Tax Exemption of Non Stock Non Profit Educational Institutions

FIRST DIVISION
ANGELES UNIVERSITY G.R. No. 189999

FOUNDATION,
Petitioner, Present:
LEONARDO-DE CASTRO,J.,
- versus - Acting Chairperson,
BERSAMIN,
VILLARAMA, JR.,
CITY OF ANGELES, JULIET G. PEREZ, and
QUINSAAT, in her capacity as PERLAS-BERNABE, JJ.
Treasurer of Angeles City and
ENGR. DONATO N. DIZON, in his Promulgated:
capacity as Acting Angeles City
Building Official, June 27, 2012
Respondents.
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DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, as amended, which seeks to reverse and set aside the
Decision[1] dated July 28, 2009 and Resolution[2] dated October 12, 2009 of the
Court of Appeals (CA) in CA-G.R. CV No. 90591. The CA reversed the
Decision[3] dated September 21, 2007 of the Regional Trial Court of Angeles City,
Branch 57 in Civil Case No. 12995 declaring petitioner exempt from the payment of
building permit and other fees and ordering respondents to refund the same with
interest at the legal rate.
The factual antecedents:
Petitioner Angeles University Foundation (AUF) is an educational institution

established on May 25, 1962 and was converted into a non-stock, non-profit
education foundation under the provisions of Republic Act (R.A.) No. 6055[4] on
December 4, 1975.
Sometime in August 2005, petitioner filed with the Office of the City Building
Official an application for a building permit for the construction of an 11-storey
building of the Angeles University Foundation Medical Center in its main campus
located at MacArthur Highway, Angeles City, Pampanga. Said office issued a
Building Permit Fee Assessment in the amount of P126,839.20. An Order of
Payment was also issued by the City Planning and Development Office, Zoning
Administration Unit requiring petitioner to pay the sum of P238,741.64 as
Locational Clearance Fee.[5]
In separate letters dated November 15, 2005 addressed to respondents City

Treasurer Juliet G. Quinsaat and Acting City Building Official Donato N. Dizon,
petitioner claimed that it is exempt from the payment of the building permit and
locational clearance fees, citing legal opinions rendered by the Department of Justice
(DOJ). Petitioner also reminded the respondents that they have previously issued
building permits acknowledging such exemption from payment of building permit
fees on the construction of petitioners 4-storey AUF Information Technology Center
building and the AUF Professional Schools building on July 27, 2000 and March 15,
2004, respectively.[6]
Respondent City Treasurer referred the matter to the Bureau of Local

Government Finance (BLGF) of the Department of Finance, which in turn endorsed
the query to the DOJ. Then Justice Secretary Raul M. Gonzalez, in his letter-reply
dated December 6, 2005, cited previous issuances of his office (Opinion No. 157, s.
1981 and Opinion No. 147, s. 1982) declaring petitioner to be exempt from the
payment of building permit fees. Under the 1stIndorsement dated January 6, 2006,
BLGF reiterated the aforesaid opinion of the DOJ stating further that xxx the
Department of Finance, thru this Bureau, has no authority to review the resolution or
the decision of the DOJ.[7]
Petitioner wrote the respondents reiterating its request to reverse the disputed
assessments and invoking the DOJ legal opinions which have been affirmed by
Secretary Gonzalez. Despite petitioners plea, however, respondents refused to issue
the building permits for the construction of the AUF Medical Center in the main
campus and renovation of a school building located at Marisol Village. Petitioner then
appealed the matter to City Mayor Carmelo F. Lazatin but no written response was
received by petitioner.[8]
Consequently, petitioner paid under protest[9] the following:

Medical Center (new construction)
Building Permit and Electrical Fee P 217,475.20

Locational Clearance Fee 283,741.64
Fire Code Fee 144,690.00
Total - P 645,906.84
School Building (renovation)
Building Permit and Electrical Fee P 37,857.20

Fire Code Fee 5,967.74
Total - P 49,825.51
Petitioner likewise paid the following sums as required by the City Assessors
Office:
Real Property Tax Basic Fee P 86,531.10
SEF 43,274.54
Total P130,930.64[10]
[GRAND TOTAL - P 826,662.99]
By reason of the above payments, petitioner was issued the corresponding Building
Permit, Wiring Permit, Electrical Permit and Sanitary Building Permit. On June 9,
2006, petitioner formally requested the respondents to refund the fees it paid under
protest. Under letters dated June 15, 2006 and August 7, 2006, respondent City
Treasurer denied the claim for refund.[11]
On August 31, 2006, petitioner filed a Complaint[12] before the trial court seeking
the refund of P826,662.99 plus interest at the rate of 12% per annum, and also
praying for the award of attorneys fees in the amount of P300,000.00 and litigation
expenses.
In its Answer,[13] respondents asserted that the claim of petitioner cannot be granted
because its structures are not among those mentioned in Sec. 209 of the National
Building Code as exempted from the building permit fee.Respondents argued that
R.A. No. 6055 should be considered repealed on the basis of Sec. 2104 of
the National Building Code. Since the disputed assessments are regulatory in nature,
they are not taxes from which petitioner is exempt. As to the real property taxes
imposed on petitioners property located in Marisol Village, respondents pointed out
that said premises will be used as a school dormitory which cannot be considered as
a use exclusively for educational activities.
Petitioner countered that the subject building permit are being collected on the basis
of Art. 244 of the Implementing Rules and Regulations of the Local Government
Code, which impositions are really taxes considering that they are provided under
the chapter on Local Government Taxation in reference to the revenue raising power
of local government units (LGUs). Moreover, petitioner contended that, as held
in Philippine Airlines, Inc. v. Edu,[14] fees may be regarded as taxes depending on
the purpose of its exaction. In any case, petitioner pointed out that the Local
Government Code of 1991 provides in Sec. 193 that non-stock and non-profit
educational institutions like petitioner retained the tax exemptions or incentives
which have been granted to them. Under Sec. 8 of R.A. No. 6055 and applicable
jurisprudence and DOJ rulings, petitioner is clearly exempt from the payment of
building permit fees.[15]
On September 21, 2007, the trial court rendered judgment in favor of the petitioner
and against the respondents. The dispositive portion of the trial courts
decision[16] reads:
WHEREFORE, premises considered, judgment is rendered as follows:
a. Plaintiff is exempt from the payment of building permit and other

fees Ordering the Defendants to refund the total amount of Eight Hundred
Twenty Six Thousand Six Hundred Sixty Two Pesos and 99/100 Centavos
(P826,662.99) plus legal interest thereon at the rate of twelve percent (12%)
per annum commencing on the date of extra-judicial demand or June 14,
2006, until the aforesaid amount is fully paid.
b. Finding the Defendants liable for attorneys fees in the amount of

Seventy Thousand Pesos (Php70,000.00), plus litigation expenses.
c. Ordering the Defendants to pay the costs of the suit.
SO ORDERED.[17]
Respondents appealed to the CA which reversed the trial court, holding that while
petitioner is a tax-free entity, it is not exempt from the payment of regulatory fees. The
CA noted that under R.A. No. 6055, petitioner was granted exemption only from
income tax derived from its educational activities and real property used exclusively
for educational purposes.Regardless of the repealing clause in the National Building
Code, the CA held that petitioner is still not exempt because a building permit cannot
be considered as the other charges mentioned in Sec. 8 of R.A. No. 6055 which refers
to impositions in the nature of tax, import duties, assessments and other collections
for revenue purposes, following the ejusdem generisrule. The CA further stated that
petitioner has not shown that the fees collected were excessive and more than the cost
of surveillance, inspection and regulation.And while petitioner may be exempt from
the payment of real property tax, petitioner in this case merely alleged that the subject
property is to be used actually, directly and exclusively for educational purposes,
declaring merely that such premises is intended to house the sports and other facilities
of the university but by reason of the occupancy of informal settlers on the area, it
cannot yet utilize the same for its intended use. Thus, the CA concluded that petitioner
is not entitled to the refund of building permit and related fees, as well as real property
tax it paid under protest.
Petitioner filed a motion for reconsideration which was denied by the CA.
Hence, this petition raising the following grounds:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN
ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE
HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED AND
USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING THE
HONORABLE COURTS EXERCISE OF ITS POWER OF SUPERVISION
CONSIDERING THAT:
I. IN REVERSING THE TRIAL COURTS DECISION DATED 21 SEPTEMBER

2007, THE COURT OF APPEALS EFFECTIVELY WITHDREW THE
PRIVILEGE OF EXEMPTION GRANTED TO NON-STOCK, NON-
PROFIT EDUCATIONAL FOUNDATIONS BY VIRTUE OF RA 6055
WHICH WITHDRAWAL IS BEYOND THE AUTHORITY OF THE
COURT OF APPEALS TO DO.
A. INDEED, RA 6055 REMAINS VALID AND IS IN FULL FORCE AND

EFFECT. HENCE, THE COURT OF APPEALS ERRED WHEN IT
RULED IN THE QUESTIONED DECISION THAT NON-STOCK,
NON-PROFIT EDUCATIONAL FOUNDATIONS ARE NOT
EXEMPT.
B. THE COURT OF APPEALS APPLICATION OF THE PRINCIPLE

OF EJUSDEM GENERIS IN RULING IN THE QUESTIONED
DECISION THAT THE TERM OTHER CHARGES IMPOSED BY
THE GOVERNMENT UNDER SECTION 8 OF RA 6055 DOES NOT
INCLUDE BUILDING PERMIT AND OTHER RELATED FEES
AND/OR CHARGES IS BASED ON ITS ERRONEOUS AND
UNWARRANTED ASSUMPTION THAT THE TAXES, IMPORT
DUTIES AND ASSESSMENTS AS PART OF THE PRIVILEGE OF
EXEMPTION GRANTED TO NON-STOCK, NON-PROFIT
EDUCATIONAL FOUNDATIONS ARE LIMITED TO
COLLECTIONS FOR REVENUE PURPOSES.
C. EVEN ASSUMING THAT THE BUILDING PERMIT AND OTHER

RELATED FEES AND/OR CHARGES ARE NOT INCLUDED IN
THE TERM OTHER CHARGES IMPOSED BY THE
GOVERNMENT UNDER SECTION 8 OF RA 6055, ITS
IMPOSITION IS GENERALLY A TAX MEASURE AND
THEREFORE, STILL COVERED UNDER THE PRIVILEGE OF
EXEMPTION.
II. THE COURT OF APPEALS DENIAL OF PETITIONER AUFS EXEMPTION

