G.R. No.

L-39086
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-39086 June 15, 1988

ABRA VALLEY COLLEGE, INC., represented by PEDRO V.

BORGONIA, petitioner,
vs.
HON. JUAN P. AQUINO, Judge, Court of First Instance, Abra; ARMIN M.
CARIAGA, Provincial Treasurer, Abra; GASPAR V. BOSQUE, Municipal
Treasurer, Bangued, Abra; HEIRS OF PATERNO MILLARE, respondents.

PARAS, J.:
This is a petition for review on certiorari of the decision * of the defunct Court of First Instance of Abra, Branch I, dated June 14, 1974,
rendered in Civil Case No. 656, entitled "Abra Valley Junior College, Inc., represented by Pedro V. Borgonia, plaintiff vs. Armin M.
Cariaga as Provincial Treasurer of Abra, Gaspar V. Bosque as Municipal Treasurer of Bangued, Abra and Paterno Millare, defendants," the
decretal portion of which reads:

IN VIEW OF ALL THE FOREGOING, the Court hereby declares:

That the distraint seizure and sale by the Municipal Treasurer of Bangued, Abra,
the Provincial Treasurer of said province against the lot and building of the Abra
Valley Junior College, Inc., represented by Director Pedro Borgonia located at
Bangued, Abra, is valid;

That since the school is not exempt from paying taxes, it should therefore pay all
back taxes in the amount of P5,140.31 and back taxes and penalties from the
promulgation of this decision;

That the amount deposited by the plaintaff him the sum of P60,000.00 before the
trial, be confiscated to apply for the payment of the back taxes and for the
redemption of the property in question, if the amount is less than P6,000.00, the
remainder must be returned to the Director of Pedro Borgonia, who represents
the plaintiff herein;

That the deposit of the Municipal Treasurer in the amount of P6,000.00 also
before the trial must be returned to said Municipal Treasurer of Bangued, Abra;

And finally the case is hereby ordered dismissed with costs against the plaintiff.
SO ORDERED. (Rollo, pp. 22-23)

Petitioner, an educational corporation and institution of higher learning duly

incorporated with the Securities and Exchange Commission in 1948, filed a
complaint (Annex "1" of Answer by the respondents Heirs of Paterno Millare;
Rollo, pp. 95-97) on July 10, 1972 in the court a quo 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" of the college lot and building covered by
Original Certificate of Title No. Q-83 duly registered in the name of petitioner,
plaintiff below, on July 6, 1972, by respondents Municipal Treasurer and
Provincial Treasurer, defendants below, was issued for the satisfaction of the
said taxes thereon. The "Notice of Sale" was caused to be served upon the
petitioner by the respondent treasurers on July 8, 1972 for the sale at public
auction of said college lot and building, which sale was held on the same date.
Dr. Paterno Millare, then Municipal Mayor of Bangued, Abra, offered the highest
bid of P6,000.00 which was duly accepted. The certificate of sale was
correspondingly issued to him.

On August 10, 1972, the respondent Paterno Millare (now deceased) filed
through counstel a motion to dismiss the complaint.

On August 23, 1972, the respondent Provincial Treasurer and Municipal

Treasurer, through then Provincial Fiscal Loreto C. Roldan, filed their answer
(Annex "2" of Answer by the respondents Heirs of Patemo Millare; Rollo, pp. 98-
100) to the complaint. This was followed by an amended answer (Annex "3," ibid,
Rollo, pp. 101-103) on August 31, 1972.

On September 1, 1972 the respondent Paterno Millare filed his answer (Annex
"5," ibid; Rollo, pp. 106-108).

On October 12, 1972, with the aforesaid sale of the school premises at public
auction, the respondent Judge, Hon. Juan P. Aquino of the Court of First
Instance of Abra, Branch I, ordered (Annex "6," ibid; Rollo, pp. 109-110) the
respondents provincial and municipal treasurers to deliver to the Clerk of Court
the proceeds of the auction sale. Hence, on December 14, 1972, petitioner,
through Director Borgonia, deposited with the trial court the sum of P6,000.00
evidenced by PNB Check No. 904369.

On April 12, 1973, the parties entered into a stipulation of facts adopted and
embodied by the trial court in its questioned decision. Said Stipulations reads:

STIPULATION OF FACTS
COME NOW the parties, assisted by counsels, and to this Honorable Court
respectfully enter into the following agreed stipulation of facts:

1. That the personal circumstances of the parties as stated in paragraph 1 of the

complaint is admitted; but the particular person of Mr. Armin M. Cariaga is to be
substituted, however, by anyone who is actually holding the position of Provincial
Treasurer of the Province of Abra;

2. That the plaintiff Abra Valley Junior College, Inc. is the owner of the lot and
buildings thereon located in Bangued, Abra under Original Certificate of Title No.
0-83;

3. That the defendant Gaspar V. Bosque, as Municipal treasurer of Bangued,

Abra caused to be served upon the Abra Valley Junior College, Inc. a Notice of
Seizure on the property of said school under Original Certificate of Title No. 0-83
for the satisfaction of real property taxes thereon, amounting to P5,140.31; the
Notice of Seizure being the one attached to the complaint as Exhibit A;

4. That on June 8, 1972 the above properties of the Abra Valley Junior College,
Inc. was sold at public auction for the satisfaction of the unpaid real property
taxes thereon and the same was sold to defendant Paterno Millare who offered
the highest bid of P6,000.00 and a Certificate of Sale in his favor was issued by
the defendant Municipal Treasurer.

