G.R. No.

45697 November 1, 1939

MANILA ELECTRIC COMPANY, plaintif-appellant,
vs.
A.L. YATCO, Collecor o! I"er"#l Reve"$e, defendant-appellee.
Ross, Lawrence, Selph and Carrascoso for appellant.
Ofce of the Solicitor-General Tuason for appellee.

MORAN, J.:
In 1935, plaintif Manila Electric Company, a corporation organized and eisting !nder t"e la#s of t"e
$"ilippines, #it" its principal o%ce and place of &!siness in t"e City of Manila, ins!red #it" t"e city of 'e#
(or) Ins!rance Company and t"e *nited +tates ,!aranty Company, certain real and personal properties
sit!ated in t"e $"ilippines. -"e ins!rance #as entered into in &e"alf of said plaintif &y its &ro)er in 'e# (or)
City. -"e ins!rance companies are foreign corporations not licensed to do &!siness in t"e $"ilippines and
"aving no agents t"erein. -"e policies contained provisions for t"e settlement and payment of losses !pon t"e
occ!rence of any ris) ins!red against, a sample of #"ic" is policy 'o. ./ of t"e 'e# (or) ins!rance Company
attac"ed to and made an integral part of t"e agreed statement of facts.
$laintif t"ro!g" its &ro)er paid, in 'e# (or), to said ins!rance company premi!ms in t"e s!m of $91,090. -"e
Collector of Internal 1even!e, !nder t"e a!t"ority of section 19. of act 'o. .2.3, as amended, assessed and
levied a ta of one per cent!m on said premi!ms, #"ic" plaintif paid !nder protest. -"e protest "aving &een
overr!led, plaintif instit!ted t"e present action to recover t"e ta. -"e trial co!rt dismissed t"e complaint,
and from t"e 4!dgment t"!s rendered, plaintif too) t"e instant appeal.
-"e pertinent portions of t"e 5ct "ere involved read6
+EC. 19.. It s"all &e !nla#f!l for any person, company or corporation, or for#ard applications for
ins!rance in or to iss!e or to deliver or accept policies of or for any company or companies not "aving
&een legally a!t"orized to transact &!siness in t"e $"ilippine Islands, as provided in t"is c"apter7 and
any s!c" person, company or corporation violating t"e provisions of t"is section s"all &e deemed g!ilty
of a penal ofense, and !pon conviction t"ereof, s"all for eac" s!c" ofense &e p!nis"ed &y a 8ne of
t#o "!ndred pesos, or imprisonment for t#o mont"s, or &ot" in t"e discretion not a!t"orized to
transact &!siness in t"e $"ilippine Island may &e placed !pon terms and conditions as follo#s6

. . . . 5nd provided f!rt"er, t"at t"e pro"i&itions of t"is section s"all not afect t"e rig"t of an o#ner of
property to apply for and o&tain for "imself policies in foreign companies in cases #ere said o#ner does
not ma)e !se of t"e services of any agent, company or corporation residing or doing &!siness in t"e
$"ilippine Islands. In all case #"ere o#ners of property o&tain ins!rance directly #it" foreign
companies, it s"all &e t"e d!ty of said o#ners to report to t"e ins!rance commissioner and to t"e
Collector of Internal 1even!e eac" case #"ere ins!rance "as &een so efected, and s"all pay t"e ta of
one per cent!m on premi!m paid, in t"e manner re9!ired &y la# of ins!rance companies, and s"all &e
s!&4ect to t"e same penalties for fail!re to do so.
5ppellant maintains t"at t"e second paragrap" of t"e provisions of t"e 5ct aforecited is !nconstit!tional, and
"as &een so declared &y t"e +!preme Co!rt of t"e *nited +tates in t"e case of Compania General de Tabacos
v. Collector of nternal Revenue, .35 *.+., :3, 2: +!p. Ct. 1ep., 1//, 3. ;a#. ed., 133.
-"e case relied !pon involves a s!it to recover from t"e Collector of Internal 1even!e certain taes in
connection #it" ins!rance premi!ms #"ic" t"e -o&acco <arcelona, +pain, paid to t"e ,!ardian Ins!rance
Company of ;ondon, England, and to ;e Comite des 5ss!rances Maritimes de $aris, of $aris, =rance. -"e
-o&acco Company, t"ro!g" its "ead o%ce in <arcelona, ins!red against 8re #it" t"e ;ondon Company t"e
merc"andise it "ad in deposit in t"e #are"o!se in t"e $"ilippines. 5s t"e merc"andise #ere from time to time
s"ipped to E!rope, t"e "ead o%ce at <arcelona ins!red t"e same #it" t"e $aris Company against marine ris)s
#"ile s!c" merc"andise #ere in transit from t"e $"ilippines to +pain. -"e ;ondon Company, !nli)e t"e $aris
Company, #as licensed to do ins!rance &!siness in t"e $"ilippines and "ad an agent t"erein. ;osses, if any, on
policies #ere to &e paid to t"e -o&acco Company in $aris. -"e ta assessed and levied &y t"e Collector of
Internal 1even!e, !nder t"e same la# no# involved, #as c"allenged as !nconstit!tional. -"e +!preme Co!rt
of t"e !nited +tates s!stained t"e ta #it" respect to premi!ms paid to t"e ;ondon Company and "eld it
erroneo!s #it" respect to premi!ms paid to t"e $aris Company.lawphi!.net
-"e fact!al &asis !pon #"ic" t"e imposition of t"e ta on premi!ms paid to t"e $aris Company #as declared
erroneo!s, is stated &y t"e +!preme Co!rt of t"e *nited +tates t"!s6
Coming t"en to t"e ta on t"e premi!ms paid to t"e $aris Company t"e contract of ins!rance on #"ic"
t"e premi!m #as paid #as made at <arcelona in +pain, t"e "ead9!arters of t"e -o&acco Company
&et#een t"e -o&acco Company and t"e $aris Company, and any losses arising t"ere!nder #ere to &e
paid in $aris. -"e $aris Company "ad no comm!nication #"atever #it" anyone in t"e $"ilippine Islands.
-"e collection of t"is ta involves an e-action !pon a company of +pain la#f!lly doing &!siness in t"e
$"ilippine Islands efected &y reason of a contract made &y t"at company #it" a company in $aris on
merc"andise s"ipped from t"e $"ilippine Islands for delivery in <arcelona. It is an imposition !pon a
contract not made in t"e $"ilippines and "aving no sit!s t"ere and to &e meas!red &y money paid as
premi!ms in $aris, #it" t"e place of payment of loss, if any, in $aris. >e are very clear t"at t"e contract
and t"e premi!ms paid !nder it are not #it"in t"e 4!risdiction of t"e government of t"e $"ilippine
Islands.
5nd, !pon t"e a!t"ority of t"e cases of "ll#e$er v. Lousiana, 105 *.+., 53:, 21 ;a#. ed., :3., and St. Louis
Cotton Compress Compan$ v. "r%ansas, .5/ *.+., 320, 033 ;a#. ed., .39, t"e +!preme Co!rt of t"e *nited
+tates "eld t"at ?as t"e state is for&idden to deprive a person of "is li&erty #it"o!t d!e process of la#, it may
not compel anyone #it"in its 4!risdiction to pay tri&!te to it for contracts or money paid to sec!re t"e &ene8ts
of contract made and to &e performed o!tside of t"e state.?
@n t"e ot"er "and, t"e +!preme Co!rt of t"e *nited +tates, in s!staining t"e imposition of t"e ta !pon
premi!ms paid &y t"e ass!red to t"e ;ondon Company, says6
. . . . Aoes t"e fact t"at #"ile t"e -o&acco Company and t"e ;ondon Company #ere #it"in t"e
4!risdiction of t"e $"ilippines t"ey made a contract o!tside of t"e $"ilippines, prevent t"e imposition
!pon t"e ass!red of a ta of 1 per cent !pon t"e money paid &y it as a premi!m to t"e ;ondon
CompanyB >e may properly ass!me t"at t"is ta placed !pon t"e ass!red m!st !ltimately &e paid &y
t"e ins!rer, and treating its real incidence as s!c", t"e 9!estion arises #"et"er ma)ing and carrying
o!t t"e policy does not involve an eercise or !se of t"e rig"t of t"e ;ondon Company to do &!siness in
t"e $"ilippine Islands !nder its license, &eca!se t"e policy covers 8re ris)s no property #it"in t"e
$"ilippine Islands #"ic" may re9!ire ad4!stment and t"e activities of agents in t"e $"ilippine Islands
#it" respect to settlement of losses arising t"ere!nder. -"is #e t"in) m!st &e ans#ered a%rmatively
!nder &'uitable Life "ssur. Soc. v. (enns$lvania, .3: *.+., 123 ;a#. ed., 1.39, 35 +!p. Ct. 1ep., :.9.
-"e case is a close one, &!t in deference to t"e concl!sion #e reac"ed in t"e latter case, #e a%rm t"e
4!dgment of t"e co!rt &elo# in respect to t"e ta !pon t"e premi!m paid to t"e ;ondon Company.
-"e r!ling in t"e $aris Company case is o&vio!sly not applica&le in t"e instant one, for t"ere, not only #as t"e
contract eec!ted in a foreign co!ntry, &!t t"e merc"andise ins!red #as in transit from t"e $"ilippines to
+pain, and not"ing #as to &e done in t"e $"ilippines in p!rs!ance of t"e contract. Co#ever, t"e r!le laid do#n
in connection #it" t"e ;ondon Company may, &y analogy, &e applied in t"e present case, t"e essential facts of
&ot" cases &eing similar. Cere, t"e ins!red is a corporation organized !nder t"e la#s of t"e $"ilippines, its
principal o%ce and place of &!siness &eing in t"e City of Manila. -"e 'e# (or) Ins!rance Company and t"e
*nited +tates ,!aranty Company may &e said to &e doing policies iss!ed &y t"em cover ris)s on properties
#it"in t"e $"ilippines, #"ic" may re9!ire ad4!stment and t"e activities of agents in t"e $"ilippines #it"
respect to t"e settlement of losses arising t"ere!nder. =or instance, it is t"erein stip!lated t"at ?t"e ins!red,
as often as may &e reasona&ly re9!ired, s"all e"i&it to any person designated &y t"e company all t"e
remains of any property t"erein descri&ed and s!&mit to eamination !nder oat" &y any person named &y t"e
company, and as often as may &e reasona&ly re9!ired, s"all e"i&it to any person designated &y t"e company
all t"e remains of any property t"erein descri&ed and s!&mit to an eamination all &oo)s of acco!nts . . . at
s!c" reasona&le time and place as may &e designated &y t"e company or its representative.? 5nd, in case of
disagreement as to t"e amo!nt of losses or damages as to re9!ire t"e appointment of appraisers, t"e
ins!rance contract provides t"at ?t"e appraisers s"all 8rst select a competent !mpire7 and fail!re for 8fteen
days to agree to s!c" !mpire, t"en, on re9!est of t"e ins!red or of t"e company, s!c" !mpire s"all &e
selected &y a 4!dge of t"e co!rt of record in t"e state in #"ic" t"e property ins!red is located.?.