FROM REAL PROPERTY TAXES CONTAINED IN ITS QUESTIONED
DECISION AND QUESTIONED RESOLUTION IS CONTRARY TO
APPLICABLE LAW AND JURISPRUDENCE.[18]
Petitioner stresses that the tax exemption granted to educational stock corporations
which have converted into non-profit foundations was broadened to include any
other charges imposed by the Government as one of the incentives for such
conversion. These incentives necessarily included exemption from payment of
building permit and related fees as otherwise there would have been no incentives
for educational foundations if the privilege were only limited to exemption from
taxation, which is already provided under the Constitution.
Petitioner further contends that this Court has consistently held in several
cases that the primary purpose of the exaction determines its nature.Thus, a charge
of a fixed sum which bears no relation to the cost of inspection and which is payable
into the general revenue of the state is a tax rather than an exercise of the police
power. The standard set by law in the determination of the amount that may be
imposed as license fees is such that is commensurate with the cost of regulation,
inspection and licensing. But in this case, the amount representing the building
permit and related fees and/or charges is such an exorbitant amount as to warrant a
valid imposition; such amount exceeds the probable cost of regulation. Even with
the alleged criteria submitted by the respondents (e.g., character of occupancy or use
of building/structure, cost of construction, floor area and height), and the
construction by petitioner of an 11-storey building, the costs of inspection will not
amount to P645,906.84, presumably for the salary of inspectors or employees, the
expenses of transportation for inspection and the preparation and reproduction of
documents. Petitioner thus concludes that the disputed fees are substantially and
mainly for purposes of revenue rather than regulation, so that even these fees cannot
be deemed charges mentioned in Sec. 8 of R.A. No. 6055, they should properly be
treated as tax from which petitioner is exempt.
In their Comment, respondents maintain that petitioner is not exempt from the
payment of building permit and related fees since the only exemptions provided in
the National Building Code are public buildings and traditional indigenous family
dwellings. Inclusio unius est exclusio alterius. Because the law did not include
petitioners buildings from those structures exempt from the payment of building
permit fee, it is therefore subject to the regulatory fees imposed under the National
Building Code.
Respondents assert that the CA correctly distinguished a building permit fee from
those other charges mentioned in Sec. 8 of R.A. No. 6055. As stated by petitioner
itself, charges refer to pecuniary liability, as rents, and fees against persons or
property. Respondents point out that a building permit is classified under the term
fee. A fee is generally imposed to cover the cost of regulation as activity or privilege
and is essentially derived from the exercise of police power; on the other hand,
impositions for services rendered by the local government units or for conveniences
furnished, are referred to as service charges.
Respondents also disagreed with petitioners contention that the fees imposed and
collected are exorbitant and exceeded the probable expenses of regulation. These
fees are based on computations and assessments made by the responsible officials
of the City Engineers Office in accordance with the Schedule of Fees and criteria
provided in the National Building Code. The bases of assessment cited by petitioner
(e.g. salary of employees, expenses of transportation and preparation and
reproduction of documents) refer to charges and fees on business and occupation
under Sec. 147 of the Local Government Code, which do not apply to building
permit fees. The parameters set by the National Building Code can be considered as
complying with the reasonable cost of regulation in the assessment and collection of
building permit fees. Respondents likewise contend that the presumption of
regularity in the performance of official duty applies in this case. Petitioner should
have presented evidence to prove its allegations that the amounts collected are
exorbitant or unreasonable.
For resolution are the following issues: (1) whether petitioner is exempt from the
payment of building permit and related fees imposed under the National Building
Code; and (2) whether the parcel of land owned by petitioner which has been
assessed for real property tax is likewise exempt.
R.A. No. 6055 granted tax exemptions to educational institutions like petitioner
which converted to non-stock, non-profit educational foundations.Section 8 of said
law provides:
SECTION 8. The Foundation shall be exempt from the payment of all taxes,
import duties, assessments, and other charges imposed by the Government
onall income derived from or property, real or personal, used exclusively for the
educational activities of the Foundation.(Emphasis supplied.)
On February 19, 1977, Presidential Decree (P.D.) No. 1096 was issued adopting
the National Building Code of the Philippines. The said Code requires every person,
firm or corporation, including any agency or instrumentality of the government to
obtain a building permit for any construction, alteration or repair of any building or
structure.[19]Building permit refers to a document issued by the Building Official x x x to
anowner/applicant to proceed with the construction, installation, addition, alteration,
renovation, conversion, repair, moving, demolition or other work activity of a
specific project/building/structure or portions thereof after the accompanying
principal plans, specifications and other pertinent documents with the duly notarized
application are found satisfactory and substantially conforming with the National
Building Code of the Philippines x x x and its Implementing Rules and Regulations
(IRR).[20] Building permit fees refers to the basic permit fee and other charges
imposed under the National Building Code.
Exempted from the payment of building permit fees are: (1) public buildings and (2)
traditional indigenous family dwellings.[21] Not being expressly included in the
enumeration of structures to which the building permit fees do not apply, petitioners
claim for exemption rests solely on its interpretation of the term other charges
imposed by the National Government in the tax exemption clause of R.A. No. 6055.
A charge is broadly defined as the price of, or rate for, something, while the
word fee pertains to a charge fixed by law for services of public officers or for use
of a privilege under control of government.[22] As used in the Local Government
Code of 1991 (R.A. No. 7160), charges refers to pecuniary liability, as rents or fees
against persons or property, while feemeans a charge fixed by law or ordinance for
the regulation or inspection of a business or activity.[23]
That charges in its ordinary meaning appears to be a general term which could
cover a specific fee does not support petitioners position that building permit fees
are among those other charges from which it was expressly exempted. Note that the
other charges mentioned in Sec. 8 of R.A. No. 6055 is qualified by the words
imposed by the Government on all x x x property used exclusively for the educational
activities of the foundation.Building permit fees are not impositions on property but
on the activity subject of government regulation. While it may be argued that the fees
relate to particular properties, i.e., buildings and structures, they are actually imposed
on certain activities the owner may conduct either to build such structures or to
repair, alter, renovate or demolish the same. This is evident from the following
provisions of the National Building Code:
Section 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard life, health, property,
and public welfare, consistent with theprinciples of sound environmental
management and control; and tothis end, make it the purpose of this Code to provide
for allbuildings and structures, a framework of minimum standards and
requirements to regulate and control their location, site, design quality of materials,
construction, use, occupancy, and maintenance.
Section 103. Scope and Application
(a) The provisions of this Code shall apply to the design,location, sitting,
construction, alteration, repair,conversion, use, occupancy, maintenance, moving,
demolitionof, and addition to public and private buildings andstructures, except
traditional indigenous family dwellingsas defined herein.
xxxx
Section 301. Building Permits
No person, firm or corporation, including any agency orinstrumentality of

the government shall erect, construct, alter, repair, move, convert or demolish any
building or structure or causethe same to be done without first obtaining a building
permittherefor from the Building Official assigned in the place where thesubject
building is located or the building work is to be done. (Italics supplied.)
That a building permit fee is a regulatory imposition is highlighted by the fact

that in processing an application for a building permit, the Building Official shall see to
it that the applicant satisfies and conforms with approved standard requirements on
zoning and land use, lines and grades, structural design, sanitary and sewerage,
environmental health, electrical and mechanical safety as well as with other rules and
regulations implementing the National Building Code.[24] Thus, ancillary permits such
as electrical permit, sanitary permit and zoning clearance must also be secured and the
corresponding fees paid before a building permit may be issued. And as can be gleaned
from the implementing rules and regulations of the National Building Code, clearances
from various government authorities exercising and enforcing regulatory functions
affecting buildings/structures, like local government units, may be further required
before a building permit may be issued.[25]
Since building permit fees are not charges on property, they are not
impositions from which petitioner is exempt.
As to petitioners argument that the building permit fees collected by

respondents are in reality taxes because the primary purpose is to raise revenues for
the local government unit, the same does not hold water.
A charge of a fixed sum which bears no relation at all to the cost of inspection
and regulation may be held to be a tax rather than an exercise of the police
power.[26] In this case, the Secretary of Public Works and Highways who is mandated
to prescribe and fix the amount of fees and other charges that the Building Official
shall collect in connection with the performance of regulatory functions, [27] has
promulgated and issued the Implementing Rules and Regulations [28] which provide
for the bases of assessment of such fees, as follows:
1. Character of occupancy or use of building
2. Cost of construction 10,000/sq.m (A,B,C,D,E,G,H,I), 8,000 (F), 6,000 (J)
3. Floor area
4. Height
Petitioner failed to demonstrate that the above bases of assessment were

arbitrarily determined or unrelated to the activity being regulated.Neither has
petitioner adduced evidence to show that the rates of building permit fees imposed
and collected by the respondents were unreasonable or in excess of the cost of
regulation and inspection.
In Chevron Philippines, Inc. v. Bases Conversion Development

Authority,[29] this Court explained:
In distinguishing tax and regulation as a form of police power, the
determining factor is the purpose of the implemented measure. If the purpose is
primarily to raise revenue, then it will be deemed a tax even though the measure
results in some form of regulation. On the other hand, if the purpose is primarily
to regulate, then it is deemed a regulation and an exercise of the police power
of the state, even though incidentally, revenue is generated. Thus, in Gerochi v.
Department of Energy, the Court stated:
The conservative and pivotal distinction between these two

(2) powers rests in the purpose for which the charge is made. If
generation of revenue is the primary purpose and regulation is
merely incidental, the imposition is a tax; but if regulation is the
primary purpose, the fact that revenue is incidentally raised does
not make the imposition a tax.[30] (Emphasis supplied.)
Concededly, in the case of building permit fees imposed by the National