5. That all other matters not particularly and specially covered by this stipulation
of facts will be the subject of evidence by the parties.

WHEREFORE, it is respectfully prayed of the Honorable Court to consider and

admit this stipulation of facts on the point agreed upon by the parties.

Bangued, Abra, April 12, 1973.

Sgd. Agripino Brillantes

Typ AGRIPINO BRILLANTES
Attorney for Plaintiff

Sgd. Loreto Roldan

Typ LORETO ROLDAN
Provincial Fiscal
Counsel for Defendants
Provincial Treasurer of
Abra and the Municipal
Treasurer of Bangued, Abra
Sgd. Demetrio V. Pre
Typ. DEMETRIO V. PRE
Attorney for Defendant
Paterno Millare (Rollo, pp. 17-18)

Aside from the Stipulation of Facts, the trial court among others, found the
following: (a) that the school is recognized by the government and is offering
Primary, High School and College Courses, and has a school population of more
than one thousand students all in all; (b) that it is located right in the heart of the
town of Bangued, a few meters from the plaza and about 120 meters from the
Court of First Instance building; (c) that the elementary pupils are housed in a
two-storey building across the street; (d) that the high school and college
students are housed in the main building; (e) that the Director with his family is in
the second floor of the main building; and (f) that the annual gross income of the
school reaches more than one hundred thousand pesos.

From all the foregoing, the only issue left for the Court to determine and as
agreed by the parties, is whether or not the lot and building in question are used
exclusively for educational purposes. (Rollo, p. 20)

The succeeding Provincial Fiscal, Hon. Jose A. Solomon and his Assistant, Hon.
Eustaquio Z. Montero, filed a Memorandum for the Government on March 25,
1974, and a Supplemental Memorandum on May 7, 1974, wherein they opined
"that based on the evidence, the laws applicable, court decisions and
jurisprudence, the school building and school lot used for educational purposes
of the Abra Valley College, Inc., are exempted from the payment of taxes."
(Annexes "B," "B-1" of Petition; Rollo, pp. 24-49; 44 and 49).

Nonetheless, the trial court disagreed because of the use of the second floor by
the Director of petitioner school for residential purposes. He thus ruled for the
government and rendered the assailed decision.

After having been granted by the trial court ten (10) days from August 6, 1974
within which to perfect its appeal (Per Order dated August 6, 1974; Annex "G" of
Petition; Rollo, p. 57) petitioner instead availed of the instant petition for review
on certiorari with prayer for preliminary injunction before this Court, which
petition was filed on August 17, 1974 (Rollo, p.2).

In the resolution dated August 16, 1974, this Court resolved to give DUE
COURSE to the petition (Rollo, p. 58). Respondents were required to answer
said petition (Rollo, p. 74).

Petitioner raised the following assignments of error:

I

THE COURT A QUO ERRED IN SUSTAINING AS VALID THE SEIZURE AND

SALE OF THE COLLEGE LOT AND BUILDING USED FOR EDUCATIONAL
PURPOSES OF THE PETITIONER.

II

THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND

BUILDING OF THE PETITIONER ARE NOT USED EXCLUSIVELY FOR
EDUCATIONAL PURPOSES MERELY BECAUSE THE COLLEGE PRESIDENT
RESIDES IN ONE ROOM OF THE COLLEGE BUILDING.

III

THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND

BUILDING OF THE PETITIONER ARE NOT EXEMPT FROM PROPERTY
TAXES AND IN ORDERING PETITIONER TO PAY P5,140.31 AS REALTY
TAXES.

IV

THE COURT A QUO ERRED IN ORDERING THE CONFISCATION OF THE

P6,000.00 DEPOSIT MADE IN THE COURT BY PETITIONER AS PAYMENT
OF THE P5,140.31 REALTY TAXES. (See Brief for the Petitioner, pp. 1-2)

The main issue in this case is the proper interpretation of the phrase "used
exclusively for educational purposes."

Petitioner contends that the primary use of the lot and building for educational
purposes, and not the incidental use thereof, determines and exemption from
property taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence,
the seizure and sale of subject college lot and building, which are contrary
thereto as well as to the provision of Commonwealth Act No. 470, otherwise
known as the Assessment Law, are without legal basis and therefore void.