-r!e it is t"at t"e ;ondon Company "ad a license to do &!siness in t"e $"ilippines, &!t t"is fact #as not a
decisive factor in t"e decision of t"at case, for reliance #as t"erein placed on t"e &'uitable Life "ssurance
Societ$ v. (enns$lvania, .3: *.+., 123, 59 ;a#. ed., 1.39, 35 +!p. Ct. 1ep., :.9, #"erein it #as said t"at ?t"e
E9!ita&le +ociety #as doing &!siness in $ennsylvania #"en it #as ann!ally paying t"e dividends in
$ennsylvania or sending an ad4!ster into t"e state in case of disp!te or ma)ing proof of deat",? and t"erefore
?t"e tapayer "ad s!&4ected itself to t"e 4!risdiction of $ennsylvania in doing &!siness t"ere.? D+ee CompaEia
,eneral de -a&acos v. Collector of Internal 1even!e, .35 *.+., :3, 3. ;a#. ed., 133, 1:..F
-"e controlling consideration, t"erefore, in t"e decision of t"e ;ondon Company case #as t"at said company,
&y ma)ing and carrying o!t policies covering ris)s located in t"is co!ntry #"ic" mig"t re9!ire ad4!stment or
t"e ma)ing of proof of loss t"erein, did &!siness in t"e $"ilippines and s!&4ected itself to its 4!risdiction, a r!le
t"at can perfectly &e applied in t"e present case to t"e ne# (or) Ins!rance Company and t"e *nited +tates
,!aranty Company.
It is arg!ed, "o#ever, t"at t"e sending of an !n4!ster to t"e $"ilippines to 8 t"e amo!nt of losses, is a mere
contingency and not an act!al fact, as s!c", it cannot &e a gro!nd for "olding t"at t"e ins!rance companies
s!&4ected t"emselves to t"e taing 4!risdiction of t"e $"ilippines. -"is arg!ment co!ld "ave &een made in t"e
;ondon Company case #"ere no ad4!ster appears to "ave ever &een sent to t"e $"ilippines nor any
ad4!stment ever made, and yet t"e stip!lations to t"at efect #ere "eld to &e s!%cient to &ring t"e foreign
corporation #it"in t"e taing 4!risdiction of t"e $"ilippines.
In epitome, t"en, t"e #"ole 9!estion involved in t"is appeal is #"et"er or not t"e disp!ted ta is one imposed
&y t"e Common#ealt" of t"e $"ilippines !pon a contract &eyond its 4!risdiction. >e are of t"e opinion and so
"old t"at #"ere t"e ins!red against also #it"in t"e $"ilippines, t"e ris) ins!red against also #it"in t"e
$"ilippines, and certain incidents of t"e contract are to &e attended to in t"e $"ilippines, s!c" as, payment of
dividends #"en received in cas", sending of an !n4!ster into t"e $"ilippines in case of disp!te, or ma)ing of
proof of loss, t"e Common#ealt" of t"e $"ilippines "as t"e po#er to impose t"e ta !pon t"e ins!red,
regardless of #"et"er t"e contract is eec!ted in a foreign co!ntry and #it" a foreign corporation. *nder s!c"
circ!mstances, s!&stantial elements of t"e contract may &e said to &e so sit!ated in t"e $"ilippines as to give
its government t"e po#er to ta. 5nd, even if it &e ass!med t"at t"e ta imposed !pon t"e ins!red #ill
!ltimately &e passed on t"e ins!rer, t"!s constit!ting an indirect ta !pon t"e foreign corporation, it #o!ld
still &e valid, &eca!se t"e foreign corporation, &y t"e stip!lations of its contract, "as s!&4ected itself to t"e
taing 4!risdiction of t"e $"ilippines. 5fter all, Common#ealt" of t"e $"ilippines, &y protecting t"e properties
ins!red, &ene8ts t"e foreign corporation, and it is &!t reasona&le t"at t"e latter s"o!ld pay a 4!st contri&!tion
t"erefor. It #o!ld certainly &e a discrimination against domestic corporations to "old t"e ta valid #"en t"e
policy is given &y t"em and invalid #"en iss!ed &y foreign corporations.
G!dgment a%rmed, #it" costs against appellant.
G.R. No. L%&154 'ecember (), 1915
*OA+,IN 'E -ILLATA, petitioner,
vs.
*... .TANLEY, Ac/"0 I"1$l#r Collecor o! C$1om1, respondent.
CAR.ON, J.:
In t"e lang!age of plaintifHs &rief ?-"is an application for a #rit of pro"i&ition directed against t"e Collector of
C!stoms and intended to restrain "im from enforcing against plaintif t"e provisions of C!stoms 5dministrative
Circ!lar 'o. 0.3. -"e complaint alleges t"at t"e plaintif is t"e master of +.+. Iizcaya of t"e coast#ise trade7
t"at as s!c" captain, on G!ly 0, 191., #"en sailing from t"e port of ,!&at to t"e port of ;egaspi, $. I., "e failed
to notify t"e postmaster of t"e former port, in advance, of "is intended sailing, and t"erefore failed to carry
t"e mails &et#een said ports7 t"at defendant is t"reatening to s!spend or revo)e t"e license of plaintif &y
reason of said facts, !nder and &y virt!e of t"e terms of C!stoms 5dministrative Circ!lar 'o. 0.3, to t"e great
and irrepara&le damage of plaintif.?!awphil.net
C!stoms 5dministrative Circ!lar 'o. 0.3 is as follo#s6 )(rescribin# re#ulations for the transportation of mails
on vessels en#a#ed in the (hilippine Coastwise trade.
M5'I;5, *ecember +,, !-!..
$515,15$C I. Every vessel to #"ic" a license is granted !nder t"e provisions of section 113 of 5ct 'o.
355 to engage in t"e coast#ise trade of t"e $"ilippine Islands ... s"all carry mail tendered for
transportation in a safe and sec!re manner, and s"all )eep t"e same free from in4!ry &y #ater or
ot"er#ise. Master, o#ners, or agents of vessels s"all give prompt advance notice of t"e intended
sailing t"ereof to t"e postmaster at eac" port of depart!re in ample time to permit t"e ma)ing !p of
mails for dispatc". 5ny c"anges in s!c" sailings s"all also &e promptly comm!nicated to t"e
postmaster.
$51. II. Mails carried &y vessels s"all &e delivered at ports of call on s"ore or on a #"arf immediately
after arrival and prior to t"e disc"arge or lading of any cargo, and s"all &e ta)en from s"ore or #"arf
4!st &efore t"e vesselHs sailing time, ecept at ports #"ere t"e postal a!t"orities "ave arranged for
s"ip-side delivery.
$51. III. Eac" vessel mentioned in t"e preceding paragrap" s"all &e provided #it" a loc) &o "aving a
slot in t"e top or side t"ereof to receive letters, papers, or ot"er mail matter delivered on &oard t"e
vessel after t"e mails "ave &een closed at t"e post-o%ce for t"at partic!lar voyage. 5ll mail matter
deposited in s!c" &o s"all &e delivered &y t"e master, or "is representative, to t"e postmaster at a
port of call #"ere a post-o%ce is located.itc-a!f
$51. II. -"e master, o#ner, agent, or ot"er person in c"arge of a vessel s"all &e legally lia&le for t"e
loss of or damage to mail in "is c!stody, or in t"e c!stody of "is representative or agents.
$51. I. -"e license of t"e master of any vessel engaged in t"e coast#ise trade of t"e $"ilippine Islands
may &e s!spended or revo)ed &y t"e Ins!lar Collector of C!stoms for fail!re to comply #it" or strictly
enforce t"e reg!lations governing t"e transportation of mails.
$51. II. $ostmaster t"ro!g"o!t t"e Islands are re9!ested to promptly report to t"is o%ce in #riting any
!nnecessary delay in t"e "andling of mails transported &y vessels, or fail!re on t"e part of masters
t"ereof to comply #it" t"e re9!irements of t"is circ!lar.
$51. III. $"ilippine c!stoms o%cers s"all give d!e p!&licity to t"e terms of t"is circ!lar.
-"e case is s!&mitted to !s !pon t"e plaintifHs dem!rrer to t"e defendantHs ans#er to t"e complaint.
5s #e !nderstand t"e iss!es raised &y t"e pleadings, t"e real 9!estions s!&mitted to !s for ad4!dication are6
=irst. Cas t"e ,overnment of t"e $"ilippine Islands t"e po#er, t"ro!g" any of its agencies, to re9!ire, #it"
reference to all vessels engaged in t"e coast#ise trade, t"at ?Every vessel to #"ic" a license is granted !nder
t"e provisions of section 113 of 5ct 'o. 355 to engage in t"e coast#ise trade of t"e $"ilippine Islands ... s"all
carry mail tendered for transportation in a safe and sec!re manner, and s"all )eep t"e same free from in4!ry
&y #ater or ot"er#ise. Masters, o#ners, or agents of vessel s"all give prompt advance notice of t"e intended
sailing t"ereof to t"e postmaster at eac" port of depart!re in ample time to permit t"e ma)ing !p of mails for
dispatc". 5ny c"anges in s!c" sailings s"all also &e promptly comm!nicated to t"e postmasterB?
+econd. 5ss!ming t"at s!c" po#er eists, #as t"e Collector of C!stoms clot"ed #it" po#er to prom!lgate a
circ!lar at t"e date of t"e iss!e of C!stoms Circ!lar 'o. 0.3, prescri&ing t"e masters of all vessels engaged in
t"e coast#ise trade m!st comply #it" s!c" a reg!lation, and to penalize t"em for fail!re so to do &y
s!spending or revo)ing t"eir licensesB <ot" t"ese 9!estions m!st, #e t"in), &e ans#ered in t"e a%rmative.
