Province of Abra vs.

Hernando
The Province of Abra sought to tax the properties of the Roman Catholic Bishop, Inc. of Bangued. Judge Harold
Hernando dismissed the petition of Abra without hearing its side. Hernando ruled that there “is no question that
the real properties sought to be taxed by the Province of Abra are properties of the respondent Roman Catholic
Bishop of Bangued, Inc.” Likewise, there is no dispute that the properties including their produce are actually,
directly and exclusively used by the Roman Catholic Bishop of Bangued, Inc. for religious or charitable
purposes.”
ISSUE: Whether or not the properties of the church (in this case) is exempt from taxes.
HELD: No, they are not tax exempt. It is true that the Constitution provides that “charitable institutions,
mosques, and non-profit cemeteries” are 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 exemption from taxation is not favored and is never presumed, so that if granted it must
be strictly construed against the taxpayer. However, in this case, there is no showing that the said properties are
actually and directly used for religious or charitable uses.

ABRA VALLEY COLLEGE VS. AQUINO

FACTS: Petitioner, an educational corporation and institution of higher learning duly incorporated with the
Securities and Exchange Commission in 1948, 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 amounting to P5,140.31. Said “Notice of Seizure” by respondents Municipal Treasurer and
Provincial Treasurer, defendants below, was issued for the satisfaction of the said taxes thereon.

The parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned decision.
The trial court ruled for the government, holding that the second floor of the building is being used by the
director for residential purposes and that the ground floor used and rented by Northern Marketing Corporation, a
commercial establishment, and thus the property is not being used exclusively for educational purposes. Instead
of perfecting an appeal, petitioner availed of the instant petition for review on certiorari with prayer for
preliminary injunction before the Supreme Court, by filing said petition on 17 August 1974.

ISSUE: Whether or not the lot and building are used exclusively for educational purposes.

HELD: Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, 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. ﾝ
Reasonable emphasis has always been made that the exemption extends to facilities which are incidental to and
reasonably necessary for the accomplishment of the main purposes. The use of the school building or lot for
commercial purposes is neither contemplated by law, nor by jurisprudence. In the case at bar, the lease of the
first floor of the building to the Northern Marketing Corporation cannot by any stretch of the imagination be
considered incidental to the purpose of education. The test of exemption from taxation is the use of the property
for purposes mentioned in the Constitution.

The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the assessed tax be
returned to the petitioner. The modification is derived from the fact that the ground floor is being used for
commercial purposes (leased) and the second floor being used as incidental to education (residence of the
director).
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.

FACTS: On June 8, 1972 the 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 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.

(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.

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.
ISSUE: Whether or not the properties are exclusively for education purposes?

HELD: 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

The phrase “exclusively used for educational purposes” was further clarified by this Court, thus““Moreover, the
exemption in favor of property used exclusively for charitable or educational purposes is ‘not limited to property
actually indispensable’ therefor, 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.’ ”

The exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of
the main purpose the lease of the first floor to the Northern Marketing Corporation cannot by any stretch of the
imagination be considered incidental to the purposes of education; Case at bar.—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
pur-pose—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.

Trial Court correct in imposing the tax not because the second floor is being used by the Director and his family
for residential purposes but because the first floor is being used for commercial purposes.—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.

