TO: Atty.

Warren Evangelista

FROM: Allana Marie P. Nacino

DATE: September 14, 2019

RE: Constitutionality of law removing the tax-exempt status of religious organizations if they
endorse a candidate for election

A law removing the tax-exempt status of religious organizations if they endorse a candidate for
election is constitutional because the tax exemption granted to religious institutions and
organizations by the Constitution and the Tax Code is not absolute. Such exemption was granted
to the said institutions and organizations in conformity with Section 6, Article II of the 1987
Philippine Constitution which states that the separation of Church and State shall be inviolable.
Thus, any actions of such institutions and organizations rendering them not exclusively for
religious, charitable or educational purposes shall be ground for the removal of their tax exemption.

Although not expressly exempted under the 1987 Philippine Constitution unlike that of religious
institutions, religious organizations are exempted from income tax under Section 30 of the Tax
Code based on the Principle of Separation of Church and State enshrined under Section 6, Article
II of the 1987 Philippine Constitution. This provision states that the separation of Church and State
shall be inviolable. Since the power to tax is also the power to destroy, the State, under this
provision, is asked to lessen its interference with religious affairs. Thus, our legislators included
religious organizations among the few under the Tax Code which are exempt from income tax.

This, however, is not absolute. Section 30 of the Tax Code is qualified by the condition that such
religious organizations should be exclusively for religious and charitable purposes to be exempted
from income tax. This is because the Constitution only protects the separation of the Church and
State. The moment religious organizations are found to not be exclusively for religious or
charitable purposes, such organizations may be removed from their tax exemption. In the case of
religious organizations endorsing a candidate for election, such may be a valid ground for removal
of the tax exemption of the religious organization because such case no longer falls under the
Doctrine of Separation of Church and State. With elections being purely political in nature, any
religious organization who endorse a candidate in the elections loses its status as religious

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organization exclusively for religious and charitable purposes. Thus, their tax-exempt status may
be removed.

As ruled by the Supreme Court in the case of Dumaguete Cathedral Credit Cooperative vs.
Commissioner of Internal Revenue, G.R. No. 182722, "the power of taxation, while indispensable,
is not absolute and may be subordinated to the demands of social justice." Although there is no
exact jurisprudence yet in the Philippines to rule on the validity of a law removing the tax-exempt
status of religious organizations that endorsed a candidate for election, it can be inferred from the
aforesaid ruling that tax-emptions are not absolute and may be removed as long as the reason for
the exemption no longer lies, which in this case, is the protection of the separation of the Church
and State.

While this issue is not yet determined here in the Philippines, in foreign jurisdictions like the
United States of America, tax exemption is granted to religious organizations subject to the
mandatory condition that it does not participate or intervene in any political campaign on behalf
of or in opposition to any candidate for public office. In the same light, such law may be passed
here in the Philippines as it does not violate our Constitution, but on the contrary, it executes its
intention which is to minimize the interference of the State in the affairs of the Church, but not on
the affairs of religious organizations which are not exclusively used for religious, charitable, or
educational purposes. With elections being a political act, religious organizations that endorse
candidates for election are no longer acting exclusively as hands of the Church, and therefore
should no longer be protected by the Principle of Separation of Church and State.

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