On the other hand, 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 thereof, Mr. Pedro V. Borgonia, 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 (See photograph
attached as Annex "8" (Comment; Rollo, p. 90]).

Due to its time frame, the constitutional provision which finds application in the
case at bar is Section 22, paragraph 3, Article VI, of the then 1935 Philippine
Constitution, which 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 ...

Relative thereto, Section 54, paragraph c, Commonwealth Act No. 470 as

amended by Republic Act No. 409, otherwise known as the Assessment Law,
provides:

The following are exempted from real property tax under the Assessment Law:

xxx xxx xxx

(c) churches and parsonages or convents appurtenant thereto, and all lands,
buildings, and improvements used exclusively for religious, charitable, scientific
or educational purposes.

xxx xxx xxx

In this regard petitioner argues that the primary use of the school lot and building
is the basic and controlling guide, norm and standard to determine tax
exemption, and not the mere incidental use thereof.

As early as 1916 in YMCA of Manila vs. Collector of lnternal Revenue, 33 Phil.

217 [1916], 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 the case of Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51

Phil. 352 [1972], 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.

The phrase "exclusively used for educational purposes" was further clarified by
this Court in the cases of Herrera vs. Quezon City Board of assessment Appeals,
3 SCRA 186 [1961] and Commissioner of Internal Revenue vs. Bishop of the
Missionary District, 14 SCRA 991 [1965], thus —

Moreover, the exemption in favor of property used exclusively for charitable or

educational purposes is 'not limited to property actually indispensable' therefor
(Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are
incidental to and reasonably necessary for the accomplishment of said purposes,
such as in the case of hospitals, "a school for training nurses, a nurses' home,
property use to provide housing facilities for interns, resident doctors,
superintendents, and other members of the hospital staff, and recreational
facilities for student nurses, interns, and residents' (84 CJS 6621), such as
"Athletic fields" including "a firm used for the inmates of the institution. (Cooley on
Taxation, Vol. 2, p. 1430).

The test of exemption from taxation is the use of the property for purposes
mentioned in the Constitution (Apostolic Prefect v. City Treasurer of Baguio, 71
Phil, 547 [1941]).

It must be stressed however, that while this Court allows a more liberal and non-
restrictive interpretation of the phrase "exclusively used for educational
purposes" as provided for in Article VI, Section 22, paragraph 3 of the 1935
Philippine Constitution, 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. Otherwise stated, the use of the
school building or lot for commercial purposes is neither contemplated by law,
nor by jurisprudence. Thus, while the use of the second 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 purpose—educational, the lease of the first floor thereof to the
Northern Marketing Corporation cannot by any stretch of the imagination be
considered incidental to the purpose of education.

It will be noted however that the aforementioned lease appears to have been
raised for the first time in this Court. That the matter was not taken up in the to
court is really apparent in the decision of respondent Judge. No mention thereof
was made in the stipulation of facts, not even in the description of the school
building by the trial judge, both embodied in the decision nor as one of the issues
to resolve in order to determine whether or not said properly may be exempted
from payment of real estate taxes (Rollo, pp. 17-23). On the other hand, it is
noteworthy that such fact was not disputed even after it was raised in this Court.

Indeed, it is axiomatic that facts not raised in the lower court cannot be taken up
for the first time on appeal. Nonetheless, as an exception to the rule, this Court
has held that although a factual issue is not squarely raised below, still in the
interest of substantial justice, this Court is not prevented from considering a
pivotal factual matter. "The Supreme Court is clothed with ample authority to
review palpable errors not assigned as such if it finds that their consideration is
necessary in arriving at a just decision." (Perez vs. Court of Appeals, 127 SCRA
645 [1984]).

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 second floor of the same is being used by the Director and his
family for residential purposes, but because the first floor thereof is being used
for commercial purposes. However, 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.

PREMISES CONSIDERED, the decision of the Court of First Instance of Abra,

Branch I, is hereby AFFIRMED subject to the modification that half of the
assessed tax be returned to the petitioner.

SO ORDERED.

Yap, C.J., Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

Footnotes

* Penned by the respondent Judge, Hon. Judge P. Aquino.

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101 Phil. 386

[ G. R. No. L-9637, April 30, 1957 ]

AMERICAN BIBLE SOCIETY, PLAINTIFF AND APPELLANT, VS.

CITY OF MANILA, DEFENDANT AND APPELLEE.

DECISION
FELIX, J.:
Plaintiff-appellant is a foreign, non-stock, non-profit, religious, missionary
corporation duly registered and doing business in the Philippines through
its Philippine agency established in Manila in November, 1898, with its
principal office at 636 Isaac Peral in said City. The defendant-appellee is a
municipal corporation with powers that are to be exercised in conformity
with the provisions of Republic Act No. 409, known as the Revised Charter
of the City of Manila.