>e s"all 8rst eamine t"e 9!estion of t"e po#er of t"e $"ilippine ,overnment to prescri&e and enforce a
reg!lation of t"is )ind at t"e date of iss!ance of C!stoms Circ!lar 'o. 0.3.
5 decree dated 5!g!st 2, 1:03, provided as follo#s6
In t"e matter of t"e investigation made for t"e application of t"e provisions no# in force relative to t"e
notice to &e given in advance to t"e post-o%ce of t"e sailing of s"ips, in t"e eceptional case of a s"ip
4!st arrived in port and #"ic" "as to sail immediately for t"e convenience of t"e interests of its o#ners
or consignees,
Caving considered t"e ordinances relating to pac)et &oats and ot"er royal orders and s!perior decrees
imposing !pon t"e captain of every s"ip t"e d!ty of giving notice to t"e post-o%ce fo!r days in
advance at least of t"e date t"ey are to sail and t"e port of destination,
Considering t"at t"e act!al application of s!c" provisions mig"t afect in a remar)a&le #ay t"e
commercial interests in t"e very eceptional case spo)en of, #"ere t"e s"ip 4!st anc"ored s"o!ld "ave
to set sail again &efore t"e period of fo!r days referred to,
The capitania del puerto, the administracion #eneral de aduanas, comandancia #eneral de carabineros
and the administracion #eneral de correos, "aving &een "eard,
-"is s!perior civil government ordains6 -"at #"en a s"ip falls #it"in t"e precise eceptional case raised
&y t"e #it"in resol!tion, its captain s"all only &e re9!ired to give, from t"e very instant of determining
t"e sailing of t"e s"ip, immediate notice to t"e post-o%ce stating t"e day and "o!r in #"ic" t"e sailing
m!st &e made,
=or t"e p!rposes t"at may &e proper, let t"is decree &e comm!nicated to t"e comandancia #eneral de
marina, capitania del puerto de Manila and Cavite and t"e administracion #eneral de correos, and let
same &e p!&lis"ed in t"e ,azette for general information. 1eport to t"e government of C.M. and 8le.
D<erriz, *iccionario de la "dministracion de /ilipinas, 1:::, vol. 1, p. 510.F
5 later decree dated Gan!ary 13, 1:30, #as as follo#s6
Caving considered t"e cons!ltation made &y t"e comandancia general de marina proposing t"e
amendment of section 3 of t"e s!perior decree of Aecem&er 1:, 1:0:, relative to t"e d!ty imposed
!pon s"ipo#ners or consignees of steamers #"et"er national or foreign, plying &et#een t"is port and
t"e ot"er ports of t"e 5rc"ipelago or C"ina and vice versa, of giving fo!r daysH notice &efore t"e day
t"ey are to sail, to t"eir great pre4!dice7 and
Caving considered t"e reports s!&mitted &y t"e direccion #eneral de administracion civil and the
administracion #eneral de correos0
Considering t"e fact t"at since t"at s!perior order #as enforced, t"e fort!nate increase of steamers
and conse9!ently t"e fre9!ent repetition of voyages made &y t"em, is evident, and t"erefore, t"is
circ!mstance alone #o!ld c"ange t"e o&4ect or reason #"ic" at t"at time made it necessary to impose
t"e d!ty referred to in said section 3.
Considering t"e importance and val!e at certain times of t"e prompt clearance of one of its s"ips to a
commercial 8rm #"ic" is at all times #ort"y of protection &y t"e government.
-"is general government ordains as follo#s6
1. -"e period of fo!r days prescri&ed &y section 3 of of t"e s!perior decree of Aecem&er 1:, 1:0:, is
red!ced to t#o.
.. -"e s"ipo#ners or consignees of steamers, #"et"er national or foreign, plying &et#een t"is port and
t"e ot"er ports of t"e arc"ipelago or C"ina, and vice versa, s"all give notice to t"e captain of t"e portHs
&efore midday, in order t"at t"e post-o%ce may "ave immediate notice of t"e sailing at an "o!r t"at
may ena&le it to insert same in t"e ,azette of net day, and t"e s"ip may sail in t"e afternoon of t"e
day net follo#ing.
3. -"e o%ce of t"e captain of t"e port #ill report daily to t"e administracion #eneral de correos all
s"ips t"at at 1. oHcloc), noon, may "ave re9!ested t"e visita de salida and in t"e event of t"ere &eing
none a report s"all &e sent stating t"at fact.
2. -"e report of t"e captain of t"e portHs o%ce m!st &e at t"e administracion general &efore . oHcloc),
p.m., every day.
5. Captains and consignees of s"ips can in no case re9!est t"e visita de salida #it"o!t t"e period of
forty-eig"t "o!rs intervening &et#een t"e time t"ey report and t"e visit, so as to give opport!ne notice
to t"e administracion de correos.
0. -"e centro de correos s"all send t"e notices to t"e ,azette and ot"er ne#spapers, and s"all post
t"em &esides on a &!lletin &oard at t"e door of t"e post-o%ce.F <erriz, *iccionario de la "dministracion
de /ilipinas, 1:::, vol. 1, pp. 5.:, 5.9.F
-"e decree 4!st cited is t"e latest provision of +panis" la# dealing #it" t"e s!&4ect matter !nder consideration
to #"ic" o!r attention "as &een invited, and #e ass!me t"at it prescri&ed t"e la# in force in t"ese Islands at
t"e date of t"e 5merican occ!pation. 5n eamination of its terms leaves little room for do!&t t"at !nder
+panis" sovereignty t"e ,overnment of t"ese Islands ass!med and eercised t"e rig"t to prescri&e reasona&le
reg!lations re9!iring vessels trading in t"e $"ilippine Islands to carry t"e mails and to give d!e notice of t"eir
sailing "o!rs to t"e postal a!t"orities. Indeed it is a matter of common )no#ledge t"at, !nder t"e la#s and
reg!lations in force at t"e time of t"e c"ange of sovereignty, all vessels engaged in t"e coasting trade #ere
re9!ired to carry t"e mails, and to f!rnis" t"e postal a!t"orities #it" d!e notice of t"eir sailing "o!rs. -"ere is
no allegation in t"e pleadings denying t"e contin!ance in force of t"is practice !nder 5merican sovereignty
do#n to t"e date of t"e iss!ance of t"e a&ove cited C!stoms 5dministrative Circ!lar7 and #e are not advised
of t"e enactment or prom!lgation of any local stat!te or reg!lation prior to t"at date #"ic" #o!ld ec!se
t"ese vessels from compliance #it" t"e reg!lations in force !nder t"e old sovereignty #it" regard t"ereto.
Co!nsel for t"e plaintif do not c"allenge t"e po#er of t"e former sovereign to prom!lgate t"e a&ove-cited
decrees reg!lating t"e postal service, and rely #"olly !pon t"eir contention t"at #"atever may "ave &een t"e
state of t"e la# prior to t"e enactment of t"e $"ilippine <ill of 1ig"ts D5ct of Congress, G!ly 1, 19/.F t"e
$"ilippine ,overnment #as t"ereafter denied t"e po#er to enforce or enact s!c" reg!lations.
-"e in9!iry, t"erefore, as to t"e po#er of t"e $"ilippine ,overnment, t"ro!g" its appropriate agents, to enact
and enforce a reg!lation re9!iring all vessels licensed to engage in t"e interisland trade to transport t"e mails
and to give timely notice of t"eir sailing "o!rs to t"e local postal a!t"orities may &e limited to a consideration
as to #"et"er or not it lost t"e po#er so to do, t"e enactment of t"e $"ilippine <ill of 1ig"ts.
>e are of opinion, and so "old, t"at t"ere is not"ing in t"e $"ilippine <ill of 1ig"ts #"ic" deprived t"e
$"ilippine ,overnment of t"e po#er to ma)e and enforce reasona&le reg!lations of t"is nat!re #it" #"ic" it
#as clot"ed prior to t"e enactment of t"at stat!te.
It is contended t"at to re9!ire t"e master of a vessel to transport t"e mails and to give timely notice to t"e
postal a!t"orities of t"e "o!r of "is depart!re may in some instances ca!se grave loss and serio!s
inconvenience to "er o#ner &y preventing "er depart!re at an earlier "o!r7 and t"at in all instances it imposes
an o&ligation !pon t"e o#ner to render services #"ic" t"e ,overnment "as no po#er to re9!ire in t"e a&sence
of a contract, and #it"o!t 4!st compensation.
It m!st not &e forgotten, "o#ever, t"at vessels licensed to engage in t"e interisland trade are common
carriers7 and t"at as to t"em, t"ere is an etensive 8eld of reg!lation and control #"ic" may properly &e
eercised &y t"e state #it"o!t contravention of t"e provisions of t"e $"ilippine <ill of 1ig"ts or t"e
Constit!tion of t"e *nited states7 and t"is not#it"standing t"e fact t"at t"e enforcement of s!c" reg!lations
may tend to restrict t"eir li&erty and to control t"e free eercise of t"eir discretion in t"e cond!ct of t"eir
&!siness to a degree and in a form and manner #"ic" #o!ld not &e tolerated !nder t"e constit!tional
g!arantees #it" relation to t"e private &!siness of a private citizen.
Common carriers eercise a sort of p!&lic o%ce, and "ave d!ties to perform in #"ic" t"e p!&lic is interested.
-"eir &!siness is, t"erefore, afected #it" a p!&lic interest, and is s!&4ect to p!&lic reg!lation.
-"e nat!re of t"e &!siness in #"ic" t"ey are engaged as a p!&lic employment, is s!c" t"at it is clearly #it"in
t"e po#er of t"e state to impose s!c" 4!st and reasona&le reg!lations t"ereon as in t"e interest of t"e p!&lic it
may deem proper. @f co!rse s!c" reg!lations m!st not "ave t"e efect of depriving an o#ner of t"is property
#it"o!t d!e process of la#, nor of con8scating or appropriating private property #it"o!t 4!st compensation,
nor of limiting or prescri&ing irrevoca&ly vested rig"ts or privileges la#f!lly ac9!ired !nder a c"arter or
franc"ise. <!t aside from s!c" constit!tional limitations, t"e determination of t"e nat!re and etent of t"e
reg!lations #"ic" s"o!ld &e prescri&ed rests in t"e "ands of t"e legislator. D'e# Gersey +team 'av. Co. vs.
