71 Phil. 547 – Political Law – Powers of the State; Power to Tax – Exemption From Taxation – Assessment vs Tax
In 1937, an ordinance (Ordinance No. 137: Special Assessment List, City of Baguio) was passed in the City of Baguio. The said ordinance sought to assess properties of property owners within the defined city limits. The Apostolic Prefect of Mt. Province (APMP), on the other hand, is a religious corporation duly established under Philippine laws. Pursuant to the ordinance, it paid a total amount of P1,019.37 but under protest. APMP later averred that it should be exempt from the said special contribution since as a religious institution, it has a constitutionally guaranteed right not to be taxed including its properties.
ISSUE: Whether or not APMP is exempt from taxes.
HELD: No. In the first place, the ordinance was in the nature of an assessment and not a taxation.
The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution. Based on Justice Cooley’s words:
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.
In the case at bar, the Prefect cannot claim exemption because the assessment is not taxation per se but rather a system for the benefits of the inhabitants of the city.