Government under the National Building Code, revenue is incidentally generated for
the benefit of local government units. Thus:
Section 208. Fees
Every Building Official shall keep a permanent record and accurate account
of all fees and other charges fixed and authorized by the Secretary to be collected
and received under this Code.
Subject to existing budgetary, accounting and auditing rules and

regulations, the Building Official is hereby authorized to retain not more than
twenty percent of his collection for the operating expenses of his office.
The remaining eighty percent shall be deposited with the provincial, city or
municipal treasurer and shall accrue to the General Fund of the province, city or
municipality concerned.
Petitioners reliance on Sec. 193 of the Local Government Code of 1991 is

likewise misplaced. Said provision states:
SECTION 193. Withdrawal of Tax Exemption Privileges. -- Unless
otherwise provided in this Code, tax exemptions or incentives granted to, or
presently enjoyed by all persons, whether natural or juridical, including
government-owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock and non-
profit hospitals and educational institutions, are hereby withdrawn upon the
effectivity of this Code. (Emphasis supplied.)
Considering that exemption from payment of regulatory fees was not among those
incentives granted to petitioner under R.A. No. 6055, there is no such incentive that
is retained under the Local Government Code of 1991.Consequently, no reversible
error was committed by the CA in ruling that petitioner is liable to pay the subject
building permit and related fees.
Now, on petitioners claim that it is exempted from the payment of real property tax
assessed against its real property presently occupied by informal settlers.
Section 28(3), Article VI of the 1987 Constitution provides:

xxxx
(3) Charitable institutions, churches and parsonages or convents

appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and
improvements, actually, directly and exclusively used for religious, charitable
or educational purposes shall be exempt from taxation.
x x x x (Emphasis supplied.)
Section 234(b) of the Local Government Code of 1991 implements the

foregoing constitutional provision by declaring that --
SECTION 234. Exemptions from Real Property Tax. The following are
exempted from payment of the real property tax:
xxxx
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, non-profit or religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for religious, charitable
or educational purposes;
x x x x (Emphasis supplied.)
In Lung Center of the Philippines v. Quezon City,[31] this Court held that only
portions of the hospital actually, directly and exclusively used for charitable
purposes are exempt from real property taxes, while those portions leased to private
entities and individuals are not exempt from such taxes. We explained the condition
for the tax exemption privilege of charitable and educational institutions, as follows:
Under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in order to
be entitled to the exemption, the petitioner is burdened to prove, by clear and
unequivocal proof, that (a) it is a charitable institution; and (b) its real properties
are ACTUALLY, DIRECTLY and EXCLUSIVELY used for charitable
purposes. Exclusive is defined as possessed and enjoyed to the exclusion of
others; debarred from participation or enjoyment; and exclusively is defined, in a
manner to exclude; as enjoying a privilege exclusively. If real property is used for
one or more commercial purposes, it is not exclusively used for the exempted
purposes but is subject to taxation. The words dominant use or principal use cannot
be substituted for the words used exclusively without doing violence to the
Constitutions and the law. Solely is synonymous with exclusively.
What is meant by actual, direct and exclusive use of the property for
charitable purposes is the direct and immediate and actual application of the
property itself to the purposes for which the charitable institution is organized. It
is not the use of the income from the real property that is determinative of whether
the property is used for tax-exempt purposes.[32] (Emphasis and underscoring
supplied.)
Petitioner failed to discharge its burden to prove that its real property is actually,
directly and exclusively used for educational purposes. While there is no allegation
or proof that petitioner leases the land to its present occupants, still there is no
compliance with the constitutional and statutory requirement that said real property
is actually, directly and exclusively used for educational purposes. The respondents
correctly assessed the land for real property taxes for the taxable period during which
the land is not being devoted solely to petitioners educational
activities. Accordingly, the CA did not err in ruling that petitioner is likewise not
entitled to a refund of the real property tax it paid under protest.
WHEREFORE, the petition is DENIED. The Decision dated July 28, 2009 and
Resolution dated October 12, 2009 of the Court of Appeals in CA-G.R. CV No.
90591 are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
MARTIN S. VILLARAMA, JR.

Associate Justice
WE CONCUR:
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
Acting Chairperson
LUCAS P. BERSAMIN JOSE PORTUGAL PEREZ

Associate Justice Associate Justice
ESTELA M. PERLAS-BERNABE
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.
TERESITA J. LEONARDO-DE CASTRO

Associate Justice
Acting Chairperson
CERTIFICATION
I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court.
ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296,
The Judiciary Act of 1948, as amended)

Designated Acting Chairperson of the First Division per Special Order No. 1226 dated May 30, 2012.

Designated Additional Member per Raffle dated June 25, 2012 vice Associate Justice Mariano C. Del Castillo
who recused himself from the case due to close association to one of the parties.

Designated Acting Member of the First Division per Special Order No. 1227 dated May 30, 2012.
[1]
Rollo, pp. 45-59. Penned by Associate Justice Rosmari D. Carandang with Associate Justices Mariflor P. Punzalan
Castillo and Ramon M. Bato, Jr. concurring.
[2]
Id. at 61-62.
[3]
Records, pp. 184-194. Penned by Judge Omar T. Viola.
[4]
AN ACT TO PROVIDE FOR THE CONVERSION OF EDUCATIONAL INSTITUTIONS FROM STOCK CORPORATIONS TO
NON-PROFIT FOUNDATIONS, DIRECTING THE GOVERNMENT SERVICE INSURANCE SYSTEM, THE SOCIAL SECURITY
SYSTEM AND THE DEVELOPMENT BANK OF THE PHILIPPINES TO ASSIST IN SUCH CONVERSION, AND FOR OTHER
PURPOSES. Approved on August 4, 1969.
[5]
Records, pp. 19-20.
[6]
Id. at 26-29.
[7]
Id. at 30-37.
[8]
Id. at 38-49.
[9]
Id. at 48-56, 66-74, 87-89.
[10]
Id. at 75-80, 90.
[11]
Id. at 57-64, 81-97.
[12]
Id. at 2-16.
[13]
Id. at 105-110.
[14]
No. L-41383, August 15, 1988, 164 SCRA 320.
[15]
Supra note 5.
[16]
Id. at 184-194.
[17]
Id. at 194.
[18]
Rollo, pp. 19-21.
[19]
Sec. 301, P.D. No. 1096.
[20]
Rule I, Sec. 106, 2004 Revised Implementing Rules and Regulations of the National Building Code of the
Philippines (P.D. 1096). Italics supplied.
[21]
Sec. 209, P.D. 1096.
[22]
Blacks Law Dictionary, Fifth Edition, pp. 211 and 553.
[23]
Sec. 131 (g) and (l), Local Government Code of 1991.
[24]
Sec. 303, P.D. No. 1096.
[25]
Office of the Ombudsman v. Espiritu, G.R. No. 174826, April 8, 2008, 550 SCRA 695, 705.
[26]
Progressive Development Corporation v. Quezon City, G.R. No. 36081, April 24, 1989, 172 SCRA 629, 636,
citing Saldaa v. City of Iloilo, 104 Phil. 28, 33 (1958).
[27]
Sec. 203 (4), P.D. No. 1096.
[28]
Rule 11, No. 3 (1), IRR of P.D. No. 1096.
[29]
G.R. No. 173863, September 15, 2010, 630 SCRA 519.
[30]
Id. at 526.
[31]
G.R. No. 144104, June 29, 2004, 433 SCRA 119, 138.
[32]
Id. at 137-138.
FIRST DIVISION
[G.R. No. 124043. October 14, 1998]
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. COURT OF

APPEALS, COURT OF TAX APPEALS and YOUNG MENS
CHRISTIAN ASSOCIATION OF THE PHILIPPINES,
INC., respondents.
DECISION
PANGANIBAN, J.:
Is the income derived from rentals of real property owned by the Young Mens Christian
Association of the Philippines, Inc. (YMCA) established as a welfare, educational and charitable
non-profit corporation -- subject to income tax under the National Internal Revenue Code (NIRC)
and the Constitution?
The Case
This is the main question raised before us in this petition for review on certiorarichallenging
two Resolutions issued by the Court of Appeals[1] on September 28, 1995[2]and February 29,
1996[3] in CA-GR SP No. 32007. Both Resolutions affirmed the Decision of the Court of Tax
Appeals (CTA) allowing the YMCA to claim tax exemption on the latters income from the lease
of its real property.
The Facts
The Facts are undisputed.[4] 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.
In 1980, private respondent earned, among others, an income of P676,829.80 from leasing out
a portion of its premises to small shop owners, like restaurants and canteen operators,
and P44,259.00 from parking fees collected from non-members. On July 2, 1984, the
commissioner of internal revenue (CIR) issued an assessment to private respondent, in the total
amount of P415,615.01 including surcharge and interest, for deficiency income tax, deficiency
expanded withholding taxes on rentals and professional fees and deficiency withholding tax on
wages. Private respondent formally protested the assessment and, as a supplement to its basic
protest, filed a letter dated October 8, 1985. In reply, the CIR denied the claims of YMCA.
Contesting the denial of its protest, the YMCA filed a petition for review at the Court if Tax
Appeals (CTA) on March 14, 1989. In due course, the CTA issued this ruling in favor of the
YMCA:
xxx [T]he leasing of private respondents facilities to small shop owners, to restaurant
and canteen operators and the operation of the parking lot are reasonably incidental to
and reasonably necessary for the accomplishment of the objectives of the [private
respondents]. It appears from the testimonies of the witnesses for the [private
respondent] particularly Mr. James C. Delote, former accountant of YMCA, that these
facilities were leased to members and that they have to service the needs of its
members and their guests. The Rentals were minimal as for example, the barbershop
was only charged P300 per month. He also testified that there was actually no lot
devoted for parking space but the parking was done at the sides of the building. The
parking was primarily for members with stickers on the windshields of their cars and
they charged P.50 for non-members. The rentals and parking fees were just enough to
cover the costs of operation and maintenance only. The earning[s] from these rentals
and parking charges including those from lodging and other charges for the use of the
recreational facilities constitute [the] bulk of its income which [is] channeled to
support its many activities and attainment of its objectives. As pointed out earlier, the
membership dues are very insufficient to support its program. We find it reasonably
necessary therefore for [private respondent] to make [the] most out [of] its existing
facilities to earn some income. It would have been different if under the
circumstances, [private respondent] will purchase a lot and convert it to a parking lot
to cater to the needs of the general public for a fee, or construct a building and lease it
out to the highest bidder or at the market rate for commercial purposes, or should it
invest its funds in the buy and sell of properties, real or personal. Under these
circumstances, we could conclude that the activities are already profit oriented, not
incidental and reasonably necessary to the pursuit of the objectives of the association
and therefore, will fall under the last paragraph of section 27 of the Tax Code and any
income derived therefrom shall be taxable.
Considering our findings that [private respondent] was not engaged in the business of
operating or contracting [a] parking lot, we find no legal basis also for the imposition
of [a] deficiency fixed tax and [a] contractors tax in the amount[s] of P353.15
and P3,129.73, respectively.
xxxxxxxxx
WHEREFORE, in view of all the foregoing, the following assessments are hereby
dismissed for lack of merit:
1980 Deficiency Fixed Tax P353,15;

