YMCA vs.

Collector of Internal Revenue FACTS: The Young Men's Christian Association of Manila was incorporated under the law of the Philippine Islands and received its character in June 1907. The purposes of this association were exclusively for religious, charitable and educational, in developing the Christian character and usefulness of its members and in improving the spiritual, mental, social and physical condition of young men. The city of Manila assessed and levied a tax on the property, contending that the property is taxable. YMCA paid the taxes under protest. Thereafter, they filed an action to recover it on the ground that the property was exempt from taxation under the charter of the city of Manila. The association claimed exemption from taxation on the grounds that it is a religious, charitable and educational institution combined. The decision was for the city and the association appealed. ISSUE: Whether or not the building and grounds of the Young Men's Christian Association of Manila are subject to taxation? RULING: The Supreme Court ruled that the lodging and boarding houses ran by the association do not constitute a business. Firstly, no profit is realized by the association in any sense. Secondly, the purpose of the association is not, primarily, to obtain the money which comes from the lodgers and boarders. The real purpose is to keep the membership continually. The Court regarded this feature of the institution not as a business or means of making money, but, rather, as a very efficient means of maintaining the influence of the institution over its membership. It is stated that an institution must devote itself exclusively to one or the other of the purpose mentioned in the statute before it can be exempt from taxation; but the statute does not say that it must be devoted exclusively to any one of the purposes mentioned. It may be a combination of two or three or more of those purposes and still be entitled to exempt. YMCA cannot be said to be an institution used exclusively for religious purposes, or an institution used exclusively for charitable purposes, or an institution devoted exclusively to educational purposes. It is, rather, an institution used exclusively for all three purposes, and that, as such; it is entitled to be exempted from taxation. Bishop of Nueva Segovia vs. Provincial Board of Ilocos Norte GR 27588, 31 December 1927 FACTS: The Roman Catholic Apostolic Church is the owner of a parcel of land in San Nicolas, Ilocos Norte. On the south side is a part of the Church yard, the convent and an adjacent lots used for a vegetable garden in which there is a stable and a well for the use of the convent. In the center is the remainder of the church yard and the Church. On the north side is an old cemetery with its two walls still standing, and a portion where formerly stood a tower. The provincial board assessed land tax on lots comprising the north and south side, which the church paid under protest. It filed suit to recover the amount, alleging that the collection of this tax is illegal. ISSUE: Whether the lots are covered by the Churchs tax exemption? HELD: The exemption in favor of the convent in the payment of land tax refers to the home of the priest who presides over the church and who has to take care of himself in order to discharge his duties. The exemption includes not only the land actually occupied by the Church but also the adjacent ground destined to the

ordinary incidental uses of man. A vegetable garden, thus, which belongs to a convent, where its use is limited to the necessity of the priest, comes under the exemption. In regard to the lot which formerly was the cemetery was neither used for any commercial purpose. The land was used as a lodging house by the people who participate in religious festivities, which constitute an incidental use in religious functions. Likewise it comes within the exemption.

Lladoc vs. Collector of Internal Revenue G.R. No. L-19201 June 16, 1965 FACTS: In 1957, M.B. Estate Inc., of Bacolod City, donated 10,000.00 pesos in cash to Fr. Crispin Ruiz, the parish priest of Victorias, Negros Occidental, and predecessor of Fr. Lladoc, for the construction of a new Catholic church in the locality. The total donated amount was spent for such purpose. M.B. Estate then filed the donor's gift tax return in 1958. Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the Catholic Parish of Victorias of which Fr. Lladoc was the parish priest. Fr. Lladoc protested the assessment and claimed at the time of the donation, he was not the parish priest in Victorias and there is no legal entity or juridical person known as the "Catholic Parish Priest of Victorias," and, therefore, he should not be liable for the donee's gift tax. Also, the assessment against the Roman Catholic Church would be in violation of the Constitution. ISSUE: Whether or not petitioner should be liable for the assessed donee's gift tax on the P10,000.00 donated for the construction of the Victorias Parish Church? RULING: The Supreme Court ruled that the imposition of the gift tax was valid. It is a cardinal rule in taxation that exemptions from payment thereof are highly disfavored by law, and the party claiming exemption must justify his claim by a clear, positive, or express grant of such privilege by law. The phrase "exempt from taxation" as employed in Section 22(3), Article VI of the Constitution of the Philippines, should not be interpreted to mean exemption from all kinds of taxes. The exemption is only from the payment of taxes assessed on such properties. In the present case, what the Collector assessed was a donee's gift tax; the assessment was not on the properties themselves. Gift tax is not within the exempting provisions. A gift tax is not a property tax, but an excise tax imposed on the transfer of property by way of gift inter vivos, the imposition of which on property used exclusively for religious purposes, does not constitute an impairment of the Constitution. And since there was no clear, positive or express grant of such privilege by law, the exemption was denied.

Province of Abra v. Hernando GR L-49336, 31 August 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 they 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.

Abra Valley College vs. Aquino GR L-39086, 15 June 1988 FACTS: ABRA VALLEY COLLEGE, INC is an educational corporation and institution of higher learning recognized by the government. It 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. Private respondents maintain that the college lot and building in question which were subjected to seizure and sale to answer for the unpaid tax are used: (1) for the educational purposes of the college; (2) as the permanent residence of the President and Director, and his family including the in-laws and grandchildren; and (3) for commercial purposes because the ground floor of the college building is being used and rented by a commercial establishment, the Northern Marketing Corporation. On the other hand, petitioner contends that the primary use of the lot and building for educational purposes, and not the incidental use, determines and exemption from property taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence, they find the seizure and sale of subject college lot and building are without legal basis and should therefore be void. ISSUE: Whether the College is exempt from taxes? HELD: While the Court allows a more liberal and non-restrictive interpretation of the phrase exclusively used for educational purposes, reasonable emphasis has always been made that exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purposes. In the case at bar, the Court held that the use of the second floor of the main building for residential purposes of the Director and his family is still within the concept of incidental use. However, the lease of the first floor to the Northern

Marketing Corporation cannot be considered incidental to the purpose of education since it is being used for commercial purpose. The decision of the Court of First Instance was affirmed. However, since only a portion is used for purposes of commerce, the Court ruled that it is only fair that half of the assessed tax be returned to the school.

