Case Summary (G.R. No. 47252)
Key Dates and Applicable Law
The payment under protest was made on June 25, 1937. The case was decided on April 18, 1941. The relevant legal framework includes the Philippine Constitution applicable at that time (Batas Commonwealth), Ordinance No. 137 and its subsequent amendments, and the enabling Act No. 1963 (now Article 2553 (1) of the Revised Administrative Code), which empowers the city to levy special assessments for public improvements.
Factual Stipulations
Both parties agreed on several facts:
- The petitioner is a religious corporation with properties in Baguio dedicated to religious and educational purposes.
- The respondent demanded and collected the special contribution under the cited ordinances.
- The special contribution corresponds to benefits conferred by the city's sewerage and drainage system, which operates on a "special assessment" basis, affecting properties included on the official special assessment list established by Ordinance No. 137.
- The petitioner previously paid special contributions without protest until 1937, when it formally protested the payment.
- The construction directly benefits all properties included in the special assessment list, including those of the petitioner.
- The petitioner claims exemption from the special contribution based on constitutional provisions exempting properties used exclusively for religious, charitable, or educational purposes from taxation.
Legal Issues
The core issues are:
- Whether the special contribution levied under Ordinance No. 137 is a tax subject to constitutional exemptions or a special assessment not covered by such exemptions.
- Whether the petitioner’s properties are exempt from payment because they are devoted exclusively to religious purposes.
- Whether Ordinance No. 137 and its amendments are valid and effective in imposing the special contribution.
- Whether the petitioner had already fulfilled its share of the expenses related to the sewerage system before the 1937 payment.
Nature of the Special Contribution
The Court analyzed the nature of special contributions, distinguishing them from general taxes. It affirmed an established principle that special assessments are levies imposed on property owners who directly benefit from particular public improvements, such as drainage and sewerage systems. Unlike general taxes, special assessments are:
- Levied solely on property
- Based strictly on the benefits conferred to the properties assessed
- Limited in time and locality to the improvement and affected properties
These characteristics distinguish special assessments from taxes, which are broader and impose a general liability on personal property as well. Thus, the contribution demanded from the petitioner is a special assessment, not a general tax.
Application of Constitutional Exemptions
The petitioner invoked the constitutional exemption under Article 14, Section 3 of the 1935 Philippine Constitution, which exempts cemeteries, churches, parishes, convents, and all lands, buildings, and improvements used exclusively for religious, charitable, or educational purposes from taxation. The Court held that this exemption applies exclusively to taxes and does not extend to special assessments, as these are not taxes in the legal sense. Furthermore, the petitioner failed to prove that the properties were used exclusively for religious purposes, an essential requirement for exemption. Stipulations only indicated dedication to religious purposes, not exclusivity, thus negating any entitlement to exemption.
Validity of Ordinance No. 137 and Amendments
The Court confirmed the validity of Ordinance No. 137 and its numerous amendments. It held that the City of Baguio was duly authorized by Section 1, Article 8 of Act No. 1963 (now Article 2553 (1) of the Revised Administrative Code) to impose special contributions to defray costs of public improvements such as the sewerage and drainage system benefiting affected properties. Therefore,
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Parties and Nature of the Case
- The appellant is The Apostolic Prefect of the Mountain Province, a religious corporation organized under Philippine laws with residence in the City of Baguio.
- The appellee is the Treasurer and Collector of the City of Baguio, a public official responsible for tax collection.
- The case concerns a civil action initiated by the appellant to recover P1,019.37, which was paid under protest as a special contribution (contribución especial) on properties in Baguio for the year 1937.
- The respondent-city treasurer demanded and collected this payment pursuant to Ordinance No. 137 and its subsequent amendments and resolutions from the City Council of Baguio.
- The appellant appeals from the ruling of the Court of First Instance in Baguio, which dismissed the case without costs.
Stipulated Facts
- The appellant is a religious corporation with properties in Baguio used for worship and education.
- The respondent is the city’s treasurer responsible for tax collection.
- On June 25, 1937, appellant paid P1,019.37 under protest due to the imposition of a special contribution levied based on numerous city ordinances, including Ordinance No. 137 and several amendments, as well as City Council Resolution No. 10 (1918).
- The protest was specifically made by letter on the same date, specifying reasons and formally requesting a favorable resolution and refund.
- The treasurer rejected the protest.
- The parcels of land paying the special contribution were included in the “special assessment list” adopted by Ordinance No. 137, listing properties subject to this charge.
- The City of Baguio constructed a drainage and sewerage system pursuant to the ordinances cited.
- The appellant had previously paid similar charges without protest for years before 1937; 1937 marked the first year of protest.
- The drainage and sewerage system benefitted directly and specially all property owners within the special assessment list, including appellant’s properties, by promoting sanitary conditions.
- The parties reserved the right to present further evidence.
Issues Presented
- Whether properties owned by the appellant are exempt from the payment of the special contribution levied for the drainage and sewerage system.
- Whether Ordinance No. 137 and its amendments exclude exempt properties from the imposition of special contributions.
- Whether Ordinance No. 137 and its amendments are null and void if they do not exclude exempt properties.
- Whether, assuming the ordinance is legal, the appellant was illegally charged given it purportedly paid its participation