Bishop of Nueva Segovia vs. Provincial Board of Ilocos

Facts: The Roman Catholic Apostolic Church is the owner of a parcel of land in San Nicolas, Ilocos Norte. On
the south side is a part of the Church yard, the convent and an adjacent lost used for a 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 its two walls still standing, and a portion where formerly stood
a tower. The provincial board assessed land tax on lots comprising the north and south side, which the church
paid under protest. It filed suit to recover the amount.
Issue: Whether the lots are covered by the Church’s tax exemption.
Held: The exemption in favor of the convent in the payment of 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. The exemption
includes not only the land actually occupied by the Church but also the adjacent ground destined to the ordinary
incidental uses of man. A vegetable garden, thus, which belongs to a convent, where its use is limited to the
necessity of the priest, comes under the exemption. Further, land used as a lodging house by the people who
participate in religious festivities, which constitutes an incidental use in religious functions, likewise comes
within the exemption. It cannot be taxed according to its former use, i.e. a cemetery
Commisioner vs. Bishop of Missionery District of the Philippine Islands GR L-19445, 31 August 1965 En Banc,
Regala (J): 7 concur, 1 took no part
Facts: The Missioner y District of the Philippine Islands, of the Protestant Episcopal Church in the United States,
owns and operates the St. Luke’s Hospital in Quezon City, the Brent Hospital in Zamboanga City, and the St.
Stephen’s High School in Manila. In 1957 to 1959, the Missionary District received various shipments of
materials, supplies, equipment and other articles intended for use in the construction and operation of the new St.
Luke’s Hospital. On these shipments, the Commissioner collected compensation tax. The Missionary District
filed claims for refund, but which was denied by the Commissioner on the ground that St. Luke’s Hospital was
not a charitable institution and therefore was not exempt from taxes.
Issue: Whether the shipments for St. Luke’s Hospital are tax-exempt.
Held: Under RA 1916, which covers taxes on donations in any form and all articles imported into the
Philippines, requires that the imported articles ush have been donated, the donee must be a duly incorporated or
established international civic organization, religious or charitable society or institution for civic, religious or
charitable purposes; and the articles must have been donated for the use of the organization, society or
institution; or for free distribution and not for sale, barter or hire. As the law does not distinguish or qualify the
enjoyment or the exemption (as the Secretary of Finance did in Departent Order 18, series of 1958), the
admission of pay patients does not detract from the charitable character of a hospital, if its funds are devoted
exclusively to the maintenance of the institution. Thus, the shipments are tax exempt.

1. YMCA is a non-stock, non-profit institution, which conducts various programs and activities that are
beneficial to the public, especially the young people, pursuant to its religious, educational and charitable
objectives
2. YMCA earned, among others, an income of P676,829.80 from leasing out a portion of its premises to
small shop owners, like restaurants and canteen operators, and P44,259.00 from parking fees collected
from non-members.
3. the CIR issued an assessment in the total amount of P415,615.01 including surcharge and interest, for
deficiency income tax, deficiency expanded withholding taxes on rentals and professional fees and
deficiency withholding tax on wages.

1. Issue: Is the rental income of the YMCA from its real estate subject to tax?

2. Ruling:

3. Taxes are the lifeblood of the nation; the Court has always applied the doctrine of strict interpretation in
construing tax exemptions. Furthermore, a claim of statutory exemption from taxation should be
manifest and unmistakable from the language of the law on which it is based.

4. The last paragraph of Section 27, the YMCA argues, should be “subject to the qualification that the
income from the properties must arise from activities ‘conducted for profit’ before it may be considered
taxable.”

5. This argument is erroneous.

6. As previously stated, a reading of said paragraph ineludibly shows that the income from any property
of exempt organizations, as well as that arising from any activity it conducts for profit, is taxable.
The phrase “any of their activities conducted for profit” does not qualify the word “properties.” This
makes income from the property of the organization taxable, regardless of how that income is used —
whether for profit or for non-profit purposes.

7. Hence, Respondent Court of Appeals committed reversible error when it allowed, on reconsideration, the
tax exemption claimed by YMCA on income it derived from renting out its real property, on the solitary
but unconvincing ground that the said income is not collected for profit but is merely incidental to its
operation. The law does not make a distinction. The rental income is taxable regardless of whence such
income is derived and how it used or disposed of. Where the law does not distinguish, neither should we.

8. Constitutional Provisions on Taxation

9. Invoking not only the NIRC but also the fundamental law, private respondent submits that Article VI,
Section 28 of par. 3 of the 1987 Constitution, exempts “charitable institutions” from the payment not
only of property taxes but also of income tax from any source.

10. The Court is not persuaded.

11. Accordingly, Justice Hilario G. Davide, Jr what is exempted is not the institution itself; those exempted
from real estate taxes are lands, buildings and improvements actually, directly and exclusively used for
religious, charitable or educational purposes.”

