Atty. Gregorio B. Austral, CPA
Taxing religion
Here is an oft-cited case involving the issue of whether a religious exercise may be subject to tax. American Bible Society (ABS) is a foreign non-profit religious corporation doing business in the Philippines through its Philippine agency by 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.
The acting City Treasurer of the City of Manila informed American Bible Society that it was conducting the business of general merchandise since November, 1945 without the necessary Mayor’s permit and municipal license, in violation of city ordinances. For this reason, it was required to secure, within three days, the corresponding permit and license fees, together with compromise in the sum of P5,821.45. ABS paid the amount under protest to the City Treasure of Manila.
ABS argued that it never made any profit from the sale of its bibles and 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.
ABS contends that Ordinances Nos. 2529 (license fees) and 3000(permit), as respectively amended, are unconstitutional and illegal in so far as its society is concerned, 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.
The Ordinance is of general application and not particularly directed against institutions like the plaintiff, and it does not contain any provisions whatsoever prescribing religious censorship nor restraining the free exercise and enjoyment of any religious profession.
The Supreme Court held that ABS is exempt from requirement of payment of license fees, but not exempt from Mayor’s permit.
Article III, section 1, clause (7) of the Constitution of the Philippines guarantees the freedom of religious profession and worship. The constitutional guaranty of the free exercise and enjoyment of religious profession and worship carries with it the right to disseminate religious information. Any restraints of such right can only be justified like other restraints of freedom of expression on the grounds that there is a clear and present danger of any substantive evil which the State has the right to prevent.
In the case at bar the license fee is imposed upon ABS for its distribution and sale of bibles and other religious literature. It is a license tax — a flat tax imposed on the exercise of a privilege granted by the Bill of Rights which is not allowed. The power to impose a license tax on the exercise of these freedoms 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.
The right to enjoy freedom of the press and religion occupies a preferred position as against the constitutional right of property owners.
It may be true that in the case at bar 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 ABS was engaged in the business or occupation of selling said “merchandise” for profit.
For this reason, the provisions of City of Manila Ordinance No. 2529 (license fees), as amended, cannot be applied to ABS, for in doing so it would impair its free exercise and enjoyment of its religious profession and worship as well as its rights of dissemination of religious beliefs.
With respect to Ordinance No. 3000, as amended, which requires the obtention the Mayor’s permit before any person can engage in any of the businesses, trades or occupations enumerated therein, We do not find that it imposes any charge upon the enjoyment of a right granted by the Constitution, nor tax the exercise of religious practices.SOURCE: https://web.mylegalwhiz.com/summary/view/284/12473