G.R. No.

L-9637 April 30, 1957

AMERICAN BIBLE SOCIETY, plaintiff-appellant,

vs.
CITY OF MANILA, defendant-appellee.

FACTS:

American Bible Society (ABS) is a foreign, non-stock, non-profit, religious, missionary corporation duly registered and
doing business in the Philippines through its Philippine agency established in Manila. In the course of its ministry, ABS’ Philippine agency
has been distributing and selling bibles and/or gospel portions thereof (except during the Japanese occupation) throughout the Philippines
and translating the same into several Philippine dialects. On May 29 1953, the acting City Treasurer of the City of Manila informed ABS
that it was conducting the business of general merchandise since November, 1945, without providing itself with the necessary
Mayor's permit and municipal license, in violation of several ordinances and required ABS to secure the corresponding permit and
license fees, together with compromise covering the period from the 4th quarter of 1945 to the 2nd quarter of 1953, in the total sum of
P5,821.45.

ABS protested against this requirement, but the City Treasurer demanded that it deposit and pay to avoid the closing of its
business as well as further fines and penalties. ABS paid under protest then subsequently filed a suit praying that judgment be
rendered declaring the ordinances illegal and unconstitutional because they provide for religious censorship and restrain the free exercise
and enjoyment of its religious profession, to wit: the distribution and sale of bibles and other religious literature to the people of the
Philippines and to return the money.

The City of Manila replied maintaining that said ordinances were enacted by the Municipal Board of the City of Manila by virtue of
the power granted to it by section 2444, subsection (m-2) of the Revised Administrative Code, superseded on June 18, 1949, by section
18, subsection (1) of Republic Act No. 409, known as the Revised Charter of the City of Manila.

When the case was set for hearing, ABS proved that it has been in existence in the Philippines since 1899, and that its parent
society is in New York, United States of America; that its, contiguous real properties located at Isaac Peral are exempt from real
estate taxes; and that it was never required to pay any municipal license fee or tax before the war, nor does the ABS in the US pay
any license fee or sales tax for the sale of bible therein. It also said that it never made any profit from the sale of its bibles, which are
disposed of for as low as one third of the cost, and that in order to maintain its operating cost it obtains substantial remittances from its
New York office and voluntary contributions and gifts from certain churches, both in the United States and in the Philippines, which are
interested in its missionary work.

Regarding ABS’ contention of lack of profit in the sale of bibles, City of Manila retorts that the admissions of plaintiff-appellant's
lone witness who testified on cross-examination that bibles bearing the price of 70 cents each from plaintiff-appellant's New York office are
sold here by plaintiff-appellant at P1.30 each; those bearing the price of $4.50 each are sold here at P10 each; those bearing the price of
$7 each are sold here at P15 each; and those bearing the price of $11 each are sold here at P22 each, clearly show that plaintiff's
contention that it never makes any profit from the sale of its bible, is evidently untenable.

ISSUE:
WON American Bible Society is liable to pay sales tax for the distribution and sale of bibles (NO)

HELD:
Under Sec. 1 of Ordinance 3000, one of the ordinance in question, person or entity engaged in any of the business, trades
or occupation enumerated under Sec. 3 must obtain a Mayor’s permit and license from the City Treasurer. American Bible
Society’s business is not among those enumerated.

However, item 79 of Sec. 3 of the Ordinance provides that all other businesses, trade or occupation not mentioned,
except those upon which the City is not empowered to license or to tax P5.00 . Therefore, the necessity of the permit is made to
depend upon the power of the City to license or tax said business, trade or occupation.

2 provisions of law that may have bearing on this case:

a. Chapter 60 of the Revised Administrative Code, the Municipal Board of the City of Manila is empowered to tax and fix the
license fees on retail dealers engaged in the sale of books
b. Sec. 18(o) of RA 409: to tax and fix the license fee on dealers in general merchandise, including importers and indentors, except
those dealers who may be expressly subject to the payment of some other municipal tax. Further, Dealers in general
merchandise shall be classified as (a) wholesale dealers and (b) retail dealers. For purposes of the tax on retail dealers, general
merchandise shall be classified into four main classes: namely (1) luxury articles, (2) semi-luxury articles, (3) essential
commodities, and (4) miscellaneous articles. A separate license shall be prescribed for each class but where commodities of
different classes are sold in the same establishment, it shall not be compulsory for the owner to secure more than one license if
he pays the higher or highest rate of tax prescribed by ordinance. Wholesale dealers shall pay the license tax as such, as may be
provided by ordinance
 The only difference between the 2 provisions is the limitation as to the amount of tax or license fee that a retail dealer has to
pay per annum

As held in Murdock vs. Pennsylvania, The power to impose a license tax on the exercise of these freedoms provided for in the Bill
of Rights, is indeed as potent as the power of censorship which this Court has repeatedly struck down. It is not a nominal fee imposed as a
regulatory measure to defray the expenses of policing the activities in question. It is in no way apportioned. It is flat license tax levied and
collected as a condition to the pursuit of activities whose enjoyment is guaranteed by the constitutional liberties of press and religion and
inevitably tends to suppress their exercise. That is almost uniformly recognized as the inherent vice and evil of this flat license tax.

Further, the case also mentioned that the power to tax the exercise of a privilege is the power to control or suppress its
enjoyment. Those who can tax the exercise of this religious practice can make its exercise so costly as to deprive it of the resources
necessary for its maintenance. Those who can tax the privilege of engaging in this form of missionary evangelism can close all its doors to
all those who do not have a full purse.

Under Sec. 27(e) of Commonwealth Act No. 466 or the National Internal Revenue Code, Corporations or associations
organized and operated exclusively for religious, charitable, . . . or educational purposes, . . .: Provided, however, That the income of
whatever kind and character from any of its properties, real or personal, or from any activity conducted for profit, regardless of
the disposition made of such income, shall be liable to the tax imposed under this Code shall not be taxed

The price asked for the bibles and other religious pamphlets was in some instances a little bit higher than the actual cost of the
same but this cannot mean that American Bible Society was engaged in the business or occupation of selling said
"merchandise" for profit

Therefore, the Ordinance cannot be applied for in doing so it would impair American Bible Society’s free exercise and enjoyment
of its religious profession and worship as well as its rights of dissemination of religious beliefs.