ABRA VALLEY COLLEGE, INC. VS AQUINO JUNE 15 1988PARAS, J.

FACTS:Abra Valley College, an educational corporation and institution of higherlearning duly incorporated with the SEC filed a complaint to annul and declarevoid the Notice of Seizure and the Notice of Sale of its lot and building locatedat Bangued, Abra, for non-payment of real estate taxes and penalties. PaternoMillare filed through counsel a motion to dismiss the complaint. The provincialfiscal filed a memorandum for the government wherein they opined hat based onthe evidence, the laws applicable, court decisions and jurisprudence, the schoolbuilding and the school lot used for educational purposes of the Abra ValleyCollege are exempted from payment of taxes. Nonetheless, the trial courtdisagreed because of the use of the second floor by the Director of the said schoolfor residential purpose. He thus ruled for the government and rendered theassailed decision.ISSUE:Whether or not the lot and building in question are used exclusively foreducational purposes?HELD:NO. It must be stressed that while the court allows a more liberal and non-restrictive interpretation of the phrase exclusively used for educationalpurposes as provided for in the Article VI, Section 22, Paragraph 3 of the 1935Philippine Constitution, reasonable emphasis has always been made thatexemption extends to facilities which are incidental to and reasonably necessaryfor the accomplishment of the main purpose. Otherwise stated, the use of theschool building or lot for commercial purposes is neither contemplated by law, norby jurisprudence. Thus, while the use of the second floor of the main building inthe 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 themain or primary purpose educational, the lease of the first floor thereof to theNorthern Marketing Corporation cannot by any stretch of the imagination beconsidered incidental to the purposes of education.Under the 1935 Constitution, the rial court correctly arrived at theconclusion that the school building as well as the lot where it is built, should betaxed, not because the second floor of the same is being used by the director andhis family for residential purposes, but because the first floor thereof is being usedfor commercial purposes. However, since only a portion is used for purposes of commerce, it is only fair that half of the assessed tax be return to the schoolinvolved

Case number: 80REYES VS. ALMANZORGR 43839-46 April 26, 1991 196 SCRA 322Paras, J.:FACTS: Petitioners (J.B.L. Reyes and Edmundo Reyes) are owners of parcels of land leased to tenants.RA 6359 was enacted prohibiting for one year an increase in monthly rentals of dwelling unitsand said Act also disallowed ejectment of lessees upon the expiration of the usual period of lease. City assessor of Manila (one of the respondents) assessed the value of petitionersproperty based on the schedule of market values duly reviewed by the Secretary of Finance.The revision entailed an increase to the tax rates and petitioners averred that the reassessmentimposed upon them greatly exceeded the annual income derived from their properties. ISSUE: Whether or not income approach is the method to be used in the tax assessment and not thecomparable sales approach. RULING: Petition Granted.By no stretch of the imagination can the market value of properties covered by PD 20 beequated with the market value of properties not so covered. In the case at bar, not even factorsdeterminant of the assessed value of subject properties under the comparable sales approachwere presented by respondent namely:1.That the sale must represent a bonafide arms length transaction between a willing seller and a willing buyer 2.The property must be comparable property. As a general rule, there were no takers so that there can be no reasonable basis for theconclusion that these properties are comparable.Taxes are lifeblood of government, however,such collection should be made in accordance with the law and therefore necessary to reconcileconflicting interests of the authorities so that the real purpose of taxation, promotion of thewelfare of common good can be achieved.

Eastern Theatrical Co. vs. AlfonsoGR L-1104, 31 May 1944 Second Division, Perfecto (J): 5 concur Facts: The municipal board of Manila enacted Ordinance 2958 (series of 1946) imposing a fee on the price ofevery admission ticket sold by cinematograph theaters, vaudeville companies, theatrical shows and boxingexhibitions, in addition to fees imposed under Sections 633 and 778 of Ordinance 1600. Eastern TheatricalCo., among others, question the validity of ordinance, on the ground that it is unconstitutional for beingcontrary to the provisions on uniformity and equality of taxation and the equal protection of the lawsinasmuch as the ordinance does not tax other kinds of amusement, such as race tracks, cockpits, cabarets,concert halls, circuses, and other places of amusement. Issue: Whether the ordinance violates the rule on uniformity and equality of taxation. Held: Equality and uniformity in taxation means that all taxable articles or kinds of property of the same classshall be taxed at the same rate. The taxing power has the authority to make reasonable and naturalclassifications for purposes of taxation; and the theater companies cannot point out what places of amusementtaxed by the ordinance do not constitute a class by themselves and which can be confused with those notincluded in the ordinance. The fact that somew places of amusement are not taxed while others, like the onesherein, are taxed is no argument at all against the equality and uniformity of the tax imposition.

Villanueva vs. Iloilo City GR L-26521, 28 December 1968En Banc, Castro (J): 8 concur Facts: On 30 September 1946, the Municipal Board of Iloilo City enacted Ordinance 86 imposinglicense tax fees upon tenement house (P25); tenemen house partly engaged or wholly engaged in anddedicated to business in Baza, Iznart, and Aldeguer Streets (P24 per apartment); and tenementhouse, padtly or wholly engaged in business in other streets (P12 per apartment). The validity of suchordinance was challenged by Eusebio and Remedios Villanueva, owners of four tenement housescontaining 34 apartments. The Supreme Court held the ordinance to be ultra vires. On 15 January1960, however, the municipal board, believing that it acquired authority to enact an ordinance of thesame nature pursuant to the Local Autonomy Act, enacted Ordinance 11 (series of 1960), Eusebioand Remedios Villaniueva assailed the ordinance anew. Issue: Whether Ordinance 11 violate the rule of uniformity of taxation. Held: The Court has ruled that tenement houses constitute a distinct class of property; and that taxesare uniform and equal when imposed upon all property of the same class or character within thetaxing authority. The fact that the owners of the other classes of buildings in Iloilo are not imposedupon by the ordinance, or that tenement taxes are imposed in other cities do not violate the rule of equality and uniformity. The rule does not require that taxes for the same purpose should be imposedin different territorial subdivisions at the same time. So long as the burden of tax falls equally andimpartially on all owners or operators of tenement houses similarly classified or situated, equality anduniformity is accomplished. The presumption that tax statutes are intended to operate uniformly andequally was not overthrown herein.

