Lladoc vs.
CIR Ruling/Ratio:
No. L-19201, June 16, 1965
Petitioner - REV. FR. CASIMIRO LLADOC
Respondents - THE COMMISSIONER OF INTERNAL REVENUE and THE COURT OF
TAX APPEALS
Doctrine:
 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.
 Gift Tax on property used for religious purpose not violation of the
constitution. It is not a property tax but an excise tax imposed on the
transfer of property by way if gift inter vivos, the imposition of which a
property used exclusively for religious purposes does not constitute
impairment of the constitution.
 The head of the diocese is the real party interest in gift on church property.
Facts:
 1957 – M.B. Estate, Inc of Bacolod City donated 10,000.00 in cash to Rev.
Fr. Cripsin Ruiz the then parish priest, for the construction of new catholic
church.
 March 3, 1958 – the donor filed for the donor’s gift tax return.
 April 29, 1960 – respondent CIR issued as assessment for donee’s gift tax
against the catholic parish of victorias priest which is the petitioner.
 November 2, 1960 – petitioner appealed to the court of tax appeals,
claiming among others, that at the time of the donation, he was not the
parish priest in Victorias, that there is no legal entity or juridical person
known as the parish priest of victorias and therefore should not be liable
for the donee’s gift tax.
 It was also asserted that the gift tax even against the Roman Catholic
Church would not be valid as it is a clear violation of the constitution.
Issue: Whether or not the gift tax issued upon the Roman Catholic Church is valid?
 Yes. The gift tax issued upon the Roman Catholic Church is valid. Gift tax is
an excise tax. It does not seem right to indirectly burden the present
parishoners of Rev. Fr. Ruiz for donee’s gift tax on a donation to which they
were not benefited.
 There is no legal basis to include to include within the Constitutional
exemption, taxes partake of the nature of an exercise of the privilege of
receiving the properties.
 It is a cardinal rule in taxation that exemptions from payment thereof are
highly disfavored by law, and the party claiming exemption must justify his
claim by a clear, positive, or express grant of such privilege by law.
 The exemption is only from the payment of taxes assessed on such
properties enumerated, as property taxes, as contra-distinguished from
excise taxes.
 Manifestly, gift tax is not within the exempting provisions of Section 22(3),
Article 6. 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.
Dispositive: The decision of the respondent Commissioner of Internal revenue
appealed from, is hereby affirmed except with regard to the imposition of the
compromise penalt…