A municipal ordinance imposing license fees on the sale of merchandise, when applied to the distribution and sale of bibles and religious literature by a non-profit religious corporation, constitutes an unconstitutional restraint on the free exercise of religion and the dissemination of religious beliefs, as it is not a nominal fee for regulation but a tax on a constitutional privilege. However, an ordinance requiring a Mayor's permit for businesses, trades, or occupations, if generally applicable and not imposing a charge on the enjoyment of a constitutional right or taxing religious practices, is not per se unconstitutional but may be inapplicable if the underlying activity it seeks to regulate (through related tax ordinances) is constitutionally protected from such taxation.

The American Bible Society (ABS), a non-profit religious missionary corporation, had been distributing and selling bibles and religious materials in the Philippines since 1898. In 1953, the City Treasurer of Manila informed ABS that it was considered to be conducting the business of "general merchandise" and required it to secure a Mayor's permit and pay license fees for the period from the 4th quarter of 1945 to the 2nd quarter of 1953, based on City Ordinances. ABS paid the assessed amount under protest and filed suit to challenge the legality and constitutionality of these ordinances as applied to its activities.

• Plaintiff-appellant, American Bible Society (ABS), is a foreign, non-stock, non-profit, religious, missionary corporation registered and doing business in the Philippines since 1898, distributing and selling bibles and gospel portions.
• On May 29, 1953, the acting City Treasurer of Manila informed ABS that it was conducting the business of general merchandise since November 1945 without the necessary Mayor's permit and municipal license, in violation of Ordinance No. 3000 (as amended) and Ordinances Nos. 2529, 3028, and 3364.
• The City Treasurer required ABS to secure the permit and pay license fees, including a compromise, totaling P5,821.45 for the period from the 4th quarter of 1945 to the 2nd quarter of 1953.
• To avoid business closure and further penalties, ABS paid P5,891.45 under protest on October 24, 1953, and on the same day filed a complaint questioning the legality of the ordinances.
• ABS presented evidence that it never made a profit from bible sales, often selling them at one-third of the cost, and relied on remittances from its New York office and voluntary contributions.
• Defendant City of Manila contended that ABS did make a profit, citing instances where bibles were sold at prices higher than their cost from the New York office.
• The parties submitted a stipulation of facts detailing the quarterly sales amounts of ABS from the 4th quarter of 1945 to the 1st quarter of 1953.
• Ordinance No. 3000 required a Mayor's permit for various businesses, trades, or occupations, including "All other businesses, trades or occupations not mentioned... except thane upon which the City is not aw/powered to license or to tax" for a P5.00 fee.
• Ordinance No. 2529, as amended, imposed quarterly license fees based on gross sales or receipts for businesses including "retail dealers in general merchandise" and "retail dealers exclusively engaged in the sale of... books, including stationery."

• The Municipal Ordinances (No. 3000, as amended, and Nos. 2529, 3028, 3364) are illegal and unconstitutional as applied to ABS because they provide for religious censorship and restrain the free exercise and enjoyment of its religious profession, specifically the distribution and sale of bibles and religious literature.
• Subsection m-2 of Section 2444 of the Revised Administrative Code, under which Ordinances Nos. 2529 and 3000 were promulgated, was repealed by Section 18 of Republic Act No. 409 (Revised Charter of the City of Manila), rendering the ordinances no longer in force.
• An ordinance providing for percentage taxes based on gross sales or receipts, to be valid under the new Charter of the City of Manila (RA 409), must first be approved by the President of the Philippines, which was not done for the questioned ordinances.
• The sales made by ABS, even if they have assumed commercial proportions, cannot escape from the operation of said municipal ordinances under the cloak of religious privilege, implying that its activities are fundamentally religious and not commercial.
• The Collector of Internal Revenue exempted ABS from income tax, indicating its activities are purely religious.

• The questioned ordinances were enacted by the Municipal Board of the City of Manila by virtue of the power granted to it by section 2444, subsection (m-2) of the Revised Administrative Code, superseded by section 18, subsection (l) of Republic Act No. 409.
• Although Section 2444 (m-2) of the former Manila Charter and Section 18(o) of the new Charter differ in expression, their meaning is practically the same for taxing the merchandise, and thus Ordinances Nos. 2529 and 3000 remain in full force.
• The business of "retail dealers in general merchandise" is expressly enumerated in Section 18(o) of RA 409, so an ordinance prescribing a municipal tax on such business does not require Presidential approval.
• The admissions of ABS's witness showed that bibles were sold at prices higher than their cost from the New York office, indicating a profit-making aspect to the sales.
• The ordinances are of general application and not specifically directed against religious institutions like the plaintiff.