In the course of its ministry, plaintiff's Philippine agency has been

distributing and selling bibles and/or gospel  portions thereof (except
during the Japanese occupation) throughout the Philippines and
translating the same into several Philippine dialects. On May 29, 1953, the
acting City Treasurer of the City of Manila informed plaintiff that it was
conducting the business of general merchandise since November, 1945,
without providing itself with the necessary Mayor's permit and municipal
license, in violation of Ordinance No. 3000, as amended, and Ordinances
Nos. 2529, 3028 and 3364, and required plaintiff to secure, within three
days, the corresponding permit and license fees, together with compromise
covering the period from the 4th quarter of 1945 to the 2nd quarter of 1953,
in the total sum of P5,821.45 (Annex A).

Plaintiff protested against this requirement, but the City Treasurer

demanded that plaintiff deposit and pay under protest the sum of
P5,891.45, if suit was to be taken in court regarding the same (Annex B). To
avoid the closing of its business as well as further fines and penalties in the
premises, on October 24, 1953, plaintiff paid to the defendant under protest
the said permit and license fees in the aforementioned amount, giving at
the same time notice to the City Treasurer that suit would be taken in court
to question the legality of the ordinances under which the said fees were
being collected (Annex C), which was done on the same date by filing the
complaint that gave rise to this action. In its complaint plaintiff prays that
judgment be rendered declaring the said Municipal Ordinance No. 3000, as
amended, and Ordinances Nos. 2529, 3028 and 3364 illegal and
unconstitutional, and that the defendant be ordered to refund to the
plaintiff the sum of P5,891.45 paid under protest, together with legal
interest thereon, and the costs, plaintiff further praying for such other relief
and remedy as the court may deem just and equitable.

Defendant answered the complaint, maintaining in turn that said

ordinances were enacted by the Municipal Board of the City of Manila by
virtue of the power granted to it by section 2444, subsection (m-2) of the
Revised Administrative Code, superseded on June 18, 1949, by section 18,
subsection (1) of Republic Act No. 409, known as the Revised Charter of the
City of Manila, and praying that the complaint be dismissed, with costs
against plaintiff. This answer was replied by the plaintiff reiterating the 
unconstitutionally of the  often-repeated  ordinances.

Before trial the parties submitted the following stipulation of facts:

"Come now the parties in the above-entitled case, thru their undersigned
attorneys and respectfully submit the following stipulation of facts:
1. That tile plaintiff sold for the use of the purchasers at its principal office
at 636 Isaac Peral, Manila, Bibles, New Testaments, bible portions and
bible concordance in English and other foreign languages imported by it
from the United States as well as Bibles, New Testaments and bible
portions in the local dialects imported and/or purchased locally; that from
the fourth quarter of 1945 to the first quarter of 1953 inclusive the sales
made by the plaintiff were as follows:

Quarter Amount of Sales

 
4th quarter 1945 P1.244.21
1st quarter1946 2,206.85
2rd quarter1946 1,950.38
3th quarter1946 2,235.99
1st quarter1946 3,256.04
2nd quarter1947 13,241.07
3rd quarter1947 15,774.55
4th quarter1947 14,654.13
1st quarter1947 12,590.94
2nd quarter1948 11,143.90
3rd quarter 1948 14,715.26
4th quarter1948 38,333.83
1th quarter1948 16,179.90
2th quarter1949 17,802.08
3rd quarter1949 23,975.10
4th quarter1949 16,640.79
1th quarter1949 15,961.38
2th quarter1950 18,562.46
3th quarter1950 21,816.32
4th quarter1950 25,004.55
1st quarter1950 45,287.92
2nd quarter1951 29,103.98
3rd quarter1951 20,181.10
4th quarter1951 22,968.91
1st quarter 1952 23,002.65
2nd quarter1952 17,626.96
3rd quarter1952 17,921.01
4th quarter1952. 24,180.72
1st quarter1953 29,516.21
2. That the parties hereby reserve the right to present evidence of other
facts not herein stipulated.

Wherefore, it is respectfully prayed that this case be set for hearing- so that
the parties may present further evidence on their behalf.   (Record  on
Appeal,   pp. 15-10)".
When the case was set for hearing, plaintiff proved, among other things,
that it has been in existence in the Philippines since 1899, and that its
parent society is in Now York, United States of America; that its contiguous
real properties located at Isaac Peral are exempt from real estate taxes; and
that it was never required to pay any municipal license fee or tax before the
war, nor does the American Bible Society in the United States pay any
license fee or sales tax for the sale of bible therein. Plaintiff further tried to
establish that it never made any profit from the sale of its bibles, which are
disposed of for as low as one third of the cost, and that in order to maintain
its operating cost it obtains substantial remittances from its New York
office and voluntary contributions and gifts from certain churches, both in
the United States and in the Philippines, which are interested in its
missionary work. Regarding plaintiff's contention of lack of profit in the
sale of bibles, defendant retorts that the admissions of plaintiff-appellant's
lone "witness who testified on cross-examination that bibles bearing the
price of 70 cents each from plaintiff-appellant's New York office are sold
here by plaintiff-appellant at P1.30 each; those bearing the price of $4.50
each are sold here at P10 each; those bearing the price of 17 each are sold
here at P15 each; and those bearing the price of $11 each are sold here at
P22 each, clearly show that plaintiff's contention that it never makes any
profit from the sale of its bible, is evidently untenable.

