PHILIPPINE SUPREME COURT DECISIONS

EN BANC

[G.R. No. 47252. April 18, 1941.]

THE APOSTOLIC PREFECT OF THE MOUNTAIN PROVINCE, plaintiff-appellant, versus THE

TREASURER OF THE CITY OF BAGUIO, defendant-appellee.

Messrs. Cavanna, Jasmines, and Tianco, representing the appellant.

The Solicitor General, representing the appellee.

SYLLABUS

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

assessments created and collected to amortize extraordinary expenses incurred for projects
such as drainage and sewerage systems, which benefit residents in a particular way, are not
taxes in the legal sense. According to the ordinance, the special assessment imposed on
properties in the City of Baguio was created to amortize the extraordinary expenses incurred
for the construction of the drainage and sewerage system, a project that benefited all
property owners in the city in a special way. If the special assessment imposed on the
appellant is not strictly 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.
​ ID.; ID.; EXEMPTION ESTABLISHED BY THE CONSTITUTION. — Furthermore, according
to the stipulation of facts, the appellant cannot successfully invoke the exemption established
by the Constitution because it has not been admitted or proven that his properties, which
paid the special assessment, were exclusively used for religious purposes. While it was
stipulated that the properties were dedicated to religious purposes, it was not agreed upon or
proven that such use was exclusive. It could, therefore, happen that the properties, in
addition to being dedicated to religious purposes, were also used for non-religious purposes.
​ 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 Section 8(1) of Act No.
1963, now Section 2553(1) of the Revised Administrative Code, to create the disputed
special assessment to amortize the expenses incurred by the drainage and sewerage
system constructed for the benefit of all residents of the said city.

DECISION

IMPERIAL, M.:

The plaintiff filed this action to recover from the defendant the sum of P1,019.37, which he paid
under protest as a special assessment on his properties in the City of Baguio for the year 1937. He
appealed from the decision of the Court of First Instance of said city, which dismissed his complaint
without costs.

The parties submitted the case through the following partial stipulation of
facts:jgc:chanrobles.com.ph
"1. The plaintiff is a sole corporation of a religious character, organized in accordance with the laws
of the Philippines, with residence in the City of Baguio;

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

"3. That the defendant demanded and collected from the plaintiff on June 25, 1937, the sum of One
thousand nineteen pesos and thirty-seven centavos (P1,019.37), Philippine currency, under the
provisions of Ordinance No. 137, as amended and modified by Ordinances Nos. 263, 277, 283, 297,
311, 325, 348, 367, 387, 419, 471, 454, 455, 466, 512, 552, 591, 592, and Resolution of the City
Council of Baguio 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.

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

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

"8. That the plaintiff had been paying in years prior to 1937, without protest, the amounts demanded
by the city in accordance with the aforementioned ordinances; and for the first time, he protested in
1937, the protest that is the subject of this litigation;

"9. That a list of the properties appraised in the City of Baguio was included in Ordinance No. 137,
and that list became part of Ordinance No. 137 and was called and converted into the ’SPECIAL
ASSESSMENT LIST, CITY OF BAGUIO,’ for the purposes of said ordinance, and the properties
affected in the payment under protest of the plaintiff were and are included in said list and have not
been excluded until the present by virtue of any ordinance subsequent to No. 137;

"10. That the construction of the drainage and sewerage system has directly and especially
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 in the said list.

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

The appellant argues in his assignment of errors the following propositions: (1) that his real
properties and improvements in the City of Baguio, being exempt from the payment of any tax by the
Constitution and existing laws, must likewise be exempt from the payment of the special assessment
imposed by the appellee, which he paid under protest; (2) that Ordinance No. 137 and its
amendments, under which the special assessment has been imposed, exclude from their provisions
his properties exempt from the payment of any tax; (3) that in case the said ordinances do not
exclude his properties from the payment of the special assessment, they are null and void; and (4)
that assuming the said ordinances are legal, the appellee, as Treasurer of the City of Baguio,
illegally collected the special assessment paid under protest by the appellant, for the reason that at
the date of payment, the appellant had already satisfied his share of the expenses of the drainage
and sewerage system that caused the imposition of the special assessment.

The first proposition involves the question of whether the properties on which the special
assessment was imposed are effectively exempt from such payment. The special assessment was
collected by the appellee under the provisions of Sections 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, lying 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 the payment of the special assessment
both by virtue of Section 2 of Ordinance No. 137 and by virtue of Section 14, (3), Title VI, of the
Constitution of the Philippines, 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 Section 2 of Ordinance No. 137, only properties not exempt from the
payment of a tax are liable to pay the special assessment and that, in accordance with the cited
constitutional provision, the appellant’s properties are exempt from the payment of the special
assessment because they are dedicated to religious purposes. This contention requires, in the first
place, 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 amortize extraordinary expenses incurred for projects such as drainage and sewerage
systems, which benefit residents in a particular way, are not taxes in the legal sense. According to
the ordinance, the special assessment imposed on properties in the City of Baguio was created to
amortize the extraordinary expenses incurred for the construction of the drainage and sewerage
system, a project that benefited all property owners in the city in a special way. 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 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, according to the stipulation of facts, the appellant cannot successfully invoke the
exemption established by the Constitution because it has not been admitted or proven that his
properties that paid the special assessment were exclusively used for religious purposes. While it
was stipulated that the properties were dedicated to religious purposes, it was not agreed upon or
proven that such use was exclusive. It could, therefore, happen that the properties, in addition to
being dedicated to religious purposes, were also used for 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 Section 8(1) of Act No. 1963, now Section 2553(1) of the Revised Administrative
Code, to create the disputed special assessment to amortize the expenses incurred by the drainage
and sewerage system constructed for the benefit of all residents of the said city.

The appellant’s last contention is that assuming the validity of Ordinance No. 137 and its
amendments, he is no longer obligated to pay the special assessment because he had already
satisfied in years prior to 1937 his aliquot share of said special assessment. The contention is
equally unfounded because it appears from Exhibit 1 that the cost of the drainage and sewerage
system amounts to P502,750.76 and the city only collected by special assessment until the year
1937 the sum of P291,290.08, resulting in the fact that the cost of the system in the year 1937 was
not yet fully satisfied.

Finding the decision appealed from in accordance with law, the same is hereby affirmed in all its
parts, with costs against the appellant. So ordered.

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