SYLLABUS

1. TAXES; SPECIAL ASSESSMENTS. — It is a well-established rule in tax matters

that special assessments created and collected to defray extraordinary expenses
incurred by works such as the drainage and sewerage system that benefit the
residents in a special way are not taxes in their legal sense. According to the
ordinance, the special assessment levied on properties located in the City of
Baguio was created to defray the extraordinary expenses incurred by the
construction of the drainage and sewerage system, a work that specially benefited
all the city's property owners. If the special assessment imposed on the appellant
is not strictly speaking a tax from which he is exempt, it is evident that neither
under the ordinance nor the Constitution is the appellant exempt from paying the
special assessment.

2. ID.; ID.; EXEMPTION ESTABLISHED BY THE CONSTITUTION. — Furthermore, in

accordance with the stipulation of facts, the appellant cannot successfully invoke
the exemption established by the Constitution because it has not been admitted
or proven that its properties, which paid the special assessment, were used
exclusively for religious purposes. It is true that it was stipulated that the
properties were dedicated to religious purposes, but it was neither agreed nor
proven that such use was exclusive, so it could occur that the properties, in
addition to being dedicated to religious purposes, were also used for other non-
religious purposes.

3. ID.; ID.; MUNICIPAL ORDINANCES. — As for the validity of Ordinance No. 137
and its amendments, it is undeniable that the City of Baguio is authorized by
Article 8(1) of Act No. 1963, now Article 2553(1) of the Revised Administrative
Code, to create the disputed special assessment for the purpose of defraying the
expenses incurred by the drainage and sewerage system constructed for the
benefit of all the inhabitants of said city.

DECISION

IMPERIAL, M.:

The plaintiff filed this action to recover from the defendant the sum of P1,019.37 paid
under protest as a special assessment on its properties in the City of Baguio for the year
1937. He appealed from the judgment of the Court of First Instance of said city which
dismissed his complaint, without costs.
The parties submitted the matter through the following partial stipulation of
facts:jgc:chanrobles.com.ph

"1. � The plaintiff is a sole religious corporation, organized in accordance with the
laws of the Philippines, with residence in the City of Baguio;

2. � The defendant is a public official of the City of Baguio and acts as treasurer
and collector of said city;

"3. � That on June 25, 1937, the defendant demanded and collected from the plaintiff
the sum of One thousand nineteen pesos and thirty-seven centavos (P1,019.37),
Philippine currency, by virtue of the provisions of Ordinance No. 137, as amended and
supplemented by Ordinances Nos. 263, 277, 283, 297, 311, 325, 348, 367, 387, 419, 471,
454, 455, 466, 512, 552, 591, 592, and City Council Resolution No. 10 dated January 22,
1918. All the aforementioned ordinances, as well as Resolution No. 10, Series of 1918,
are made integral parts of this agreement.

4. � The payment made by the plaintiff of P1,019.37 corresponds to the year 1937
and was made under protest in a letter dated June 25, 1937, in which the reasons
for the protest were explained, and the favorable resolution of the protest and
the refund of the amount paid were requested;

"5. � The defendant denied the protest;

"6. � The lands affected by the payment of P1,019.37 are properties of the plaintiff
dedicated to worship and teaching during the year 1937 and in previous years;

"7. � The City of Baguio constructed, in accordance with the ordinances mentioned in
paragraph 2 of this stipulation, a drainage and sewerage system;

"8. � The plaintiff had been paying in previous years before 1937, without protest, the
amounts demanded by the city in accordance with the aforementioned ordinances; and
for the first time protested in 1937, the protest of which is the subject of this litigation;

"9. � The list of properties assessed in the City of Baguio was included in Ordinance
No. 137, and said list became part of Ordinance No. 137 and was named and converted
into the 'SPECIAL ASSESSMENT LIST, CITY OF BAGUIO,' for the purposes of said
ordinance, and the properties affected by the payment under protest of the plaintiff
were and are included in said list and have not been excluded to date by virtue of any
ordinance subsequent to No. 137;
"10. � The construction of the drainage and sewerage system has directly and
specially benefited all the owners whose lots and lands are included in the 'SPECIAL
ASSESSMENT LIST, CITY OF BAGUIO,' including the lands of the plaintiff affected in said
list and in the payment under protest, and this drainage and sewerage system has
promoted the cleanliness and sanitary condition of the lands on said list.

"11. � The parties reserve the right to present additional evidence."cralaw virtua1aw
library

The appellant maintains in his assignments of error the following propositions: (1) that
his real properties and improvements in the City of Baguio are exempt from paying any
tax under the Constitution and the existing laws and, therefore, should likewise be
exempt from paying the special assessment imposed by the appellee and paid under
protest; (2) that Ordinance No. 137 and its amendments, under which the special
assessment was imposed, exclude his properties exempt from paying any tax from their
provisions; (3) that assuming that the aforementioned ordinances do not exclude his
properties from paying the special assessment, they are null and void; and (4) that
assuming the mentioned ordinances are legal, the appellee, as Treasurer of the City of
Baguio, illegally collected the special assessment paid under protest by the appellant on
the grounds that at the time of payment, the appellant had already satisfied his share of
the expenses of the drainage and sewerage system, which led to the imposition of the
special assessment.