1980 Deficiency Contractors Tax P3,129.23;
1980 Deficiency Income Tax P372,578.20.
While the following assessments are hereby sustained:

1980 Deficiency Expanded Withholding Tax P1,798.93;
1980 Deficiency Withholding Tax on Wages P33,058.82
plus 10% surcharge and 20% interest per annum from July 2, 1984 until fully paid but not to
exceed three (3) years pursuant to Section 51 (e)(2) & (3) of the National Internal Revenue Code
effective as of 1984.[5]
Dissatisfied with the CTA ruling, the CIR elevated the case to the Court of Appeals (CA). In
its Decision of February 16, 1994, the CA[6] initially decided in favor of the CIR and disposed of
the appeal in the following manner:
Following the ruling in the afore-cited cases of Province of Abra vs. Hernando and
Abra Valley College Inc. vs. Aquino, the ruling of the respondent Court of Tax
Appeals that the leasing of petitioners (herein respondent) facilities to small shop
owners, to restaurant and canteen operators and the operation of the parking lot are
reasonably incidental to and reasonably necessary for the accomplishment of the
objectives of the petitioners,' and the income derived therefrom are tax exempt, must
be reversed.
WHEREFORE, the appealed decision is hereby REVERSED in so far as it dismissed

the assessment for:
1980 Deficiency Income Tax P 353.15

1980 Deficiency Contractors Tax P 3,129.23, &
1980 Deficiency Income Tax P372,578.20,
but the same is AFFIRMED in all other respect.[7]
Aggrieved, the YMCA asked for reconsideration based on the following grounds:
I
The findings of facts of the Public Respondent Court of Tax Appeals being
supported by substantial evidence [are] final and conclusive.
II
The conclusions of law of [p]ublic [r]espondent exempting [p]rivate [r]espondent from the
income on rentals of small shops and parking fees [are] in accord with the applicable law
and jurisprudence.[8]
Finding merit in the Motion for Reconsideration filed by the YMCA, the CA reversed itself
and promulgated on September 28, 1995 its first assailed Resolution which, in part, reads:
The Court cannot depart from the CTAs findings of fact, as they are supported by
evidence beyond what is considered as substantial.
xxxxxxxxx
The second ground raised is that the respondent CTA did not err in saying that the
rental from small shops and parking fees do not result in the loss of the
exemption. Not even the petitioner would hazard the suggestion that YMCA is
designed for profit.Consequently, the little income from small shops and parking fees
help[s] to keep its head above the water, so to speak, and allow it to continue with its
laudable work.
The Court, therefore, finds the second ground of the motion to be meritorious and in
accord with law and jurisprudence.
WHEREFORE, the motion for reconsideration is GRANTED; the respondent CTAs decision is
AFFIRMED in toto.[9]
The internal revenue commissioners own Motion for Reconsideration was denied by
Respondent Court in its second assailed Resolution of February 29, 1996. Hence, this petition for
review under Rule 45 of the Rules of Court.[10]
The Issues
Before us, petitioner imputes to the Court of Appeals the following errors:
I
In holding that it had departed from the findings of fact of Respondent Court of
Tax Appeals when it rendered its Decision dated February 16, 1994; and
II
In affirming the conclusion of Respondent Court of Tax Appeals that the income of private
respondent from rentals of small shops and parking fees [is] exempt from taxation.[11]
This Courts Ruling
The Petition is meritorious.
First Issue:
Factual Findings of the CTA
Private respondent contends that the February 16, 1994 CA Decision reversed the factual
findings of the CTA. On the other hand, petitioner argues that the CA merely reversed the ruling of
the CTA that the leasing of private respondents facilities to small shop owners, to restaurant and
canteen operators and the operation of parking lots are reasonably incidental to and reasonably
necessary for the accomplishment of the objectives of the private respondent and that the income
derived therefrom are tax exempt.[12] Petitioner insists that what the appellate court reversed was
the legal conclusion, not the factual finding, of the CTA.[13] The commissioner has a point.
Indeed, it is a basic rule in taxation that the factual findings of the CTA, when supported by
substantial evidence, will not be disturbed on appeal unless it is shown that the said court
committed gross error in the appreciation of facts.[14] In the present case, this Court finds that the
February 16, 1994 Decision of the CA did not deviate from this rule. The latter merely applied the
law to the facts as found by the CTA and ruled on the issue raised by the CIR: Whether or not the
collection or earnings of rental income from the lease of certain premises and income earned from
parking fees shall fall under the last paragraph of Section 27 of the National Internal Revenue Code
of 1977, as amended.[15]
Clearly, the CA did not alter any fact or evidence. It merely resolved the aforementioned issue,
as indeed it was expected to. That it did so in a manner different from that of the CTA did not
necessarily imply a reversal of factual findings.
The distinction between a question of law and a question of fact is clear-cut. It has been held
that [t]here is a question of law in a given case when the doubt or difference arises as to what the
law is on a certain state of facts; there is a question of fact when the doubt or difference arises as
to the truth or falsehood of alleged facts.[16] In the present case, the CA did not doubt, much less
change, the facts narrated by the CTA. It merely applied the law to the facts. That its interpretation
or conclusion is different from that of the CTA is not irregular or abnormal.
Second Issue:
Is the Rental Income of the YMCA Taxable?
We now come to the crucial issue: Is the rental income of the YMCA from its real estate
subject to tax? At the outset, we set forth the relevant provision of the NIRC:
SEC. 27. Exemptions from tax on corporations. -- The following organizations shall
not be taxed under this Title in respect to income received by them as such --
xxxxxxxxx
(g) Civic league or organization not organized for profit but operated exclusively for
the promotion of social welfare;
(h) Club organized and operated exclusively for pleasure, recreation, and other non-
profitable purposes, no part of the net income of which inures to the benefit of any
private stockholder or member;
xxxxxxxxx
Notwithstanding the provision in the preceding paragraphs, the income of whatever

kind and character of the foregoing organization from any of their properties, real or
personal, or from any of their activities conducted for profit, regardless of the
disposition made of such income, shall be subject to the tax imposed under this Code.
(as amended by Pres. Decree No. 1457)
Petitioners argues that while the income received by the organizations enumerated in Section
27 (now Section 26) of the NIRC is, as a rule, exempted from the payment of tax in respect to
income received by them as such, the exemption does not apply to income derived xxx from any
if their properties, real or personal, or from any of their activities conducted for profit, regardless,
of the disposition made of such income xxx.
Petitioner adds that rented income derived by a tax-exempt organization from the lease of its
properties, real or personal, [is] not, therefore, exempt from income taxation, even if such income
[is] exclusively used for the accomplishment of its objectives.[17]We agree with the commissioner.
Because taxes are the lifeblood of the nation, the Court has always applied the doctrine of
strict interpretation in construing tax exemptions.[18] Furthermore, a claim of statutory exemption
from taxation should be manifest and unmistakable from the language of the law on which it is
based. Thus, the claimed exemption must expressly be granted in a statute stated in a language too
clear to be mistaken.[19]
In the instant case, the exemption claimed by the YMCA is expressly disallowed by the very
wording of the last paragraph of then Section 27 of the NIRC which mandates that the income of
exempt organizations (such as the YMCA) from any of their properties, real or personal, be subject
to the imposed by the same Code. Because the last paragraph of said section unequivocally
subjects to tax the rent income f the YMCA from its rental property,[20] the Court is duty-bound to
abide strictly by its literal meaning and to refrain from resorting to any convoluted attempt at
construction.
It is axiomatic that where the language of the law is clear and unambiguous, its express terms
must be applied.[21] Parenthetically, a consideration of the question of construction must not even
begin, particularly when such question is on whether to apply a strict construction or a literal one
on statutes that grant tax exemptions to religious, charitable and educational propert[ies] or
institutions.[22]
The last paragraph of Section 27, the YMCA argues, should be subject to the qualification
that the income from the properties must arise from activities conducted for profit before it may
be considered taxable.[23] This argument is erroneous. As previously stated, a reading of said
paragraph ineludibly shows that the income from any property of exempt organizations, as well as
that arising from any activity it conducts for profit, is taxable. The phrase any of their activities
conducted for profit does not qualify the word properties. This makes income from the property of
the organization taxable, regardless of how that income is used -- whether for profit or for lofty
non-profit purposes.
Verba legis non est recedendum. Hence, Respondent Court of Appeals committed reversible
error when it allowed, on reconsideration, the tax exemption claimed by YMCA on income it
derived from renting out its real property, on the solitary but unconvincing ground that the said
income is not collected for profit but is merely incidental to its operation. The law does not make
a distinction. The rental income is taxable regardless of whence such income is derived and how
it used or disposed of.Where the law does not distinguish, neither should we.
Constitutional Provisions
on Taxation
Invoking not only the NIRC but also the fundamental law, private respondent submits that
Article VI, Section 28 of par. 3 of the 1987 Constitution,[24] exempts charitable institutions from
the payment not only of property taxes but also of income tax from any source.[25] In support of its
novel theory, it compares the use of the words charitable institutions, actually and directly in the
1973 and the 1987 Constitutions, on the hand; and in Article VI Section 22, par. 3 of the 1935
Constitution, on the other hand.[26]
Private respondent enunciates three points. First, the present provision is divisible into two
categories: (1) [c]haritable institutions, churches and parsonages or convents appurtenant thereto,
mosques and non-profit cemeteries, the incomes of which are, from whatever source, all tax-
exempt;[27] and (2) [a]ll lands, buildings and improvements actually and directly used for religious,
charitable or educational purposes, which are exempt only from property taxes.[28] Second, Lladoc
v. Commissioner of Internal Revenue,[29] which limited the exemption only to the payment of
property taxes, referred to the provision of the 1935 Constitution and not to its counterparts in the
1973 and the 1987 Constitutions.[30] Third, the phrase actually, directly and exclusively used for
religious, charitable or educational purposes refers not only to all lands, buildings and
improvements, but also to the above-quoted first category which includes charitable institutions
like the private respondent.[31]
The Court is not persuaded. The debates, interpellations and expressions of opinion of the
framers of the Constitution reveal their intent which, in turn, may have guided the people in
ratifying the Charter.[32] Such intent must be effectuated.
Accordingly, Justice Hilario G. Davide, Jr., a former constitutional commissioner, who is now
a member of this Court, stressed during the Concom debates that xxx what is exempted is not the
institution itself xxx; those exempted from real estate taxes are lands, buildings and improvements
actually, directly and exclusively used for religious, charitable or educational purposes.[33] Father
Joaquin G. Bernas, an eminent authority on the Constitution and also a member of the Concom,
adhered to the same view that the exemption created by said provision pertained only to property
taxes.[34]
In his treatise on taxation, Mr. Justice Jose C. Vitug concurs, stating that [t]he tax exemption
covers property taxes only."[35] Indeed, the income tax exemption claimed by private respondent
finds no basis in Article VI, Section 28, par. 3 of the Constitution.
Private respondent also invokes Article XIV, Section 4, par. 3 of the Charter,[36]claiming that
the YMCA 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.[37] We reiterate that private respondent is exempt from the payment of
property tax, but not income tax on the rentals from its property. The bare allegation alone that it
is a non-stock, non-profit educational institution is insufficient to justify its exemption from the
payment of income tax.
As previously discussed, laws allowing tax exemption are construed strictissimi juris. Hence,
for the YMCA to be granted the exemption it claims under the aforecited provision, it must prove
with substantial evidence that (1) it falls under the classification non-stock, non-profit educational
institution; and (2) the income it seeks to be exempted from taxation is used actually, directly, and
exclusively for educational purposes.However, the Court notes that not a scintilla of evidence was
submitted by private respondent to prove that it met the said requisites.
Is the YMCA an educational institution within the purview of Article XIV, Section 4, par.3
of the Constitution? We rule that it is not. The term educational institution or institution of learning
has acquired a well-known technical meaning, of which the members of the Constitutional
Commission are deemed cognizant.[38] Under the Education Act of 1982, such term refers to
schools.[39] The school system is synonymous with formal education,[40] which refers to the
hierarchically structured and chronological graded learnings organized and provided by the formal
school system and for which certification is required in order for the learner to progress through
the grades or move to the higher levels.[41] The Court has examined the Amended Articles of
Incorporation[42] and By-Laws[43] of the YMCA, but found nothing in them that even hints that it is
a school or an educational institution.[44]
Furthermore, under the Education Act of 1982, even non-formal education is understood to
be school-based and private auspices such as foundations and civic-spirited organizations are ruled
out.[45] It is settled that the term educational institution, when used in laws granting tax exemptions,
refers to a xxx school seminary, college or educational establishment xxx.[46] Therefore, the private
respondent cannot be deemed one of the educational institutions covered by the constitutional
provision under consideration.
xxx Words used in the Constitution are to be taken in their ordinary acceptation. While in its
broadest and best sense education embraces all forms and phrases of instruction, improvement
and development of mind and body, and as well of religious and moral sentiments, yet in the
common understanding and application it means a place where systematic instruction in any or
all of the useful branches of learning is given by methods common to schools and institutions of
learning. That we conceive to be the true intent and scope of the term [educational institutions,]
as used in the Constitution.[47]
Moreover, without conceding that Private Respondent YMCA is an educational institution,
the Court also notes that the former did not submit proof of the proportionate amount of the subject
income that was actually, directly and exclusively used for educational purposes. Article XIII,
Section 5 of the YMCA by-laws, which formed part of the evidence submitted, is patently
insufficient, since the same merely signified that [t]he net income derived from the rentals of the
commercial buildings shall be apportioned to the Federation and Member Associations as the
National Board may decide.[48] In sum, we find no basis for granting the YMCA exemption from
income tax under the constitutional provision invoked
Cases Cited by Private

