Digester: Ragragio

Number 18

REV. FR. CASIMIRO LLADOC vs. The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX APPEALS June 16, 1965 DOCTRINE: The imposition of an excise tax, such as a gift tax on donations, is not a violation of the constitutional provision exempting churches, parsonages or convents from property tax. Petitioner: Fr. Lladoc Respondent: Commissioner of Internal Revenue, Court of Tax Appeals Facts: Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in cash to Rev. Fr. Crispin Ruiz (Ruiz), then parish priest of Victorias, Negros Occidental, and predecessor of Fr. Casimiro Lladoc (Lladoc), for the construction of a new Catholic Church in the locality. The donor filed the gift tax return on March 3, 1958. The Commissioner of Internal Revenue (CIR) assessment for donee's gift tax against the Catholic Parish of Victorias, Negros Occidental, of which Lladoc was the priest. Lladoc filed a protest, which was denied by the CIR. A motion for reconsideration was also denied, thus Lladoc filed a petition for review with the Court of Tax Appeals (CTA).

Lladocs Contention: 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 "Catholic Parish Priest of Victorias," and, therefore, he should not be liable for the donee's gift tax. It was also 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 provisions of the Constitution.

CTAs contention: Parish priests are the guardians, superintendents or administrators of Church properties within the parishes where they are assigned, with the right of succession and may sue and be sued. Furthermore, the CTA cannot make Ruiz liable, as that would be tantamount to making Ruiz current parish answer for the gift tax assessed against Lladocs current parish, given Lladocs argument that Ruiz should be made to pay. Finally, the Constitutional exemption raised by Lladoc does not apply to exciser taxes, such as gift taxes, as this is a tax on the privilege of receiving properties, not on the property itself.

Issues: Should Lladoc be liable for the assessed gift tax?

Ratio: No. The Court determined that the Head of the Diocese to which the Parish of Victorias pertains is the real party in interest, not Lladoc. (No further discussion was made as to *why* this is so.) In response to a resolution issued by the Court on March 15, 1965, the Bishop of Bacolod, who was the Head of the Diocese, manifested that it was submitting itself to the jurisdiction and orders of this Court and that it was presenting, by reference, the brief of Lladoc as its own and for all purposes The Court also ruled that the assessment of the gift tax is valid. 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, does not constitute an impairment of the Constitution. The phrase "exempt from taxation," as employed in the Constitution should not be interpreted to mean exemption from all kinds of taxes. There being no clear, positive or express grant of such privilege by law, the exemption herein must be denied. Disposition: Decision appealed from is A FFIRMED with MODIFICATION.