After hearing the Court rendered judgment, the last part of which is as
follows:

"As may be seen from the repealed section (m-2) of tile Revised
Administrative Code and the repealing portions (o) of section 18 of
Republic Act Ho. 409, although, they seemingly differ in the way the
legislative intent is expressed, yet their meaning is practically the same for
the purpose of taxing the merchandise mentioned in said leg;al provisions,
and that the taxes to be levied by said ordinances is in the nature of
percentage graduated taxes (Sec. 3 of Ordinance No. 3000, as amended,
and Sec. 1, Group 2, of Ordinance No. 2529, as amended by Ordinance No.
3364).

IN VIEW OF THE FOREGOING CONSIDERATIONS, this Court is of the

opinion and so holds that this case should he dismissed, as it is hereby
dismissed, for lack of merits, with costs against the plaintiff."
Not satisfied with this verdict plaintiff took up the matter to the Court of
Appeals which certified the case to Us for the reason that the errors
assigned to the lower Court involved only questions of law.

Appellant contends that the lower Court erred:

1.   In  holding  that   Ordinances  Nos.   2529  and   3000,   as  

respectively amended, are not unconstitutional;

2.   In holding that subsection m-2 of Section 2444 of the Revised

Administrative  Code under which  Ordinances  Nos.  2529  and 
8000 were promulgated, was not repealed by Section 18 of Republic
Act No. 409;

3.   In   not holding   that   an   ordinance   providing   for   percentage

taxes based on gross sales or receipts, in order to be valid under the
 new Charter of the City of Manila, must first be approved by the
President of the Philippines; and

4.   In holding that, as  the  sales  made  by the  plaintiff-appellant have 

assumed  commercial  proportions,  it  cannot  escape  from  the
operation of said municipal ordinances under the cloak of religious
privilege.

The issues. As may be seen from the preceding statement of the case, the
issues involved in the present controversy may be reduced to the following:
(1) whether or not the ordinances of the City of Manila, Nos. 3000, as
amended, and 2529, 3028 and 3364, are constitutional and valid; and (2)
whether the provisions of said ordinances are applicable or not to the case
at bar.

Section 1, subsection (7) of Article III of the Constitution of the  Republic  of

the Philippines, provides  that:

"(7) No law shall be made respecting an establishment of religion, or

prohibiting the free exercise thereof, and the free exercise and enjoyment of
religious profession and worship, without discrimination or preference,
shall forever be allowed. No religion test shall be required for the exercise of
civil or political rights."
Predicated on this constitutional mandate, plaintiff-appellant contends that
Ordinances Nos. 2529 and ,1000, as respectively amended, are
unconstitutional and illegal in so far as its society is concerned, because
they provide for religious censorship and restrain the free exercise and
enjoyment of its religious profession, to wit: the distribution and sale of
bibles and other religious literature to the .people of the Philippines.

Before entering into a discussion of the constitutional aspect of the case,

We shall first consider the provisions of the questioned ordinances in
relation to their application to the sale of bibles, etc. by appellant. The
records show that by letter of May 29, 1953 (Annex A), the City Treasurer
required plaintiff to secure a Mayor's permit in connection with the
society's alleged business of distributing and selling bibles, etc. and to pay
permit dues in the sum of P35 for the period covered in this litigation, plus
the sum of P35 for compromise on account of plaintiff's failure to secure the
permit required by Ordinance No. S000 of the City of Manila, as amended.
This Ordinance is of general application and not particularly directed
against institutions like the plaintiff, and it does not contain any provisions
whatsoever prescribing religious censorship nor restraining the free
exercise and enjoyment of any religious profession. Section 1 of Ordinance
No. 3000 reads as follows:

"Sec. 1. PERMITS NECESSARY. It shall be unlawful for any person or

entity to conduct or engage in any of the businesses, trades, or
occupations enumerated in Section 3 of this Ordinance or other
businesses, trades, or occupations for which a permit is required for the
proper supervision and enforcement of existing laws and ordinances
governing the sanitation, security, and welfare of the public and the
health of Ike employee* engaged in the business specified, in said section 3
hereof, WITHOUT FIRST HAVING OBTAINED A PERMIT THEREFOR
FROM THE MAYOR AND THE NECESSARY LICENSE FROM THE CITY
TREASURER."
The business, trade or occupation of the plaintiff involved in this case is not
particularly mentioned in Section 3 of the Ordinance, and the record does
not show that a permit is required therefor under existing laws and
ordinances for the proper supervision and enforcement of their provisions
governing the sanitation, security and welfare of the public and the health
of the employees engaged in the business of the plaintiff. However, section
3 of Ordinance 3000 contains item No. 79, which reads as follows:

"79. All other businesses, trades or occupations not mentioned

in this Ordinance, except thane upon which the City is not P5.00"
aw/powered to license or to tax
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.