Churchill vs. ConcepcionGR 11572, 22 September 1916 Second Division, Trent (J): 4 concur Facts: Section 100 of Act 2339 (promulgated 1914) imposed an annual tax of P4 per square meter uponelectric signs, billboards, and spaces used for posting or displaying temporary signs, and all signs displayedon premises not occupied by buildings. The section was amended by Act 2432, reducing the tax to P2 persquare meter. The taxes imposed by Act 2432 were ratified by the US Congress on 4 March 1915. Francis A.Churchill and Stewart Tait, co-partners in Mercantile Advertising Agency, owed a billboard to which theywere taxed at P104. The tax was paid under protest. Churchill and Tait instituted the action to recover theamount. Issue: Whether the statute or tax is void for lack of uniformity. Held: Uniformity in taxation means that all taxable articles or kinds of property, of the same class, shall betaxed at the same rate. It does not mean that lands, chattels, securities, incomes, occupations, franchises,privileges, necessities, and luxuries shall all be assessed at the same rate. Different articles may be taxed atdifferent amounts provided the rate is uniform on the same class everywhere, with all people, at all times.Herein, the Act imposes a tax of P2 per square meter or a fraction thereof upon every electric sign, billboard,etc., wherever found in the Philippine Islands. The rule of taxation upon such signs is uniform throughout theislands. The rule does not require taxes to be graded according to the value of the subject(s) upon which theyare imposed, especially those levied as privilege or occupation taxes.

Cagayan Electric Power & Light Co. vs. CommissionerGR L-60126, 25 September 1985 Second Division, Aquino (J): 5 concur Facts: Cagayan Electric is a holder of a legislative franchise under Republic Act 3247 where payment of 3%tax on gross earnings is in lieu of all taxes and assessments upon privileges, etc. In 1968, RA 5431 amendedthe franchise by making all corporate taxpayers liable for income tax except those indicated in paragraph (c)(1) of Section 24 of the Tax Code. In 1969, through RA 6020, its franchise was extended to two other townsand the tax exemption was reenacted. In 1973, the Commissioner required the company to pay deficiencyincome taxes for 1968 to 1971. Issue: Whether the withdrawal of the franchises tax exemption violates the non-impairment clause of theConstitution. Held: Congress could impair the companys legislative franchise by making it liable for income tax. TheConstitution provides that a franchise is subject to amendment, alteration or repeal by the Congress when thepublic interest so requires. RA 3247 itself provides that the franchise is subject to amendment, etc. byCongress. The enactment of RA 5431 had the effect of withdrawing the companys exemption from income tax. The exemption was restored by the enactment of RA 6020. The company is liable only for the income tax for the period of 1 January to 3 August 1969.

American Bible Society v. City of Manila [GR L-9637, 30 April 1957] Second Division, Felix (J): 7 concur, 1 concur in result Facts: In the course of its ministry, American Bible SocietysPhilippine agency has been distributing and selling bibles and/orgospel portions thereof (since 1898, but except during the Japaneseoccupation) throughout the Philippines and translating the same intoseveral Philippine dialects. On 29 May 1953, the acting CityTreasurer of the City of Manila informed the Society that it wasconducting the business of general merchandise since November1945, without providing itself with the necessary Mayors permit andmunicipal license, in violation of Ordinance 3000, as amended, andOrdinances 2529, 3028 and 3364, and required the Society tosecure, within 3 days, the corresponding permit and license fees,together with compromise covering the period from the 4th quarterof 1945 to the 2nd quarter of 1953, in the total sum of P5,821.45.On 24 October 1953, the Society paid to the City Treasurer underprotest the said permit and license fees, giving at the same timenotice to the City Treasurer that suit would be taken in court toquestion the legality of the ordinances under which the said feeswere being collected, which was done on the same date by filing thecomplaint that gave rise to this action. After hearing, the lower courtdismissed the complaint for lack of merit. the Society appealed tothe Court of Appeals, which in turn certified the case to the SupremeCourt for the reason that the errors assigned involved only questionsof law. Issue: Whether the Society is required to secure municipal permit toallow it to sell and distribute bibles and religious literature, and topay taxes from the sales thereof. Held: No. Section 27 (e) of Commonwealth Act 466 (NIRC) exemptscorporations or associations organized and operated exclusively forreligious, charitable, or educational purposes, Provided however,That the income of whatever kind and character from any of itsproperties, real or personal, or from any activity conducted for profit,regardless of the disposition made of such income, shall be liable tothe tax imposed under the Code. Herein, the act of distributing andselling bibles, etc. is purely religious and cannot be made liable fortaxes or fees therein. Further, Ordinance 2529, as amended, cannotbe applied to the Society, for in doing so it would impair its freeexercise and enjoyment of its religious profession and worship aswell as its rights of dissemination of religious beliefs. The fact thatthe price of the bibles and other religious pamphlets are little higherthan the actual cost of the same does not necessarily mean that it isalready engaged in the business or occupation of selling said merchandise for profit. Furthermore, Ordinance 3000 of the City of Manila is of general application and it does not contain anyprovisions whatsoever prescribing religious censorship norrestraining the free exercise and enjoyment of any religiousprofession. The ordinance is not applicable to the Society, as itsbusiness, trade or occupation is not particularly mentioned in Section3 of the Ordinance, and the record does not show that a permit isrequired therefor under existing laws and ordinances for the propersupervision and enforcement of their provisions governing thesanitation, security and welfare of the public and the health of theemployees engaged in the business of the Society.

