Case Summary (G.R. No. L-19201)
Key Dates
- 1957: Donation of ₱10,000 for construction of Victorias parish church
- March 3, 1958: Donor’s gift tax return filed
- April 29, 1960: Commissioner’s assessment issued against the Catholic Parish of Victorias
- November 2, 1960: Appeal filed with the Court of Tax Appeals (CTA)
- June 16, 1965: Decision by the Supreme Court
Applicable Law
- 1935 Philippine Constitution, Article VI, Section 22(3) (exemption of churches, parsonages, etc., from property taxation)
- National Internal Revenue Code (gift tax provisions, compromise penalties, surcharges, interest)
- Relevant jurisprudence: Phipps v. Commissioner of Internal Revenue; Collector v. Manila Jockey Club; Roman Catholic Church v. Hastings; Collector v. U.S.T.
Facts and Procedural History
In 1957 M.B. Estate, Inc. donated ₱10,000 to Rev. Fr. Crispin Ruiz for a new church in Victorias. The amount was fully applied to its construction. The donor timely filed its gift tax return in 1958. In 1960 the Commissioner assessed a donee’s gift tax of ₱1,370 (inclusive of surcharges, interest from May 15, 1958, and a compromise penalty). The assessment was addressed to the “Catholic Parish of Victorias,” with Rev. Fr. Lladoc as its current priest. Lladoc protested, arguing (a) he was not parish priest in 1957; (b) no juridical person called “Catholic Parish Priest of Victorias” exists; and (c) any assessment against the Church would violate constitutional tax exemptions. The protest was denied, prompting an appeal to the CTA.
CTA Ruling on Juridical Personality and Liability
The CTA held that under canon law parish priests are administrators of parish property, with capacity to sue and be sued. It rejected the notion that only the priest in office at the time of donation could be taxed; shifting liability to a former pastor would unfairly burden unrelated parishioners. The CTA further concluded that gift tax—an excise on the privilege of receiving property—does not fall within the constitutional exemption of property taxes on religious uses. It affirmed the Commissioner’s assessment but reduced the compromise penalty to ₱20.00, thereby fixing the payable donee’s gift tax at ₱900, plus a 5% ad valorem surcharge and 1% monthly interest from May 15, 1958.
Supreme Court Analysis of Constitutional Exemption
Examining the 1935 Constitution, the Court distinguished property taxes from excise taxes. Article VI, Section 22(3) exempts only property taxes on churches, convents, and appurtenant lands used exclusively for religious purposes—not excise taxes on transfers. Gift tax is imposed on the transfer of property inter vivos and is therefore an excise tax on the privilege of receiving the gift. Absent a clear, positive statutory or constitutional grant, no exemption extends to gift tax.
Determination of the Real Party in Interest and Substitution
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...continue readingCase Syllabus (G.R. No. L-19201)
Facts
- In 1957, M.B. Estate, Inc. of Bacolod City donated ₱10,000.00 in cash to Rev. Fr. Crispin Ruiz, then parish priest of Victorias, Negros Occidental, for the construction of a new Catholic Church; the full amount was actually spent for that purpose.
- On March 3, 1958, the donor filed its gift tax return.
- On April 29, 1960, the Commissioner of Internal Revenue assessed a donee’s gift tax of ₱1,370.00 against the “Catholic Parish of Victorias,” including surcharges, 1% interest per month (May 15, 1958 to June 15, 1960), and a compromise penalty for late filing.
- Petitioner, Rev. Fr. Casimiro Lladoc (then parish priest of Victorias), protested and sought withdrawal of the assessment; the Commissioner denied both the protest and a motion for reconsideration.
- On November 2, 1960, petitioner appealed to the Court of Tax Appeals (CTA), contending that:
- He was not the parish priest at the time of the donation;
- There is no juridical person known as “Catholic Parish of Victorias”;
- Assessment of gift tax against the Church violates constitutional exemptions.
- The CTA held that:
- Parish priests under canon law are administrators of parish property, with right of succession, and may sue or be sued;
- It would be unfair to shift liability to petitioner’s predecessor or future parishioners;
- Gift tax is an excise, not a property tax, and thus not constitu