Merc"antsH <an), 0 Co#., 322, 3:.7 M!nn vs. Illinois, 92 *.+., 113, 13/.F
@f co!rse t"is po#er to reg!late is not a po#er to destroy, and limitation is not t"e e9!ivalent of
con8scation. *nder pretense of reg!lating fares and freig"ts t"e state can not re9!ire a railroad
corporation to carry persons or property #it"o!t re#ard. 'or can it do t"at #"ic" in la# amo!nts to a
ta)ing of private property for p!&lic !se #it"o!t 4!st compensation, or #it"o!t d!e process of la#.
DC"icago etc. 1. Co. vs. Miesota, 132 *.+., 21:7 Minneapolis Easter 1. Co. vs. Minnesota, 132 *. +., 203.F
<!t t"e 4!diciary o!g"t not to interfere #it" reg!lations esta&lis"ed !nder legislative sanction !nless
t"ey are so plainly and palpa&ly !nreasona&le as to ma)e t"eir enforcement e9!ivalent to t"e ta)ing of
property for p!&lic !se #it"o!t s!c" compensation as !nder all t"e circ!mstances is 4!st &ot" to t"e
o#ner and to t"e p!&lic, t"at is, 4!dicial interference s"o!ld never occ!r !nless t"e case presents,
clearly and &eyond all do!&t, s!c" a Jagrant attac) !pon t"e rig"ts and property !nder t"e g!ise of
reg!lations as to compel t"e co!rt to say t"at t"e reg!lations in 9!estion #ill "ave t"e efect to deny
4!st compensation for private property ta)en for t"e p!&lic !se. DC"icago etc. 1. Co. vs. >ellman, 123
*.+., 3397 +myt" vs. 5mes, 109 *.+., 200, 5.27 Cenderson <ridge Co. vs. Cenderson City, 133 *.+.,
59., 012.F D=is"er vs. (angco +teams"ip Co., 31 $"il. 1ep., 1.F
>e are of opinion t"at a reg!lation re9!iring all coasting vessels licensed to engage in t"e interisland trade to
carry t"e mails and give prompt advance notice in all cases of intended sailings in ample time to permit
dispatc" of mails, and of c"anges of sailing "o!rs, Dmanifestly #it" a vie# to ma)e it possi&le for t"e post-
o%ce o%cials to tender mail for transportation at t"e last practica&le moment prior to t"e "o!r of depart!reF
is a reasona&le reg!lation, made in t"e interests of t"e p!&lic, #"ic" t"e states "as a rig"t to impose #"en it
grants licenses to t"e vessels afected t"ere&y. >e are not no# considering t"e 9!estion of t"e rig"t of t"ese
vessels to direct compensation for t"e transportation of s!c" mail #"en tendered. >e are considering merely
t"e rig"t of t"e state to re9!ire all licensed coasting vessels to "old t"emselves in readiness to receive and to
carry mail #"en d!ly tendered, and to give s!c" reasona&le notice as to t"eir sailing "o!rs as may &e
necessary to sec!re ample time for t"e tender of t"e mail &efore t"e sailing "o!r. Certainly #e #o!ld not &e
4!sti8ed in "olding t"at s!c" a reg!lation is ?so plainly and palpa&ly !nreasona&le? and ?s!c" a Jagrant attac)
!pon t"e rig"ts of property !nder t"e g!ise of reg!lations? as to compel t"e co!rt to say t"at its enforcement
#o!ld &e ?e9!ivalent to t"e ta)ing of property for p!&lic !se #it"o!t s!c" compensation as !nder all t"e
circ!mstances is 4!st &ot" to t"e o#ner and to t"e p!&lic.?
Considera&le ependit!res of p!&lic money "ave &een made in t"e past and contin!e to &e made ann!ally for
t"e p!rpose of sec!ring t"e safety of vessels plying in $"ilippine #aters. -o t"is end lig"t"o!ses "ave &een
erected7 #"arfs and doc)s constr!cted7 and &!oys, &ells and ot"er #arning signals maintained at points of
danger. ;argely for t"e p!rpose of conveying timely #arnings of t"reatening #eat"er to t"ose t"at go do#n
into t"e sea in s"ips, appropriations are made for t"e s!pport of a >eat"er <!rea! Coast and geodetic s!rveys
are cond!cted to )eep t"em informed as to t"e dangers "idden &eneat" t"e treac"ero!s sea. ;icensed pilots
are provided to ins!re safe entry into t"e dangero!s ports and "ar&ors t"ro!g"o!t t"e Islands. Maps, c"arts
and general information as to condition afecting travel &y #ater are )ept !p to date, and f!rnis"ed all vessels
"aving need for t"em. In a #ord, t"e ,overnment !n"esitatingly spends a considera&le part of t"e p!&lic
f!nds #"erever and #"enever it appears t"at t"e safety and even t"e convenience of t"e s"ipping in
$"ilippine #aters #ill &e advanced t"ere&y. Can it &e fairly contended t"at a reg!lation is !nreasona&le #"ic"
re9!ires vessels licensed to engaged in t"e interisland trade, in #"ose &e"alf t"e p!&lic f!nds are so lavis"ly
epended, to "old t"emselves in readiness to carry t"e p!&lic mails #"en d!ly tendered for transportation,
and to give s!c" reasona&le notice of t"eir sailing "o!rs as #ill ins!re t"e prompt dispatc" of all mails ready
for delivery at t"e "o!rs t"!s designatedB
It is !rged, also, t"at t"e prom!lgation and enforcement of a la# or reg!lation re9!iring coast#ise trading
vessels to ma)e provisions for t"e transportation of t"e mails #"en tendered, and to give notice of t"eir sailing
"o!rs in ample time to permit t"e dispatc" of t"e mails, is in efect to deprive t"e o#ners of t"eir property
#it"o!t d!e process of la#, to deny t"em t"e e9!al protection of t"e la#s, and to violate t"e provisions of t"e
<ill of 1ig"ts #"ic" prescri&e t"at t"e r!le of taation s"all &e !niform.
>e cannot agree #it" any of t"ese propositions. It is only #"en t"e o#ner of a vessel enters t"e 9!asi-p!&lic
employment of a common carrier t"at reg!lations of t"is )ind &egin to afect or control t"e cond!ct of "is
&!siness, and "e cannot &e "eard to complain t"at "e is deprived of "is property #it"o!t d!e process of la#
#"en "e elects, of "is o#n free #ill and accord, to sec!re a license as a common carrier in $"ilippine #aters,
and to engage in a &!siness, one of t"e conditions of #"ic" is t"at "e #ill comply #it" s!c" reg!lations. *nder
t"e la# in force in t"ese Islands at t"e time of t"e c"ange of sovereignty, and of t"e enactment of t"e 5ct of
Congress t"e o#ners of all licensed coasting vessels #ere re9!ired to comply #it" reg!lations of t"is
c"aracter, as one of t"e conditions !pon #"ic" t"ey #ere permitted to engage in t"e 9!asi-p!&lic employment
of carriers in t"e interisland trade. Manifestly t"ere is no merit in a claim &y t"e o#ner of one of t"ese vessels
t"at t"e enforcement of t"ese reg!lations amo!nts to a deprivation of property #it"o!t d!e process of la#.
-"e o#ner of every coasting vessels in t"ese Islands licensed to engage in t"e interisland trade, prior to t"e
prom!lgation of C!stoms 5dministration Circ!lar 'o. 0.3, too) o!t "is license and dedicated "is vessel to t"e
9!asi-p!&lic employment of a common carrier #it" f!ll )no#ledge of t"e eistence of reg!lations s!c" as t"at
no# !nder consideration, and of t"e assertion and ass!mption &y t"e ,overnment of po#er to prom!lgate and
enforce s!c" reg!lations. It is f!tile, t"erefore, for any s!c" o#ner to contend t"at t"e prom!lgation or
enforcement &y t"e ,overnment t"ro!g" its proper agencies of any reasona&le order of t"is )ind, deprives
"im of property #it"o!t d!e process of la#. 'o one is compelled to comply #it" t"ese reg!lations !nless "e
vol!ntarily enters !pon t"e &!siness #"ic" t"ey afect, and if "e does enter s!c" &!siness "e cannot claim
t"at "e is !nla#f!lly deprived, #it"o!t d!e process of la#, of t"at #"ic" "e vol!ntarily agrees to s!rrender.
5s to t"e contention t"at t"e reg!lation !nder consideration denies to t"e o#ners of coast#ise trading vessels
t"e e9!al protection of t"e la#s, and violates t"e r!le prescri&ing !niformity of taation it s"o!ld &e
ins!%cient per"aps to say t"at if re#ulations of this %ind be re#arded as in the nature of a ta1 upon the
vessels a2ected thereb$, t"e ta cannot &e attac)ed for lac) of !niformity so long as it is laid !niformly !pon
all t"e mem&ers of t"e class to #"ic" it etends. In t"is connection, t"e arg!ment of co!nsel Domitting citation
of a!t"orityF is s!&stantially as follo#s6
-"e constit!tional la# re9!iring !niformity of taation imposes t"e d!ty !pon t"e +tate directly to lay
its &!rdens !niformly and evenly !pon all. It does not permit t"e +tate to lay any partic!lar &!rden, e.
g. t"e carriage of t"e mails, !pon any person or class of persons, on t"e gro!nd t"at said person or
class may t!rn a&o!t and divide t"e &!rden #it" ot"er persons or amongst a slig"tly larger class. -"e
carriage of t"e p!&lic mails is a p!&lic, governmental f!nction to &e performed at p!&lic cost. It is not
permissi&le to impose t"at &!rden !pon t"e carriers eit"er a&sol!tely or !nder t"e implied
!nderstanding t"at t"e carriers #ill s"ift t"e &!rden to t"at portion of t"e p!&lic #"o constit!te t"e
s"ippers or patrons of t"e carriers.
'or yet is t"e circ!lar in 9!estion capa&le of 4!sti8cation on t"e gro!nd t"at t"e service re9!ired is not
a grat!ito!s one, &!t one re9!ired in consideration of, and in ec"ange for t"e coast#ise license, or Din
t"e case of foreign vesselsF t"e permission to visit at t#o $"ilippine ports. It is a matter of la# no
coast#ise vessel can engage in its &!siness #it"o!t t"e prescri&ed license. -o re9!ire t"erefore t"at a
vessel m!st !nderta)e t"e free carriage of mails in order to proc!re a license is t"e eact e9!ivalent of
re9!iring t"at it c"oose &et#een carrying all mail matter free of c"arge and going o!t of &!siness.