12. Indeed, the income tax exemption claimed by private respondent finds no basis in Article VI, Section 28,
par. 3 of the Constitution.
 13. Private respondent also invokes Article XIV, Section 4, par. 3 of the Charter, claiming that the YMCA “is
a non-stock, non-profit educational institution whose revenues and assets are used actually, directly and
exclusively for educational purposes so it is exempt from taxes on its properties and income.”

14. We reiterate that private respondent is exempt from the payment of property tax, but not income
tax on the rentals from its property.
15. The bare allegation alone that it is a non-stock, non-profit educational institution is insufficient to justify
its exemption from the payment of income tax.

16. The YMCA to be granted the exemption it claims under the, it must prove with substantial evidence that
17. it falls under the classification non-stock, non-profit educational institution; and
18. the income it seeks to be exempted from taxation is used actually, directly, and exclusively for
educational purposes.

19. Is the YMCA an educational institution within the purview of Article XIV, Section 4, par.3 of the
Constitution?

20. We rule that it is not.

21. The term “educational institution” or “institution of learning” has acquired a well-known technical
meaning.

22. Under the Education Act of 1982, such term refers to schools. The school system is synonymous with
formal education, which “refers to the hierarchically structured and chronological graded learnings
organized and provided by the formal school system and for which certification is required in order for
the learner to progress through the grades or move to the higher levels.”

23. The Court has examined the “Amended Articles of Incorporation” and “By-Laws” of the YMCA, but
found nothing in them that even hints that it is a school or an educational institution.
Moreover, without conceding that Private Respondent YMCA is an educational institution, the Court
also notes that the former did not submit proof of the proportionate amount of the subject income that
was actually, directly and exclusively used for educational purposes. Article XIII, Section 5 of the
YMCA by-laws, which formed part of the evidence submitted, is patently insufficient, since the same
merely signified that “the net income derived from the rentals of the commercial buildings shall be
apportioned to the Federation and Member Associations as the National Board may decide.”

24. GARCIA VS. EXECUTIVE SECRETARY 211 SCRA 219 July 3, 1992Feliciano, J.:FACTS:
25. The President issued an EO which imposed, across the board, including crude oil and othero i l
p r o d u c t s , a d d i t i o n a l d u t y a d v a l o r e m . T h e Ta r i f f C o m m i s s i o n h e l d p u b l i c
hearingson said EO and submitted a report to the President for consideration
a n d a p p r o p r i a t e action. The President, on the other hand issued an EO which levied a special duty of
P0.95per liter of imported crude oil and P1.00 per liter of imported oil products.
26. ISSUE:
27. Whether or not the President may issue an EO which is tantamount to enacting a bill in thenature of
revenue-generating measures.
28. RULING:
29. T h e C o u r t s a i d t h a t a l t h o u g h t h e e n a c t m e n t o f a p p r o p r i a t i o n , r e v e n u e a n d
t a r i f f b i l l s is within the province of the Legislative, it does not follow that EO in
question, assumingthey may be characterized as revenue measure are prohibited to the President, that
theymust be enacted instead by Congress. Section 28 of Article VI of the 1987
Constitutionprovides:“The Congress may, by law authorize the President to fix… tariff rates and other
duties orimposts…” The relevant Congressional statute is the Tariff and Customs Code of
the Philippines andSections 104 and401, the pertinent provisions thereof.

