Lladoc vs CIR

Facts:

In 1957, the M.B. Estate, Inc. in Bacolod City donated P10,000.00 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 was actually spent for the
purpose intended.

On March 1958, M.B. Estate, Inc. 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 P1,370.00 including
surcharges, interest of 1% monthly from May 1958 to June 1960 and the compromise for the
late filling of the return against the Catholic Parish of Victorias 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.

Issue:

WON donee’s gift tax should be paid.

Ruling:

Yes, donee’s gift tax should be paid. Section 22 (3), Art. VI of the Constitution of the
Philippines, exempts from taxation cemeteries, churches and parsonages or convents,
appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious
purposes. The exemption is only from payment of taxes assessed on such properties
enumerated, as property taxes, as contra distinguished from excise tax.

In the present case, what the collector assessed was a donee’s gift tax; the assessment
was not on the property themselves. It did not rest upon general ownership; it was an excise
tax upon the use made of the properties, upon the exercise of the privilege of receiving the
properties. Manifestly, gift tax is not within the exempting provisions of the section just
mentioned. A gift tax in 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, does 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 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
Llandoc, the exemption herein must be denied.