@nce grant t"at t"e +tate may re9!ire free carriage of mails as a condition for t"e sec!ring of a license
and yo! m!st also grant t"e rig"t to re9!ire t"e free clot"ing of t"e Consta&!lary as a condition for t"e
license to import merc"andise and to do &!siness on t"e Escolta. -"ere is no lengt" to #"ic" t"e
parallel may not &e logically carried, and if t"e re9!irements of t"is circ!lar co!ld &e validated on t"is
gro!nd, t"e Ins!lar government co!ld eist "andsomely #it"o!t taation &y t"e similar levy of tri&!te
in )ind as a condition precedent to t"e eercise of vocations, trades and professions. It goes #it"o!t
saying, "o#ever, t"at a +tate so s!pported #o!ld not &e imposing its taation !niformly as is re9!ired
&y t"e f!ndamental la# of o!r land.
$remising #"at follo#s #it" t"e o&servation t"at o!r stat!tes, alt"o!g" t"ey re9!ire ?!niformity? of taation,
do not prescri&e t"e r!le as to ?e9!ality? in taation #"ic" prevails in some 4!risdictions7 #e t"in) t"ese
contentions of co!nsel can &est &e disposed of &y a fe# citations from t"e "ig"est tet-&oo) and 4!dicial
a!t"orities.
-"e distinction &et#een ?e9!ality? and ?!niformity? in taation is t"!s stated in <lac) on Constit!tional ;a#,
page 39., citing Miller, Const., .216
In practice, t"erefore, ?e9!ality? in taation means to &e called !pon to pay taes, #"ic" taes s"all &e
strictly proportioned to t"e relative val!e of t"eir taa&le property. 5nd K!niformityH in taation means
t"at all taa&le articles or )inds of property, of t"e same class, s"all &e taed at t"e same rate. It does
not mean t"at lands, c"attels, sec!rities, incomes, occ!pations, franc"ises, privileges, necessities, and
l!!ries s"all all &e assessed at t"e same rate. Aiferent articles may &e taed at diferent amo!nts,
provided t"e rate is !niform on t"e same class every#"ere, #it" all people, and at all times.
5pplying t"e r!le "ere laid do#n t"e ta in 9!estion seems to &e s!%ciently !niform.
'eit"er does t"e fact t"at t"e imposition of t"e ta may res!lt in do!&le taation necessarily afect its
validity. D1 Cooley on -aation, 3d., 3:9.F
-"e po#er to impose taes is one so !nlimited in force and so searc"ing in etent, t"at t"e co!rts
scarcely vent!re to declare t"at it is s!&4ect to any restrictions #"atever, ecept s!c" as rest in t"e
discretion of t"e a!t"ority #"ic" eercises it. It reac"es to every trade or occ!pation7 to every o&4ect of
ind!stry, !se, or en4oyment7 to every species of possession7 and it imposes a &!rden #"ic", in case of
fail!re to disc"arge it, may &e follo#ed &y seiz!re and sale or con8scation of property. 'o attri&!te of
sovereignty is more pervading, and at no point does t"e po#er of t"e ,overnment afect more
constantly and intimately all t"e relations of life t"an t"ro!g" t"e eactions made !nder it. ... -"e
po#er to ta rests !pon necessity, and is in"erent in every sovereignty. -"e legislat!re of every free
+tates #ill possess it !nder t"e general grant of legislative po#er, #"et"er partic!larly speci8ed in t"e
constit!tion among t"e po#ers to &e eercised &y it or not. 'o constit!tional government can eist
#it"o!t it, and no ar&itrary government #it"o!t reg!lar and steady taation co!ld &e anyt"ing &!t an
oppressive and veatio!s despotism, since t"e only alterative to taation #o!ld &e a forced etortion
for t"e needs of government from s!c" persons or o&4ects as t"e men in po#er mig"t select as victims.
C"ief G!stice Mars"all "as said of t"is po#er6 ?-"e po#er of taing t"e people and t"eir property is
essential to t"e very eistence of government, and may &e legitimately eercised on t"e o&4ects to
#"ic" it is applica&le to t"e !tmost etent to #"ic" t"e government may c"oose to carry it. -"e only
sec!rity against t"e a&!se of t"is po#er is fo!nd in t"e str!ct!re of t"e government itself. In imposing a
ta, t"e legislat!re acts !pon its constit!ents. -"is is, in general, a s!%cient sec!rity against erroneo!s
and oppressive taation. -"e people of a +tate, t"erefore, give to t"eir property7 and as t"e eigencies
of t"e government cannot &e limited, t"ey prescri&e no limits to t"e eercise of t"is rig"t, resting
con8dently on t"e interest of t"e legislator, and on t"e inJ!ence of t"e constit!ents over t"eir
representative, to g!ard t"em against its a&!se.?
-"e same eminent 4!dge "as said in anot"er case6 ?-"e po#er of legislation, and conse9!ently of
taation, operates on all persons and property &elonging to t"e &ody politic. -"is is an original
principle, #"ic" "as its fo!ndation in society itself. It is granted &y all for t"e &ene8t of all. It resides in
t"e government as part of itself, and need not &e reserved #"ere property of any description, or t"e
rig"t to !se it in any manner, is granted to individ!als or corporate &odies. Co#ever a&sol!te t"e rig"t
of an individ!al may &e, it is still in t"e nat!re of t"at rig"t t"at it m!st &ear a portion of t"e p!&lic
&!rdens, and t"at portion m!st &e determined &y t"e legislat!re. -"is vital po#er may &e a&!sed7 &!t
t"e interest, #isdom, and 4!stice of t"e representative &ody, and its relations #it" its constit!ents,
f!rnis" t"e only sec!rity #"ere t"ere is no epress contract against !n4!st and ecessive taation, as
#ell as against !n#ise legislation generally.? 5nd again, t"e same 4!dge says, it is ?!n8t for t"e 4!dicial
department to in9!ire #"at degree of taation is t"e legitimate !se, and #"at degree may amo!nt to
t"e a&!se, of t"e po#er.? D'!mero!s cases cited in s!pport of t"e tet.F Constit!tional ;imitations, p.
5:3, Cooley.
It is insisted, "o#ever, t"at t"e ta in t"e case &efore !s is ecessive, and so ecessive as to indicate a
p!rpose on t"e part of Congress to destroy t"e franc"ise of t"e &an), and is, t"erefore, &eyond t"e
constit!tional po#er of Congress.
-"e 8rst ans#er to t"is is t"at t"e 4!dicial cannot prescri&e to t"e legislative department of t"e
government limitations !pon t"e eercise of its ac)no#ledged po#ers. -"e po#er to ta may &e
eercised oppressively !pon persons, &!t t"e responsi&ility of t"e legislat!re is not to t"e co!rts, &!t to
t"e people &y #"om its mem&ers are elected. +o if a partic!lar ta &ears "eavily !pon a corporation or
a class of corporations, it cannot, for t"at reason only, &e prono!nced contrary to t"e Constit!tion.
DIeazie <an) vs. =enno, : >all., 533, 52:.F
>"ilst, as a res!lt of o!r #ritten constit!tion, it is aiomatic t"at t"e 4!dicial department of t"e
government is c"arged #it" t"e solemn d!ty of enforcing t"e Constit!tion, and t"erefore in cases
properly presented, of determining #"et"er a given manifestation of a!t"ority "as eceed t"e po#er
conferred &y t"at instr!ment, no instance is aforded from t"e fo!ndation of t"e government #"ere an
act, #"ic" #as #it"in a po#er conferred, #as declared to, &e rep!gnant to t"e Constit!tion, &eca!se it
appeared to t"e 4!dicial mind t"at t"e partic!lar eertion of constit!tional po#er #as eit"er !n#ise or
!n4!st. -o anno!nce s!c" a principle #o!ld amo!nt to declaring t"at in o!r constit!tional system t"e
4!diciary #as not only c"arged #it" t"e d!ty of !p"olding t"e Constit!tion &!t also #it" t"e
responsi&ility of correcting every possi&le a&!se arising from t"e eercise &y t"e ot"er departments of
t"eir conceded a!t"ority. +o to "old #o!ld &e to overt"ro# t"e entire distinction &et#een t"e
legislative, 4!dicial and eec!tive departments of t"e government, !pon #"ic" o!r system is fo!nded,
and #o!ld &e a mere act of 4!dicial !s!rpation. DMcCray vs. *.+., 195 *.+., .3.F
<!t, it is insisted, t"is taation is so !ne9!al and ar&itrary in t"e fact t"at it taes a &!siness #"en
carried on &y a corporation, and eempts a similar &!siness #"en carried on &y a partners"ip or private
individ!al, as to place it &eyond t"e a!t"ority conferred !pon Congress. 5s #e "ave seen, t"e only
limitation !pon t"e a!t"ority conferred is !niformity in laying t"e ta, and !niformity does not re9!ire
t"e e9!al application of t"e ta to all persons or corporations #"o may come #it"in its operation, &!t it
is limited to geograp"ical !niformity t"ro!g"o!t t"e *nited +tates. -"is s!&4ect is f!lly disc!ssed and
set at rest in Lno#lton vs. Moore D13: *.+., 217 22 ;. ed., 9097 ./ +!p. Ct. 1ep., 323F, and #e can add
not"ing to t"e disc!ssion contained in t"at case. D=lint vs. +tone -racy Co., 31 +!p. Ct. 1ep., 32., 35..F
It #ill &e o&served t"at #e do not consider or decide t"e 9!estion disc!ssed in plaintifHs &rief as to t"e po#er
of t"e $"ilippine ,overnment to condition t"e grant of licenses to vessels engaged in t"e interisland trade on
t"eir agreement to transport t"e mails free of c"arge. >e do not t"in) t"at 9!estion is s9!arely s!&mitted to
!s &y t"e pleadings. Ecept, per"aps in paragrap" III, t"e circ!lar itself no#"ere re9!ires or imposes !pon t"e
vessels afected t"ere&y t"e d!ty of carrying t"e mails free of c"arge7 and it is manifest &ot" from t"e
complaint and t"e &rief of co!nsel t"at t"e prayer for pro"i&ition is not &ased on t"at relatively !nimportant
provision of t"e circ!lar.