Respondent Inapplicable
The cases[49] relied on by private respondent do not support its cause. YMCA of Manila v.
Collector of Internal Revenue[50] and Abra Valley College, Inc. v. Aquino[51]are not applicable,
because the controversy in both cases involved exemption from the payment of property tax, not
income tax. Hospital de San Juan de Dios, Inc. v. Pasay City[52] is not in point either, because it
involves a claim for exemption from the payment of regulatory fees, specifically electrical
inspection fees, imposed by an ordinance of Pasay City -- an issue not at all related to that involved
in a claimed exemption from the payment if income taxes imposed on property leases. In Jesus
Sacred Heart College v. Com. Of Internal Revenue,[53] the party therein, which claimed an
exemption from the payment of income tax, was an educational institution which submitted
substantial evidence that the income subject of the controversy had been devoted or used solely
for educational purposes. On the other hand, the private respondent in the present case had not
given any proof that it is an educational institution, or that of its rent income is actually, directly
and exclusively used for educational purposes.
Epilogue
In deliberating on this petition, the Court expresses its sympathy with private respondent. It
appreciates the nobility its cause. However, the Courts power and function are limited merely to
applying the law fairly and objectively. It cannot change the law or bend it to suit its sympathies
and appreciations. Otherwise, it would be overspilling its role and invading the realm of
legislation.
We concede that private respondent deserves the help and the encouragement of the
government. It needs laws that can facilitate, and not frustrate, its humanitarian tasks.But the Court
regrets that, given its limited constitutional authority, it cannot rule on the wisdom or propriety of
legislation. That prerogative belongs to the political departments of government. Indeed, some of
the member of the Court may even believe in the wisdom and prudence of granting more tax
exemptions to private respondent. But such belief, however well-meaning and sincere, cannot
bestow upon the Court the power to change or amend the law.
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated
September 28, 1995 and February 29, 1996 are hereby dated February 16, 1995
is REVERSED and SET ASIDE. The Decision of the Court of Appeals dated February 16, 1995
is REINSTATED, insofar as it ruled that the income tax. No pronouncement as to costs.
SO ORDERED.
Davide, Jr. (Chairman), Vitug and Quisumbing, JJ., concur.
Bellosillo, J., see Dissenting Opinion.
[1]
Special Former Fourth Division composed of J. Nathanael P. de Pano, Jr., presiding justice and ponente;
and JJ., Fidel P. Purisima (now an associate justice of the Supreme Court) and Corona Ibay-Somera, concurring.
[2]
Rollo, pp. 42-48.
[3]
Ibid., pp. 50-51.
[4]
See Memorandum of private respondent, pp. 1-10 and Memorandum of petitioner, pp. 3-10; rollo, pp. 149-158 and
192-199, respectively. See also Decision of the CTA, pp. 1-21; rollo, pp. 69-89.
[5]
CTA Decision, pp. 16-18 and 2--21; rollo, pp. 84-86 and 88-89.
[6]
Penned by J. Asaali S. Isnani and concurred in by JJ. Nathanael P. De Pano, Jr., chairman, and Corona Ibay-Somera
of the Fourth Division.
[7]
Rollo, pp. 39-40.
[8]
CA Resolution, p. 2; rollo, p. 43.
[9]
Ibid., pp. 2,, 6-7; rollo, pp. 43, 47-48.
[10]
The case was submitted for resolution on April 27, 1998, upon receipt by this Court of private respondents Reply
Memorandum.
[11]
Petitioners Memorandum, pp. 10-11; rollo, pp. 199-200.
[12]
Ibid., p. 16; rollo, p. 205.
[13]
Ibid., p. 17; rollo, p. 206.
[14]
Commissioner of Internal Revenue v. Mitsubishi Metal Corp., 181 SCRA 214, 220, January 22, 1990.
[15]
Rollo, p. 36.
[16]
Ramos et al. v. Pepsi Cola Bottling Co. of the P.I. et al., 19 SCRA 289, 292, February 9, 1967, per
Bengzon, J.; citing II Martin, Rules of Court in the Philippines, 255 and II Bouviers Law Dictionary, 2784.
[17]
Memorandum for Petitioner, pp. 21-22; rollo, pp. 210-211.
[18]
See Commissioner of Internal Revenue v. Court of Appeals, 271 SCRA 605, 613, April 18, 1997.
[19]
Davao Gulf Lumber Corporation v. Commissioner of Internal Revenue and Court of Appeals, GR No. 117359, p.
15, July 23, 1998, per Panganiban, J.
[20]
Justice Jose C. Vitug, Compendium of Tax Law and Jurisprudence, p. 75, 4th revised ed. (1989); and De Leon,
Hector S., The National Internal Revenue Code Annotated, p. 108, 5th ed. (1994), citing a BIR ruling dated May 6,
1975.
[21]
See Ramirez v. Court of Appeals, 248 SCRA 590, 596, September 28, 1995.
[22]
Cooley, Thomas M., The Law of Taxation, p. 1415, Vol. II, 4th ed. (1924).
[23]
Reply Memorandum of private respondent, p. 10. p. 234.
[24]
Charitable institutions, churches and parsonages of convents appurtenant thereto, mosques, non-profitcemeteries,
and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or
educational purposes shall be exempt from taxation. (Underlining copied from Reply Memorandum of Private
Respondent, p. 7; rollo, p. 231)
[25]
Reply Memorandum of private respondent, p. 7; rollo, p. 231.
[26]
Cemeteries, churches, and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements
actually, directly , and exclusively used for religious, charitable, or educational purposes shall be exempt from
taxation.
[27]
Reply Memorandum of private respondent, pp. 7-8; rollo, pp. 231-232.
[28]
Ibid., p. 8; rollo, p. 232.
[29]
14 SCRA 292, June 16, 1965.
[30]
[31]
Ibid., p. 9; rollo, p. 233.
[32]
Nitafan v. Commissioner of Internal Revenue, 152 SCRA 284, 291-292, July 27, 1987.
[33]
Record of the Constitutional Commission, Vol. Two, p. 90.
[34]
Bernas, Joaquin G., The 1987 Constitution of the Republic of the Philippines: A Commentary, p. 720, 1996 ed.;
citing Lladoc v. Commissioner of Internal Revenue, supra, p. 295.
[35]
Vitug, supra, p. 16.
[36]
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 or cessation of the corporate
existence of such institutions, their assets shall be disposed of in the manner provided by law.
[37]
Reply Memorandum of private respondent, p. 20; rollo, p. 244.
[38]
See Krivenko v. Register of Deeds of Manila, 79 Phil 461, 468 (1947).
[39]
Section 26, Batas Pambansa Blg. 232.
[40]
[41]
[42]
Exhibit B, BIR Records, pp. 54-56.
[43]
Exhibit C, BIR Records, pp. 27-53.
[44]
This is in stark contrast to its predecessor, the YMCA of Manila. In YMCA of Manila v. Collector of Internal
Revenue (33 Phil 217, 221 [1916]), cited by private respondent, it was noted that the said institution had an educational
department that taught courses in various subjects such as law, commerce, social ethics, political economy and others.
[45]
Dizon, Amado C., Education Act of 1982 Annotated, Expanded and Updated, p. 72 (1990).
[46]
84 CJS 566.
[47]
Kesselring v. Bonnycastle Club, 186 SW2d 402, 404 (1945).
[48]
By-Laws of the YMCA, p. 22; BIR Records, p. 31.
[49]
[50]
Supra.
[51]
162 SCRA 106, June 15, 1988.
[52]
16 SCRA 226, February 28, 1966.
[53]
95 SCRA 16, May 24, 1954.
G.R. No. 196596, November 09, 2016 - COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. DE LA SALLE UNIVERSITY, INC
INC., Respondent.
Before the Court are consolidated petitions for review on certiorari:1
1. G.R. No. 196596 filed by the Commissioner of Internal Revenue (Commissioner) to assail the December 10, 2010 de
2. G.R. No. 198841 filed by De La Salle University, Inc. (DLSU) to assail the June 8, 2011 decision and October 4, 2011
3. G.R. No. 198941 filed by the Commissioner to assail the June 8, 2011 decision and October 4, 2011 resolution in CT
G.R. Nos. 196596, 198841 and 198941 all originated from CTA Special First Division (CTA Division) Case No. 7303. G.R. No.
7303. chanro blesvi rt uallawl ibra ry
Sometime in 2004, the Bureau of Internal Revenue (BIR) issued to DLSU Letter of Authority (LOA) No. 2794 authorizing its re
On May 19, 2004, BIR issued a Preliminary Assessment Notice to DLSU.6
Subsequently on August 18, 2004, the BIR through a Formal Letter of Demand assessed DLSU the following deficiency taxes:
demanded the payment of P17,303,001.12, inclusive of surcharge, interest and penalty for taxable years 2001, 2002 and
DLSU protested the assessment. The Commissioner failed to act on the protest; thus, DLSU filed on August 3, 2005 a petition
DLSU, a non-stock, non-profit educational institution, principally anchored its petition on Article XIV, Section 4 (3) of the Co
chanRoble svirtual Lawlib ra ry
(3) All revenues and assets of non-stock,