As to the license fees that the Treasurer of the City of Manila required the
society to pay from the 4th quarter of 1945 to the 1st quarter of 1953 in the
sum of P5,821.45, including' the sum of ¥50 as compromise, Ordinance No.
2529, as amended by Ordinances Nos. 2779, 2821 and 3028 prescribes the
following:

"Sec. 1. FEES. Subject to the provisions of section 578 of the Revised

Ordinances of the City of Manila, as amended, there shall be paid to the
City Treasurer for engaging m any of the businesses or occupations below
enumerated, quarterly, license fees based on gross   sales   or   receipts  
realized   during   the   preceding-   quarter   in accordance with the rates
herein prescribed: Provided, however, That a person engaged   in   any
business   or occupation for the first time shall pay the initial license fee
based on the probable gross sales or receipts  for the first quarter beginning
from the  date of the opening of the business as indicated herein for the
corresponding business or occupation.

*            *                *                *            *

Group1 2.- Retail dealers in new (not yet used) merchandise, which dealers
are not yet subject to the payment of any municipal tax, such as (1) retail
dealers in general merchandise: (2) retail dealers exclusively engaged in the
sale of * * * books, including stationery.
*            *                *                *            *

As may be seen, the license fees required to be paid quarterly in Section 1 of

said Ordinance No. 2529, as amended, are not imposed directly upon any
religions institution but upon those engaged in any of the business or
occupations therein enumerated, such as retail "dealers in general
merchandise" which, it is alleged, cover the business or occupation of
selling bibles, books, etc.

Chapter 60 of the Revised Administrative Code which includes section

2444, subsection (m-2) of said legal body, as amended by Act No.
3659, approved on December 8, 1829, empowers the Municipal Board of
the City of Manila:
"(M-2) To tax arid fix the license fee on (a) dealers in new automobiles or
accessories or both, and (b) retail dealers in new (not yet used)
merchandise, which dealers are not yet subject to the payment oi;  any
municipal tax.

"For the purpose of taxation, these retail dealers shall he classified as

(1) retail dealers in general merchandise, and (2) retail dealers exclusively
engaged in the sale of (a) textiles * * :p (e) books, including stationery,
paper and office supplies, * * *: Provided, however, That the combined
total tax, of any debtor or manufacturer, or both, enumerated under these
subsections (m-1) and (m-2), whether dealing in one or all of tile articles
mentioned , SHALL NOT BE IN EXCESS OF FIVE HUNDRED PESOS PER
ANNUM."
and appellee's counsel maintains that City Ordinances Nos. 2529 and 3000,
as amended, were enacted in virtue of the power that said Act No. 3669
conferred upon the City of Manila. Appellant, however, contends that said
ordinances are no longer in force and effect as the law under which they
were promulgated has been expressly repealed by Section 102 of Republic
Act No. 409 passed on June 18, 1949, known as the Revised Manila
Charter.

Passing upon this point the lower Court categorically stated that Republic
Act No. 409 expressly repealed the provisions of Chapter 60 of the Revised
Administrative Code but in the opinion of the trial Judge, although Section
2444 (m-2) of the former Manila Charter and section 18(o) of the new
seemingly differ in the way the legislative intent was expressed, yet their
meaning is practically the same for the purpose of taxing the merchandise
mentioned in both legal provisions and, consequently, 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 preexisting statute,

will repeal the old statute in its entirety and by the same enactment
reenacment all or certain portions of the preexisting law. Of course, the
problem created by this sort of legislative action involves mainly the effect
of the repeal upon rights and liabilities which accrued under the original
statute. Are those rights and liabilities destroyed or preserved? The
authorities arc divided as to the effect of simultaneous repeals and re-
enactments. Some adhere to the view that the rights and liabilities accrued
under the repealed act are destroyed, since the statutes from which they
sprang arc actually terminated, even though for only a very short period of
time. Others, and they seem to be in the majority, refuse to accept this
view of the situation, and consequently maintain that all rights and
liabilities which have accrued under the original statute are preserved
and 'may be enforced, since the re-enactment neutralizes the repeal,
therefore continuing the law in force without interruption".     (Crawford
Statutory  Construction,   Sec.  322).
Appellant's counsel states that section 18 (o) of Republic Act No. 409
introduces a new and wider concept of taxation and is so different .from the
provisions of Section 2444 (m-2) that the former cannot be considered as a
substantial re-enactment of the provisions of the latter. We have quoted
above the provisions of section 2444 (m-2) of the Revised Administrative
Code and We shall now copy hereunder the provisions of Section 18,
subdivision (o)  of Republic Act No. 409, which reads as follows:

"(o) 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 under the
provisions of this section.

