Case 90 LLADOC vs. COMM. OF INT. REV.

14 SCRA 292
1965

Facts: Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in
cash to Rev. Fr. Crispin Ruiz, then parish priest of Victorias, Negros Occidental, and
predecessor of herein petitioner, for the construction of a new Catholic Church in the
locality. On March 3, 1958, the donor M.B. Estate, Inc., filed the donor's gift tax return.
Under date of April 29, 1960, the respondent Commissioner of Internal Revenue issued
an assessment for donee's gift tax against the Catholic Parish of Victorias, Negros
Occidental, of which petitioner was the priest. The tax amounted to P1,370.00 including
surcharges, interests of 1% monthly from May 15, 1958 to June 15, 1960, and the
compromise for the late filing of the return. Petitioner lodged a protest to the
assessment and requested the withdrawal thereof. The protest and the motion for
reconsideration presented to the Commissioner of Internal Revenue were denied. The
petitioner appealed to the Court of Tax Appeals on November 2, 1960. In the petition for
review, the Rev. Fr. Casimiro Lladoc claimed, 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 "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.

ISSUE: W/N the petitioner, as the successor of Rev. Fr. Crispin Ruiz, who received the
donation in behalf of the Catholic parish of Victorias or the Roman Catholic Church
has the obligation to pay for the donation’s tax return considering that he does not
benefited on that donation for he was only the successor of the former parish priest of
the Catholic Parish of Victorias.

HELD: Yes. He is obliged and compelled to pay for the donation’s tax return.

Section 22 (3), Art. VI of the 1935 Constitution provides that Cemeteries,

churches, and parsonages or convents appurtenant thereto, and all lands, buildings,
and improvements used exclusively for religious, charitable, or educational purposes
shall be exempt from taxation.

However, in this case, The exemption is only from the payment of taxes
assessed on such properties enumerated, as property taxes, as contra distinguished
from excise taxes. 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 section just mentioned.
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 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.
Case 91 CIR vs. CA, YMCA
G.R. 124043
Oct. 14, 1998

Facts: Private Respondent YMCA is a non-stock, non-profit institution, which conducts

various programs and activities that are beneficial to the public, especially the young
people, pursuant to its religious, educational and charitable objectives. YMCA earned
income from leasing out a portion of its premises to small shop owners, like restaurants
and canteen operators, and from parking fees collected from non-members. Petitioner
issued an assessment to private respondent for deficiency taxes. Private respondent
formally protested the assessment. In reply, the CIR denied the claims of YMCA.

- The Court of Tax Appeals (CTA) dismissed the petition for lack of merit.
- Dissatisfied with the CTA ruling, the CIR elevated the case to the Court of
Appeals (CA).
The CA reversed the decision of CTA

ISSUE: Whether or not the income derived from rentals of real property owned by
YMCA subject to income tax considering that YMCA is a non-profit organization.

HELD: Yes. The income derived from rentals of real property owned by YMCA
subject to income tax.

Article XIV, Section 4, par. 3 of the Constitution provides that all revenues and
assets of non-stock, non-profit educational institutions used actually, directly, and
exclusively for educational purposes shall be exempt from taxes and duties. Upon the
dissolution of cessation of the corporate existence of such institutions, their assets shall
be disposed of in the manner provided by law. Propriety educational institutions,
including those cooperatively owned, may likewise be entitled to such exemptions
subject to the limitations provided by law including restrictions on dividends and
provisions for erinvestment.