• Whether or not Ordinances of the City of Manila, Nos. 3000 (as amended) and 2529 (as amended by Nos. 2779, 2821, 3028, and 3364) are constitutional and valid.
• Whether or not the provisions of said ordinances are applicable to the American Bible Society's activities of distributing and selling bibles and other religious literature.
• Whether subsection m-2 of Section 2444 of the Revised Administrative Code was repealed by Section 18 of Republic Act No. 409, and if so, the effect on the validity of the ordinances.
• Whether an ordinance providing for percentage taxes based on gross sales, to be valid under the new Charter of Manila, requires Presidential approval.

• The Supreme Court reversed the decision of the lower court and ordered the City of Manila to refund P5,891.45 to the American Bible Society.
• Ordinance No. 2529, as amended, imposing license fees based on gross sales, is unconstitutional and illegal when applied to ABS because it impairs its free exercise and enjoyment of religious profession and worship, and its right to disseminate religious beliefs. The Court found that the fee was not nominal but a tax on the exercise of a constitutional privilege, which tends to suppress it.
• While the Court acknowledged that religious groups are not free from all financial burdens, a flat license tax imposed as a condition for exercising constitutional privileges like religious dissemination is different from a tax on income or property.
• Ordinance No. 3000, requiring a Mayor's permit, is not per se unconstitutional, as it does not impose a charge on the enjoyment of a constitutional right or tax religious practices directly. However, since Ordinance No. 2529 (the tax ordinance) is inapplicable to ABS, Ordinance No. 3000, which necessitates a permit based on the city's power to license or tax, is also inapplicable to the specific business/occupation of ABS.
• The Court held that the questioned ordinances, although promulgated under the old charter, are still in force despite the enactment of RA 409, as the re-enactment of similar taxing powers neutralizes the repeal, continuing the law in force without interruption, except for any limitations (like the P500 cap in the old law) that are no longer present in the new law.
• The requirement for Presidential approval under Section 18(ii) of RA 409 applies to businesses not otherwise enumerated. Since "retail dealers in general merchandise" (which the City classified ABS as) is enumerated in Section 18(o), Presidential approval was not necessary for an ordinance taxing such business.

• Freedom of Religious Profession and Worship (Art. III, Sec. 1(7), Phil. Constitution) — This constitutional guarantee includes the right to disseminate religious information. Any restraint on this right is only justifiable if there is a clear and present danger of a substantive evil that the State has a right to prevent. The Court applied this by stating that imposing a license fee (tax) on the sale of bibles by a religious organization directly burdens this freedom.
• Taxation of Religious Exercise — While religious organizations are not exempt from all financial burdens (e.g., income tax on unrelated business activities, property tax), a license tax imposed as a condition for the exercise of religious propagation is unconstitutional. The power to tax such a privilege is the power to control or suppress its enjoyment. This was central to striking down Ordinance No. 2529 as applied to ABS.
• Statutory Construction (Repeal and Re-enactment) — When a legislature repeals an old statute in its entirety and by the same enactment re-enacts all or certain portions of the pre-existing law, the majority view is that rights and liabilities accrued under the original statute are preserved, as the re-enactment neutralizes the repeal, continuing the law in force without interruption. This doctrine was used to uphold the general continuing validity of the ordinances despite the change in Manila's Charter, as RA 409 contained similar taxing powers.
• Police Power (Mayor's Permit) — Ordinances requiring permits for businesses are generally valid exercises of police power for regulation, sanitation, security, and public welfare. Such a permit requirement is not unconstitutional per se if it doesn't directly tax or charge for the exercise of a constitutional right. The Court found Ordinance No. 3000 (Mayor's permit) not inherently unconstitutional but inapplicable because the underlying activity (sale of bibles by ABS) was deemed exempt from the related license tax.

• "The constitutional guaranty of the free exercise and enjoyment of religious profession and worship carries with it the right to disseminate religious information. Any restraint 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."
• "It is one thing to impose a tax on the income or property of a preacher. It is quite another thing to exact a tax from him for the privilege of delivering, a sermon. The tax imposed by the City of Jeannette is a flat license tax, payment of Which is a condition of the exercise of these constitutional privileges. The power to tax the exercise of a privilege Is the power to control or suppress its enjoyment." (Quoting Murdock vs. Pennsylvania)
• "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 appellant was engaged in the business or occupation of selling said 'merchandise' for profit. For this reason We believe that the provisions of City of Manila Ordinance No. 2529, as amended, cannot be applied to appellant, 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."

