Trinidad v. Sagrada Orden De Predicadores

Citation44 S.Ct. 204,263 U.S. 578,68 L.Ed. 458
Decision Date14 January 1924
Docket NumberNo. 53,53
CourtUnited States Supreme Court

Messrs. Grant T. Trent and Logan N. Rock, both of Washington, D. C., and F. Granville Munson, of New York City, for petitioner.

Mr. Gabriel La O, of Manila, Porto Rico, for respondent.

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

This was an action to recover money paid under protest as a tax on income. The plaintiff prevailed in the Philippine courts, both trial and appellate (Sagrada Orden de Predicadores, etc., v. Trinidad, 42 Phil. Rep. 397), and the case is here on certiorari (260 U. S. 711, 43 Sup. Ct. 13, 67 L. Ed. 476).

The tax was levied under paragraphs G(a) and M of section 2 of the Act of October 3, 1913, c. 16, 38 Stat. 172, 180, requiring every corporation, not within defined exceptions, to pay an annual tax, computed at a specified rate, on its entire net income from all sources. The exceptions covered, among others, any corporation 'organized and operated exclusively for religious, charitable, scientific or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual.' The plaintiff insisted it was within this exception, and the Philippine courts so ruled.

The case was heard on a stipulation stating:

'That the plaintiff is a corporation sole constituted under sections 154 to 164 of Act No. 1459 of the Philippine Commission, and is organized and operated for religious, benevolent, scientific and educational purposes in these islands and in its missions in China, Cochin China and Japan, and that neither its net income nor part of its rents from whatever source it may come is applied to the benefit of any particular stockholder or individual, or of any of its members, and that no part of the whole or of some of its temporal properties belong to any of its members, who have no rights to the same, even in case of dissolution of the corporation.

'That the dividends and interests or profits and expenses, which appear in Exhibit 1 of the defendant as the income of the plaintiff, constitute the income derived from the investments of the capital of the plaintiff corporation, which was invested, in the year 1913, nearly in the manner and form specified in Exhibit 2 of the defendant, and that the rents appearing in Exhibit 1 were derived from the properties which together with their valuations appear in Exhibit 3 of the defendant.'

The second paragraph of the stipulation is rather obscure and the exhibits are in a very condensed form, but all are elucidated by the opinions below and the briefs here. They mean, when read with these aids, that the plaintiff has large properties in the Philippines, consisting of real estate, stocks in private corporations and money loaned at interest, all of which are held and used as sources from which to obtain funds or revenue for carrying on its religious, charitable and educational work; that the bulk of its income consists of rents, dividends and interest derived from these properties; that the rest of its income is relatively small and comes from alms for mass, profits from occasional sales of some of its stocks, and sums received, in excess of cost, for wine, chocolate and other articles purchased and supplied for use in its churches, missions, parsonages, schools, and other subordinate agencies. The proportions in which these several items contributed to its income for the year covered by the tax in question are shown in the margin.1

The defendant concedes that the plaintiff is organized and operated for religious, charitable and educational purposes and that no part of its net income inures to the benefit of any stockholder or individual, but contends that it is not ...

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