-"e real contention arises over t"e provisions of paragrap" I, #"ic" re9!ire trading vessels to carry mails
tendered for transportation in a safe and a sec!re manner. <!t t"is does not necessarily re9!ire t"ese vessels
to accept and to carry mail free of c"arge. It is only #"en goods are la#f!lly tendered t"at common carriers
may &e compelled to carry t"em, and it m!st &e pres!med t"at t"e a!t"or of t"e circ!lar "ad in mind a la#f!l
tender of mails #"en #e #rote t"is paragrap". If a vessels may not &e re9!ired to carry mail #it"o!t direct
compensation, or a contract providing for s!c" compensation, it m!st &e pres!med t"at t"e Collector did not
intend to re9!ire vessels to accept mail #it"o!t tender of reasona&le compensation for s!c" services or
provision for payment &y contract or ot"er#ise, and t"at t"is paragrap" #as intended merely as a reg!lation
re9!iring t"e acceptance of all mail t"!s la#f!lly tendered and t"e safe transportation of s!c" mail #"en
accepted for transportation.
-"e complaint does not allege, ecept per"aps &y inference, t"at t"e defendant or any o%cer of t"e
,overnment "as !nderta)en or is !nderta)ing to compel t"e plaintif master of t"e 3i4ca$a, or t"e o#ners of
t"at vessel, over t"eir protest, to carry t"e mails free of c"arge. -"e allegations of t"e complaint in t"is regard
are s!&stantially limited to t"e allegations set fort" in paragrap" 5 t"ereof, to t"e efect t"at neit"er t"e
circ!lar nor t"e la#s of t"e $"ilippine Islands contain any provision for compensation for t"e services re9!ired
!nder t"e terms of t"e circ!lar, and t"at &y virt!e of t"e circ!lar t"e plaintif master and "is vessel ate
t"reatened #it" t"e prescri&ed penalties !nless t"ey render the re'uired services #it"o!t compensation. <!t
!nless t"e circ!lar &e constr!ed as re9!iring t"e transportation of mail #it"o!t direct compensation, and #e
are of opinion t"at it does not necessarily "ave t"at efect, t"e complaint no#"ere alleges or c"arges t"at t"e
defendant Collector of C!stoms re9!ires or t"reatens to re9!ire t"e plaintif captain or "is vessel to carry t"e
mail free of c"arge.
Co!nsel in "is &rief c"allenges and disc!sses at some lengt" t"e po#er of t"e ,overnment of t"e $"ilippine
Islands to re9!ire plaintifHs vessel to carry mail #it"o!t providing 4!st compensation t"erefor. It #o!ld appear
from t"e arg!ment of co!nsel t"at licensed coast#ise vessels #ere re9!ired !nder t"e former sovereign to
carry mails #it"o!t direct compensation, and t"at t"ere is some contention as to #"et"er t"ey may &e
re9!ired to do so !nder t"e la#s no# in force7 and it #o!ld seem t"at in many instances t"ese vessels
contin!ed to carry t"e mails free of c"arge do#n to t"e date of t"e iss!ance of t"e circ!lar, t"o!g" not"ing is
said as to #"et"er or not t"is #as done vol!ntarily and #it"o!t protest. If t"ese intimations in t"e arg!ment of
co!nsel are fo!nded in fact, a nice 9!estion of la# mig"t #ell &e raised, !nder appropriate pleadings, as to
#"et"er t"e government co!ld contin!e to re9!ire s!c" services, #it"o!t direct compensation, #"ere it does
not appear t"at t"e re9!ired transportation of t"e mails imposes an ine9!ita&le &!rden in a partic!lar
instance7 t"is as a condition of a contin!ance of t"e licenses !nder #"ic" coast#ise trading vessels are
re9!ired to operate, and in consideration of t"e indirect compensation received &y s!c" vessels t"ro!g" t"e
a&ove-mentioned ependit!res on t"eir &e"alf, or &y #ay of services to &e rendered in consideration of t"e
privilege of entering and contin!ing in t"e &!siness of common carriers, some#"at as licensed attorneys are
re9!ired to render certain services #it"o!t direct compensation in consideration of t"e privilege granted t"em
to ofer t"eir services to t"e p!&lic in t"e practice of t"eir profession.
>e decline, "o#ever, to consider or decide t"is 9!estion in t"e a&sence of t"e necessary allegations setting
fort" t"at t"e defendant Collector of C!stoms "as compelled and is t"reatening to compel t"e plaintif master
of t"e 3i4ca$a to carry mails free of c"arge. It does not appear from t"e pleadings, nor are #e advised as a
matter of fact, t"at any attempt "as &een made or is &eing made &y t"e defendant Collector to compel t"e
plaintif master of t"e 3i4ca$a, over "is protest, to carry mail #it"o!t compensation. -"e allegations of t"e
complaint disclose merely t"at "e t"reatened to enforce t"e reg!lations of t"e circ!lar re9!iring t"e master of
t"e 3i4ca$a to ma)e provision for t"e transportation of t"e mails #"en tendered, and for t"e giving of
reasona&le notice as to sailing "o!rs !pon #"ic" s!c" tender mig"t &e &ased.
>e come no# to consider t"e a!t"ority of t"e Collector of C!stoms to iss!e and enforce general r!les and
reg!lations, s!c" as are set fort" in C!stoms 5dministrative Circ!lar 'o. 0.3, s!&4ect to t"e approval of t"e
+ecretary of =inance and G!stice.
+ection 3 of 5ct 'o. 355 provides t"at t"e c!stoms service s"all em&race, among ot"er t"ings, t"e follo#ing6
-"e doc!menting of vessels &!ilt or o#ned in t"e $"ilippine Islands, etc.
-"e ecl!sion of foreign vessels from t"e coast#ise trade.
-"e entry and clearance of vessels.
-"e enforcement of s!c" reg!lation of commerce, foreign and coast#ise, as s"all &e esta&lis"ed &y
competent a!t"ority.
-"e reg!lation of t"e carriage of passengers &y #ater and t"e licensing of vessels t"erefor.
+ection 3 of t"at 5ct, provides, in part, as follo#s6 ?-"e Ins!lar Collector s"all "ave general a!t"ority
t"ro!g"o!t t"e $"ilippine Islands in all matters em&raced #it"in t"e 4!risdiction of t"e C!stoms +ervice.?
+ection 19 of t"at 5ct, provides, in part, as follo#s6 ?-"e Ins!lar Collector s"all, from time to time, ma)e and
prom!lgate general r!les and reg!lations, not inconsistent #it" la#, s!&4ect to t"e approval of t"e +ecretary of
=inance and G!stice6
1. Airecting t"e manner of eec!tion of t"e c!stoms la# and la#s relating to commerce, navigation,
and immigration.

3. $rescri&ing t"e met"od of loading and !nloading merc"andise and t"e transportation t"ereof &y
&onded carriers, rail#ays, vessels, &onded lig"ters, carts, or ot"er#ise.

+ection 33 of t"at 5ct provides as follo#s6 ?In t"e coasting trade, t"e and meas!rement, doc!menting,
enrollment, and licensing of vessels &!ilt or o#ned in t"e $"ilippine 5rc"ipelago and in t"e ma)ing and
recording of all doc!ments relating t"ereto, t"e Ins!lar Collector s"all o&serve, prom!lgate, and enforce s!c"
orders and reg!lations respecting t"e same as "ave &een "eretofore or s"all "ereafter &e prescri&ed &y t"e
proper a!t"ority. In t"e a&sence of s!c" reg!lations or orders "e s"all o&serve and follo# t"e la#s of t"e
*nited +tates and t"e reg!lations of t"e -reas!ry Aepartment of t"e *nited +tates so far as t"e same may &e,
in "is so!nd 4!dgment, applica&le. Certi8cates of protection s"all "ereafter &e signed &y t"e collector of
c!stoms at ports #"ere iss!ed and co!ntersigned &y t"e Ins!lar Collector.?
+ection 132 of 5ct 'o. 355 is as follo#s6 ?-"e coast#ise trade s"all &e !nder t"e general control and
s!pervision of t"e Ins!lar Collector, and !nder t"e direct s!pervision of collectors of c!stoms at t"e s!&ports
of entry #it"in t"eir respective collection districts.?
+ection 1 of 5ct 'o. 3:/, amended &y section 1 of 5ct 'o. 10/., provides, in part, as follo#s6 ?5 &oard is
"ere&y created, to consist of t"e Ins!lar Collector of C!stoms, t"e s!pervising inspector of "!lls and &oilers,
and assistant inspector of "!lls, one person "olding an !nepired license as matter in t"e $"ilippine coast#ise
trade, and one ot"er competent person, #"ose d!ty it s"all &e to eamine and certify licenses all applicants
for licenses as #atc" o%cers and engineers !pon vessels of t"e $"ilippine Islands.?
+ection . of 5ct 'o. 3:/ is as follo#s6 ?>"enever any person applies for license as master, mate, patron, or
engineer of a $"ilippine coast#ise vessel it s"all &e t"e d!ty of t"e <oard on $"ilippine Marine Eamination to
ma)e a t"oro!g" in9!iry as to "is c"aracter and caref!lly to eamine t"e applicant, t"e evidence "e presents
in s!pport of "is application, and s!c" ot"er evidence as it may deem proper or desira&le, and if satis8ed t"at
"is capacity, eperience, "a&its of life, and c"aracter as s!c" as to #arrant t"e &elief t"at "e can &e safely
intr!sted #it" t"e d!ties and responsi&ilities of t"e position for #"ic" "e ma)es application, it s"all so certify
to t"e Ins!lar Collector of C!stoms, #"o s"all iss!e a license a!t"orizing s!c" applicant to act as master,
mate, patron, or engineer, as t"e case may &e.?
+ection 0 of t"at 5ct is as follo#s6 ?Every license a!t"orized to &e iss!ed as a&ove set fort" s"all &e operative
and in force !ntil G!ly 8rst, nineteen "!ndred and fo!r, &!t t"e Ins!lar Collector of C!stoms may at any time
s!spend or revo)e any license !pon satisfactory proof of miscond!ct, intemperate "a&its, incapacity, or
inattention to d!ty on t"e part of t"e licensee.?