The first proposition involves the question of whether the properties on which the
special assessment was levied are indeed exempt from such payment. The special
assessment was collected by the appellee under the provisions of Articles 2 and 5 of
Ordinance No. 137, which provide:jgc:chanrobles.com.ph

"It having heretofore been ascertained that said work will benefit each and all owners or
possessors of property subject to taxation situated, Iying and being within the corporate
limits of the City, it is hereby declared that benefit will accrue from said work to each
and all said persons, and said persons shall pay a compensation for said benefit."cralaw
virtua1aw library

"The City Assessor having heretofore compiled from the City Assessment and Valuation
aforesaid and certified to the City Treasurer a list containing and setting forth the total
amount of property within the corporate limits of the City subject to assessment and
levy for the purposes in this Ordinance recited, the total amount of properties
individually owned and possessed, and the name of each individual owner and
possessor, the rate per centum, to wit: ONE PER CENTUM ad valorem of said total value
which is necessary for the purposes set forth in Section III hereof, is hereby made the
amount to be paid individually by each owner or possessor as his share, and the above-
mentioned list is hereby made part hereof and named 'SPECIAL ASSESSMENT LIST,' and
said list is hereby declared to be, and made the City official list and basis for assessing,
levying and collecting the rate of compensation aforesaid from the above-referred
owners and possessors, and each owner or possessor is required to, and shall pay the
amount in said list stated as his individual share to the City Treasurer on or after the first
of March and not later than June 30th, 1914."cralaw virtua1aw library

The appellant argues that his properties are exempt from paying the special assessment
both under Article 2 of Ordinance No. 137 and under Article 14(3), Title VI, of the
Philippine Constitution, which reads as follows:jgc:chanrobles.com.ph

"(3) Cemeteries, churches, parsonages, and convents appurtenant thereto, and all lands,
buildings, and improvements used exclusively for religious, charitable, or educational
purposes shall be exempt from taxation."cralaw virtua1aw library

It is alleged that according to Article 2 of Ordinance No. 137, only properties not exempt
from any tax must pay the special assessment, and according to the constitutional
provision cited, the appellant's properties are exempt from paying the special
assessment because they are dedicated to religious purposes. This contention requires,
first and foremost, a determination of whether the special assessment imposed by
Ordinance No. 137 is a tax in its legal sense. It is a well-established rule in tax matters
that special assessments created and collected to defray extraordinary expenses
incurred by works, such as the drainage and sewerage system, that benefit the
inhabitants in a special way are not taxes in their legal sense. According to the
ordinance, the special assessment collected on properties located in the City of Baguio
was created to defray the extraordinary expenses incurred by the construction of the
drainage and sewerage system, a work that specially benefited all the city's property
owners. Judge Cooley, in distinguishing between taxes and special assessments in his
treatise on taxation, expresses himself in these terms:jgc:chanrobles.com.ph

"While the word 'tax' in its broad meaning, includes both general taxes and special
assessments, and in a general sense a tax is an assessment, and an assessment is a tax,
yet there is a recognized distinction between them in that assessment is confined to
local impositions upon property for the payment of the cost of public improvements in
its immediate vicinity and levied with reference to special benefits to the property
assessed. The differences between a special assessment and a tax are that (1) a special
assessment can be levied only on land; (2) a special assessment cannot (at least in most
states) be made a personal liability of the person assessed; (3) a special assessment is
based wholly on benefits; and (4) a special assessment is exceptional both as to time
and locality. The imposition of a charge on all property, real and personal, in a
prescribed area, is a tax and not an assessment, although the purpose is to make a local
improvement on a street or highway. A charge imposed only on property owners
benefited is a special assessment rather than a tax notwithstanding the statute calls it a
tax."cralaw virtua1aw library

If the special assessment imposed on the appellant is not strictly speaking a tax from
which he is exempt, it is evident that neither under the ordinance nor the Constitution is
the appellant exempt from paying the special assessment.

Furthermore, in accordance with the stipulation of facts, the appellant cannot

successfully invoke the exemption established by the Constitution because it has not
been admitted or proven that its properties, which paid the special assessment, were
used exclusively for religious purposes. It is true that it was stipulated that the properties
were dedicated to religious purposes, but it was neither agreed nor proven that such
use was exclusive, so it could occur that the properties, in addition to being dedicated to
religious purposes, were also used for other non-religious purposes.

As for the validity of Ordinance No. 137 and its amendments, it is undeniable that the
City of Baguio is authorized by Article 8(1) of Act No. 1963, now Article 2553(1) of the
Revised Administrative Code, to create the disputed special assessment for the purpose
of defraying the expenses incurred by the drainage and sewerage system constructed
for the benefit of all the inhabitants of said city.

The appellant's last contention is that assuming Ordinance No. 137 and its amendments
are valid, he is no longer obliged to pay the special assessment because he had already
satisfied his aliquot share of said special assessment in years prior to 1937. The
contention is equally unfounded because it appears from Exhibit 1 that the cost of the
drainage and sewerage system amounted to P502,750.76, and the city had only
collected P291,290.08 as special assessment until 1937; it follows that the cost of the
system in 1937 had not yet been fully paid.

The judgment appealed from being in accordance with law, it is affirmed in all its parts,
with costs against the appellant. So ordered.

Avanceña, Pres., Diaz, Laurel, and Horrilleno, JJ., concur.