GR L 15772; (October,1961) (Digest)
G.R. No. L-15772; October 31, 1961
THE COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. CHURCH OF JESUS CHRIST “NEW JERUSALEM”, respondent.
FACTS
The respondent, Church of Jesus Christ “New Jerusalem,” a religious corporation, received a donation from abroad consisting of two cases of Chesterfield cigarettes. The donor specified that the cigarettes were for free distribution to the poor and destitute members of the church. The taxpayer requested exemption from the specific tax under Republic Act No. 1916 , which grants tax exemption for donated articles imported by qualified organizations for free distribution.
The Secretary of Finance and subsequently the Commissioner of Internal Revenue denied the request. The denial was based on the ground that the free distribution of cigarettes, given the nature of the articles, could not be considered as serving civic, religious, or charitable purposes. The taxpayer appealed this decision to the Court of Tax Appeals.
ISSUE
Whether the imported cigarettes, donated to a religious corporation for free distribution to its poor members, are exempt from specific tax under Republic Act No. 1916 .
RULING
Yes. The Supreme Court affirmed the decision of the Court of Tax Appeals, holding the cigarettes exempt. The legal logic centers on the proper interpretation of Republic Act No. 1916 . For exemption, the law requires: (1) the articles are donated; (2) the consignee is a duly incorporated religious, civic, or charitable institution; and (3) the articles are for the institution’s use or for free distribution, not for commercial gain. All these conditions were met.
The Court rejected the Commissioner’s theory that the exemption is limited to articles whose inherent nature is for civic, religious, or charitable purposes. The phrase “for civic, religious or charitable purposes” in the law qualifies the nature of the recipient institution, not the imported articles. The law explicitly covers “all articles” consigned to such institutions for free distribution. The charitable purpose is derived from the act of free distribution to the needy, not from the character of the goods distributed.
The Court further supported this interpretation by examining the legislative intent behind the law, which was enacted post-World War II to encourage relief donations by removing tax obstacles. A restrictive interpretation would defeat this purpose. The element of charity is present in giving comfort items like cigarettes to the poor, akin to donations sent to soldiers. The law contains adequate safeguards against abuse, such as imposing double taxes if the articles are later sold. Therefore, the exemption was correctly granted.