+ection . of 5ct 'o. 1/.5 is as follo#s6 ?*pon t"e epiration of t"e license a!t"orized to &e iss!ed &y said 5ct
'!m&ered +even C!ndred and eig"ty, t"e said <oard is f!rt"er a!t"orized and empo#ered to rene# s!c"
license from year to year !pon d!e application &eing made as prescri&ed in said 5ct, &!t eac" rene#al s"all &e
operative for only one year. In case of rene#al of license t"e #ritten eamination re9!ired &y section t"ree of
said 5ct s"all not &e "ad, &!t t"e applicant for rene#al s"all only &e re9!ired to s!&mit to an eamination, if
deemed necessary &y t"e <oard, to test "is p"ysical so!ndness, &!t t"e <oard is a!t"orized to ref!se any
application for rene#al !pon satisfactory evidence of miscond!ct, intemperate "a&its, incapacity, or
inattention to d!ty on t"e part of t"e licensee, and also to revo)e any s!c" rene#al license, #"en granted, for
t"e same reasons, or any of t"em.?
=!rt"ermore t"e d!ties of t"e captain of t"e port, as t"at o%ce formerly eisted and as provided in t"e
+panis" la#s, no# devolve !pon t"e Ins!lar Collector of C!stoms and "is s!&ordinates as "e may direct,
p!rs!ant to t"e provisions of section 1 of 5ct 'o. 0.5.
It follo#s t"at any d!ties #"ic" t"e captain of t"e port #as re9!ired to perform !nder t"e a&ove cited decrees
and similar reg!lations iss!ed !nder t"e +panis" 5dministration of t"e ,overnment of t"ese Islands, devolved
!pon t"e Collector of C!stoms at t"e date of t"e prom!lgation of Circ!lar 'o. 0.3, so far as t"ose decrees and
similar reg!lations contin!ed in force at t"at time.
>e concl!de from an eamination of t"ese citations of la#, t"at in so far as C!stoms 5dministrative Circ!lar
'o. 0.3 consists of a &ody of reasona&le reg!lations controlling and prescri&ing t"e cond!ct of vessels
licensed to engage in t"e coast#ise trade, and of licensed o%cers a&oard s!c" vessels, #it" reference to t"e
transportation of mail, t"e Ins!lar Collector #as clot"ed #it" t"e necessary a!t"ority at t"e date of t"e circ!lar
for its preparation, prom!lgation and enforcement. 5s #e "ave already indicated, t"e circ!lar Daside per"aps
from its t"ird paragrap", as to #"ic" no real contention is involved in t"ese proceedingsF is, #"en correctly
constr!ed, s!c" a &ody of reasona&le reg!lations, to!c"ing t"e cond!ct of coast#ise vessels and t"eir o%cers
#it" reference to t"e transportation of mails. >e "ave, t"erefore, no do!&t as to t"e a!t"ority of t"e
defendant collector in t"e premises.
*nder t"e elementary r!le &y virt!e of #"ic" a dem!rrer ?searc"es t"e #"ole record,? #e are forced to t"e
concl!sion t"at, !nless amended, t"e complaint m!st &e dismissed, on t"e gro!nd t"at no ca!se of action is
developed &y t"e pleadings.
-#enty days "ereafter, let t"e complaint &e dismissed at t"e costs of t"e petitioner !nless amended so as to
set fort" a ca!se of action, and ten days t"ereafter let t"e record &e 8led in t"e arc"ives of original actions in
t"is co!rt. +o ordered.
G.R. No. L%4&17 M#2 (6, 1954
.IL-E.TER M. P,N.ALAN, ET AL., plaintifs-appellants,
vs.
T3E M,NICIPAL 4OAR' O5 T3E CITY O5 MANILA, ET AL., defendants-appellants.
REYE., J.6
-"is s!it #as commenced in t"e Co!rt of =irst Instance of Manila &y t#o la#yers, a medical practitioner, a
p!&lic acco!ntant, a dental s!rgeon and a p"armacist, p!rportedly ?in t"eir o#n &e"alf and in &e"alf of ot"er
professionals practising in t"e City of Manila #"o may desire to 4oin it.? @&4ect of t"e s!it is t"e ann!lment of
@rdinance 'o. 339: of t"e City of Manila toget"er #it" t"e provision of t"e Manila c"arter a!t"orizing it and
t"e ref!nd of taes collected !nder t"e ordinance &!t paid !nder protest.
-"e ordinance in 9!estion, #"ic" #as approved &y t"e m!nicipal &oard of t"e City of Manila on G!ly .5, 195/,
imposes a m!nicipal occ!pation ta on persons eercising vario!s professions in t"e city and penalizes non-
payment of t"e ta ?&y a 8ne of not more t"an t#o "!ndred pesos or &y imprisonment of not more t"an si
mont"s, or &y &ot" s!c" 8ne and imprisonment in t"e discretion of t"e co!rt.? 5mong t"e professions taed
#ere t"ose to #"ic" plaintifs &elong. -"e ordinance #as enacted p!rs!ant to paragrap" D1F of section 1: of
t"e 1evised C"arter of t"e City of Manila Das amended &y 1ep!&lic 5ct 'o. 2/9F, #"ic" empo#ers t"e
M!nicipal <oard of said city to impose a m!nicipal occ!pation ta, not to eceed $5/ per annum, on persons
engaged in t"e vario!s professions a&ove referred to.
Caving already paid t"eir occ!pation ta !nder section ./1 of t"e 'ational Internal 1even!e Code, plaintifs,
!pon &eing re9!ired to pay t"e additional ta prescri&ed in t"e ordinance, paid t"e same !nder protest and
t"en &ro!g"t t"e present s!it for t"e p!rpose already stated. -"e lo#er co!rt !p"eld t"e validity of t"e
provision of la# a!t"orizing t"e enactment of t"e ordinance &!t declared t"e ordinance itself illegal and void
on t"e gro!nd t"at t"e penalty t"ere in provided for non-payment of t"e ta #as not legally a!t"orized. =rom
t"is decision &ot" parties appealed to t"is Co!rt, and t"e only 9!estion t"ey "ave presented for o!r
determination is #"et"er t"is r!ling is correct or not, for t"o!g" t"e decision is silent on t"e ref!nd of taes
paid plaintifs ma)e no assignment of error on t"is point.
-o &egin #it" defendantsH appeal, #e 8nd t"at t"e lo#er co!rt #as in error in saying t"at t"e imposition of t"e
penalty provided for in t"e ordinance #as #it"o!t t"e a!t"ority of la#. -"e last paragrap" D%%F of t"e very
section t"at a!t"orizes t"e enactment of t"is ta ordinance Dsection 1: of t"e Manila C"arterF in epress terms
also empo#ers t"e M!nicipal <oard )to 51 penalties for the violation of ordinances which shall not e1ceed
to6sic7 two hundred pesos 5ne or si1 months) imprisonment, or both such 5ne and imprisonment, for a sin#le
o2ense.) Cence, t"e prono!ncement &elo# t"at t"e ordinance in 9!estion is illegal and void &eca!se it
imposes a penalty not a!t"orized &y la# is clearly #it"o!t &asis.
5s to plaintifsH appeal, t"e contention in s!&stance is t"at t"is ordinance and t"e la# a!t"orizing it constit!te
class legislation, are !n4!st and oppressive, and a!t"orize #"at amo!nts to do!&le taation.
In raising t"e "!e and cry of ?class legislation?, t"e &!rden of plaintifsH complaint is not t"at t"e professions to
#"ic" t"ey respectively &elong "ave &een singled o!t for t"e imposition of t"is m!nicipal occ!pation ta7 and
in any event, t"e ;egislat!re may, in its discretion, select #"at occ!pations s"all &e taed, and in t"e eercise
of t"at discretion it may ta all, or it may select for taation certain classes and leave t"e ot"ers !ntaed.
DCooley on -aation, Iol. 2, 2t" ed., pp. 3393-3395.F $laintifsH complaint is t"at #"ile t"e la# "as a!t"orized
t"e City of Manila to impose t"e said ta, it "as #it""eld t"at a!t"ority from ot"er c"artered cities, not to
mention m!nicipalities. >e do not t"in) it is for t"e co!rts to 4!dge #"at partic!lar cities or m!nicipalities
s"o!ld &e empo#ered to impose occ!pation taes in addition to t"ose imposed &y t"e 'ational ,overnment.
-"at matter is pec!liarly #it"in t"e domain of t"e political departments and t"e co!rts #o!ld do #ell not to
encroac" !pon it. Moreover, as t"e seat of t"e 'ational ,overnment and #it" a pop!lation and vol!me of
trade many times t"at of any ot"er $"ilippine city or m!nicipality, Manila, no do!&t, ofers a more l!crative
8eld for t"e practice of t"e professions, so t"at it is &!t fair t"at t"e professionals in Manila &e made to pay a
"ig"er occ!pation ta t"an t"eir &ret"ren in t"e provinces.
$laintifs &rand t"e ordinance !n4!st and oppressive &eca!se t"ey say t"at it creates discrimination #it"in a
class in t"at #"ile professionals #it" o%ces in Manila "ave to pay t"e ta, o!tsiders #"o "ave no o%ces in t"e
city &!t practice t"eir profession t"erein are not s!&4ect to t"e ta. $laintifs ma)e a distinction t"at is not
fo!nd in t"e ordinance. -"e ordinance imposes t"e ta !pon every person ?eercising? or ?p!rs!ing? M in t"e
City of Manila nat!rally M any one of t"e occ!pations named, &!t does not say t"at s!c" person m!st "ave "is
o%ce in Manila. >"at constit!tes eercise or p!rs!it of a profession in t"e city is a matter of 4!dicial
determination. -"e arg!ment against do!&le taation may not &e invo)ed #"ere one ta is imposed &y t"e
state and t"e ot"er is imposed &y t"e city D1 Cooley on -aation, 2t" ed., p. 29.F, it &eing #idely recognized
t"at t"ere is not"ing in"erently o&noio!s in t"e re9!irement t"at license fees or taes &e eacted #it"
respect to t"e same occ!pation, calling or activity &y &ot" t"e state and t"e political s!&divisions t"ereof. D51
5m. G!r., 321.F
In vie# of t"e foregoing, t"e 4!dgment appealed from is reversed in so far as it declares @rdinance 'o. 339: of
t"e City of Manila illegal and void and a%rmed in so far as it "olds t"e validity of t"e provision of t"e Manila
c"arter a!t"orizing it. >it" costs against plaintifs-appellants.
G.R. No. L%19()1 *$"e 16, 1965
RE-. 5R. CA.IMIRO LLA'OC, petitioner,
vs.
T7e COMMI..IONER O5 INTERNAL RE-EN,E #"8 T7e CO,RT o! TA9 APPEAL., respondents.
