- Owners of boarding stables for race horses and race horse owners

Manila Race Horse Trainers Association, Inc. v. Dela Fuente

themselves, who in the scheme of shifting may carry the taxation burden,
are a class by themselves and appropriately taxed where owners of other
kinds of horses are taxed lessor not at all, considering that equity in
taxation is generally conceived in terms of ability to pay in relation to the
benefits received by the taxpayer and by the public from the business or
property taxed

Facts:
This action was instituted for a declaratory relief by the Manila Race Horses Trainers
Association, Inc., a non-stock corporation, who allege that they are owners of
boarding stables for race horses and that their rights as such are affected by
Ordinance No. 3065 of the City of Manila approved on July 1, 1947
- AN ORDINANCE PROVIDING FOR LICENSE FEES ON PERSONS MAINTAINING OR
CONDUCTING ANY BOARDING STABLE FOR HORSE RACES AND/OR HORSE
STABLES, OR PLACES WHERE HORSE ARE KEPT, FED, OR BOARDED FOR OTHERS,
FOR COMPENSATION OR HIRE, AND/OR FOR PRIVATE, AND FOR OTHER
PURPOSES

They made the Mayor of Manila defendant and prayed that said ordinance be
declared invalid as violative of the Philippine Constitution. The case was submitted
on the pleadings, and the decision was that the ordinance in question "is
constitutional and valid and has been enacted in accordance with the powers of the
Municipal Board granted by the Charter of the City of Manila"
Issues:

- Race horses are devoted to gambling if legalized, their owners derive fat

income and the public hardly any profit from horse racing,and this business
demands relatively heavy police supervision

The differentiation against which the plaintiffs complain conforms to the practical
dictates of justice and equity and is not discriminatory within the meaning of the
Constitution
The clause of the ordinance taxing or licensing boarding stables for race horses
does not prejudice the plaintiffs in any material way, and it is well settled that a
person who is not adversely affected by a licensing ordinance may not attack its
validity

1. WON the ordinance makes an arbitrary classification thus being violative of

the constitution.

he may not complain that a licensing ordinance is invalid as against a class other
than that to which he belongs

2. WON the tax is on race horses, and not on boarding stables.

the plaintiff may contest the validity of the provisions that injure his interest but
not those that do not

Held:

2. NO.

1. NO.
In taxing only boarding stables for race horses, the Court does not believe that the
ordinance, makes arbitrary classification
In the case of Eastern Theatrical Co. Inc., vs. Alfonso, it was said there is equality
and uniformity in taxation if all articles or kinds of property of the same class are
taxed at the same rate

- "the fact that some places of amusement are not taxed while others, such as
cinematographs, theaters, vaudeville companies, theatrical shows, and boxing
exhibitions and other kinds of amusements or places of amusement are taxed,is
not argument at all against the equality and uniformity of tax imposition."

The spirit, rather than the letter, of an ordinance determines the construction
- the court looks less to its words and more to the context, subject matter,
consequence and effect

- what is within the spirit is within the ordinance although it is not within the

letter thereof, while that which is in the letter, although not within the spirit, is
not within the ordinance.

From the context of the said ordinance, the intent to tax or license stables and not
horses is clearly manifest. The tax is assessed not on the owners of the horses but
on the owners of the stables

There would be discrimination if some boarding stables of the same class used for
the same number of horses were not taxed or were made to pay less or more than
others

The number of horses is used in the assessment purely as a method of fixing an

equitable and practical distribution of the burden imposed by the measure

From the viewpoint of economics and public policy the taxing of boarding stables
for racehorses to the exclusion of boarding stables for horses dedicated to other
purposes is not indefensible (not justifiable by argument)

maintained proportionately less amount should be exacted than for a stable

where more horses are kept and from which greater income is derived.

