Case Summary (G.R. No. L-9637)
Petitioner
American Bible Society (through its Philippine agency in Manila).
Respondent
City of Manila (acting through its Municipal Board and City Treasurer).
Key Dates
• Philippine agency established: November 1898
• Alleged unpermitted operations since: November 1945
• Demand for unpaid fees and compromise: May 29, 1953
• Payment under protest and filing of suit: October 24, 1953
• Trial court decision: Dismissal (date unspecified)
• Supreme Court decision: April 30, 1957
Applicable Law
• 1935 Constitution of the Republic of the Philippines, Article III, Section 1(7) guaranteeing free exercise of religion;
• Commonwealth Act No. 466 (National Internal Revenue Code), Section 27(e) on tax exemptions for religious corporations;
• Revised Administrative Code, § 2444(m-2), empowering Manila to license and tax retail dealers in merchandise (annual cap ₱500);
• Republic Act No. 409 (Revised Charter of the City of Manila), § 18(o) and (ii), authorizing municipal taxes on dealers in general merchandise and requiring Presidential approval for certain percentage-based license taxes;
• Manila City Ordinance No. 3000 (permit requirement) and Ordinance No. 2529 (license fees on gross receipts), as amended by Ordinances Nos. 3028, 3364, etc.
Factual Background
From the fourth quarter of 1945 through the second quarter of 1953, the Society’s Philippine agency sold imported and locally procured Bibles and related materials across multiple quarters, generating gross receipts for which no municipal permit or license fee was secured. In May 1953, the City Treasurer demanded a mayor’s permit fee and quarterly license taxes plus compromise penalties totalling ₱5,821.45. To avoid business closure, the Society paid ₱5,891.45 under protest and filed suit to recover the amount, challenging the validity and constitutionality of the ordinances.
Ordinances and Municipal Authority
Ordinance No. 3000 mandates that any person or entity conducting businesses enumerated in its Section 3, or those requiring permits for public health and welfare, must secure a mayor’s permit and license. Its catch-all Item 79 covers “all other businesses” at a ₱5.00 permit fee if not otherwise exempt. Ordinance No. 2529 imposes quarterly license fees on retail dealers in general merchandise (including books) based on gross receipts. These ordinances derive authority from:
• Section 2444(m-2) of the Revised Administrative Code, permitting Manila to tax retail dealers in general merchandise up to ₱500 per annum; and
• Section 18(o) of R.A. 409, re-enacting taxation power over general merchandise dealers without an annual limit; additionally, Section 18(ii) requires Presidential approval for percentage-based taxes on businesses not otherwise enumerated.
Charter Authority and Repeal Analysis
The Society argued that R.A. 409 repealed § 2444(m-2) entirely, invalidating ordinances enacted under it. The trial court found R.A. 409’s § 18(o) a substantive re-enactment of § 2444(m-2), preserving municipal taxing power. The absence of an annual cap in § 18(o) did not signal a new exercise of authority but a continuation. The Court applied the doctrine that simultaneous repeal and re-enactment maintain accrued rights and liabilities, holding the ordinances in force.
Presidential Approval Requirement
The Society contended that Ordinance No. 2529’s percentage tax on gross sales required Presidential approval under R.A. 409, § 18(ii). However, “retail dealers in general merchandise” are expressly listed in § 18(o), exempting such ordinances from the § 18(ii) approval requirement. Thus, no presidential endorsement was needed.
Constitutional Challenge: Free Exercise of Religion
Under Article III, Section 1(7) of the 1935 Constitution, no law shall prohibit the free exercise of religion or impose religious censorship. The Society invoked U.S. precedents (e.g., Murdock v. Pennsylvania) establishing that flat license taxes on religious literature distributors impose a burden tantamount to censorship or suppression of religious exercise. It asserted that its sale and distribution of Bibles—conducted at minimal or below cost and subsidized by gifts—are purely religious activities immune from commercial taxation.
Tax Exemptions and Missionary Activities
Commonwealth Act No. 466 exempts income of corporations organized exclusively for religious purposes, though income from profit-conducting activities remains taxable. The Society had secured an income tax exemption, reinforcing its characterization of Bible distr
...continue readingCase Syllabus (G.R. No. L-9637)
Facts
- The American Bible Society (plaintiff-appellant) is a foreign, non-stock, non-profit religious missionary corporation, operating in the Philippines since November 1898 through its Manila agency at 636 Isaac Peral.
- It distributes and sells Bibles, New Testaments, gospel portions, Bible concordances and other religious literature in English, various Philippine dialects and foreign languages.
- The City of Manila (defendant-appellee) is a municipal corporation organized under Republic Act No. 409 (Revised Charter of the City of Manila).
- On May 29, 1953, the Acting City Treasurer notified the Society that since November 1945 it had been “conducting the business of general merchandise” without a mayor’s permit and municipal license, in violation of various ordinances.
- The Treasurer demanded P5,821.45 in back permit and license fees (plus P50 compromise), threatening closure, fines and penalties unless the amounts were paid or protested in three days.
- To avoid business interruption, the Society paid P5,891.45 under protest on October 24, 1953, and immediately filed suit seeking to declare Ordinance No. 3000 (as amended) and Ordinances Nos. 2529, 3028 and 3364 unconstitutional, and to recover the protested sum with interest and costs.
Procedural History
- Trial Court: Dismissed the complaint for lack of merit, upholding the ordinances as valid and enforceable; costs against plaintiff.
- Court of Appeals: Plaintiff appealed; the case was certified to the Supreme Court as presenting questions of law only.
- Supreme Court: Granted review to decide constitutionality and applicability of the ordinances.
Stipulated and Established Facts
- From 4th quarter 1945 through 2nd quarter 1953, the Society’s quarterly gross sales figures (ranging from P1,244.21 to P45,287.92) were stipulated but not challenged.
- The Society’s Manila property is exempt from real estate taxes.
- Before World War II it paid no municipal license or sales tax in Manila, nor does its New York parent pay such taxes in the United States.
- It does not earn profit from Bible sales (sold at or below cost); operating expenses are met by remittances from New York and voluntary contributions.
Contentions of the Parties
- Appellant:
- The challenged ordinances impose unconstitutional religious censorship and burden the free exercise of religion (Art. III, Sec. 1(7), Const.).
- Section 2444(m-2) of the Revised Admini