PARE'E., J.:
+ometime in 1953, t"e M.<. Estate, Inc., of <acolod City, donated $1/,///.// in cas" to 1ev. =r. Crispin 1!iz,
t"en paris" priest of Iictorias, 'egros @ccidental, and predecessor of "erein petitioner, for t"e constr!ction of
a ne# Cat"olic C"!rc" in t"e locality. -"e total amo!nt #as act!ally spent for t"e p!rpose intended.
@n Marc" 3, 195:, t"e donor M.<. Estate, Inc., 8led t"e donorHs gift ta ret!rn. *nder date of 5pril .9, 190/,
t"e respondent Commissioner of Internal 1even!e iss!ed an assessment for doneeHs gift ta against t"e
Cat"olic $aris" of Iictorias, 'egros @ccidental, of #"ic" petitioner #as t"e priest. -"e ta amo!nted to
$1,33/.// incl!ding s!rc"arges, interests of 1N mont"ly from May 15, 195: to G!ne 15, 190/, and t"e
compromise for t"e late 8ling of t"e ret!rn.
$etitioner lodged a protest to t"e assessment and re9!ested t"e #it"dra#al t"ereof. -"e protest and t"e
motion for reconsideration presented to t"e Commissioner of Internal 1even!e #ere denied. -"e petitioner
appealed to t"e Co!rt of -a 5ppeals on 'ovem&er ., 190/. In t"e petition for revie#, t"e 1ev. =r. Casimiro
;ladoc claimed, among ot"ers, t"at at t"e time of t"e donation, "e #as not t"e paris" priest in Iictorias7 t"at
t"ere is no legal entity or 4!ridical person )no#n as t"e ?Cat"olic $aris" $riest of Iictorias,? and, t"erefore, "e
s"o!ld not &e lia&le for t"e doneeHs gift ta. It #as also asserted t"at t"e assessment of t"e gift ta, even
against t"e 1oman Cat"olic C"!rc", #o!ld not &e valid, for s!c" #o!ld &e a clear violation of t"e provisions of
t"e Constit!tion.
5fter "earing, t"e C-5 rendered 4!dgment, t"e pertinent portions of #"ic" are 9!oted &elo#6
... . $aris" priests of t"e 1oman Cat"olic C"!rc" !nder canon la#s are similarly sit!ated as its
5rc"&is"ops and <is"ops #it" respect to t"e properties of t"e c"!rc" #it"in t"eir paris". -"ey are t"e
g!ardians, s!perintendents or administrators of t"ese properties, #it" t"e rig"t of s!ccession and may
s!e and &e s!ed.

-"e petitioner imp!gns t"e, fairness of t"e assessment #it" t"e arg!ment t"at "e s"o!ld not &e "eld
lia&le for gift taes on donation #"ic" "e did not receive personally since "e #as not yet t"e paris"
priest of Iictorias in t"e year 1953 #"en said donation #as given. It is intimated t"at if someone "as to
pay at all, it s"o!ld &e petitionerHs predecessor, t"e 1ev. =r. Crispin 1!iz, #"o received t"e donation in
&e"alf of t"e Cat"olic paris" of Iictorias or t"e 1oman Cat"olic C"!rc". =ollo#ing petitionerHs line of
t"in)ing, #e s"o!ld &e e9!ally !nfair to "old t"at t"e assessment no# in 9!estion s"o!ld "ave &een
addressed to, and collected from, t"e 1ev. =r. Crispin 1!iz to &e paid from income derived from "is
present paris" #"ere ever it may &e. It does not seem rig"t to indirectly &!rden t"e present
paris"ioners of 1ev. =r. 1!iz for doneeHs gift ta on a donation to #"ic" t"ey #ere not &ene8ted.

>e sa# no legal &asis t"en as #e see none no#, to incl!de #it"in t"e Constit!tional eemption, taes
#"ic" parta)e of t"e nat!re of an ecise !pon t"e !se made of t"e properties or !pon t"e eercise of
t"e privilege of receiving t"e properties. D$"ipps vs. Commissioner of Internal 1even!e, 91 = O.dP 0.37
193:, 3/. *.+. 32..F
It is a cardinal r!le in taation t"at eemptions from payment t"ereof are "ig"ly disfavored &y la#, and
t"e party claiming eemption m!st 4!stify "is claim &y a clear, positive, or e1press #rant of s!c"
privilege &y la#. DCollector vs. Manila Goc)ey Cl!&, ,.1. 'o. ;-:355, Marc" .3, 19507 53 @.,. 330..F
-"e p"rase ?eempt from taation? as employed in +ection ..D3F, 5rticle II of t"e Constit!tion of t"e
$"ilippines, s"o!ld not &e interpreted to mean eemption from all )inds of taes. +tat!tes eempting
c"arita&le and religio!s property from taation s"o!ld &e constr!ed fairly t"o!g" strictly and in s!c"
manner as to give efect to t"e main intent of t"e la#ma)ers. D1oman Cat"olic C"!rc" vs. Castrings 5
$"il. 3/1.F

>CE1E=@1E, in vie# of t"e foregoing considerations, t"e decision of t"e respondent Commissioner of
Internal 1even!e appealed from, is "ere&y a%rmed ecept #it" regard to t"e imposition of t"e
compromise penalty in t"e amo!nt of $./.// DCollector of Internal 1even!e v. *.+.-., ,.1. 'o. ;-11.32,
'ov. .:, 195:F7 ..., and t"e petitioner, t"e 1ev. =r. Casimiro ;ladoc is "ere&y ordered to pay to t"e
respondent t"e amo!nt of $9//.// as doneeHs gift ta, pl!s t"e s!rc"arge of 8ve per centum D5NF as
ad valorem penalty !nder +ection 119 DcF of t"e -a Code, and one per cent!m D1NF mont"ly interest
from May 15, 195: to t"e date of act!al payment. -"e s!rc"arge of .5N provided in +ection 1./ for
fail!re to 8le a ret!rn may not &e imposed as t"e fail!re to 8le a ret!rn #as not d!e to #illf!l neglect.
D ... F 'o costs.
-"e a&ove 4!dgment is no# &efore !s on appeal, petitioner assigning t#o D.F errors allegedly committed &y
t"e -a Co!rt, all of #"ic" converge on t"e sing!lar iss!e of #"et"er or not petitioner s"o!ld &e lia&le for t"e
assessed doneeHs gift ta on t"e $1/,///.// donated for t"e constr!ction of t"e Iictorias $aris" C"!rc".
+ection .. D3F, 5rt. II of t"e Constit!tion of t"e $"ilippines, eempts from taation cemeteries, churches and
parsonages or convents, app!rtenant t"ereto, and all lands, buildin#s, and improvements !sed ecl!sively for
religio!s p!rposes. -"e eemption is only from t"e payment of taes assessed on s!c" properties en!merated,
as property taes, as contra disting!is"ed from ecise taes. In t"e present case, #"at t"e Collector assessed
#as a doneeHs gift ta7 t"e assessment #as not on t"e properties t"emselves. It did not rest !pon general
o#ners"ip7 it #as an ecise !pon t"e !se made of t"e properties, !pon t"e eercise of t"e privilege of
receiving t"e properties D$"ipps vs. Com. of Int. 1ec. 91 = .d 0.3F. Manifestly, gift ta is not #it"in t"e
eempting provisions of t"e section 4!st mentioned. 5 gift ta is not a property ta, &!t an ecise ta imposed
on t"e transfer of property &y #ay of gift inter vivos, t"e imposition of #"ic" on property !sed ecl!sively for
religio!s p!rposes, does not constit!te an impairment of t"e Constit!tion. 5s #ell o&served &y t"e learned
respondent Co!rt, t"e p"rase ?eempt from taation,? as employed in t"e Constit!tion DsupraF s"o!ld not &e
interpreted to mean eemption from all )inds of taes. 5nd t"ere &eing no clear, positive or epress grant of
s!c" privilege &y la#, in favor of petitioner, t"e eemption "erein m!st &e denied.
-"e net iss!e #"ic" readily presents itself, in vie# of petitionerHs t"esis, and @!r 8nding t"at a ta lia&ility
eists, is, #"o s"o!ld &e called !pon to pay t"e gift taB $etitioner post!lates t"at "e s"o!ld not &e lia&le,
&eca!se at t"e time of t"e donation "e #as not t"e priest of Iictorias. >e note t"e merit of t"e a&ove claim,
and in order to p!t t"ings in t"eir proper lig"t, t"is Co!rt, in its 1esol!tion of Marc" 15, 1905, ordered t"e
parties to s"o# ca!se #"y t"e Cead of t"e Aiocese to #"ic" t"e paris" of Iictorias pertains, s"o!ld not &e
s!&stit!ted in lie! of petitioner 1ev. =r. Casimiro ;ladoc it appearing t"at t"e Cead of s!c" Aiocese is t"e real
party in interest. -"e +olicitor ,eneral, in representation of t"e Commissioner of Internal 1even!e, interposed
no o&4ection to s!c" a s!&stit!tion. Co!nsel for t"e petitioner did not also ofer o&4ection t"ereto.
@n 5pril 3/, 1905, in a resol!tion, >e ordered t"e Cead of t"e Aiocese to present #"atever legal iss!es andQor
defenses "e mig"t #is" to raise, to #"ic" resol!tion co!nsel for petitioner, #"o also appeared as co!nsel for
t"e Cead of t"e Aiocese, t"e 1oman Cat"olic <is"op of <acolod, manifested t"at it #as s!&mitting itself to t"e
4!risdiction and orders of t"is Co!rt and t"at it #as presenting, &y reference, t"e &rief of petitioner 1ev. =r.
Casimiro ;ladoc as its o#n and for all p!rposes.
In vie# "ere of and considering t"at as "eretofore stated, t"e assessment at &ar "ad &een properly made and
t"e imposition of t"e ta is not a violation of t"e constit!tional provision eempting c"!rc"es, parsonages or
convents, etc. D5rt II, sec. .. O3P, Constit!tionF, t"e Cead of t"e Aiocese, to #"ic" t"e paris" Iictorias
$ertains, is lia&le for t"e payment t"ereof.
-"e decision appealed from s"o!ld &e, as it is "ere&y a%rmed insofar as ta lia&ility is concerned7 it is
modi8ed, in t"e sense t"at petitioner "erein is not personally lia&le for t"e said gift ta, and t"at t"e Cead of
t"e Aiocese, "erein s!&stit!te petitioner, s"o!ld pay, as "e is presently ordered to pay, t"e said gift ta,
#it"o!t special, prono!ncement as to costs.