In this case, it is without merit since the exemption provided lies on the payment
of property tax, and not on the income tax on the rentals of its property. The bare
allegation alone that one is a non-stock, non-profit educational institution is insufficient
to justify its exemption from the payment of income tax. Rental income derived by a tax-
exempt organization from the lease of its properties, real or personal, is not exempt
from income taxation, even if such income is exclusively used for the accomplishment of
its objectives. A claim of statutory exemption from taxation should be manifest and
unmistakable from the language of the law on which it is based. Thus, it must expressly
be granted in a statute stated in a language too clear to be mistaken. Verba legis non
est recedendum — where the law does not distinguish, neither should we.
Case 92 CATHOLIC CHURCH vs. HASTINGS
5 PHIL 701
March 15, 1906

Facts: This is an action for the return of taxes under protest

In the year 1901 the assessor and collector of the city of Manila imposed a tax
upon the residence of the Roman Catholic archbishop of Manila, overruling the claim
that it was exempt from taxation. This residence is from 80 to 100 meters distant from
the Cathedral Church, separated from it by one intervening building the ownership of
which has not been proved is near but not adjoining or contiguous to the church, and
communicates with it by street directly leading from one to the other. It is occupied as a
residence by the archbishop, who is the head pastor of all the churches in his diocese,
the cathedral being his special church.

ISSUE: W/N the tax paid by the plaintiff to the defendants under protest, amounting to
$1,607.47, United States currency, was improperly collected considering that charitable
and religious property should be exempted from taxation.

HELD: Yes. It is a violation of the law on exempting charitable and religious institutions
from taxation.

Section 48 of Act No. 183 of the Philippine Commission, passed in 1901 provides that :

"Exemption from taxation. — Lands or buildings owned by the United States of America,
the Central Government of the Philippine Islands, or the city of Manila, and burying
grounds, churches and their adjacent parsonages and conventos, and lands or
buildings used exclusively for religious, charitable, scientific, or educational purposes,
and not for profit, shall be exempt from taxation, but such exemption shall not extend to
lands or buildings held for investment, though income therefrom be devoted to religious,
charitable, scientific, or educational purposes."

In this case, the city assessor and collector of the City of Manila erred in
imposing a tax upon the residence of the Roman Catholic archbishop of Manila.
Case 93 PROVINCE OF ABRA vs. HERNANDO
107 SCRA 104
1981

Facts: This is petition for certiorari and mandamus filed by the province of Abra
against Hon. Harold M. Hernando for the denial of a motion to dismiss an action for
declaratory relief by private respondent Roman Catholic Bishop of Bangued desirous of
being exempted from a real estate tax followed by a summary judgment granting such
exemption, without even hearing the side of petitioner. Petitioner claimed that
respondent Judge "virtually ignored the pertinent provisions of the Rules of Court and
violated the rights of petitioner to due process, by giving due course to the petition of
private respondent for declaratory relief, and thereafter without allowing petitioner to
answer and without any hearing, adjudged the case, all in total disregard of basic laws
of procedure and basic provisions of due process in the constitution, thereby indicating
a failure to grasp and understand the law, which goes into the competence of the
Honorable Presiding Judge.

ISSUE: W/N the petitioner’s case for tax exemption shall be heard.

HELD: Yes. The petitioner’s case shall be heard.

Under the pertinent provision of Presidential Decree which provides as follows:

"No court shall entertain any suit assailing the validity of a tax assessed under this Code
until the taxpayer, shall have paid, under protest, the tax assessed against him nor shall
any court declare any tax invalid by reason of irregularities or informalities in the
proceedings of the officers charged with the assessment or collection of taxes, or of
failure to perform their duties within this time herein specified for their performance
unless such irregularities, informalities or failure shall have impaired the substantial
rights of the taxpayer; nor shall any court declare any portion of the tax assessed under
the provisions of this Code invalid except upon condition that the taxpayer shall pay the
just amount of the tax, as determined by the court in the pending proceeding.

Hence, the petitioner is entitled to due process of law and the petition is
meritorious.
Private respondent also invokes Article XIV, Section 4, par. 3 of the Constitution,
claiming that it “is a non-stock, non-profit educational institution whose revenues and
assets are used actually, directly and exclusively for educational purposes so it is
exempt from taxes on its properties and income.” This is without merit since the
exemption provided lies on the payment of property tax, and not on the income tax on
the rentals of its property. The bare allegation alone that one is a non-stock, non-profit
educational institution is insufficient to justify its exemption from the payment of income
tax.