Case

Title Lladoc vs. Commissioner of Internal Revenue

G.R. no. L-19201
Main Topic Power of Taxation
Other Related Topic
Date: June 16, 1965

DOCTRINES
1. TAXATION; CONSTITUTIONAL EXEMPTION FOR RELIGIOUS PURPOSES REFERS ONLY TO
PROPERTY TAXES. — Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from
taxation cemeteries, churches and personages or convents, appurtenants thereto, and all lands,
buildings, and improvements used exclusively for religious purposes. The exemption is only from
the payment of taxes assessed on such properties enumerated, as property taxes, as contra-
distinguished from excise taxes.

2.ID.; ID.; GIFT TAX ON PROPERTY USED FOR RELIGIOUS PURPOSES NOT VIOLATION OF
CONSTITUTION. — A gift tax is not an assessment on the properties themselves. It did not rest
upon general ownership. Rather it is an excise upon the use made of the properties and upon
the privilege of receiving them. It is not, therefore a property tax, but an excise tax imposed on
the transfer of property by way of gift inter vivos, the imposition of which a property used
exclusively for religious purposes, does not constitute an impairment of the Constitution.

FACTS:
In 1957, the M.B. Estate, Inc. in Bacolod City donated P10,000 in case to Rev. Fr. Crispin Ruiz, the
then parish priest of Victorias, Negros Occidental and the predecessor of Rev. Fr. Casimiro
Lladoc, for the construction of a new Catholic Church. The total amount was actually spent for
the purpose intended. On March 1958, M.B. Estate filed a donor’s gift tax return. Subsequently,
on April 1960, the CIR issued an assessment for donee’s gift tax in the amount of P1,370
including surcharges, interest of 1% monthly from May 1958 to June 1960 and the compromise
for the late filing of the return against the Catholic Parish of Victorias, Negros Occidental of
which Lladoc was a priest. Lladoc protested and moved to reconsider but it was denied. He then
appealed to the CTA, in his petition for review, he claimed that at the time of the donation, he
was not the parish priest, thus, he is not liable. Moreover, he asserted that the assessment of
the gift tax, even against the Roman Catholic Church, would not be valid, for such would be a
clear violation of the Constitution. The CTA ruled in favor of the CIR. Hence, the present petition

ISSUE:
Whether or not Comelec donee’s gift tax should be paid

HELD:
Yes, Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation
cemeteries, churches and personages or convents, appurtenant thereto, and all lands, buildings,
and improvements used exclusively for religious purposes. The exemption is only from the
payment of taxes assessed on such properties enumerated, as property taxes, as contra-
distinguished from excise taxes. In the present case, what the collector assessed was a donee’s
gift tax; the assessment was not on the properties themselves. It did not rest upon general
ownership; It was an excise upon the use made of the properties, upon the exercise of the
privilege of receiving the properties (Phipps v. CIR). Manifestly, gift tax is not within the
exempting provisions of the section just mentioned. A gift tax is not a property tax, but an excise
tax imposed on the transfer of property by way of gift inter vivos, the imposition of which on
property used exclusively for religious purposes, do not constitute an impairment of the
Constitution.

As well observed by the learned respondent court, the phrase “exempt from taxation,” as
employed in the Constitution supra should not be interpreted to mean exemption from all kinds
of taxes. And there being no clear, positive or express grant of such privilege by law, in favor of
the petitioner, the exemption herein must be denied.

In view hereof and considering that, as heretofore stated, the assessment at bar had been
properly made and the imposition of the tax is not a violation of the constitutional provision
exempting churches, personages or convents, etc. (Art. VI, sec. 22[3], Constitution), the Head of
the Diocese, to which the parish of Victorias pertains is liable for the payment thereof.