- It is but fair and just that for a boarding stable where only one horse is

Pepsi Cola Bottling Company vs Municipality of Tauauan

Facts:
Pepsi Cola has a bottling plant in the Municipality of Tanauan, Leyte. In Sept. 1962, the
Municipality approved Ordinance No. 23 which levies and collects from soft drinks
producers and manufacturers a tax of 1/16 of a centavo for every bottle of soft drink
corked
In Dec. 1962, the Municipality also approved Ordinance No. 27 which levies and collects
taxes on soft drinks produced or manufactured within the territorial jurisdiction of this
municipality a tax of 1 centavo on each gallon of volume capacity
Both taxes are denominated as municipal production tax
Pepsi Cola assailed the validity of the ordinances as it alleged that they constitute double
taxation in 2 instances: a) double taxation because Ordinance No. 27 covers the same subject
matter and impose practically the same tax rate as with Ordinance No. 23, b) double taxation
because the 2 ordinances impose percentage or specific taxes
Pepsi Cola also questions the constitutionality of RA 2264 which allows for the delegation of
taxing powers to local govt units; that allowing local govts to tax companies like Pepsi Cola
is confiscatory and oppressive
The Municipality assailed the arguments presented by Pepsi Cola. It argued, among others,
that only Ordinance No. 27 is being enforced and that the latter law is an amendment of
Ordinance No. 23, hence there is no double taxation
Issue:
1. WON there is undue delegation of taxing powers.
2. WON there is double taxation and imposition of percentage or specific taxes.
3. WON the Ordinance in question are unjust and unfair.
Held:
1. No.
There is no undue delegation. The power of taxation is an essential and inherent attribute
of sovereignty, belonging as a matter of right to every independent govt, without being
expressly conferred by the people
The Constitution even allows such delegation. Legislative powers may be delegated to local
govts in respect of matters of local concern
- By necessary implication, the legislative power to create political corporations for
purposes of local self- govt carries with it the power to confer on such local govtal
agencies the power to tax
Under the New Constitution, local govts are granted the autonomous authority to create
their own sources of revenue and to levy taxes
- Sec. 5, Article 11 provides: Each local govt unit shall have the power to create its
sources of revenue and to levy taxes, subject to such limitations as may be provided by
law.
- It cannot be said that Sec. 2 of RA No. 2264 emanated from beyond the sphere of
the legislative power to enact and vest in local govts the power of local taxation
The plenary nature of the taxing power thus delegated would not suffice to invalidate the
said law as confiscatory and oppressive

- When it is said that the taxing power may be delegated to municipalities and the like, it
-

is meant that there may be delegated such measure of power to impose and collect
taxes as the legislature may deem expedient
Municipalities may be permitted to tax subjects which for reasons of public policy the
State has not deemed wise to tax for more general purposes

2. No.
There is no double taxation. Double taxation, in general, is not forbidden by our
fundamental law
- It becomes obnoxious only where the taxpayer is taxed twice for the benefit of the
same govtal entity or by the same jurisdiction for the same purpose, but not in a case
where one tax is imposed by the State and the other by the city or municipality
The
2 ordinances in question are not the same. The difference between the ordinances

clearly lies in the tax rate of the soft drinks produced:

- in Ordinance No. 23, it was 1/16 of a centavo for every bottle corked while in
Ordinance No. 27, it is 1 centavo on each gallon) of volume capacity
- The intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is
thus clear: it was intended as a plain substitute for the prior Ordinance No. 23, and
operates as a repeal of the latter.
- Only Ordinance No. 27 is being enforced by defendants-appellees
Ordinance 27 is not a percentage or a specific tax
- a municipal ordinance which prescribes a set ratio between the amount of the tax and
the volume of sale of the taxpayer imposes a sales tax and is null and void for being
outside the power of the municipality to enact
- But the imposition of "a tax of one centavo on each gallon of volume capacity" on all
soft drinks produced or manufactured under Ordinance No. 27 does not partake of
the nature of a percentage tax on sales. The tax is levied on the produce (whether sold
or not) and not on the sales
- It is also not a specific tax because it was not mentioned in the list of articles which
can be taxed
3. No.
an increase in the tax alone would not support the claim that the tax is oppressive, unjust
and confiscatory
municipal corporations are allowed much discretion in determining the rates of imposable
taxes
- in line with the constitutional policy of according the widest possible autonomy to
local govts in matters of local taxation, an aspect that is given expression in the Local
Tax Code
Reluctance should not deter compliance with an ordinance such as Ordinance No. 27 if
the purpose of the law to further strengthen local autonomy were to be realized
Municipalities are empowered to impose, not only municipal license taxes upon persons
engaged in any business or occupation but also to levy for public purposes, just and
uniform taxes