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,   and   (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.

For purposes of this section, the term 'General merchandise' shall include
poultry and livestock, agricultural products, fish and other allied products."
The only essential difference that We find between these two provisions
that may have any bearing on the case at bar, is that while subsection (m-2)
prescribes that the combined total tax of any dealer or manufacturer, or
both, enumerated under subsections (m-1) and (m-2), whether dealing in
one or all of the articles mentioned therein, shall not be in excess of P500
per annum, the corresponding section 18, subsection (o) of Republic Act
No. 409, does not contain any limitation as to the amount of tax or license
fee that the retail dealer has to pay per annum. Hence, and in accordance
with the weight of the authorities above referred to that maintain that "all
rights and liabilities which have accrued under the original statute are
preserved and may be enforced,, since the reenactment neutralizes the
repeal, therefore continuing the law in force without interruption", We hold
that the questioned ordinances of the City of Manila are still in force and
effect.

Plaintiff, however, argues that the questioned ordinances, to be valid, must

first be approved by the President of the Philippines as per section 18,
subsection (ii) of Republic Act No. 409, which reads as follows:

" (ii) To tax, license and regulate any business, trade or occupation being
conducted within the City of Manila, not otherwise enumerated in the
preceding subsections, including percentage, taxes based on gross sales or
receipts, subject io the, approval of the PRESIDENT, except amusement
taxes."
but this requirement of the President's approval was not contained in
section 2444 of the former  Charter of the City of Manila under which
Ordinance No. 2529 was promulgated. Anyway, as stated by appellee's
counsel, the business of "retail dealers in general merchandise" is expressly
enumerated in subsection (o), section 18 of Republic Act No, 409; hence, an
ordinance prescribing a municipal tax on said business does not have to be
approved by the.President to be effective, as it is not among those referred
to in said subsection (ii). Moreover, the questioned ordinances are still in
force, having been promulgated by the Municipal Board of the City of
Manila under the authority granted to it by law.

The question that now remains to be determined is whether said

ordinances are inapplicable, invalid or unconstitutional if applied to the
alleged business of distribution and sale of bibles to the people of the
Philippines by a religious corporation like the American Bible Society,
plaintiff herein.

With regard to Ordinance No. 2529, as amended by Ordinances Nos. 2779,

2821 and 3028, appellant contends that it is unconstitutional and illegal
because it restrains the free exercise and enjoyment of the religious
profession and worship of appellant.

Article III, section 1, clause (7) of the Constitution of the Philippines

aforequoted, guarantees the freedom of religious profession and worship.
"Religion has been spoken of as 'a profession of faith to an active power that
binds and elevates man to its Creator' (Aglipay vs. Ruiz, 64 Phil., 201). It
has. reference to one's views of his relations to His Creator and to the
obligations they impose of reverence to His being and character, and
obedience to His Will (Davis vs. Beason, 133 U.S., 342). The constitutional
guaranty of the free exercise and enjoyment of religious profession and
worship carries with it the right to disseminate religious information. Any
restraint of such right can only be justified like other restraints of freedom
of expression on the grounds that there is a clear and present danger of any
substantive evil which the State has the right to prevent".     (Tanada and
Fernando on the Constitution of the Philippines, Vol. I, 4th ed., p. 297). In
the case at bar the license fee herein involved is imposed upon appellant for
its distribution and sale of bibles and other religious literature:

"In the case of Murdock vs. Pennsylvania, it was held that an ordinance
requiring' that a license be obtained before a person could canvass or solicit
orders for goods, paintings, pictures, wares or merchandise cannot be made
to apply to members of Jehovah's Witnesses who' went about from door to
door distributing1 literature and soliciting  people to 'purchase' certain
religious books and pamphlets, all published by the Watch Tower Bible &
Tract Society. The 'price' of the books was twenty-five cents each, the 'price'
of the pamphlets five cents each. It was shown that in making the
solicitations there was a request for additional 'contribution' of twenty-five
cents each for the books and five cents each for the pamphlets. Lesser sum
were accepted, however, and books were even donated in case interested
persons were without funds.
On the above facts the Supreme Court held that it could not be said that
petitioners were engaged in commercial rather than a religious venture.
Their activities could not be described as embraced in the occupation of
selling books and pamphlets. Then the Court continued:

