[Danilo B Policarpio Jr.
] Constitutional Law 2
JD 1.5 A
[Lladoc vs. CIR]
[G.R. No. L-19201 June 16, 1965]
Doctrine: The very foundation of the right to exercise eminent domain is a genuine necessity,
and that necessity must be of a public character. The ascertainment of the necessity must
precede or accompany, and not follow, the taking of the land.
Facts: In 1957, M.B. Estate, Inc. of Bacolod City made a monetary donation of P10,000 to Rev.
Fr. Crispin Ruiz, the parish priest of Victorias, Negros Occidental at that time, to construct a new
Catholic church. The amount was fully utilized for the intended purpose. Subsequently, the
donor filed the appropriate gift tax return on March 3, 1958. On April 29, 1960, the
Commissioner of Internal Revenue assessed Donee’s gift tax against the Catholic Parish of
Victorias, now with Rev. Fr. Casimiro Lladoc as the parish priest. The tax amounted to P1,370,
including surcharges and interests. Rev. Fr. Lladoc filed a protest and motion for
reconsideration, both of which were denied by the Commissioner. Rev. Fr. Lladoc appealed to
the Court of Tax Appeals (CTA) on November 2, 1960, arguing that he should not be liable for
the gift tax because the Catholic Parish Priest of Victorias was neither a legal entity nor a
juridical person and he was not the parish priest at the time of the donation. He contended that
taxing the Roman Catholic Church would violate the Constitution. The CTA denied the appeal
and maintained the Commissioner’s decision to impose the gift tax, except for the compromise
penalty. It concurred that the Catholic parish priests, under canon law, had administrative
duties over church properties and could be liable for taxes unrelated to property taxation, such
as excise taxes on privilege. Rev. Fr. Lladoc then appealed to the Supreme Court..
Issue: Whether donee's gift tax against the Catholic Parish of Victorias, Negros Occidental is
invalid.
Ruling: No. The exemption is only from the payment of taxes assessed on such properties
enumerated in Section 22 (3), Art. VI of the Constitution, as property taxes, as contra
distinguished from excise taxes.
Section 22 (3), Art. VI of the Constitution of the Philippines provides that exempted from
taxation are cemeteries, churches and parsonages or convents, appurtenant thereto, and all
lands, buildings, and improvements used exclusively for religious purposes.
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 vs. Com. of Int. Rec. 91 F 2d 627). Manifestly, gift tax is not within the exempting
provisions of the Constitution. 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. As
well observed by the learned respondent Court, the phrase "exempt from taxation," as
Page 1 of 2
[Danilo B Policarpio Jr.] Constitutional Law 2
JD 1.5 A
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 petitioner, the exemption herein must be denied.
Therefore, the donee's gift tax against the Catholic Parish of Victorias, Negros Occidental is
valid.
Page 2 of 2