Eastern Theatrical Co. v Alfonso

Facts:
The Municipal Board of the City of Manila enacted Ordinance No. 2958 which
imposes a fee on the price of every admission ticket sold by theaters and other
similar amusement establishments. The fees imposed are graduated according to
the price of the ticket sold
AN ORDINANCE IMPOSING A FEE ON THE PRICE OF EVERY ADMISSION TICKET
SOLD BY CINEMATOGRAPHS, THEATERS VAUDEVILLE COMPANIES THEATRICAL
SHOWS AND BOXING EXHIBITION AND PROVIDING FOR OTHER PURPOSES

12 corporations engaged in the motion picture business instituted a complaint in

the CFI to impugn the validity of the ordinance
CFI upheld the validity of the ordinance and held that:
- Under Sec 2444(m) of the Revised Administrative Code (RAC), the City of
Manila had the power to enact the ordinance
- Sec 2444(m) of the RAC was not repealed by the NIRC nor the power
granted by it withdrawn
- Ordinance did not violate the principle of equality and uniformity of
taxation
Issues and Arguments:
1. WON ordinance was enacted beyond the charter powers of the City of
Manila.
Petitioners: Sec 2444(m) of the RAC, which grants to the City the power
to regulate theaters, confers only the power to tax on business but not on
amusement.
2. WON Sec 2444(m) of the RAC has been impliedly repealed by the NIRC.
Petitioners: Since the NIRC was passed later the RAC and since both
taxing powers cover the same field of legislation, Sec 2444(m) of the
RAC must have been repealed by the NIRC and consequently, the power
to regulate theaters granted to the City was withdrawn.
3. WON the ordinance violates the principle of equality and uniformity of
taxation enjoined by the Constitution.
Petitioners: Ordinance does not tax other kinds of amusements (e.g. race
tracks, cockpits, cabarets, concert halls)

Held and Ratio:

1. NO.
The tax imposed by Sec 2444(m) cannot be defined as and be restricted to tax
on business. The fact that said Sec. includes theaters and similar amusement
establishments shows that the power to tax amusement is expressly included
within the power granted by Sec 2444(m) of the Revised Administrative Code
The tax cannot be defined as tax on business and cannot be restricted within a
smaller scope than what is authorized by the words used, to the extent of
excluding what plaintiffs describe as tax on amusement
Ordinance was passed by the Municipal Board of MNL by virtue of its express
legislative power to tax, fix the license fee and regulate the business of theaters,
cinematographs and further to fix the location of and to tax, fix the license fee
for and regulate the business of theatrical performances public exhibition
circus and other performances and places of amusement
2. NO.
The conflict pointed out by the petitioners is imaginary
Both provisions of law may stand together and be enforced at the same time
without any incompatibility among themselves
Graduated tax on admission tickets to theaters and other places of amusement
imposed by the NIRC is collected by and for the purposes of the National
govt, whereas, Ordinance No. 2958 imposes and requires the collection of a
similar tax by and for the purposes of the govt of the City of MNL, and there
is no case of double taxation
3. NO.
Equality and uniformity of taxation means that all taxable articles or kinds of
property of the same class shall be taxed at the same rate
The taxing power has the authority to make reasonable and natural
classifications for purposes of taxation. Petitioners cannot point out what
places of amusement do not constitute a class by themselves and which can be
confused with those not included in the ordinance

Uy Matiao and Co., Inc. v City of Cebu

Facts:
Uy Matiao and Co., a domestic corporation, paid under protest the fees for the
storage in its warehouse in the City of Cebu of copra and/or hemp and/or for
engaging in buying and/or selling copra and/or hemp in the said City provided for
in ordinance no. 38 of the City of Cebu
The plaintiff seeks to recover in this action after a demand for refund had been
refused by the corresponding City authorities
CFI of Cebu rendered judgment holding Ordinance No. 38, series of 1946, and
No. 46. series of 1947, null and void
Issue: WON the City of Cebu is authorized under its charter (Com. Act No. 58) to
impose and collect the tax or license free provided in the ordinances in question
Held: YES.
Sec. 17, Commonwealth Act No. 58, provides that the Municipal Board has the
power to:
- To tax, fix the license free for, regulate the business, and fix the location of match factories,
blacksmith shops, foundries, steam boilers lumberyard, the storage and sale of gunpowder, tar,
pitch, resin, coal, oil, gasoline, benzine, turpentine, hemp, cotton, nitroglycerine, petroleum, or
any of the products thereof and of all other highly combustible or explosive materials, and other
establishment likely to endanger the public safety or give rise to conflagrations or explosions, and
subject to the provisions of ordinances issued by the PH Health Service in accordance with law

