ABRA VALLEY COLLEGE, INC. VS AQUINO JUNE 15 1988 PARAS, J.

FACTS: Abra Valley College, an educational corporation and institution of higher learning duly incorporated with the SEC 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. Paterno Millare filed through counsel a motion to dismiss the complaint. The provincial fiscal filed a memorandum for the government wherein they opined hat based on the evidence, the laws applicable, court decisions and jurisprudence, the school building and the school lot used for educational purposes of the Abra Valley College are exempted from payment of taxes. Nonetheless, the trial court disagreed because of the use of the second floor by the Director of the said school for residential purpose. He thus ruled for the government and rendered the assailed decision. ISSUE: Whether or not the lot and building in question are used exclusively for educational purposes? HELD: NO. It must be stressed that while the court allows a more liberal and nonrestrictive interpretation of the phrase exclusively used for educational purposes as provided for in the 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 purpose. 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 purposes of education. Under the 1935 Constitution, the rial 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 return to the school involved.

REV. FR. CASIMIRO LLADOC VS. CIR & CTA JUNE 16 1965

PAREDES, J. FACTS: MB Estate, Inc., of Bacolod City, donated Php 10,000 in cash to Rev. Fr. Crispin Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of Rev. Fr. Lladoc, for the construction of a new Catholic Church in the locality. The donor MB Estate, Inc. filed the donor's gift tax return. The commissioner of internal revenue issued an assessment for donee's gift tax against the Catholic Parish of Victorias, Negros Occidental, of which lladoc was the priest. Lladoc lodged a protest to the assessment and requested the withdrawal thereof. The protest and the motion for reconsideration presented to the commissioner were denied. Lladoc appealed to the CTA asserting that the assessment of the gift tax, even against the Roman Catholic Church, would not be valid, for such would be clear violation of the provision of the constitution. CTA rendered judgement affirming the decision of the CIR. Hence, this petition. ISSUE: Whether or not the assessment of the donee's gift tax against petitioner is valid? HELD: YES. Section 22(3), Art VI of the Constitution exempts from taxation cemeteries, churches and parsonages or convents, appurtenant thereto, and all lands, buildings and improvements used exclusively for religious purposes. The exemption is only from the payment of taxes assessed on such properties enumerated, as property taxes, as contra-distinguished from excise taxes. In the present case, what the Collector assessed was a donee's gift tax; the assessment was not on the properties themselves. It did not rest upon the use made of the properties, upon the exercise of the privilege of receiving the properties. Manifestly, gift tax is not within the exempting provisions of the section just mentioned. 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 puposes, does not constitute an impairment of the Constitution.

YMCA OF MANILA VS COLLECTOR OF INTERNAL REVENUE JANUARY 19, 1916 MORELAND, J. FACTS: The City of Manila contending that the building and lots of the YMCA is taxable, assessed it and levied a tax thereon. It was paid under protest and this

action begun to recover it on the ground that the property was exempt from taxation under the charter of the city of Manila. The decision was for the city and the association appealed. YMCA contends that it is a welfare, educational and charitable non-profit corporation, therefore its rental income from leasing its facilities to small shop owners, restaurants, and canteen operators, and from collecting parking fees is not subject to tax. ISSUE: Whether or not the rental income of YMCA may be a subject of taxation? HELD: NO. The Supreme Court ruled that while it may be true that the YMCA keeps a lodging and 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, ans as such, it is entitled to b exempted from taxation. * There is o doubt about the correctness of the contention that an institution must devote itself exclusively to one or the other of the purposes mentioned in the statute before it can be exempt from taxation; but the statute does not say that it must be devoted exclusively to anyone of the purpose therein mentioned. It may be a combination of 2 or 3 or more of those purposes and still be entitled to exemption. The YMCA of Manila 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 for educational purposes; but we believe it can be truthfully said that it is an institution used exclusively for all 3 purposes, and that, as such, it is entitled to be exempted from taxation.

ROMAN CATHOLIC BISHOP OF NUEVA SEGOVIA VS PROVINCIAL BOARD OF ILOCOS NORTE DECEMBER 31 1927 AVANCENA, C. J. FACTS: The Roman Catholic Apostolic Church, represented by the Bishop of Nueva Segovia, possesses and is the owner of a parcel of land in the Municipality of San Nicolas, Ilocos Norte, all four sides of which face on the public street. On the south side is a part of the churchyard, the convent and an adjacent lot used for 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 churchyard and the church. On the north side is an old cemetery with 2 of its walls still standing, and a portion where

formerly stood a tower, the base of which may still be seen. As required by the provincial board of ilocos norte, the plaintiff paid, under protest, the land tax on the lot adjoining the convent and the lot which formerly was the cemetery with the portion where the tower stood. Plaintiff filed this action for the recovery of the sum paid by it by way of land tax, alleging that the collection of this tax is illegal. ISSUE: Whether or not the said property is exempt from tax? HELD: YES. The exemption of favor of the convent in the payment of the 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. It therefore must, in this sense, include not only the land actually occupied by the church, but also the adjacent ground destined to the ordinary incidental uses of man. In regard to the lot which formerly was the cemetery, while it is no longer used as such, neither is it used for commercial purposes and, according to the evidence, is now being used as a lodging house by the people who participate in religious festivities, which constitutes an incidental use in religious functions, which also comes within the exemption.