SOUTHERN CROSS CEMENT

Facts:
Republic Act No. 8800, the Safeguard Measures Act (SMA), which was one of the laws enacted by
Congress soon after the Philippines ratified the General Agreement on Tariff and Trade (GATT) and the
World Trade Organization (WTO) Agreement.[3] The SMA provides the structure and mechanics for
the imposition of emergency measures, including tariffs, to protect domestic industries and producers
from increased imports which inflict or could inflict serious injury on them.
Petitioner Southern Cross Cement Corporation (Southern Cross) is a domestic corporation engaged in
the business of cement manufacturing, production, importation and exportation. Its principal
stockholders are Taiheiyo Cement Corporation and Tokuyama Corporation, purportedly the largest
cement manufacturers in Japan.[5]
Private respondent Philippine Cement Manufacturers Corporation[6] (Philcemcor) is an association of
domestic cement manufacturers. It has eighteen (18) members,[7] per Record. While Philcemcor
heralds itself to be an association of domestic cement manufacturers, it appears that considerable equity
holdings, if not controlling interests in at least twelve (12) of its member-corporations, were acquired
by the three largest cement manufacturers in the world, namely Financiere Lafarge S.A. of France,
Cemex S.A. de C.V. of Mexico, and Holcim Ltd. of Switzerland (formerly Holderbank Financiere
Glaris, Ltd., then Holderfin B.V.).
the DTIs disagreement with the conclusions of the Tariff Commission, but at the same time, ultimately
denying Philcemcors application for safeguard measures on the ground that the he was bound to do so
in light of the Tariff Commissions negative findings.
Philcemcor challenged this Decision of the DTI Secretary by filing with the Court of Appeals a Petition
for Certiorari, Prohibition and Mandamus[11] seeking to set aside the DTI Decision, as well as the
Tariff Commissions Report. The Court of Appeals Twelfth Division, in a Decision[13] penned by Court
of Appeals Associate Justice Elvi John Asuncion,[14] partially granted Philcemcors petition.
On 23 June 2003, Southern Cross filed the present petition, arguing that the Court of Appeals has no
jurisdiction over Philcemcors petition, as the proper remedy is a petition for review with the CTA
conformably with the SMA, and; that the factual findings of the Tariff Commission on the existence or
non-existence of conditions warranting the imposition of general safeguard measures are binding upon
the DTI Secretary.
Despite the fact that the Court of Appeals Decision had not yet become final, its binding force was
cited by the DTI Secretary when he issued a new Decision on 25 June 2003, wherein he ruled that that
in light of the appellate courts Decision, there was no longer any legal impediment to his deciding
Philcemcors application for definitive safeguard measures.
The Court of Appeals had held that based on the foregoing premises, petitioner’s prayer to set aside the
findings of the Tariff Commission in its assailed Report dated March 13, 2002 is DENIED. On the
other hand, the assailed April 5, 2002 Decision of the Secretary of the Department of Trade and
Industry is hereby SET ASIDE. Consequently, the case is REMANDED to the public respondent
Secretary of Department of Trade and Industry for a final decision in accordance with RA 8800 and its
Implementing Rules and Regulations. Hence, the appeal.
Yet on 25 June 2003, the DTI Secretary issued a new Decision, ruling this time that that in light of the
appellate courts Decision there was no longer any legal impediment to his deciding Philcemcors
application for definitive safeguard measures.[41] He made a determination that, contrary to the
findings of the Tariff Commission, the local cement industry had suffered serious injury as a result of
the import surges.[42] Accordingly, he imposed a definitive safeguard measure on the importation of
gray Portland cement, in the form of a definitive safeguard duty in the amount of P20.60/40 kg. bag for
three years on imported gray Portland Cement. Hence, the appeal.
Issue:
Whether or not the decision of DTI Secretary, to impose safeguard measures is valid.
Held:
NO, due to the nature of this case, the Court found that the DTI should follow the regulations
prescribed by SMA. The Court held that he assailed Decision of the Court of Appeals is DECLARED
NULL AND VOID and SET ASIDE. The Decision of the DTI Secretary dated 25 June 2003 is also
DECLARED NULL AND VOID and SET ASIDE. No Costs.
Yet on 25 June 2003, the DTI Secretary issued a new Decision, ruling this time that that in light of the
appellate courts Decision there was no longer any legal impediment to his deciding Philcemcors
application for definitive safeguard measures.[41] He made a determination that, contrary to the findings
of the Tariff Commission, the local cement industry had suffered serious injury as a result of the import
surges. Accordingly, he imposed a definitive safeguard measure on the importation of gray Portland
cement, in the form of a definitive safeguard duty in the amount of P20.60/40 kg. bag for three years on
imported gray Portland Cement.