'We do not mean to say that religious groups and the press are free from all
financial burdens of government. See Grosjean vs. American Press Co., 297
U.S., 233, 250, 80 L. ed. 660, 668, 56 S, Ct. 444. We have here something1
quite different, for example, from a tax on the income of one who engages
in religious activities or 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. It is quite another thing to exact a tax from him for
the privilege of delivering, a sermon. The tax imposed by the City of
Jeannettc is a flat license tax, payment of Which is a condition of the
exercise of these constitutional privileges. 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. Thosa who
can tax the privilege of engaging in this form of missionary evangelism can
close all its doors to all 'hose who do not have a full purse. Spreading
religious beliefs in this ancient and honorable manner would thus be 
denied the needy.    * * *

It is contended however that the fact that the license tax can suppress or
control this activity is unimportant if it does not  do  so.    But  that  is   to  
disregard   the  nature   of this   tax.    It is a license tax a flat tax imposed on
the exercise of a privilege granted by the Bill of Rights * * * The power to
impose a license tax on the exercise of these freedoms is indeed1 as potent
as the power of censorship which this Court has repeatedly struck down. * *
* He 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 ia flat license tax levied and collected as a condition to the pursuit of
activities whose  enjoyment is guaranted 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 the  flat license 
tax.'
Nor could dissemination of religious information be1 conditioned upon the
approval of an official or manager even if the town were owned by a
corporation as held in the case of Marsh vs. State of Alabama (326 U.S.
501), or by the United States Itself as held in the case of Tucker vs. Texas
(326 U.S. 517). In the former case the Supreme Court expressed the opinion
that the right to enjoy freedom of the press and religion occupies a
preferred position as against the constitutional right of property  owners.

'When we balance the constitutional rights of owners of property against

those of the people to enjoy freedom of press and religion, as we must here,
we remain mindful of the fact that the latter occupy a preferred position. * *
* In our view the circumstance that the property rights to the premises
where the deprivation of property here involved, took place, were held by
others than the public, is not sufficient to justify the State's permitting a
corporation to govern a community of citizens so as to restrict their
fundamental liberties and the enforcement of such  restraint by the
application of a State statute.'" (Tanada and Fernando on the Constitution
of the .Philippines, Vol. 1, 4th ed., p.  304-306).
Section 27 of Commonwealth Act No. 466, otherwise known as the National
Internal Revenue Code, provides:

"Sec. 27. EXEMPTIONS PROM TAX ON CORPORATIONS. The following

organizations shall not be taxed under this Title in respect to income
received by them as such

"(e) Corporations or associations organized and operated exclusively for

religious, charitable, * * * or educational purposes. "' * *: Provided,
however, That thu 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;".
Appellant's counsel claims that the Collector of Internal Revenue has
exempted the plaintiff from this tax and says that such exemption clearly
indicates that the act of distributing and selling bibles, etc. is purely
religious and does not fall under the above legal provisions.
It may be true that in the case at bar 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 appellant was engaged in the
business or occupation of selling said "merchandise" for profit. For this
reason We believe that the provisions of City of Manila 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.

With respect to Ordinance No. 3000, as amended, which requires the

obtention of the Mayor's permit before any person can engage in any of the
businesses, trades or occupations enumerated therein, We do not find that
it imposes any charge upon the enjoyment of a right granted by the
Constitution, nor tax the exercise of religious practices. In the case of
Coleman vs. City of Griffin, 189 S.E. 427, this point was elucidated as
follows:

"An ordinance by the City of Griffin, declaring that the practice of

distributing either by hand or otherwise, circulars, handbooks, advertising,
or literature of any kind, whether said articles are being delivered free, or
whether same are being' sold within the city limits of the City of Griffin,
without first obtaining written permission from the city manager of the City
of Griffin, shall be deemed a nuisance and punishable as an offense against
the City of Griffin, does not deprive defendant of his constitutional right of
the, free, exercise and enjoyment of religious profession ami worship, even
though, if  prohibits him  from introducing and carrying out a scheme or 
purpose which he sees fit to claim as a part of his religious system."
It seems clear, therefore, that Ordinance No. 3000 cannot be considered
unconstitutional, even if applied to plaintiff Society.    But as Ordinance No.
2529 of the City of Manila, as amended, is not applicable to plaintiff-
appellant and defendant-appellee is powerless to license or tax: the
business of plaintiff Society involved herein for, as stated before, it would
impair plaintiff's right to the free exercise and enjoyment of its religious
profession and worship, as well an its tights of dissemination of religious
beliefs, We find that Ordinance No. 3000, as amended, is also inapplicable
to said business, trade or occupation of the plaintiff.
 Wherefore, and on the strength of the foregoing con^ siderations, We
hereby reverse the decision appealed from, sentencing defendant to return
to plaintiff the sum of P5,891.45 unduly collected from it. Without
pronouncement as to costs.    It is so ordered.

Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Conception,

and Endencia, JJ., concur.
Reyes, A., J., concurs in the result.

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