Power of Taxation

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Lladoc v. CIR
G.R. No. L-19201 | June 16, 1965 | PAREDES, J.

Petitioner: REV. FR. CASIMIRO LLADOC

Respondents: The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX APPEALS
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DOCTRINE

The exemption from taxation for religious purposes, as stated in Section 22(3), Article VI of the
Constitution, only applies to property taxes and not excise taxes.
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FACTS

● The M.B. Estate, Inc. donated P10,000.00 in cash to Rev. Fr. Crispin Ruiz, the parish priest of
Victorias, Negros Occidental, for the construction of a new Catholic Church in the locality. The
donation was made in 1957 and the entire amount was used for the intended purpose.
● March 1958. The donor filed a donor's gift tax return. On April 1960, respondent CIR issued an
assessment for donee's gift tax against the Catholic Parish of Victorias, of which Rev. Fr. Casimiro
Lladoc was the priest.
○ The tax amounted to P1,370.00, including surcharges, interest, and a compromise for the
late filing of the return.
● Petitioner Lladoc protested the assessment and requested its withdrawal, but the protest and
motion for reconsideration were denied.
● Petitioner appealed to the Court of Tax Appeal, claiming that he was not the parish priest at the time
of the donation and that there is no legal entity known as the "Catholic Parish Priest of Victorias."
● Further, petitioner Lladoc argued that the tax assessment was in violation of the provisions of the
Constitution.
○ Section 22 (3), Art. VI of the [1935] Constitution of the Philippines [as amended] exempts
from taxation cemeteries, churches and parsonages or convents, appurtenant thereto, and
all lands, buildings, and improvements used exclusively for religious purposes.
CASE TRAIL
CTA: affirmed CIR’s assessment except with regard to the imposition of the compromise penalty of P20.00
● Hence, this appeal.
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ISSUES & HELD

W/N petitioner Rev. Fr. Lladoc should be liable for the assessed donee's gift tax on the P10,000.00
donated for the construction of the Victorias Parish Church. – NO (it should be the Head of Diocese)
SC:
● The exemption from taxation for religious purposes, as stated in Section 22(3), Article VI of the
[1935] Constitution, only applies to property taxes and not excise taxes. The gift tax imposed in this
case is an excise tax on the transfer of property by way of gift inter vivos, which does not constitute
an impairment of the Constitution.
○ SC agreed with CTA in ruling that the phrase "exempt from taxation" in the Constitution
should not be interpreted to mean exemption from all kinds of taxes. Exemptions from
payment of taxes are disfavored by law, and the party claiming exemption must justify their
claim by a clear, positive, or express grant of such privilege by law. In this case, there is no
clear grant of exemption from gift taxes for the petitioner.

● Petitioner Lladoc:
○ insists that he should not be liable for the tax assessment because at the time of the
donation he was not the priest of Victorias.
● SC: The head of the diocese, and not the parish priest, is the real party in interest in the imposition
of a donee's gift tax on property donated to the church for religious purposes. Therefore, the Head

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Power of Taxation

of the Diocese, to which the parish of Victorias pertains, should be liable for the payment of the gift
tax.