LLADOC v.

COMMISSIONER OF INTERNAL REVENUE As well observed by the learned respondent Court, the phrase "exempt from
G.R. No. L-19201, June 16, 1965 taxation," as employed in the Constitution should not be interpreted to mean exemption
from all kinds of taxes. And there being no clear, positive or express grant of such
Topic : Tax Exemptions privilege by law, in favor of Lladoc, the exemption herein must be denied.
Ponente : Justice Paredes
However, the Court noted the merit of Lladoc’s claim, and held as liable the
FACTS: Head of Deocese for being the real party in interest instead of Lladoc who was held to
be not personally liable; the former manifested that it was submitting himself to the
In 1957, M.B. Estate, Inc. donated P10,000.00 in cash to Rev. Fr. Crispin Ruiz (THEN jurisdiction and orders of the Court and he presented Lladoc’s brief, by reference, as
parish priest of Victorias, Negros Occidental) for the construction of a new Catholic his own and for all purposes.
Church in the locality. The total amount was actually spent for the purpose intended.

A year later, M.B. Estate, Inc., filed the donor's gift tax return. Subsequently, CIR issued
an assessment for donee's gift tax against the parish, of which petitioner LLadoc was
the priest.

Petitioner LLadoc filed a protest which was denied by the CIR. He then filed an appeal
with the CTA and claimed that he was not the parish priest at the time of donation, thus,
he is not liable. Moreover, he 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 Constitution.

The CTA ruled in favor of the CIR. Hence, the present petition.

ISSUE:
Whether or not the parish is exempted from paying the gift tax.

HELD:
No.

Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from

taxation cemeteries, churches and parsonages or convents, appurtenant thereto, and
all lands, buildings, and improvements used exclusively for religious purposes. 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. 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.
 LUNG CENTER VS. QUEZON CITY HELD:
G.R. No. 144104, June 29, 2004
Court qualified their ruling.
Topic : Tax Exemptions
Ponente : Justice Callejo Under the 1987 Constitution and Sec.243 (b) of RA 7160, in order to be entitled to the
exemption, the Lung Center must be able to prove that: it is a charitable institution and;
FACTS: its real properties are actually, directly and exclusively used for charitable purpose.

The petitioner Lung Center of the Philippines is a non-stock and non-profit entity In this case, the petitioner failed to prove that the entirety of its real property is actually,
established by virtue of Presidential Decree No. 1823. It is the registered owner of the directly and exclusively used for charitable purposes. While portions of the hospital are
land on which the Lung Center of the Philippines Hospital is erected. used for the treatment of patients and the dispensation of medical services to them,
 A big space at the ground floor is being leased to private parties for canteen whether paying or non-paying, other portions thereof are being leased to private
and small stores and to medical and to professional practitioners. A big portion individuals for their clinics and a canteen.
of the lot is being leased for commercial purposes to a private enterprise.
Hence, the portions of the land leased to private entities as well as those parts of the
 The petitioner accepts paying and non-paying patients.
hospital leased to private individuals are not exempt from such taxes. On the other
 It also renders medical services to out-patients, both paying and non-paying.
hand, the portions of the land occupied by the hospital and portions of the hospital
 The petitioner receives annual subsidies from the government. used for its patients, whether paying or non-paying, are exempt from real property
taxes.
In 1993, both land and the hospital building were assessed for real property taxes in
the amount of about Php 4.5 Million.
On the argument of: Section 28(3), Article VI of the 1987 Philippine Constitution
The petitioner filed a Claim for Exemption from real property taxes and claimed that it
provides, thus: Charitable institutions, churches and parsonages or convents
is a charitable institution. Arguments:
appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and
 As a charitable institution, is exempted from real property taxes under Sec
improvements, actually, directly and exclusively used for religious, charitable or
28(3) Art VI of the Constitution.
educational purposes shall be exempt from taxation.
 Its character as a charitable institution is not altered by the fact that it admits
paying patients and renders medical services to them, leases portions of the
 The tax exemption under this constitutional provision covers property taxes
land to private parties, and rents out portions of the hospital to private medical
only. What is exempted is not the institution itself . . .; those exempted from
practitioners from which it derives income to be used for operational expenses.
real estate taxes are lands, buildings and improvements actually, directly and
exclusively used for religious, charitable or educational purposes.”
City Assessor denied the claim. When appealed before the Local Board of Assessment
Appeals of Quezon City (QC-LBAA), the same was dismissed. Dismissal was likewise
affirmed by the Central Board of Assessment Appeals of Quezon City.
 Petitioner was not a charitable institution and that its real properties were not
actually, directly, and exclusively used for charitable purposes; hence, it was
not entitled to real property tax exemption.

The Court of Appeals affirmed the judgment of the CBAA.

ISSUE:
Whether the real properties of the petitioner are exempt from real property taxes.