American Bible Society vs. Manila GR L-9637, 30 April 1957 FACTS: In the course of its ministry, the Philippine agency of the American Bible Society has been distributing and selling bibles and/or gospel portions thereof throughout the Philippines and translating the same into several Philippine dialects. The acting City Treasurer of Manila required the society to secure the corresponding Mayors permit and municipal license fees, together with compromise covering the period from the 4th quarter of 1945 to the 2nd quarter of 1953. The society paid such under protest, and filed suit questioning the legality of the ordinances under which the fees are being collected. ISSUE: Whether the municipal ordinances violate the freedom of religious profession and worship. HELD: A tax on the income of one who engages in religious activities is different from a tax on property used or employed in connection with those activities. It is one thing to impose a tax on the income or property of a preacher, and another to exact a tax for him for the privilege of delivering a sermon. The power to tax the exercise of a privilege is the power to control or suppress its enjoyment. Even if religious groups and the press are not altogether free from the burdens of the government, the act of distributing and selling bibles is purely religious and does not fall under Section 27 (e) of the Tax Code (CA 466). The fact that the price of bibles, etc. is a little higher than actual cost of the same does not necessarily mean it is already engaged in business for profit. Ordinance 2529 and 3000 are not applicable to the Society. Punzalan v. Manila GR L-4817, 26 May 1954 FACTS: The Municipal Board of the City of Manila imposes municipal occupation tax on persons exercising various professions in the city. Having already paid their occupation tax under section 201 of the National Internal Revenue Code, the plaintiffs, who are professionals in their own field, paid the municipal occupation tax under protest and then filed a suit for the annulment of such Ordinance 3398. Plaintiffs brand the ordinance unjust and oppressive because they say that it creates discrimination within a class in that while professionals with offices in Manila have to pay the tax, outsiders who have no offices in the city but practice their profession therein are not subject to the tax. Also, the ordinance is tantamount to double taxation. The lower court upheld the validity of the provision of law authorizing the enactment of the ordinance but declared the ordinance itself illegal and void on the ground that the penalty therein provided for non-payment of the tax was not legally authorized. Both parties appealed. ISSUE: Whether or not the imposition of the municipal occupation tax is valid? And whether the Ordinance violates the equal protection clause?

HELD: In its discretion, legislation may select what occupations shall be taxed, and in the exercise of that discretion it may tax all, or it may select for taxation certain classes and leave the others untaxed. It is not for the courts to judge what particular cities or municipalities should be empowered to impose occupation taxes in addition to those imposed by the National Government. That matter is within the domain of the political department. The ordinance imposing the tax upon every person "exercising" or "pursuing" in the City of Manila does not say that such person must have his office in Manila. What constitutes exercise or pursuit of a profession in the city is a matter of judicial determination. The argument against double taxation may not be invoked where one tax is imposed by the state and the other is imposed by the city, it being widely recognized that there is nothing inherently obnoxious in the requirement that license fees or taxes be exacted with respect to the same occupation, calling or activity by both the state and the political subdivisions thereof. The Court holds the validity of the ordinance. Therefore, the imposition of the municipal occupation tax is valid. Likewise, the Ordinance does not violate the equal protection clause. PHYSICAL THERAPY ORGANIZATION OF THE PHILIPPINES, INC vs. THE MUNICIPAL BOARD OF THE CITY OF MANILA FACTS: Petitioner-appellant is an association of registered massagists and licensed operators of massage clinics in the City of Manila and other parts of the country. They filed an action in the Court of First Instance of Manila questioning the validity of the Municipal Ordinance No. 3659 which regulates the operation of massage clinics in the City of Manila and providing penalties for its violations. They also protested that the license fee of P100 is unreasonable. The trial court dismissed their petition. Hence, they appealed to the Supreme Court. On its appeal, the petitioner contends that the City of Manila is without authority to regulate the operation of massagists and the operation of massage clinics within its jurisdiction. ISSUE: Whether Municipal Ordinance No. 3659 is valid and whether the imposition of the P100 permit fee is reasonable?

HELD: The purpose of the Ordinance is not to regulate the practice of massage, much less to restrict the practice of licensed and qualified massagists of therapeutic massage in the Philippines. Rather, the end sought to be attained in the Ordinance is to prevent the commission of immorality and the practice of prostitution in an establishment masquerading as a massage clinic. As to the authority of the City Board to enact the Ordinance in question, General Welfare Clause, is a delegation in statutory form of the police power, under which municipal corporations, are authorized to enact ordinances to provide for the health and safety, and promote the morality, peace and general welfare of its inhabitants. Therefore, the Court recognizes Municipal Ordinance No. 3659 as valid.

The amount of the fee or charge is properly considered in determining whether it is a tax or an exercise of the police power. There is a marked distinction between license fees imposed upon useful and beneficial occupations which the sovereign wishes to regulate but not restrict, and those which are inimical and dangerous to public health, morals or safety. In the latter case the fee may be very large without necessarily being a tax. Manila Municipal Board considered the practice of hygienic and aesthetic massage not as a useful and beneficial occupation which will promote and is conducive to public morals, and consequently, imposed the said permit fee for its regulation.