G.R. No. L-22814

August 28, 1968

PEPSI-COLA BOTTLING CO. OF THE PHILIPPINES, INC., plaintiff-appellant, vs. CITY OF BUTUAN, MEMBERS OF THE MUNICIPAL BOARD, THE CITY MAYOR and THE CITY TREASURER, all of the CITY OF BUTUAN, defendantsappellees. Sabido, Sabido and Associates for plaintiff-appellant. The City Attorney of Butuan City for defendants-appellees. CONCEPCION, C.J.: Direct appeal to this Court, from a decision of the Court of First Instance of Agusan, dismissing plaintiff's complaint, with costs. Plaintiff, Pepsi-Cola Bottling Company of the Philippines, is a domestic corporation with offices and principal place of business in Quezon City. The defendants are the City of Butuan, its City Mayor, the members of its municipal board and its City Treasurer. Plaintiff seeks to recover the sums paid by it to the City of Butuan hereinafter referred to as the City and collected by the latter, pursuant to its Municipal Ordinance No. 110, as amended by Municipal Ordinance No. 122, both series of 1960, which plaintiff assails as null and void, and to prevent the enforcement thereof. Both parties submitted the case for decision in the lower court upon a stipulation to the effect: 1. That plaintiff's warehouse in the City of Butuan serves as a storage for its products the "Pepsi-Cola" soft drinks for sale to customers in the City of Butuan and all the municipalities in the Province of Agusan. These "Pepsi-Cola Cola" soft drinks are bottled in Cebu City and shipped to the Butuan City warehouse of plaintiff for distribution and sale in the City of Butuan and all municipalities of Agusan. . 2. That on August 16, 1960, the City of Butuan enacted Ordinance No. 110 which was subsequently amended by Ordinance No. 122 and effective November 28, 1960. A copy of Ordinance No. 110, Series of 1960 and Ordinance No. 122 are incorporated herein as Exhibits "A" and "B", respectively. 3. That Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case of 24 bottles of Pepsi-Cola and the plaintiff paid under protest the amount of P4,926.63 from August 16 to December 31, 1960 and the amount of P9,250.40 from January 1 to July 30, 1961. 4. That the plaintiff filed the foregoing complaint for the recovery of the total amount of P14,177.03 paid under protest and those that if may later on pay until the termination of this case on the ground that Ordinance No. 110 as amended of the City of Butuan is illegal, that the tax imposed is excessive and that it is unconstitutional. 5. That pursuant to Ordinance No. 110 as amended, the City Treasurer of Butuan City, has prepared a form to be accomplished by the plaintiff for the computation of the tax. A copy of the form is enclosed herewith as Exhibit "C". 6. That the Profit and Loss Statement of the plaintiff for the period from January 1, 1961 to July 30, 1961 of its warehouse in Butuan City is incorporated herein as Exhibits "D" to "D-1"

to "D-5". In this Profit and Loss Statement, the defendants claim that the plaintiff is not entitled to a depreciation of P3,052.63 but only P1,202.55 in which case the profit of plaintiff will be increased from P1,254.44 to P3,104.52. The plaintiff differs only on the claim of depreciation which the company claims to be P3,052.62. This is in accordance with the findings of the representative of the undersigned City Attorney who verified the records of the plaintiff. 7. That beginning November 21, 1960, the price of Pepsi-Cola per case of 24 bottles was increased to P1.92 which price is uniform throughout the Philippines. Said increase was made due to the increase in the production cost of its manufacture. 8. That the parties reserve the right to submit arguments on the constitutionality and illegality of Ordinance No. 110, as amended of the City of Butuan in their respective memoranda. xxx xxx xxx
1w ph1.t

Section 1 of said Ordinance No. 110, as amended, states what products are "liquors", within the purview thereof. Section 2 provides for the payment by "any agent and/or consignee" of any dealer "engaged in selling liquors, imported or local, in the City," of taxes at specified rates. Section 3 prescribes a tax of P0.10 per case of 24 bottles of the soft drinks and carbonated beverages therein named, and "all other soft drinks or carbonated drinks." Section 3-A, defines the meaning of the term "consignee or agent" for purposes of the ordinance. Section 4 provides that said taxes "shall be paid at the end of every calendar month." Pursuant to Section 5, the taxes "shall be based and computed from the cargo manifest or bill of lading or any other record showing the number of cases of soft drinks, liquors or all other soft drinks or carbonated drinks received within the month." Sections 6, 7 and 8 specify the surcharge to be added for failure to pay the taxes within the period prescribed and the penalties imposable for "deliberate and willful refusal to pay the tax mentioned in Sections 2 and 3" or for failure "to furnish the office of the City Treasurer a copy of the bill of lading or cargo manifest or record of soft drinks, liquors or carbonated drinks for sale in the City." Section 9 makes the ordinance applicable to soft drinks, liquors or carbonated drinks "received outside" but "sold within" the City. Section 10 of the ordinance provides that the revenue derived therefrom "shall be alloted as follows: 40% for Roads and Bridges Fund; 40% for the General Fund and 20% for the School Fund." Plaintiff maintains 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 and confiscatory; (4) it is highly unjust and discriminatory; and (5) section 2 of Republic Act No. 2264, upon the authority of which it was enacted, is an unconstitutional delegation of legislative powers. The second and last objections are manifestly devoid of merit. Indeed independently of whether or not the tax in question, when considered in relation to the sales tax prescribed by Acts of Congress, amounts to double taxation, on which we need not and do not express any opinion double taxation, in general, is not forbidden by our fundamental law. We have not adopted, as part thereof, the injunction against double taxation found in the Constitution of the United States and of some States of the Union.1 Then, again, the general principle against delegation of legislative powers, in consequence of the theory of separation of powers2 is subject to one well-established exception, namely: legislative powers may be delegated to local governments to which said theory does not apply3 in respect of matters of local concern. The third objection is, likewise, untenable. The tax of "P0.10 per case of 24 bottles," of soft drinks or carbonated drinks in the production and sale of which plaintiff is engaged or less than P0.0042 per bottle, is manifestly too small to be excessive, oppressive, or confiscatory.