The fact that copra is not mentioned in the aforementioned Sec. does not mean the
copra is excluded, because oil is in the enumeration and the main component
ingredient or constituent part of copra, which is the dried meat of the coconut, is
oil.
The city of Cebu has the power to tax, fix the license fee for, regulate the business
and fix the location of other establishments likely to endanger the public safety or
give rise to conflagrations or explosions.
There is no question that under its charter, the City of Cebu may tax or impose a
license fee on any person, firm or corporation engaged in the business of buying
and selling the storing copra in a warehouse located in the city, oil being the main
component ingredient of copra, house used for keeping or storing copra is an
establishment likely to endanger the public safety or likely to give rise to
conflagrations or explosions or explosions

The tax or license fee in question is not specific because it does not subject directly
the produce or goods to tax but indirectly as an incident to, or in connection with,
the business to be taxed. It is a tax on the business of buying and selling or storing
copra
A P0.05 tax or license fee for 100kg of fraction thereof per month is not arbitrary
but reasonable
The fact that the price of copra has been steadily going down, whereas that of
taxes are going up, does not render the tax arbitrary
The tax or license fee provided for in the ordinances in question based on the
weight regardless of value is what makes the tax or fee uniform
The tax or license fee does not deprive the owner of the copra and of the
warehouse of this property without due process of law, because it is reasonable tax
or fee and it does not deprive the dealer of his copra and the owner of the
warehouse where it is kept of his property
It is also not a tax on export because it is imposed not only upon copra to be
exported but also upon copra sold and to used for domestic purposes, if stored in
any warehouse in the City of Cebu and the weight thereof is 100kg or more
The tax or license fee in question is not among those prohibited or beyond the
power of the municipal councils and municipal districts council to impose, as
provided for in Sec. 3, Commonwealth Act No. 472.
- Com. Act No. 472 applies only to municipal council and municipal district
council and not to cities like the City of Cebu which has it own charter

Commissioner v Lingayen Gulf Electric (1988)

Facts:
Lingayen Gulf Electric Power operates an electric power plant serving the
municipalities of Lingayen and Binmaley, Pangasinan, pursuant to municipal
franchise granted it by the respective municipal councils.
The franchises provided that the grantee shall pay quarterly to the provincial
treasury of Pangasinan 1% of the gross earnings obtained through the privilege for
the first 20 years (from 1946) and 2% during the remaining 15 years of the life of
the franchise.
In 1955, the BIR assessed and demanded against the company deficiency franchise
taxes and surcharges from the years 1946 to 1954 applying the franchise tax rate of
5% on gross receipts from 1948 to 1954. The company asked for a reinvestigation,
which was denied.
CTA, however, ruled for Lingayen. Hence, this petition.
Issues:
1. WON the 5% franchise tax prescribed in Sec. 259 of the NIRC assessed against
the private respondent on its gross receipts realized before the effectivity of RA
No. 3843 is collectible.
2. WON Sec. 4 of R.A. No. 3843 is unconstitutional for being violative of the
"uniformity and equality of taxation" clause of the Constitution.
3. If the abovementioned Sec. 4 of R.A. No. 3843 is valid, whether or not it could
be given retroactive effect so as to render uncollectible the taxes in question
which were assessed before its enactment.
4. WON the Court can inquire into the wisdom of the franchise.
5. WON the respondent taxpayer is liable for the fixed and deficiency percentage
taxes in the period before the approval of its municipal franchises.
Ruling:
1. No.
The private respondent's original franchises did not contain the proviso that the
tax provided therein "shall be in lieu of all taxes;" moreover, the franchises
contained a reservation clause that they shall be subject to amendment,
alteration, or repeal
- even in the absence of such clause, the power of the Legislature to alter,
amend, or repeal any franchise is always deemed reserved