• Aglipay vs. Ruiz, 64 Phil., 201 — Cited for the definition of "religion" as a profession of faith to an active power that binds and elevates man to its Creator.
• Davis vs. Beason, 133 U.S., 342 — Cited for the definition of "religion" as referring to one's views of his relations to His Creator and the obligations they impose.
• Murdock vs. Pennsylvania, 319 U.S. 105 — Extensively quoted and relied upon as primary authority. This U.S. Supreme Court case held that an ordinance requiring a license to solicit orders for goods cannot apply to Jehovah's Witnesses distributing religious literature for a "price" or "contribution," as it would be a tax on the free exercise of religion. The Philippine Supreme Court adopted its reasoning regarding flat license taxes on religious activities.
• Grosjean vs. American Press Co., 297 U.S., 233 — Cited within the Murdock quote to distinguish permissible financial burdens (like general income or property taxes) from impermissible taxes on the exercise of constitutional privileges.
• Marsh vs. State of Alabama, 326 U.S. 501 — Cited to support the principle that dissemination of religious information cannot be conditioned on the approval of an official, even in a company-owned town, emphasizing the preferred position of freedom of press and religion.
• Tucker vs. Texas, 326 U.S. 517 — Cited alongside Marsh vs. Alabama for the same principle, extending it to a federally owned village.
• Coleman vs. City of Griffin, 189 S.E. 427 — Cited to support the ruling that Ordinance No. 3000 (Mayor's permit) is not unconstitutional per se. The Coleman case upheld an ordinance requiring permission for distributing literature, finding it did not deprive the defendant of free exercise of religion, even if it prohibited a scheme claimed as part of his religious system. The Philippine Supreme Court distinguished this by finding the permit ordinance inapplicable once the related tax ordinance was invalidated as to ABS.

• Article III, Section 1, clause (7) of the Constitution of the Republic of the Philippines — This is the free exercise clause. It guarantees that no law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and that the free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. This was the primary constitutional provision invoked by the petitioner and applied by the Court to invalidate the license fee ordinance as applied to ABS.
• Section 2444, subsection (m-2) of the Revised Administrative Code (Old Manila Charter) — This provision empowered the Municipal Board of Manila to tax and fix license fees on dealers in new automobiles and retail dealers in new merchandise not yet subject to other municipal tax, including books. The respondent City of Manila cited this as the original authority for its ordinances. The Court held that its repeal by RA 409 did not invalidate the ordinances due to the re-enactment doctrine.
• Section 18, subsection (l) and (o) of Republic Act No. 409 (Revised Charter of the City of Manila) — Subsection (o) empowers the City to tax and fix license fees on dealers in general merchandise. The Court found this provision to be a substantial re-enactment of the taxing power under the old charter, thus keeping the ordinances in force. Subsection (l) is likely a typo in the original decision's reference by respondent, as (o) is the relevant part for general merchandise. The decision later refers to section 18, subsection (o).
• Section 18, subsection (ii) of Republic Act No. 409 — This provision requires Presidential approval for ordinances taxing, licensing, or regulating businesses, trades, or occupations not otherwise enumerated in preceding subsections. The Court found this inapplicable because "retail dealers in general merchandise" was deemed enumerated under subsection (o).
• Section 102 of Republic Act No. 409 — This section expressly repealed Chapter 60 of the Revised Administrative Code (which included Section 2444). The Court discussed its effect in light of the re-enactment of similar provisions.
• Ordinance No. 3000, City of Manila (as amended) — This ordinance required a Mayor's permit for engaging in various businesses, trades, or occupations. The Court found it not unconstitutional per se but inapplicable to ABS in this instance.
• Ordinance No. 2529, City of Manila (as amended by Ordinances Nos. 2779, 2821, and 3028) — This ordinance imposed quarterly license fees based on gross sales for businesses, including retail dealers in general merchandise and books. The Court found this unconstitutional as applied to ABS's religious activities. (Ordinance 3364 is also mentioned as an amending ordinance in the facts but the ruling focuses on 2529 as the primary license fee ordinance).
• Section 27(e) of Commonwealth Act No. 466 (National Internal Revenue Code) — This section exempts corporations organized and operated exclusively for religious, charitable, or educational purposes from income tax, provided that income from properties or activities conducted for profit shall be taxable. Appellant cited its exemption under this as indicative of its non-profit, religious nature.