipal 6oard of said cit$ to i"pose a "unicipal occupation ta , not to e ceed P'( per annum, on persons en!a!ed in the various professions above referred to. <avin! alread$ paid their occupation ta under section 3(- of the National Internal Revenue %ode, plaintiffs, upon bein! re+uired to pa$