By virtue of RA No. 3843, the private respondent is liable to pay only the 2%
franchise tax, effective from the date the original municipal franchise was granted
2. No.
A tax is uniform when it operates with the same force and effect in every place
where the subject of it is found. Uniformity means that all property belonging to
the same class shall be taxed alike. The legislature has the inherent power not
only to select the subjects of taxation but to grant exemptions
Tax exemptions have never been deemed violative of the equal protection clause.
Herein, the 5% franchise tax rate provided in Sec. 259 of the Tax Code was
never intended to have universal application
Sec. 259 expressly allows the payment of taxes at rates lower than 5% when
the charter granting the franchise precludes the imposition of a higher tax.
RA 3843, the law granting the franchise, did not only fix and specify a franchise
tax of 2% on its gross receipts but made it in lieu of any and all taxes, all laws to
the contrary notwithstanding. Thus, it only effected the transfer of a taxable
property from one class to another
3. Yes.
Act No. 3843 provides that "effective ... upon the date the original franchise
was granted, no other tax and/or licenses other than the franchise tax of 2 per
centum on the gross receipts ... shall be collected, any provision to the contrary
notwithstanding."
- it therefore specifically provided for the retroactive effect of the law
4. No.
The Court does not have the authority to inquire into the wisdom of the Act
Charters or special laws granted and enacted by the legislature are in the nature
of private contracts. They do not constitute a part of the machinery of the
general govt. Also, the Court ought not to disturb the ruling of the CTA on
the constitutionality of the law in question
5. No.
During the period covered by the instant case, that is from Jan. 1, 1946 to Dec.
31, 1961, the private respondent paid the amount of P34,184.36, which was very
much more than the amount rightfully due from it
The private respondent should no longer be made to pay for the deficiency tax in
the amount of P3,025.98 for the period from Jan. 1, 1946 to Feb. 29, 1948

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. City of Butuan

Facts:
Plaintiff Pepsi-Cola Bottling Company of the PH, Inc., a domestic corporation,
seeks to recover the sums paid by it to the City of Butuan and collected by the
latter pursuant to its Municipal Ordinance No. 110, as amended by Municipal
Ordinance No. 122, which plaintiff assails as null and void, and to prevent the
enforcement thereof
Plaintiff maintains, among others, that the disputed ordinance is null and void
because:
(1) it partakes of the nature of an import tax
(2) it amounts to double taxation
(3) it is excessive, oppressive & confiscatory
(4) it is highly unjust & discriminatory
(5) Sec. 2 of RA No. 2264, upon the authority of which it was enacted, is
an unconstitutional delegation of legislative powers
Issue: WON plaintiff is correct in maintaining that Ordinance No. 110, as amended
by Ordinance No. 122, is null and void.
Held:
Yes, with respect to the 1st & 4th objections.
- Ordinance 110 of the City of Butuan, as amended by Ordinance No. 122,
imposes a tax of P0.10 per case of 24 bottles of soft drinks or carbonated
drinks only upon "any agent and/or consignee of any person,association,
partnership, company or corporation engaged in selling . . . soft drinks or
carbonated drinks."
- For, as a consequence of such measure, merchants engaged in the sale
thereof are not subject to the tax unless they are agents and/or consignees of
another dealer, who, in the very nature of things, must be one engaged in
business outside the City
- Besides, the tax would not be applicable to such agent and/or consignee, if
less than 1,000 cases of soft drinks are consigned or shipped to him every
month. When we consider, also that the tax "shall be based and computed
from the cargo manifest or bill of lading . . . showing the number of cases"
not sold but received by the taxpayer, the intention to limit the
application of the ordinance to soft drinks brought into the city from outside
thereof becomes apparent
- Viewed from this angle, the tax partakes of the nature of an import duty
which is beyond defendant's authority to impose by express provision of law
- Sales by local dealers, not acting for or on behalf of other merchants,
regardless of the volume of their sales, and even if the same exceeded those

made by said agents or consignees of producers or merchants established

outside the City of Butuan, would be exempt from the disputed tax.
- If its purpose were merely to levy a burden upon the sale of soft drinks or
carbonated beverages, there is no reason why sales thereof by sealers other
than agents or consignees of producers or merchants established outside the
City of Butuan should be exempt from the tax.
No, with respect to the 2nd, 3rd, & last objections.
- 2nd objection: double taxation, in general, is not forbidden by our
fundamental law
- 3rd objection: The tax of "P0.10 per case of 24 bottles," of soft drinks or
carbonated drinks or less than P0.0042 per bottle, is manifestly too small to
be excessive, oppressive, or confiscatory
- Last objection: the general principle against delegation of legislative powers,
in consequence of the theory of separation of powers is subject to one wellestablished exception, namely: legislative powers may be delegated to local
govts to which said theory does not apply in respect of matters of
local concern