The first and the fourth objections merit, however, serious consideration. In this connection, it is noteworthy that the tax prescribed in section 3 of Ordinance No. 110, as originally approved, was imposed upon dealers "engaged in selling" soft drinks or carbonated drinks. Thus, it would seem that the intent was then to levy a tax upon the sale of said merchandise. As amended by Ordinance No. 122, the tax is, however, imposed only upon "any agent and/or consignee of any person, association, partnership, company or corporation engaged in selling ... soft drinks or carbonated drinks." And, pursuant to section 3-A, which was inserted by said Ordinance No. 122: ... Definition of the Term Consignee or Agent. For purposes of this Ordinance, a consignee of agent shall mean any person, association, partnership, company or corporation who acts in the place of another by authority from him or one entrusted with the business of another or to whom is consigned or shipped no less than 1,000 cases of hard liquors or soft drinks every month for resale, either retail or wholesale. As a consequence, merchants engaged in the sale of soft drink or carbonated drinks, 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 and carbonated 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.4 Even however, if the burden in question were regarded as a tax on the sale of said beverages, it would still be invalid, as discriminatory, and hence, violative of the uniformity required by the Constitution and the law therefor, since only sales by "agents or consignees" of outside dealers would be subject to the tax. Sales by local dealers, not acting for or on behalf of other merchants, regardless of the volume of their sales, and even if the same exceeded those made by said agents or consignees of producers or merchants established outside the City of Butuan, would be exempt from the disputed tax. It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality under all circumstances, or negate the authority to classify the objects of taxation.5 The classification made in the exercise of this authority, to be valid, must, however, be reasonable6 and this requirement is not deemed satisfied unless: (1) it is based upon substantial distinctions which make real differences; (2) these are germane to the purpose of the legislation or ordinance; (3) the classification applies, not only to present conditions, but, also, to future conditions substantially identical to those of the present; and (4) the classification applies equally all those who belong to the same class.7 These conditions are not fully met by the ordinance in question.8 Indeed, 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. WHEREFORE, the decision appealed from is hereby reversed, and another one shall be entered annulling Ordinance No. 110, as amended by Ordinance No. 122, and sentencing the City of Butuan to refund to plaintiff herein the amounts collected from and paid under protest by the latter, with interest thereon at the legal rate from the date of the promulgation of this decision, in addition to the

costs, and defendants herein are, accordingly, restrained and prohibited permanently from enforcing said Ordinance, as amended. It is so ordered.

Ormoc Sugar vs Treasurer of Ormoc City (1968)

Facts: In 1964, the Municipal Board of Ormoc City passed Ordinance 4, imposing on any and all productions of centrifuga sugar milled at the Ormoc Sugar Co. Inc. in Ormoc City a municpal tax equivalent to 1% per export sale to the United States and other foreign countries. The company paid the said tax under protest. It subsequently filed a case seeking to invalidate the ordinance for being unconstitutional. Issue: Whether the ordinance violates the equal protection clause. Held: The Ordinance taxes only centrifugal sugar produced and exported by the Ormoc Sugar Co. Inc. and none other. At the time of the taxing ordinances enacted, the company was the only sugar central in Ormoc City. The classification, to be reasonable, should be in terms applicable to future conditions as well. The taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central, of the same class as the present company, from the coverage of the tax. As it is now, even if later a similar company is set up, it cannot be subject to the tax because the ordinance expressly points only to the company as the entity to be levied upon.

G.R. No. L-21183

September 27, 1968

VICTORIAS MILLING CO., INC., plaintiff-appellant, vs. THE MUNICIPALITY OF VICTORIAS, PROVINCE OF NEGROS OCCIDENTAL, defendantappellant. Hilado & Hilado for plaintiff-appellant. The Provincial Fiscal of Negros Occidental for defendant-appellant.

SANCHEZ, J.: This case calls into question the validity of Ordinance No. 1, series of 1956, of the Municipality of Victorias, Negros Occidental. The disputed ordinance was approved by the municipal Council of Victorias on September 22, 1956 by way of an amendment to two municipal ordinances separately imposing license taxes on operators of sugar centrals 1and sugar refineries. 2 The changes were: with respect to sugar centrals, by increasing the rates of license taxes; and as to sugar refineries, by increasing the rates of license taxes as well as the range of graduated schedule of annual output capacity. Ordinance No. 1 3 is labeled "An Ordinance Amending Ordinance No. 25, Series of 1953 and Ordinance No. 18, Series of 1947 on Sugar Central by Increasing the Rates on Sugar Refinery Mill by Increasing the Range of Graduated Schedule on Capacity Annual Output Respectively". It was, as the ordinance itself states, enacted pursuant to the taxing power conferred by Commonwealth Act 472. By Section 1 of the Ordinance: "Any person, corporation or other forms of companies, operating sugar central or engage[d] in the manufacture of centrifugal sugar shall be required to pay the following annual municipal license tax, payable quarterly, to wit: . . ." Section 1 referred to prescribes a wide range of schedule. It starts with a sugar central with mill having an annual output capacity of not less than 50,000 piculs of centrifugal sugar, in which case an annual municipal license tax of P1,000.00 is provided. Depending upon the annual output capacity the schedule of taxes continues with P2,000.00 progressively upward in twelve other grades until an output capacity of 1,500,001 piculs or more shall have been reached. For this, the annual tax is P40,000.00. The tax on sugar refineries is likewise calibrated with similar rates. It also starts with P1,000.00 for a refinery with mill having an annual output capacity of not less than 25,000 bags of 100 lbs. of refined sugar. Then, it continues with the second bracket of from 25,001 bags to 75,000 bags of 100 lbs. Here, the municipal license tax is P1,500.00. Then follow the other rates in the graduated scale with the ceiling placed at a capacity of 1,750,001 bags or more. The annual municipal license tax for the last mentioned output capacity is P40,000.00. Of importance are the provisions of Section 1(m) relating to sugar centrals and Section 2(m) covering sugar refineries with specific reference to the maximum annual license tax, viz: Section No. 1 Any person, corporation or other forms of Companies, operating Sugar Central or engage[d] in the manufacture of centrifugal sugar shall be required to pay the following annual municipal license tax, payable quarterly, to wit: xxx xxx xxx

(m) Sugar Central with mill having a capacity of producing an annual output of from 1,500,001 piculs or more shall be required to pay an annual municipal license tax of P40,000.00. Section No. 2 Any person, corporation or other forms of Companies shall be required to pay an annual municipal license tax for the operation of Sugar Refinery Mill at the following rates: xxx xxx xxx