On January 5, 2010, the CTA Division partially granted DLSU's petition for review. The dispositive portion of the decision reads
WHEREFORE, the Petition for Review is PARTIALLY GRANTED. The DST assessment on the loan transactions of [D
total amount of P18,421,363.53...xxx.
In addition, [DLSU] is hereby held liable to pay 20% delinquency interest on the total amount due computed from Sep
agreement between the parties.
SO ORDERED.9 ChanRoblesVirtualawl ibra ry
Both the Commissioner and DLSU moved for the reconsideration of the January 5, 2010 decision.10 On April 6, 2010, the CTA
On May 13, 2010, the Commissioner appealed to the CTA En Banc (CTA En Banc Case No. 622) arguing that DLSU's use of its
On May 18, 2010, DLSU formally offered to the CTA Division supplemental pieces of documentary evidence to prove that its re
On July 29, 2010, the CTA Division, in view of the supplemental evidence submitted, reduced the amount of DLSU's tax deficie
WHEREFORE, [DLSU]'s Motion for Partial Reconsideration is hereby PARTIALLY GRANTED. [DLSU] is hereby ORDE
In addition, [DLSU] is hereby held liable to pay 20% per annum deficiency interest on the...basic deficiency taxes...un
Further, [DLSU] is hereby held liable to pay 20% per annum delinquency interest on the deficiency taxes, surcharge a
Consequently, the Commissioner supplemented its petition with the CTA En Banc and argued that the CTA Division erred in ad
Dissatisfied with the partial reduction of its tax liabilities, DLSU filed a separate petition for review with the CTA En Banc (CTA
the entire assessment because DLSU submitted evidence similar to those submitted by Ateneo De Manila University (Ateneo)
purposes.18 chan roble svirtual lawlib rary
CTA En Banc Case No. 622
The CTA En Banc dismissed the Commissioner's petition for review and sustained the findings of the CTA Division.19
Tax on rental income
Relying on the findings of the court-commissioned Independent Certified Public Accountant (Independent CPA), the CTA En Ba
evidence confirming that part of its rental income had indeed been used to pay the loan it obtained to build the university's Ph
Parenthetically, DLSU's unsubstantiated claim for exemption, i.e., the part of its income that was not shown by supporting doc
DST on loan and mortgage transactions
Contrary to the Commissioner's contention, DLSU proved its remittance of the DST due on its loan and mortgage documents.2
(Tax Code)24 and Section 2 of Revenue Regulations (RR) No. 15-2001.25 cralaw red
Admissibility of DLSU's supplemental evidence
The CTA En Banc held that the supplemental pieces of documentary evidence were admissible even if DLSU formally offered th
The Commissioner moved but failed to obtain a reconsideration of the CTA En Banc's December 10, 2010 decision.27 Thus, she
CTA En Banc Case No. 671
The CTA En Banc partially granted DLSU's petition for review and further reduced its tax liabilities to P2,554,825.47 inclusive
On the validity of the Letter of Authority
The issue of the LOA's validity was raised during trial;29 hence, the issue was deemed properly submitted for decision and revi
Citing jurisprudence, the CTA En Banc held that a LOA should cover only one taxable period and that the practice of issuing a
shall be specifically indicated in the LOA.31
In the present case, the LOA issued to DLSU is for Fiscal Year Ending 2003 and Unverified Prior Years. Hence, the assessment
On the applicability of the Ateneo case
The CTA En Banc held that the Ateneo case is not a valid precedent because it involved different parties, factual settings, base
On the CTA Division's appreciation of the evidence
The CTA En Banc affirmed the CTA Division's appreciation of DLSU's evidence. It held that while DLSU successfully proved tha
educational purposes.34
Not pleased with the CTA En Banc's ruling, both DLSU (G.R. No. 198841) and the Commissioner (G.R. No. 198941) came to th
G.R. No. 196596
The Commissioner submits the following arguments:
First, DLSU's rental income is taxable regardless of how such income is derived, used or disposed of.35 DLSU's operations of ca
The Commissioner contends that Article XIV, Section 4 (3) of the Constitution must be harmonized with Section 30 (H) of the
profit regardless of the disposition made of such income, shall be subject to tax imposed by this Code.37
The Commissioner argues that the CTA En Banc misread and misapplied the case of Commissioner of Internal Revenue v.
On the contrary, the Commissioner posits that a tax-exempt organization like DLSU is exempt only from property tax but not
Second, the Commissioner insists that DLSU did not prove the fact of DST payment42 and that it is not qualified to use the On
Finally, the Commissioner objects to the admission of DLSU's supplemental offer of evidence. The belated submission of suppl
was unnecessary since its rental income was taxable regardless of its disposition.45
G.R. No. 198841
DLSU argues as that:
First, RMO No. 43-90 prohibits the practice of issuing a LOA with any indication of unverified prior years. A LOA issued contrar
DLSU points out that the LOA issued to it covered the Fiscal Year Ending 2003 and Unverified Prior Years. On the basis of this
when RMO No. 43-90 provides that:
The practice of issuing [LOAs] covering audit of 'unverified prior years' is hereby prohibited. ChanRob les Virtualawl ibra ry
it refers to the LOA which has the format "Base Year + Unverified Prior Years." Since the LOA issued to DLSU follows this form
Second, DLSU invokes the principle of uniformity in taxation, which mandates that for similarly situated parties, the same set
educational institution.50
G.R. No. 198941
The issues and arguments raised by the Commissioner in G.R. No. 198941 petition are exactly the same as those she raised in
DLSU's Comment on G.R. No. 196596
First, DLSU questions the defective verification attached to the petition.52
Second, DLSU stresses that Article XIV, Section 4 (3) of the Constitution is clear that all assets and revenues of non-stock, no
On this point, DLSU explains that: (1) the tax exemption of nonstock, non-profit educational institutions is novel to the 1987
profit educational institutions to the list of tax-exempt entities; and (3) that the 1977 Tax Code was promulgated when the 1
DLSU elaborates that the tax exemption granted to a private educational institution under the 1973 Constitution was only for
revenues of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes, was
DLSU thus invokes the doctrine of constitutional supremacy, which renders any subsequent law that is contrary to the Constitu
personal, or from any of its activities conducted for profit regardless of the disposition made of such income, should be declare
DLSU further submits that it complies with the requirements enunciated in the YMCA case, that for an exemption to be grante
directly and exclusively for educational purposes.58 Unlike YMCA, which is not an educational institution, DLSU is undisputedly
DLSU also cites the deliberations of the 1986 Constitutional Commission where they recognized that the tax exemption was gr
Third, DLSU highlights that both the CTA En Banc and Division found that the bank that handled DLSU's loan and mortgage tra
Finally, DLSU underscores that the Commissioner, despite notice, did not oppose the formal offer of supplemental evidence. B
The CIR's Comment on G.R. No. 198841
The Commissioner submits that DLSU is estopped from questioning the LOA's validity because it failed to raise this issue in bo
because an educational institution is only exempt from property tax but not from tax on the income earned from the property.
DLSU's Comment on G.R. No. 198941
DLSU puts forward the same counter-arguments discussed above.67
In addition, DLSU prays that the Court award attorney's fees in its favor because it was constrained to unnecessarily retain th
Although the parties raised a number of issues, the Court shall decide only the pivotal issues, which we summarize as follows:
I. Whether DLSU's income and revenues proved to have been used actually, directly and exclusively for educational pur
II. Whether the entire assessment should be voided because of the defective LOA; chanroble slaw
III. Whether the CTA correctly admitted DLSU's supplemental pieces of evidence; and
IV. Whether the CTA's appreciation of the sufficiency ofDLSU's evidence may be disturbed by the Court.
As we explain in full below, we rule that:
I. The income, revenues and assets of non-stock, non-profit educational institutions proved to have been used actually,
II. The LOA issued to DLSU is not entirely void. The assessment for taxable year 2003 is valid.
III. The CTA correctly admitted DLSU's formal offer of supplemental evidence; and
IV. The CTA's appreciation of evidence is conclusive unless the CTA is shown to have manifestly overlooked certain releva
The parties failed to convince the Court that the CTA overlooked or failed to consider relevant facts. We thus sustain t
a. DLSU proved that a portion of its rental income was used actually, directly and exclusively for educational pur
b. DLSU proved the payment of the DST through its bank's on-line imprinting machine.
I. The revenues and assets of non-stock, non-profit educational institutions proved to have been used actually, d
DLSU rests it case on Article XIV, Section 4 (3) of the 1987 Constitution, which reads:
(3) All revenues and assets of non-stock, non-profit educational in