American Bible Society vs. City of Manila

Facts:
American Bible Society is a foreign, non-stock, non-profit, religious, missionary
corporation duly registered and doing business in the PH through its PH agency
established in Manila in Nov 1898
City of MNL is a municipal corporation with powers that are to be exercised in
conformity with the provisions of RA No. 409, known as the Revised Charter of
the City of MNL
American Bible Society has been distributing and selling bibles and/or gospel
portions throughout the PH and translating the same into several PH dialects
City Treasurer of MNL informed American Bible Society that it was violating
several Ordinances for operating without the necessary permit and license,
thereby requiring the corporation to secure the permit and license fees covering
the period from 4Q 1945-2Q 1953
To avoid closing of its business, American Bible Society paid the City of MNL
its permit and license fees under protest
American Bible filed a complaint, questioning the constitutionality and legality of
the Ordinances 2529 and 3000, and prayed for a refund of the payment made to
the City of MNL. They contended:
a. They had been in the PH since 1899 and were not required to pay
any license fee or sales tax
b. it never made any profit from the sale of its bibles
c. In order to maintain its operating costs, it obtains substantial remittances
from its NY office and voluntary contributions and gifts from certain
churches
City of MNL prayed that the complaint be dismissed, reiterating the
constitutionality of the Ordinances in question
Trial Court dismissed the complaint
American Bible Society appealed to the Court of Appeals
Issue: WON American Bible Society is liable to pay sales tax for the distribution
and sale of bibles.
Ruling: NO.
Under Sec. 1 of Ordinance 3000, one of the ordinances in question, a person or
entity engaged in any of the business, trades or occupation enumerated under
Sec. 3 must obtain a Mayors permit and license from the City Treasurer.
American Bible Societys business is not among those enumerated
It is of general application and not particularly directed against institutions like
the plaintiff, and it does not contain any provisions whatever prescribing
religious censorship nor restraining the free exercise and enjoyment of any
religious profession.

However, item 79 of Sec. 3 of the Ordinance provides that all other businesses,
trade or occupation not mentioned, except those upon which the City is not
empowered to license or to tax P5.00
Therefore, the necessity of the permit is made to depend upon the power of the
City to license or tax said business, trade or occupation.
2 provisions of law that may have bearing on this case:
A. Chapter 60 of the Revised Administrative Code, the Municipal Board of
the City of MNL is empowered to tax and fix the license fees on retail
dealers engaged in the sale of books
B. Sec. 18(o) of RA 409: to tax and fix the license fee on dealers in general
merchandise, including importers and indentors, except those dealers who
may be expressly subject to the payment of some other municipal tax.
Further, Dealers in general merchandise shall be classified as (a) wholesale
dealers and (b) retail dealers. For purposes of the tax on retail dealers,
general merchandise shall be classified into four main classes: namely
(1) luxury articles,
(2) semi-luxury articles,
(3) essential commodities
(4) miscellaneous articles.
A separate license shall be prescribed for each class but where
commodities of different classes are sold in the same establishment, it shall
not be compulsory for the owner to secure more than one license if he
pays the higher or highest rate of tax prescribed by ordinance. Wholesale
dealers shall pay the license tax as such, as may be provided by ordinance
Ordinances Nos. 2529 and 3000, as amended, are to be considered as still in full
force and effect uninterruptedly up to the present
Often the legislature, instead of simply amending the pre-existing statute, will
repeal the old statute in its entirety and by the same enactment re-enact all or
certain portions of the preexisting law
The court holds that the questioned ordinances of the City of MNL are still in
force and effect
The only difference between the 2 provisions is the limitation as to the amount
of tax or license fee that a retail dealer has to pay per annum
As held in Murdock v Pennsylvania, The power to impose a license tax on the
exercise of these freedoms provided for in the Bill of Rights, is indeed as potent
as the power of censorship which this Court has repeatedly struck down. It is not
a nominal fee imposed as a regulatory measure to defray the expenses of policing
the activities in question. It is in no way apportioned. It is flat license tax levied
and collected as a condition to the pursuit of activities whose enjoyment is
guaranteed by the constitutional liberties of press and religion and inevitably
tends to suppress their exercise. That is almost uniformly recognized as the
inherent vice and evil of this flat license tax.