(m) Sugar Refinery with mill having a capacity of producing an annual output of from 1,750,001 bags of 100 lbs. or more shall be required to pay an annual municipal license tax of P40,000.00. For, the production of plaintiff Victorias Milling Co., Inc. in both its sugar central and its sugar refinery located in the Municipality of Victorias comes within these items in the schedule. Plaintiff filed suit below 4 to ask for judgment declaring Ordinance No. 1, series of 1956, null and void; ordering the refund of all license taxes paid and to be paid under protest; directing the officials of Victorias and the Province of Negros Occidental to observe, during the pendency of the action, the provisions of section 357 of the Revised Manual of Instructions to Treasurers of Provinces, Cities and Municipalities, 1954 edition, 5 regarding the treatment of license taxes paid under protest by virtue of a disputed ordinance; and other reliefs. 6 The reasons put forth by plaintiff are that: (a) the ordinance exceeds the amounts fixed in Provincial Circular 12-A issued by the Finance Department on February 27, 1940; (b) it is discriminatory since it singles out plaintiff which is the only operator of a sugar central and a sugar refinery within the jurisdiction of defendant municipality; (c) it constitutes double taxation; and (d) the national government has preempted the field of taxation with respect to sugar centrals or refineries. Upon the complaint as supplemented and amended, and the answer thereto, and following hearing on the merits, the trial court rendered its judgment. After declaring that "[t]here is no doubt that" the ordinance in question refers to license taxes or fees," and that "[i]t is settled that a license tax should be limited to the cost of licensing, regulating and surveillance," 7 the trial court ruled that said license taxes in dispute are unreasonable, 8 and held that: "If the defendant has the power to tax the plaintiff for purposes of revenue, it may do so by proper municipal legislation, but not in the guise of a license tax." 9 The court added: "The Court is not, however, prepared to order the refund of all the license taxes paid by the plaintiff under protest and amounting, up to the second quarter of 1960, to P280,000.00, considering that the plaintiff appears to have agreed to the payment of the license taxes at the rates fixed prior to Ordinance No. 1, series of 1956; that the defendant had evidently not complied with the provisions of Section 357 of the Revised Manual of Instructions to Treasurers of Provinces, Cities and Municipalities, 1954 Edition, as the plaintiff herein seeks an order enjoining the defendant and its appropriate officials to carry out said provisions; that the financial position of the defendant would surely be disrupted if ordered to refund, while the plaintiff may perhaps easily forego or forget what it had already parted with". 10 It disposes of the suit in the following manner: WHEREFORE, judgment is rendered (a) declaring that Ordinance No. 1, series of 1956, of the municipality of Victorias, Negros Occidental, is invalid; (b) ordering all officials of the defendant to observe the provisions of Section 357 of the Revised Manual of Instructions to Treasurers of Provinces, Cities and Municipalities, 1954 Edition, with particular reference to any license taxes paid by the plaintiff under said Ordinance No. 1, series of 1956, after

notice of this decision; and (c) ordering the defendant to refund to the plaintiff any and all such license taxes paid under protest after notice of this decision. 11 Both plaintiff and defendant appealed direct to this Court. Plaintiff questions that portion of the decision denying the refund of the license taxes paid under protest in the amount of P280,000 covering the period from the first quarter of 1957 to the second quarter of 1960; and balked at the court's order limiting refund to "any and all such license taxes paid under protest after notice of this decision." Defendant, upon the other hand, challenges the correctness of the court's decision invalidating Ordinance No. 1, series of 1956. The questions raised in the appeals will be discussed in their proper sequence. 1. We first grapple with the threshold question: Was Ordinance No. 1, series of 1956, passed by defendant's municipal council as a regulatory enactment or as a revenue measure? The trial court says, and plaintiff seconds, that the amounts set forth in the ordinance in question did exceed the cost of licensing, regulating and surveillance, and that defendant cannot impose a tax for revenue in the guise of a police or a regulatory measure. Our finding, however, is the other way.
1awphl.nt

The ordinance itself recites that its source of taxing power emanates from Commonwealth Act 472, Section 1 of which reads: Section 1. A municipal council or municipal district council shall have authority to impose municipal license taxes upon persons engaged in any occupation or business, or exercising privileges in the municipality or municipal district, by requiring them to secure licenses at rates fixed by the municipal council, or municipal district council, and to collect fees and charges for services rendered by the municipality or municipal district and shall otherwise have power to levy for public local purposes, and for school purposes, including teachers' salaries, just and uniform taxes other than percentage taxes and taxes on specified articles. Under the statute just quoted and pertinent jurisprudence, a municipality is authorized to impose three kinds of licenses: (1) license for regulation of useful occupations or enterprises; (2) license for restriction or regulation of non-useful occupations or enterprises; and (3) license for revenue. 12 The first two easily fall within the broad police power granted under the general welfare clause. 13 The third class, however, is for revenue purposes. It is not a license fee, properly speaking, and yet it is generally so termed. It rests on the taxing power. That taxing power must be expressly conferred by statute upon the municipality. 14 It is so granted under Commonwealth Act 472. To be recalled at this point is that Ordinance No. 1, series of 1956, is but an amendment of Ordinance No. 18, series of 1947, in reference to refineries, and Ordinance No. 25, series of 1953, covering sugar centrals. Ordinance No. 18 imposes "municipal taxes on persons, firms or corporations operating refinery mills in this municipality." 15 Ordinance No. 25 speaks of municipal taxes "relative to the output of the sugar centrals." 16 What are these taxes for? Resolution No. 60 of the municipal council of Victorias, 17 adopted also on September 22, 1956 in conjunction with Ordinance No. 1, series of 1956, furnishes a ready answer. It reads in part: WHEREAS, the Municipal Treasurer informed the Municipal Council of the revenue of the Municipality and the heavy obligations which confront it because of the implementation of

Minimum Wage Law on the salaries and wages it pays to its municipal employees and laborers thus greatly draining the Municipal Treasury; WHEREAS, this local administration is committed to the plan of ameliorating the deplorable situation existing in the barrios, sitios and rural areas by giving them essential and necessary facilities calculated to improve conditions thereat thru improvements of roads and feeder roads; WHEREAS, one of the causes of the municipality's financial difficulty is low rates of municipal taxes imposed by some of the ordinances enacted by the local legislative body; WHEREAS, [in] . . . the ordinances known as Ordinance No. 25, Series of 1953, dealing on theoperation of Sugar Central, and Ordinance No. 18, Series of 1947, which exclusively deals with theoperation of Sugar Refinery Mill, the rates so given are rates suggested and determined by the Provincial Circular No. 12-A, dated February 27, 1940 issued by the Department of Finance as regards to Sugar Centrals; WHEREAS, the Municipal Council has come to the conclusion that the rates provided for in such ordinances are no longer adequate if made in keeping with the present high cost of living; WHEREAS, the Municipal Council has also taken cognizance of the fact that the price of sugar per picul today is more than twice its pre-war average price; . . . . 18 Given the purposes just mentioned, we find no warrant in logic to give our assent to the view that the ordinance in question is solely for regulatory purpose. Plain is the meaning conveyed. The ordinance is for raising money. To say otherwise is to misread the purpose of the ordinance.
1aw phl .nt