Herrera vs. Quezon City Board of Assessment Appeals 3 SCRA 186 Facts: Herrera, the owner of St. Catherines Hospital in Sta. Mesa Heights, QC, sent a letter to QC Assessor requesting exemption from payment of real estate tax on the lot, building and other improvements of the hospital claiming that it was established for charitable and humanitarian purpose and not for profit. After examination, it was granted exemption from real property tax for the years 1953, 1954 and 1955. On August 1955, the City Assessor sent a letter to the Herreras saying that the property was re-classified from exempt to "taxable" and thus assessed for real property taxes effective 1956. The petitioners appealed the assessment to the Quezon City Board of Assessment Appeals, which then affirmed the decision of the City Assessor. A motion for reconsideration was filed but denied. From the records it appear that there are two kinds of charity patients a) those who come for consultation only and b) those who remain in the hospital for treatment. Although no condition is imposed on the admission of charity lying-inpatients, they usually give donations to the hospital. The income from paypatients is spent for the improvement of charity wards. The Herreras also operate St. Catherines School of Midwifery which is within the premises of the hospital. A separate set of accounting books is maintained by this school from that kept by the hospital. Issue: WON the lot, building and other improvements occupied by the St. Catherine Hospital are exempt from the real property tax. Held: St. Catherine's Hospital is a charitable institution, hence exempted from the real property tax. The fact that it admits pay-patients does not bar it from claiming that it is devoted exclusively to benevolent purposes, it being admitted that the income derived from pay-patients is devoted to the improvement of the charity wards, which represent almost two-thirds (2/3) of the bed capacity of the hospital, aside from "out-charity patients" who come only for consultation. The existence of "St. Catherine's School of Midwifery", with an enrollment of about 200 students, who practice partly in St. Catherine's Hospital and partly in St. Mary's Hospital cannot affect the exemption to which St. Catherine's Hospital is entitled under our fundamental law. On the contrary, it furnishes another ground for exemption. Province of Abra vs. Hernando 107 SCRA 104 Facts: The provincial assessor of Abra 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. Judge Hernando of t he CFI Abra presided over the case. The petitioner province filed a motion to dismiss, based on lack of jurisdiction, which was denied. It was followed by a summary judgment granting the exemption without hearing the side of the petitioner. The Acting Provincial Fiscal, as counsel for petitioner, alleged that respondent Judge "virtually ignored the pertinent provisions of the Rules of Court; ... wantonly violated the rights of petitioner to due process, by giving due course to the petition of private respondent for declaratory relief, and thereafter without allowing petitioner to answer and without any hearing, adjudged the case; all in total disregard of basic laws of procedure and basic provisions of due process in the constitution, thereby indicating a failure to grasp and understand the law. Issue: WON Judge Hernando erred in denying the motion to dismiss of petitioner and in granting the tax exemption through a summary judgment. Held: YES. The petition must be granted. Respondent Judge would not have erred so grievously had he merely compared the provisions of t he present Constitution with that appearing in the 1935 Charter on the tax exemption of "lands, buildings, and improvements." There is a marked difference. Under the 1935 Constitution: "Cemeteries, churches, and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious, charitable, or educational purposes shall be exempt from taxation." The present Constitution added "charitable institutions, mosques, and non-profit cemeteries" and required that for the exemption of ": lands, buildings, and improvements," they should not only be "exclusively" but also "actually and "directly" used for religious or charitable purposes. The Constitution is worded differently. The change should not be ignored. It must be duly taken into consideration. Reliance on past decisions would have sufficed were the words "actually" as well as "directly" not added. There must be proof therefore of the actual and direct use of the lands, buildings, and improvements for religious or charitable purposes to be exempt from taxation. It has been the constant and uniform holding that exemption from taxation is not favored and is never presumed, so that if granted it must be strictly construed against the taxpayer. Affirmatively put, the law frowns on exemption from taxation; hence, an exempting provision should be construed strictissimi juris. Petitioner Province of Abra is therefore fully justified in invoking the protection of procedural due process. If there is any case where proof is necessary to demonstrate that there is compliance with the constitutional provision that allows an exemption, this is it. Instead, respondent Judge accepted at its face the allegation of private respondent. All that was alleged in the petition for declaratory relief filed by private respondents, after mentioning certain parcels of land owned by it, are that they are used "actually, directly and exclusively" as sources of support of the parish priest and his helpers and also of private respondent Bishop. It clearly appears, therefore, that in failing to accord a hearing to petitioner Province of Abra and deciding the case immediately in favor of

private respondent, respondent Judge failed to abide by the constitutional command of procedural due process.