AnnaPhersolleSotelo October19,2015

LLB1C ConstiI
G.R.No.L49336August31,1981
THEPROVINCEOFABRA,petitionervs.
HONORABLEHAROLDM.HERNANDO,inhiscapacityasPresidingJudgeofBranchI,
CourtofFirstInstanceAbraTHEROMANCATHOLICBISHOPOFBANGUED,INC.

Facts

The Provincial Assessor of the ProvinceofAbramadeataxassessmentontheproperties

of respondent Roman Catholic Bishop. Respondent Roman Catholic Bishop of Bangued filed a
petition to exempted from a real estate tax, through an action for declaratory relief. Respondent
Judge Hernando issued a summary judgment granting suchexemption,withouthearingtheside
ofpetitionerProvinceofAbra.

Petitionersallegedthat respondentJudgethatfailedtoabidebythepertinentprovisionof
Presidential Decree No. 464, which provided as follows: "No court shall entertain any suit
assailing the validity of a tax assessed under this Code until thetaxpayer,shallhavepaid,under
protest, the tax assessed against him nor shall any court declare any tax invalid by reason of
irregularities or informalities in the proceedings of the officers charged with the assessment or
collection of taxes, or of failure to perform theirdutieswithinthistimehereinspecifiedfortheir
performance unlesssuchirregularities,informalitiesorfailureshallhaveimpairedthesubstantial
rights of the taxpayer nor shall any court declare any portion of the tax assessed under the
provisions of this Code invalid exceptuponcondition that thetaxpayershallpaythejustamount
ofthetax,asdeterminedbythecourtinthependingproceeding."

Issue

Whether or not the judgment issued by respondent Judge Hernando exempting the
propertiesofrespondentRomanCatholicBishopfromrealestatetaxisvalid.

Decision

No. The Supreme Court ruled that the respondent judge should have taken into
consideration the changes in the wording of the 1935 and 1973 Constitution with respect to tax
exemption of properties used for religious, charitable or educational purposes. The 1973
Constitution requires that there must be proof oftheactualanddirectuseofthelands,buildings,
and improvements for religious or charitable purposes to be exempt from taxation. The Court
cited the decision in Commissioner of Internal Revenue v. Guerrero: "From 1906, in Catholic
Church v. Hastings to 1966, in EssoStandardEastern,Inc. v. ActingCommissionerofCustoms,
it has been the constant and uniform holding that exemption from taxation is not favored andis
never presumed, so that if granted it must be strictly construed against the taxpayer.
Affirmativelyput,thelawfrownsonexemptionfromtaxation,hence,anexemptingprovision
shouldbeconstruedstrictissimijuris."

The Court also ruled that petitioner was fully justified in invoking the protection of
procedural due process, and that the respondent Judge should not have accepted at its face the
allegation of private respondent. "In the motion to dismiss filed onbehalfofpetitionerProvince
of Abra, the objection was based primarily on the lack of jurisdiction, as the validity of a tax
assessment may be questioned before the Local Board of Assessment Appeals and not with a
court... It clearly appears, therefore, that in failing to accord a hearing to petitioner Province of
Abra and deciding the case immediately in favor of private respondent, respondent Judgefailed
toabidebytheconstitutionalcommandofproceduraldueprocess."