We should not hang so heavy a meaning on the use of the term "municipal license tax". This does not necessarily connote the idea that the tax is imposed as the lower court would want it to mean a revenue measure in the guise of a license tax. For really, this runs counter to the declared purpose to make money. Besides, the term "license tax" has not acquired a fixed meaning. It is often "used indiscriminately to designate impositions exacted for the exercise of various privileges." 19 It does not refer solely to a license for regulation. In many instances, it refers to "revenue-raising exactions on privileges or activities." 20 On the other hand, license fees are commonly called taxes. But, legally speaking, the latter are "for the purpose of raising revenues," in contrast to the former which are imposed "in the exercise of police power for purposes of regulation."21 We accordingly say that the designation given by the municipal authorities does not decide whether the imposition is properly a license tax or a license fee. The determining factors are the purpose and effect of the imposition as may be apparent from the provisions of the ordinance. 22 Thus, "[w]hen no police inspection, supervision, or regulation is provided, nor any standard set for the applicant 23 to establish, or that he agrees to attain or maintain, but any and all persons engaged in the business designated, without qualification or hindrance, may come, and a license on payment of the stipulated sum will issue, to do business, subject to no prescribed rule of conduct and under no guardian eye, but according to the unrestrained judgment or fancy of the applicant and licensee, the presumption is strong that the power of taxation, and not the police power, is being exercised." 24

Precisely because of these considerations the present imposition must be treated as a levy for revenue purposes. A quick glance at the big amount of maximum annual tax set forth in the ordinance, P40,000.00 for sugar centrals, and P40,000.00 for sugar refineries, will readily convince one that the tax is really a revenue tax. And then, we read in the ordinance nothing which would as much as indicate that the tax imposed is merely for police inspection, supervision or regulation. Our view that the tax imposed by the ordinance is for revenue purposes finds support in judicial pronouncements which have gained foothold in this jurisdiction. In Standard Vacuum vs. Antigua, 25 this Court had occasion to pass upon a similar ordinance. In categorical terms, we there stated: "We are satisfied that the graduated license tax imposed by the ordinance in question is an occupation tax, imposed not under the police or regulatory power of the municipality but by virtue of its taxing power for purposes of revenue, and is in accordance with the last part of Section 1 of Commonwealth Act No. 472. It is, therefore, valid." 26 The present case is not to be analogized with Panaligan vs. City of Tacloban cited in the decision below. 27For there, the inspection fee sought to be collected upon every head of specified animals to be transported out of the City of Tacloban (P2.00 per hog, P10.00 per cow and 20.00 per carabao) was in reality an export tax specifically withheld from municipal taxing power under Section 2287 of the Revised Administrative Code. So also do we say that the cases of Pacific Commercial Co. vs. Romualdez, 28 Lacson vs. City of Bacolod,29 and Santos vs. Municipal Government of Caloocan, 30 used by plaintiff as references, are entirely inopposite. InPacific Commercial, the tax involved on frozen meat was nullified because tax measures on cold stores were not then within the legislative grant to the City of Manila. In Lacson, the City of Bacolod taxed every admission ticket sold in the moviehouses. And justification for this imposition was moored to the general welfare clause of the city charter. This Court held the ordinance ultra vires for the reason that the authority to tax cannot be derived from the general welfare clause. In Santos, the taxes in controversy were internal organs fees, meat inspection fees and corral fees, separate from the slaughter or slaughterhouse fees. In annulling the taxes there questioned, this Court declared: "[W]hen the Council ordained the payment of internal organs fees, meat inspection fees and corral fees, aside from the slaughter or slaughterhouse fees, it overstepped the limits of its statutory grant [Sec. 1, C.A. 655]. Only one fee was allowed by that law to be charged and that was slaughter or slaughterhouse fees." In the cases cited then, the tax ordinances did not find plain and clear statutory prop. Such infirmity is not present here. We, accordingly, rule that Ordinance No. 1, series of 1956, of the Municipality of Victorias, was promulgated not in the exercise of the municipality's regulatory power but as a revenue measure a tax on occupation or business. The authority to impose such tax is backed by the express grant of power in Section 1 of Commonwealth Act 472. 2. Not that the disputed ordinance lacks the imprimatur of the Secretary of Finance required in paragraph 2, Section 4, of Commonwealth Act 472. This legal provision necessitates such approval "[w]henever the rate of fixed municipal license taxes on businesses not excepted in this Act or otherwise covered by the preceding paragraph and subject to the fixed annual tax imposed in section one hundred eighty-two of the National Internal Revenue Law, is in excess of fifty pesos per annum; . . . ." The ordinance here challenged was recommended by the Provincial Board of Negros Occidental in its resolution (No. 1864) of October 26, 1956. 31 And, the Undersecretary of Finance in his letter to the municipal council of Victorias on December 18, 1956 approved said ordinance. But

