Case Summary (G.R. No. L-9637)
Factual Background
The AMERICAN BIBLE SOCIETY distributed and sold Bibles, New Testaments, Bible portions and concordances in English, foreign languages and local dialects in the Philippines. On May 29, 1953 the Acting City Treasurer informed the Society that it had been conducting the business of general merchandise since November, 1945 without the Mayor’s permit and municipal license required by Ordinance No. 3000, as amended, and by Ordinance No. 2529, as amended, and demanded payment of license fees and compromise for the period from the fourth quarter of 1945 to the second quarter of 1953 totaling P5,821.45. The Treasurer insisted on deposit and payment under protest of P5,891.45 if the Society would litigate. To avoid closure and further penalties, the Society paid P5,891.45 under protest on October 24, 1953 and filed suit the same day seeking refund and a declaration that the ordinances were illegal and unconstitutional.
Trial Court Proceedings
The trial court heard stipulated facts and additional evidence and ruled against the plaintiff. The trial court found that the municipal ordinances were enacted under the taxing and licensing power conferred on the Municipal Board by Section 2444(m-2) of the Revised Administrative Code and continued in effect under Section 18(o) of Republic Act No. 409, and that the taxes prescribed were percentage graduated taxes. The trial court dismissed the complaint for lack of merit, taxed costs against the plaintiff, and this adverse judgment prompted appeal and certification to the Supreme Court.
Stipulated Facts and Evidence
The parties stipulated sales figures for the plaintiff from the fourth quarter of 1945 through the first quarter of 1953 totaling numerous quarterly amounts as set forth in the record. The plaintiff proved long-standing Philippine operations since 1899, ownership of contiguous real properties exempt from real estate taxes, and that it had not previously been required to pay municipal license fees before the war. The Society produced evidence of subsidization from its New York parent and of sales at prices that the Society characterized as below cost. The City emphasized testimony showing mark-ups on imported Bibles sold in Manila to rebut the claim of non-profit activity.
Parties’ Contentions
The AMERICAN BIBLE SOCIETY asserted that the challenged ordinances were unconstitutional as applied to its distribution and sale of religious literature because they infringed the constitutional guarantee against laws respecting an establishment of religion and the free exercise and enjoyment of religious profession and worship (Article III, Section 1(7) of the Constitution). The Society further contended that Section 2444(m-2) had been repealed by Republic Act No. 409 and that ordinances imposing percentage taxes based on gross sales or receipts required Presidential approval under Section 18(ii) of Republic Act No. 409. The CITY OF MANILA maintained that the ordinances were validly enacted under the municipal taxing and licensing powers, that Section 2444(m-2) was substantially reenacted by Section 18(o) of Republic Act No. 409, and that the ordinances were of general application and did not constitute religious censorship.
Issues Presented
The Supreme Court framed the controversy as two principal issues: (1) whether Ordinance Nos. 3000 and 2529, as amended (and related ordinances), were constitutional and valid; and (2) whether those ordinances were applicable to the Society’s religious distribution and sales activities.
Ordinances and Enactment Authority
The Court examined Ordinance No. 3000, which required permits from the Mayor and licenses from the City Treasurer before engaging in businesses listed in Section 3, and Ordinance No. 2529, which imposed quarterly license fees based on gross sales or receipts for enumerated businesses including retail dealers in general merchandise and retail dealers in books. The Court observed that Chapter 60 of the Revised Administrative Code, specifically Section 2444(m-2), empowered the Municipal Board to tax and fix license fees on retail dealers in new merchandise and classified dealers in general merchandise and books. The City argued that these municipal ordinances derived authority from Section 2444(m-2).
Repeal, Reenactment, and Effect of the Revised Charter
Appellant argued that Section 2444(m-2) had been repealed by Section 102 of Republic Act No. 409 (Revised Manila Charter). The Court compared Section 2444(m-2) with Section 18(o) of Republic Act No. 409, noting that the only material difference was the removal in the new Charter of the P500 annual cap on combined taxes. Citing authorities on simultaneous repeal and reenactment, the Court held that the rights and liabilities accrued under the prior statute were preserved where the new enactment substantially reenacts the prior law. The Court therefore concluded that the municipal ordinances remained in force and effect as valid exercises of the municipal taxing power.