corporate existence of such institutions, their assets shall be dispo
subject to the limitations provided by law including restriction
Before fully discussing the merits of the case, we observe that:
First, the constitutional provision refers to two kinds of educational institutions: (1) non-stock, non-profit educational institutio
Second, DLSU falls under the first category. Even the Commissioner admits the status of DLSU as a non-stock, non-profit edu
Third, while DLSU's claim for tax exemption arises from and is based on the Constitution, the Constitution, in the same provisi
Fourth, there is a marked distinction between the treatment of nonstock, non-profit educational institutions and proprietary ed
also be granted to proprietary educational institutions, these exemptions may be subject to limitations imposed by Congress.
As we explain below, the marked distinction between a non-stock, non-profit and a proprietary educational institution is crucia
The Commissioner opposes DLSU's claim for tax exemption on the basis of Section 30 (H) of the Tax Code. The relevant text r
The following organizations shall not be taxed under this Title [Tax on Income] in respect to income received by t
(H) A non-stock and non-profit educational institution
Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the fo
[underscoring and emphasis supplied] Cha nRobles Vi rtua lawlib rary
The Commissioner posits that the 1997 Tax Code qualified the tax exemption granted to non-stock, non-profit educational ins
Did the 1997 Tax Code qualifY the tax exemption constitutionally-granted to non-stock, non-profit educational institutions?
We answer in the negative.
While the present petition appears to be a case of first impression,71 the Court in the YMCA case had in fact already analyzed a
The issue in YMCA was whether the income derived from rentals of real property owned by the YMCA, established as a "welfar
The Court denied YMCA's claim for exemption on the ground that as a charitable institution falling under Article VI, Section 2
charitable or educational purposes."74
The Court held that the exemption claimed by the YMCA is expressly disallowed by the last paragraph of then Section 27 (now
ruled that the last paragraph of Section 27 unequivocally subjects to tax the rent income of the YMCA from its property.75
In short, the YMCA is exempt only from property tax but not from income tax.
As a last ditch effort to avoid paying the taxes on its rental income, the YMCA invoked the tax privilege granted under Article X
The Court denied YMCA's claim that it falls under Article XIV, Section 4 (3) of the Constitution holding that the term education
graded learnings organized and provided by the formal school system.76
The Court then significantly laid down the requisites for availing the tax exemption under Article XIV, Section 4 (3), namely: (
We now adopt YMCA as precedent and hold that:
1. The last paragraph of Section 30 of the Tax Code is without force and effect with respect to non-stock, non-profit edu
2. The tax-exemption constitutionally-granted to non-stock, non profit educational institutions, is not subject to limitatio
The tax exemption granted by the Constitution to non-stock, non-profit educational institutions is conditioned on
We find that unlike Article VI, Section 28 (3) of the Constitution (pertaining to charitable institutions, churches, parsonages
purposes...," Article XIV, Section 4 (3) categorically states that "[a]ll revenues and assets... used actually, directly, and
The addition and express use of the word revenues in Article XIV, Section 4 (3) of the Constitution is not without significance.
We find that the text demonstrates the policy of the 1987 Constitution, discernible from the records of the 1986 Constitutiona
be charged unreasonable tuition fees if not for the tax exemption extended to all revenues and assets of non-stock, non-pr
Further, a plain reading of the Constitution would show that Article XIV, Section 4 (3) does not require that the revenues and
and income are used actually, directly and exclusively for educational purposes, then said revenues and income shall be exem
We find it helpful to discuss at this point the taxation of revenues versus the taxation of assets.
Revenues consist of the amounts earned by a person or entity from the conduct of business operations.82 It may refer to the s
Assets, on the other hand, are the tangible and intangible properties owned by a person or entity.86 It may refer to real estate
property is a component of the tax base in real property tax (RPT).87 Also, the landed cost of imported goods is a component o
Thus, when a non-stock, non-profit educational institution proves that it uses its revenues actually, directly, and exclusively fo
To be clear, proving the actual use of the taxable item will result in an exemption, but the specific tax from which the entity sh
To illustrate, if a university leases a portion of its school building to a bookstore or cafeteria, the leased portion is not actually,
The leased portion of the building may be subject to real property tax, as held in Abra Valley College, Inc. v. Aquino.90 We ru
accomplishment of the main purposes.
In concrete terms, the lease of a portion of a school building for commercial purposes, removes such asset from the property
necessary for the accomplishment of the main purpose of a university, which is to educate its students.
However, if the university actually, directly and exclusively uses for educational purposes the revenues earned from the lease
educational purposes.
Parenthetically, income and revenues of non-stock, non-profit educational institution not used actually, directly and exclusively
exempted.
The crucial point of inquiry then is on the use of the assets or on the use of the revenues. These are two things that must
The tax exemption granted by the Constitution to non-stock, non-profit educational institutions, unlike the exemp
That the Constitution treats non-stock, non-profit educational institutions differently from proprietary educational institutions c
be subject to limitations imposed by law.
We spell out below the difference in treatment if only to highlight the privileged status of non-stock, non-profit educational ins
While a non-stock, non-profit educational institution is classified as a tax-exempt entity under Section 30 (Exemptions from Ta
To be specific, Section 30 provides that exempt organizations like non-stock, non-profit educational institutions shall not be ta
Section 27 (B), on the other hand, states that [p]roprietary educational institutions...which are nonprofit shall pay a tax of ten
income tax of 30%] shall be imposed on the entire taxable income...92
By the Tax Code's clear terms, a proprietary educational institution is entitled only to the reduced rate of 10% corporate incom
Consistent with Article XIV, Section 4 (3) of the Constitution, these limitations do not apply to non-stock, non-profit education
Thus, we declare the last paragraph of Section 30 of the Tax Code without force and effect for being contrary to the Constituti
duty93 to uphold the primacy of the Constitution.94
Finally, we stress that our holding here pertains only to non-stock, non-profit educational institutions and does not cover the o
For all these reasons, we hold that the income and revenues of DLSU proven to have been used actually, directly and exclusiv
II. The LOA issued to DLSU is not entirely void. The assessment for taxable year 2003 is valid.
DLSU objects to the CTA En Banc's conclusion that the LOA is valid for taxable year 2003 and insists that the entire LOA shoul
A LOA is the authority given to the appropriate revenue officer to examine the books of account and other accounting records
information, to summon/examine, and take testimony of persons. The LOA commences the audit process97 and informs the ta
Given the purposes of a LOA, is there basis to completely nullify the LOA issued to DLSU, and consequently, disregard the BIR
The relevant provision is Section C of RMO No. 43-90, the pertinent portion of which reads:
3. A Letter of Authority [LOA] should cover a taxable period not exceeding one taxable year. The practic
What this provision clearly prohibits is the practice of issuing LOAs covering audit of unverified prior years. RMO 43-90 does n
is audited for more than one taxable year, the BIR must specify each taxable year or taxable period on separate LOAs.
Read in this light, the requirement to specify the taxable period covered by the LOA is simply to inform the taxpayer of the ex
as far back as ten years in cases of fraud audit.99
In the present case, the LOA issued to DLSU is for Fiscal Year Ending 2003 and Unverified Prior Years. The LOA does not strict
As the CTA correctly held, the assessment for taxable year 2003 is valid because this taxable period is specified in the LOA. DL
Lastly, the Commissioner's claim that DLSU failed to raise the issue of the LOA's validity at the CTA Division, and thus, should
On the contrary, the CTA En Banc found that the issue of the LOA's validity came up during the trial.100 DLSU then raised the i
had the opportunity to argue for the validity of the LOA at the CTA En Banc but she chose not to file her comment and memor
III. The CTA correctly admitted the supplemental evidence formally offered by DLSU.
The Commissioner objects to the CTA Division's admission of DLSU's supplemental pieces of documentary evidence.
To recall, DLSU formally offered its supplemental evidence upon filing its motion for reconsideration with the CTA Division.103 T
We uphold the CTA Division's admission of the supplemental evidence on distinct but mutually reinforcing grounds, to wit: (1)
First, the failure to object to the offered evidence renders it admissible, and the court cannot, on its own, disregard such evide
The Court has held that if a party desires the court to reject the evidence offered, it must so state in the form of a timely obje
Because of a party's failure to timely object, the evidence offered becomes part of the evidence in the case. As a consequence
As disclosed by DLSU, the Commissioner did not oppose the supplemental formal offer of evidence despite notice.107 The Com
the supplemental evidence were all fait accompli.
We clarify that while the Commissioner's failure to promptly object had no bearing on the materiality or sufficiency of the supp
Second, the CTA is not governed strictly by the technical rules of evidence. The CTA Division's admission of the formal offer of
Notably, this Court had in the past admitted and considered evidence attached to the taxpayers' motion for reconsideration.
In the case of BPI-Family Savings Bank v. Court of Appeals,109 the tax refund claimant attached to its motion for reconsiderati
the Final Adjustment Return although it was only submitted upon motion for reconsideration.
We held that while it is true that strict procedural rules generally frown upon the submission of documents after the trial, the l
should not bar courts from considering undisputed facts to arrive at a just determination of a controversy.112
We applied the same reasoning in the subsequent cases of Filinvest Development Corporation v. Commissioner of Internal Rev
Although the cited cases involved claims for tax refunds, we also dispense with the strict application of the technical rules of e
cases claimed refund of excess tax payments based on the Tax Code,115 DLSU is claiming tax exemption based on the Constitu
Hence, we sustain the CTA's admission of DLSU's supplemental offer of evidence not only because the Commissioner failed to
IV. The CTA's appreciation of evidence is generally binding on the Court unless compelling reasons justify otherw
It is doctrinal that the Court will not lightly set aside the conclusions reached by the CTA which, by the very nature of its funct
highest respect. These findings of facts can only be disturbed on appeal if they are not supported by substantial evidence or th
We sustain the factual findings of the CTA.
The parties failed to raise credible basis for us to disturb the CTA's findings that DLSU had used actually, directly and exclusive
a. DLSU used actually, directly, and exclusively for educational purposes a portion of its assessed income.
To see how the CTA arrived at its factual findings, we review the process undertaken, from which it deduced that DLSU succes
The CTA reduced DLSU's deficiency income tax and VAT liabilities in view of the submission of the supplemental evidence, whi
These documents showed that DLSU borrowed P93.86 Million,119 which was used to build the university's Sports Complex. Bas
to prove actual, direct and exclusive use for educational purposes.
The CTA also found that DLSU's rental income from other concessionaires, which were allegedly deposited to a fund (CF-CPA A
the disbursements from the [fund]." Thus, the CTA "cannot ascertain whether rental income from the [other] concessionaires
To stress, the CTA's factual findings were based on and supported by the report of the Independent CPA who reviewed, audite
Under the CTA Revised Rules, an Independent CPA's functions include: (a) examination and verification of receipts, invoices, v
documents; (c) preparation of schedules or summaries containing a chronological listing of the numbers, dates and amounts c
submission of a formal report with certification of authenticity and veracity of findings and conclusions in the performance of t
Based on the Independent CPA's report and on its own appreciation of the evidence, the CTA held that only the portion of the
and unsubstantiated disbursements must be subjected to income tax and VAT.123
The CTA then further reduced DLSU's tax liabilities by cancelling the assessments for taxable years 2001 and 2002 due to the
The Court finds that the above fact-finding process undertaken by the CTA shows that it based its ruling on the evidence on re
However, while we generally respect the factual findings of the CTA, it does not mean that we are bound by its conclusions. In
To recall, the CTA found that DLSU earned a rental income of P10,610,379.00 in taxable year 2003.125 DLSU earned this inco
To prove that its rental income was used for educational purposes, DLSU identified the transactions where the rental income w
DLSU also submitted documents to the Independent CPA to prove that the P6,602,655.00 transferred to the CF-CPA Account w
Contradicting the findings of the Independent CPA, the CTA concluded that out of the P10,610,379.00 rental income, P4,841
The CTA then concluded that the ratio of substantiated disbursements to the total disbursements from the CF-CPA Account for
However, as regards petitioner's rental income from Alarey, Inc., Zaide Food Corp., Capri International and MTO Book
actually, directly and exclusively used for educational purposes. Likewise, the findings of the Court-Commissioned Ind
considered by the Special First Division as used actually, directly and exclusively for educational purposes. Since for fi
fiscal year 2003 is 26.68% (P6,259,078.30/P23,463,543.02). Thus, the substantiated portion of CF-CPA Disbursemen
For better understanding, we summarize the CTA's computation as follows:
1. The CTA subtracted the rent income used in the construction of the Sports Complex (P4,007,724.00) from the rental
2. The CTA then subtracted the supposed substantiated portion of CF-CPA disbursements (P1,761,308.37) from the P6,6
3. The substantiated portion of CF-CPA disbursements (P1,761,308.37)133 was derived by multiplying the rental income
4. The 26.68% ratio134 was the result of dividing the substantiated disbursements from the CF-CPA Account as found by
We find that this system of calculation is incorrect and does not truly give effect to the constitutional grant of tax exemption to
To reiterate, to be exempt from tax, DLSU has the burden of proving that the proceeds of its rental income (which amounted
million,136 which was transferred to the CF-CPA account.
For year 2003, the total disbursement from the CF-CPA account amounted to P23.46 million.137 These figures, read in light of
educational purposes?
The records show that DLSU never claimed that the total CF-CPA disbursements of P23.46 million had been for educational pu
Of this amount, P4.01 had been proven to have been used for educational purposes, as confirmed by the Independent CPA. Th
Significantly, the Independent CPA confirmed that the CF-CPA made disbursements for educational purposes in year 2003 in t
CF-CPA disbursements should be credited to DLSU for tax exemption.
This approach, in our view, is flawed given the constitutional requirement that revenues actually and directly used for educatio
been used for educational purposes. This was what DLSU needed to prove to have actually and directly used for educational p
That this fund had been first deposited into a separate fund (the CF-CPA established to fund capital projects) lends peculiarity
CPA might have had other sources of funding is irrelevant because the assessment in the present case pertains only to the ren
because no claim whatsoever had been made that the totality of the CF-CPA disbursements had been for educational purposes
Based on these considerations, DLSU should therefore be liable only for the difference between what it claimed and what it ha
P23,463,543.02, DLSU only had to substantiate its P10.6 million rental income, part of which was the P6,602,655.00 transferr
To summarize, we thus revise the tax base for deficiency income tax and VAT for taxable year 2003 as follows:
Rental income
Less: Rent incom