considering that it is amendatory in nature, that approval was coupled with the mandate that the ordinance "should take effect at the beginning of the ensuing calendar year [1957] pursuant to Section 2309 of the Revised Administrative Code." 32 3. Plaintiff argues that the municipality is bereft of authority to enact the ordinance in question because the national government "had preempted it from entering the field of taxation of sugar centrals and sugar refineries."33 Plaintiff seeks refuge in Section 189 of the National Internal Revenue Code which subjects proprietors or operators of sugar centrals or sugar refineries to percentage tax. The implausibility of this position is at once apparent. We are not dealing here with percentage tax. Rather, we are concerned with a tax specifically for operators of sugar centrals and sugar refineries. The rates imposed are based on the maximum annual output capacity. Which is not a percentage. Because it is not a share. Nor is it a tax based on the amount of the proceeds realized out of the sale of sugar, centrifugal or refined. 34 What can be said at most is that the national government has preempted the field of percentage taxation. Section 1 of Commonwealth Act 472, while granting municipalities power to levy taxes, expressly removes from them the power to exact "percentage taxes". It is correct to say that preemption in the matter of taxation simply refers to an instance where the national government elects to tax a particular area, impliedly withholding from the local government the delegated power to tax the same field. This doctrine primarily rests upon the intention of Congress. 35 Conversely, should Congress allow municipal corporations to cover fields of taxation it already occupies, then the doctrine of preemption will not apply. In the case at bar, Section 4(1) of Commonwealth Act 472 clearly and specifically allows municipal councils to tax persons engaged in "the same businesses or occupation" on which "fixed internal revenue privilege taxes" are "regularly imposed by the National Government." With certain exceptions specified in Section 3 of the same statute. Our case does not fall within the exceptions. It would therefore be futile to argue that Congress exclusively reserved to the national government the right to impose the disputed taxes. We rule that there is no preemption. 4. Petitioner advances the theory that the ordinance is excessive. An ordinance carries with it the presumption of validity. The question of reasonableness though is open to judicial inquiry. Much should be left thus to the discretion of municipal authorities. Courts will go slow in writing off an ordinance as unreasonable unless the amount is so excessive as to be prohibitive, arbitrary, unreasonable, oppressive, or confiscatory. 36 A rule which has gained acceptance is that factors relevant to such an inquiry are the municipal conditions as a whole and the nature of the business made subject to imposition. 37 Plaintiff has however not sufficiently proven that, taking these factors together, the license taxes are unreasonable. The presumption of validity subsists. For, plaintiff has limited itself to insisting that the amounts levied exceed the cost of regulation and that the municipality has adequate funds for the alleged purposes as evidenced by the municipality's cash surplus for the fiscal year ending 1956. The cost of regulation cannot be taken as a gauge, if the municipality really intended to enact a revenue ordinance. For, "if the charge exceeds the expense of issuance of a license and costs of

regulation, it is a tax." 38And if it is, and it is validly imposed, as in this case, "the rule that license fees for regulation must bear a reasonable relation to the expense of the regulation has no application." 39 And then, a cash surplus alone cannot stop a municipality from enacting a revenue ordinance increasing license taxes in anticipation of municipal needs. Discretion to determine the amount of revenue required for the needs of the municipality is lodged with the municipal authorities. Again, judicial intervention steps in only when there is a flagrant, oppressive and excessive abuse of power by said municipal authorities. 40 Not that defendant municipality was without reason. On February 27, 1940, the Secretary of Finance, later President, Manuel A. Roxas, issued Provincial Circular 12-A. In that circular, the then Finance Secretary stated that his "Department has reached the conclusion that a tax on the basis of one centavo for every picul of annual output capacity of sugar centrals ... would be just and reasonable." At that time, the price of sugar was around P6.00 per picul. Sixteen years later 1956 when Ordinance No. 1 was approved, the market quotation for export sugar ranged from P12.00 to P15.00 per picul. 41 And yet, since then the rate per output capacity of a sugar central in Ordinance No. 1 was merely from one centavo to two centavos. There is a statement in the municipality's brief 42 that thereafter the price of sugar had never gone below P16.00 per picul; instead it had gone up. The reasonableness of the ordinance may not be disputed. It is not confiscatory. There was misapprehension in the decision below in its statement that the increase of rates for refineries was 2,000%. We should not overlook the fact that the original maximum rate covering refineries in Ordinance No. 18, series of 1947, was P2,000.00; but that was only for a refinery with an output capacity of 90,000 or more sacks. Under Section 2(c) of Ordinance No. 1, series of 1956, where the refineries have an output capacity of from 75,001 bags to 100,000 bags, the tax remains at P2,000.00. From here on, the ordinance provides for ten more scales for the graduation of the tax depending upon the output capacity (P3,000.00, P4,000.00, P5,000.00, P10,000.00, P15,000.00, P20,000.00, P25,000.00, P30,000.00, P35,000.00 and P40,000.00). But it is only where a refinery has an output capacity of 1,750,001 or more bags that the present ordinance imposes a tax of P40,000.00. The happenstance that plaintiff's refinery is in the last bracket calling upon it to pay P40,000.00 per annum does not make the ordinance in question unreasonable. Neither may we tag the ordinance with excessiveness if we consider the capital invested by plaintiff in both its sugar central and sugar refinery and its annual income from both. Plaintiff's capital investment in the sugar central and sugar refinery is more or less P26,000,000.00. 43 And here are its annual net income: for the year 1956 P3,852,910; for the year 1957 P3,854,520; for the year 1958 P7,230,493; for the year 1959 P5,951,187; and for the year 1960 P7,809,250. 44 If these figures mean anything at all, they show that the ordinance in question is neither confiscatory nor unjust and unreasonable. 5. Upon the averment that in the Municipality of Victorias plaintiff is the only operator of a sugar central and sugar refinery, plaintiff now presses its argument that Ordinance No. 1, series of 1956, is discriminatory. The ordinance does not single out Victorias as the only object of the ordinance. Said ordinance is made to apply to any sugar central or sugar refinery which may happen to operate in the municipality. So it is, that the fact that plaintiff is actually the sole operator of a sugar central and a sugar refinery does not make the ordinance discriminatory. Argument along the same lines was rejected in Shell Co. of P.I., Ltd. vs. Vao, 45 this Court holding that the circumstance "that there is no other person in the locality who exercises" the occupation designated as installation manager "does not make the ordinance discriminatory and hostile, inasmuch as it is and will be applicable to any person or firm who exercises such calling or occupation." And in Ormoc Sugar