Requirement of Presidential Approval
The Society contended that ordinances imposing percentage taxes based on gross sales or receipts required approval by the President under Section 18(ii) of Republic Act No. 409. The Court rejected this contention because the business of retail dealers in general merchandise was expressly enumerated in Section 18(o) and thus did not fall within the residual category of businesses in Section 18(ii) that require Presidential approval. Accordingly, the Court held that the challenged ordinances did not require Presidential approval to be effective.
Religious Freedom and Applicability of the Ordinances
The Court addressed whether enforcement of Ordinance No. 2529, as amended, against the Society would impermissibly restrain the free exercise and enjoyment of religious profession and worship. The Court surveyed United States precedents, notably Murdock vs. Pennsylvania, Marsh vs. State of Alabama, Tucker vs. Texas, and other authorities, recognizing that a license tax imposed as a condition to the exercise of constitutional liberties may amount to censorship or suppression and thus be constitutionally impermissible. The Court concluded that although the ordinances were general in application and did not on their face prescribe religious censorship, the imposition of license fees based on gross sales or receipts upon activities that are essentially religious dissemination would impair the Society’s constitutional rights. The Court further observed that Commonwealth Act No. 466, Sec
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Case Syllabus (G.R. No. L-9637)
Parties and Procedural Posture
- American Bible Society was a foreign, non-stock, non-profit, religious missionary corporation doing business in the Philippines through a Philippine agency with principal office at 636 Isaac Peral, Manila.
- City of Manila was a municipal corporation governed by the provisions of Republic Act No. 409, the Revised Charter of the City of Manila.
- The City Treasurer required American Bible Society to obtain a Mayor's permit and to pay municipal license fees and compromise penalties for alleged failure to secure permits from the fourth quarter of 1945 to the second quarter of 1953.
- American Bible Society paid the demanded sum of P5,891.45 under protest and filed suit seeking refund and declaration of unconstitutionality of the ordinances.
- The trial court dismissed the complaint for lack of merit and ordered costs against the plaintiff.
- The Court of Appeals certified the case to the Supreme Court on questions of law, and the Supreme Court rendered the decision reported here, with the opinion by Felix, J.
Key Factual Allegations
- American Bible Society distributed and sold Bibles, New Testaments, Bible portions and concordances in English, foreign languages, and Philippine dialects since its Philippine establishment in 1898.
- The City Treasurer's letter dated May 29, 1953 required procurement of a Mayor's permit and payment of license fees covering the period alleged, citing Ordinance No. 3000, as amended, and Ordinance No. 2529, among others.
- The parties stipulated quarterly sales figures from the fourth quarter of 1945 through the first quarter of 1953 showing substantial sales activity, including quarterly receipts as high as P45,287.92 and P38,333.83 in specified quarters.
- American Bible Society presented evidence that its contiguous real properties at Isaac Peral were exempt from real estate taxes and that it received remittances and voluntary contributions to sustain operations.
- The City relied on admissions that certain imported Bibles bearing U.S. prices were sold in the Philippines at marked-up peso prices to contest the claim that sales were not profit-driven.
Statutory Framework
- The ordinances challenged were Ordinance No. 3000, which required permits for enumerated businesses and occupations, and Ordinance No. 2529, as amended, imposing quarterly license fees based on gross sales or receipts.
- Chapter 60 of the Revised Administrative Code, particularly Section 2444, subsection (m-2), empowered the Municipal Board to tax and fix license fees on retail dealers in new merchandise, including books.
- Republic Act No. 409, the Revised Charter of the City of Manila, contained Section 18, subsection (o) classifying and empowering taxation of dealers in general merchandise and Section 18, subsection (ii) requiring Presidential approval for certain percentage taxes based on gross sales or receipts.
- Commonwealth Act No. 466, Section 27, exempted corporations organized and operated exclusively for religious purposes from income tax, subject to exceptions for income from profit-making activities.
Issues Presented
- Whether Ordinance No. 3000 and Ordinance No. 2529, as amended, were constitutional and valid.
- Whether Section 2444, subsection (m-2) of the Revised Administrative Code was repealed or effectively reenacted by Section 18, subsection (o) of Republic Act No. 409.
- Whether an ordinance imposing percentage taxes based on gross sales or receipts required prior approval of the President under Section 18, subsection (ii) of Republic Act No. 409 to be valid.
- Whether the ordinances were applicable to or could be constitutionally applied against the distribution and sale of Bibles and religious literature by American Bible Society without infringing religious freedom.