G.R. No. L-19201 - Lladoc vs. Commissioner of Internal Revenue

In 1957, M.B. Estate, Inc., of Bacolod City donated ₱10,000 in cash to Rev. Fr. Crispin Ruiz (then parish priest of Victorias, Negros Occidental) for construction of a new Catholic church; funds were fully applied to that purpose.
On March 3, 1958, the donor filed a gift tax return.
On April 29, 1960, the Commissioner of Internal Revenue assessed a donee’s gift tax of ₱1,370 (including surcharges, interest from May 15, 1958 to June 15, 1960, and a compromise penalty) against the Catholic Parish of Victorias, with Rev. Fr. Casimiro Lladoc (petitioner) as nominal recipient.

Petitioner protested the assessment and moved for its withdrawal; the Commissioner denied both.
On November 2, 1960, petitioner appealed to the Court of Tax Appeals (CTA).
CTA held that:

A parish priest is a juridical person under Canon Law, capable of suing and being sued as guardian/administrator of parish properties.
Gift tax is an excise, not a property tax, thus not exempt under Art. VI, Sec. 22(3) of the Constitution.
Petitioner was ordered to pay ₱900 gift tax plus 5% ad valorem surcharge and 1% monthly interest; compromise penalty (₱20) was removed.

On appeal to the Supreme Court, the Court ordered substitution of the Head of the Diocese (Roman Catholic Bishop of Bacolod) as real party in interest; all parties acquiesced.

Whether the donee’s gift tax assessed on the ₱10,000 donation is valid despite constitutional exemption of churches, parsonages, and appurtenant lands/buildings under Art. VI, Sec. 22(3).
Who is the proper party liable for the gift tax—the petitioner Rev. Fr. Lladoc or the Head of the Diocese.