Company, Inc. vs. Municipal Board of Ormoc City, 46 declaratory relief was sought to test the validity of a municipal ordinance which provides a city tax of twenty centavos per picul of centrifugal sugar and one per centum on the gross sale of its derivatives and by-products "produced by the Ormoc Sugar Company, Incorporated, or by any other sugar mill in Ormoc City." Mr. Justice Enrique Fernando, delivering the opinion of this Court, declared that the ordinance did not suffer "from a constitutional or statutory infirmity." And yet, in Ormoc, it is to be observed that Section 1 of the ordinance spelled out Ormoc Sugar Company, Incorporated specifically by name. Not even the name of plaintiff herein was ever mentioned in the ordinance now disputed. No discrimination exists. 6. As infirm is plaintiff's stand that its business is not confined to the Municipality of Victorias. It suffices that plantiff engages in a business or occupation subject to an exaction by the municipality within the territorial boundaries of that municipality. Plaintiff's sugar central and sugar refinery are located within the Municipality of Victorias. In this central and refinery, plaintiff manufactures centrifugal sugar and refined sugar, respectively. But plaintiff insists that plaintiff's sugar milling and refining operations are not wholly performed within the territorial limits of Victorias. According to plaintiff, transportation of canes from plantation to the mill site, operation and maintenance of telephone system, inspection of crop progress and other related activities, are conducted not only in defendant's municipality but also in the municipalities of Cadiz, Manapla, Sagay and Saravia as well. 47 We fail to see the relevance of these facts. Because, if we follow plaintiff's ratiocination, neither Victorias nor any of the municipalities just adverted to would be able to impose the tax. One thing certain, of course, is that the tax is imposed upon the business of operating a sugar central and a sugar refinery. And the situs of that business is precisely the Municipality of Victorias. 7. Plaintiff finally impleads double taxation. Its reason is that in computing the amount of taxes to be paid by the sugar refinery the cost of the raw sugar coming from the sugar central is not deducted; ergo, plaintiff is taxed twice on the raw sugar. Double taxation has been otherwise described as "direct duplicate taxation." 48 For double taxation to exist, "the same property must be taxed twice, when it should be taxed but once." 49 Double taxation has also been "defined as taxing the same person twice by the same jurisdiction for the same thing." 50 As stated in Manila Motor Company, Inc. vs. Ciudad de Manila, 51 there is double taxation "cuando la misma propiedad se sujeta a dos impuestos por la misma entidad o Gobierno, para el mismo fin y durante el mismo periodo de tiempo." With the foregoing precepts in mind, we find no difficulty in saying that plaintiff's argument on double taxation does not inspire assent. First. The two taxes cover two different objects. Section 1 of the ordinance taxes a person operating sugar centrals or engaged in the manufacture of centrifugal sugar. While under Section 2, those taxed are the operators of sugar refinery mills. One occupation or business is different from the other.Second. The disputed taxes are imposed on occupation or business. Both taxes are not on sugar. The amount thereof depends on the annual output capacity of the mills concerned, regardless of the actual sugar milled. Plaintiff's argument perhaps could make out a point if the object of taxation here were the sugar it produces, not the business of producing it. There is no double taxation. For the reasons given

The judgment under review is hereby reversed; and Judgment is hereby rendered: (a) declaring valid and subsisting Ordinance No. 1, series of 1956, of the Municipality of Victorias, Province of Negros Occidental; and (b) dismissing plaintiff's complaint as supplemented and amended. Costs against plaintiff. So ordered.

Antero Sison Jr. vs Acting BIR Commissioner Ruben Ancheta et al

on November 15, 2010

Equal Protection
Sison assails the validity of BP 135 w/c further amended Sec 21 of the National Internal Revenue Code of 1977. The law provides that thered be a higher tax impost against income derived from professional income as opposed to regular income earners. Sison, as a professional businessman, and as taxpayer alleges that by virtue thereof, he would be unduly discriminated against by the imposition of higher rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income or salaried individual taxpayers. He characterizes the above section as arbitrary amounting to class legislation, oppressive and capricious in character. There is a transgression of both the equal protection and due process clauses of the Constitution as well as of the rule requiring uniformity in taxation. ISSUE: Whether the imposition of a higher tax rate on taxable net income derived from business or profession than on compensation is constitutionally infirm. HELD: The SC ruled against Sison. The power to tax, an inherent prerogative, has to be availed of to assure the performance of vital state functions. It is the source of the bulk of public funds. Taxes, being the lifeblood of the government, their prompt and certain availability is of the essence. According to the Constitution: The rule of taxation shall be uniform and equitable. However, the rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable. Equality and uniformity in 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. Where the differentiation complained of conforms to the practical dictates of justice and equity it is not discriminatory within the meaning of this clause and is therefore uniform. There is quite a similarity then to the standard of equal protection for all that is required is that the tax applies equally to all persons, firms and corporations placed in similar situation. What misled Sison is his failure to take into consideration the distinction between a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate. Taxpayers may be classified into different categories. In the case of the gross income taxation embodied in BP 135, the discernible basis of classification is the susceptibility of the income to the application of generalized rules removing all

deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to all of them. Taxpayers who are recipients of compensation income are set apart as a class. As there is practically no overhead expense, these taxpayers are not entitled to make deductions for income tax purposes because they are in the same situation more or less. On the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or expenses necessary to produce their income. It would not be just then to disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis of gross income. There is ample justification then for the Batasang Pambansa to adopt the gross system of income taxation to compensation income, while continuing the system of net income taxation as regards professional and business income.

Abra vs Hernando (1981)

Facts: The provincial assessor made a tax assessment on the properties of the Roman Catholic Bishop of Bangued. The bishop claims tax exemption from real estate tax, through an action for declaratory relief. A summary judgment was made granting the exemption without hearing the side of the Province of Abra. Issue: Whether the properties of the Bishop of Bangued are tax-exempt. Held: The 1935 and the 1973 Constitutions differ in language as to the exemption of religious property from taxes as tehy should not only be exclusively but also actually and directly used for religious purposes. Herein, the judge accepted at its face the allegation of the Bishop instead of demonstrating that there is compliance with the constitutional provision that allows an exemption. There was an allegation of lack of jurisdiction and of lack of cause of action, which should have compelled the judge to accord a hearing to the province rather than deciding the case immediately in favor of the Bishop. Exemption from taxation is not favored and is never presumed, so that if granted, it must be strictly construed against the taxpayer. There must be proof of the actual and direct use of the lands, buildings, and improvements for religious (or charitable) purposes to be exempted from taxation. The case was remanded to the lower court for a trial on merits.