 Further, the case also mentioned that the power to tax the exercise of a privilege
is the power to control or suppress its enjoyment. Those who can tax the exercise
of this religious practice can make its exercise so costly as to deprive it of the
resources necessary for its maintenance. Those who can tax the privilege of
engaging in this form of missionary evangelism can close all its doors to all those
who do not have a full purse
Under Sec. 27(e) of Commonwealth Act No. 466 or the NIRC:
Corporations or associations organized and operated exclusively for religious,
charitable, . . . or educational purposes, . . .: Provided, however, That the
income of whatever kind and character from any of its properties, real or
personal, or from any activity conducted for profit, regardless of the
disposition made of such income, shall be liable to the tax imposed under this
Code shall not be taxed
The price asked for the bibles and other religious pamphlets was in some
instances a little bit higher than the actual cost of the same but this cannot mean
that American Bible Society was engaged in the business or occupation of selling
said "merchandise" for profit
The court believes that the provisions of City of MNL Ordinance No. 2529, as
amended, cannot be applied to appellant, for in doing so it would impair its free
exercise and enjoyment of its religious profession and worship as well as its rights
of dissemination of religious beliefs.
Ordinance No. 3000 cannot be considered unconstitutional, even if applied to
plaintiff Society but it is also inapplicable to said business, trade or occupation of
the plaintiff.
Wherefore, and on the strength of the foregoing considerations, We hereby
reverse the decision appealed from, sentencing defendant return to plaintiff the
sum of P5,891.45 unduly collected from it

Abra Valley College v Aquino

Facts:
Petitioner, an educational corporation and institution of higher learning duly
incorporated with the SEC in 1948, filed a complaint to annul and declare void
the Notice of Seizure and the Notice of Sale of its lot and building located
at Bangued, Abra, for non-payment of real estate taxes and penalties amounting
to P5,140.31.
- Said Notice of Seizure by respondents Municipal Treasurer and Provincial
Treasurer, defendants below, was issued for the satisfaction of the said taxes
thereon.
The parties entered into a stipulation of facts adopted and embodied by the trial
court in its questioned decision. The trial court ruled for the govt, holding that
the second floor of the building is being used by the director for residential
purposes and that the ground floor used and rented by Northern Marketing
Corp., a commercial establishment, and thus the property is not being used
exclusively for educational purposes.
Instead of perfecting an appeal, petitioner availed of the instant petition for
review on certiorari with prayer for preliminary injunction before the Supreme
Court, by filing said petition on 17 Aug. 1974
Issue: WON the lot and building are used exclusively for educational purposes.
Held: NO.
Sec. 22, paragraph 3, Article 6, of the then 1935 PH Constitution, expressly
grants exemption from realty taxes for cemeteries, churches and parsonages or
convents appurtenant thereto, and all lands, buildings, and improvements used
exclusively for religious, charitable or educational purposes.
Reasonable emphasis has always been made that the exemption extends to
facilities which are incidental to and reasonably necessary for the accomplishment
of the main purposes.
The use of the school building or lot for commercial purposes is neither
contemplated by law, nor by jurisprudence. The use of the 2nd floor of the
main building in the case at bar for residential purposes of the Director and his
family, may find justification under the concept of incidental use, which is
complimentary to the main or primary purposeeducational, the lease of the
first floor thereof to the Northern Marketing Corp. cannot by any stretch of
the imagination be considered incidental to the purpose of education.
The test of exemption from taxation is the use of the property for purposes
mentioned in the Constitution.
In YMCA of MNL vs. CIR, this Court ruled that while it may be true that the
YMCA keeps a lodging and a boarding house and maintains a restaurant for its
members, still these do not constitute business in the ordinary acceptance of the

word, but an institution used exclusively for religious, charitable and educational
purposes, and as such, it is entitled to be exempted from taxation
In Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, this Court
included in the exemption a vegetable garden in an adjacent lot and another lot
formerly used as a cemetery. It was clarified that the term "used exclusively"
considers incidental use also. Thus, the exemption from payment of land tax in
favor of the convent includes, not only the land actually occupied by the building
but also the adjacent garden devoted to the incidental use of the parish priest.
The lot which is not used for commercial purposes but serves solely as a sort of
lodging place, also qualifies for exemption because this constitutes incidental use
in religious functions.
Under the 1935 Constitution, the trial court correctly arrived at the conclusion
that the school building as well as the lot where it is built, should be taxed, not
because the 2nd floor of the same is being used by the Director and his family
for residential purposes, but because the 1st floor thereof is being used for
commercial purposes
- Since only a portion is used for purposes of commerce, it is only fair that half
of the assessed tax be returned to the school involved
The decision of the CFI Abra (Branch I) is affirmed subject to the modification
that half of the assessed tax be returned to the petitioner.