Complex
Rental income d
Less: Substantia
Tax base for de

On DLSU's argument that the CTA should have appreciated its evidence in the same way as it did with the evidence submitted
The issue in the Ateneo case was whether or not Ateneo could be held liable to pay income taxes and VAT under certain BIR a
require the educational institution to own or operate these commercial establishments to avail of the exemption.140
Given the lack of complete identity of the issues involved, the CTA held that it had to evaluate the separate sets of evidence d
DLSU disagrees with the CTA and argues that the entire assessment must be cancelled because it submitted similar, if not stro
First, even granting that Ateneo and DLSU submitted similar evidence, the sufficiency and materiality of the evidence supp
To state the obvious, the amount of income received by DLSU and by Ateneo during the taxable years they were assessed var
CTA varied.
On the one hand, the BIR assessed DLSU a total tax deficiency of P17,303,001.12 for taxable years 2001, 2002 and 2003. O
Thus, although both Ateneo and DLSU claimed that they used their rental income actually, directly and exclusively for educatio
that DLSU failed to prove that a portion of its income and revenues had indeed been used for educational purposes.
The CTA significantly found that some documents that could have fully supported DLSU's claim were not produced in court. In
The final nail on the question of evidence is DLSU's own admission that the original of these documents had not in fact been p
claimed exemption.
Further, DLSU's invocation of Section 5, Rule 130 of the Revised Rules on Evidence, that the contents of the missing supportin
assertion of lack of bad faith. Besides, it is not our duty to go over these documents to test the truthfulness of their contents,
Second, DLSU misunderstands the concept of uniformity oftaxation. Equality and uniformity of taxation means that all taxable
taxation similarly situated should be treated alike and placed in equal footing.149
In our view, the CTA placed Ateneo and DLSU in equal footing. The CTA treated them alike because their income proved to ha
DLSU can only assert that the CTA violated the rule on uniformity if it can show that, despite proving that it used actually, dire
exclusively for educational purposes its revenues and income.
On this point, we remind DLSU that the rule on uniformity of taxation does not mean that subjects of taxation similarly situate
against) both universities. Success in tax litigation, like in any other litigation, depends to a large extent on the sufficiency of e
b. DLSU proved its payment of the DST
The CTA affirmed DLSU's claim that the DST due on its mortgage and loan transactions were paid and remitted through its ba
DST Imprinting Machine.
We sustain the findings of the CTA. The Commissioner's argument lacks basis in both the Tax Code and the relevant revenue r
DST on documents, loan agreements, and papers shall be levied, collected and paid for by the person making, signing, issuing
payable by any party to the document, such that the payment and compliance by one shall mean the full settlement of the DS
In the present case, DLSU entered into mortgage and loan agreements with banks. These agreements are subject to DST.151 F
sufficient proof that DST has been paid. Thus, DLSU cannot be further assessed for deficiency DST on the said documents.
Finally, it is true that educational institutions are not included in the class of taxpayers who can pay and remit DST through th
loan transactions. RR No. 9-2000 expressly includes banks in the class of taxpayers that can use the On-Line Electronic DST Im
Thus, the Court sustains the finding of the CTA that DLSU proved the payment of the assessed DST deficiency, except for the
WHEREFORE, premises considered, we DENY the petition of the Commissioner of Internal Revenue in G.R. No. 196596 and A
reduced.
We also DENY both the petition of De La Salle University, Inc. in G.R. No. 198841 and the petition of the Commissioner of Int
income tax and VAT for taxable year 2003 is P343,576.70.
SO ORDERED. cralawlawlibra ry
Carpio, (Chairperson), and Del Castillo, JJ., concur.

Mendoza, J., on official leave.
Leonen, J., see Dissenting Opinion.
Endnotes:
1
The petitions are filed under Rule 45 of the Rules of Court in relation to Rule 16 of the Revised CTA Rules (A.M. No.
2
Id. at 34-70 (G.R. No. 196596).
3
Id. at 14-53 (G.R. No. 198841).
4
Id. at 9-43 (G.R. No. 198941).
5
Id. at 85. The date of the issuance of the LOA is not on record.
6
Id. at 4 (G.R. No. 196596). The PAN was issued by the SIR's Special Large Taxpayers Task Force on educational inst
7
Id. at 151-154.
8
Id. at 38 and 268.
9
Id. at 97-128.
10
Id. at 39 and 268-269.
11
Id. at 129-137.
12
Id. at 185-194.
13
Id. at 155-159, filed on May 18, 2010.
14
Id. at 302. DLSU quoted the June 9, 2010 resolution of the CTA Division, viz.:
"For resolution is [DLSU's] 'Supplemental Formal Offer of Evidence in Relation to the [CTA Division's] Resolution Date
15
Id. at 149-150.
16
Id. at 40.
17
Ateneo de Manila University v. Commissioner of Internal Revenue, CTA Case Nos. 7246 and 7293.
18
Rollo, p. 73 (G.R. No. 198841).
19
Id. at 77-96 (G.R. No. 196596), decision dated December 10, 2010.
20
Id. at 82-88.
21
Id. at 86.
22
Id. at 86-87.
23
Id. at 88-90.
24
Section 200 (D) of the Tax Code provides:
(D) Exception. - In lieu of the foregoing provisions of this Section, the tax may be paid either through purchase and a
Finance, upon recommendation of the Commissioner. [emphasis ours]
25
cralaw red Section 2.2 of RR No. 15-2001 provides that: "In lieu of constructive stamping, Section 200 (D) of the [Tax Code]
Rollo, pp. 91-94 (G.R. No. 196596).

26
27
Id. at 72-76.
28
Id. at 88-90 (G.R. No. 198841).
29
Id. at 75-79.
30
Id. at 80, citing Commissioner of Internal v. Sony Philippines, Inc., 649 Phil. 519 (2010).
31
Id. at 80.
32
Id. at 81.
33
Id. at 82.
34
These pertain to rental income from Alerey Inc., Zaide Food Corp., Capri International and MTO Bookstore. Id. at 85
35
Id. at 43-55 (G.R. No. 196596).
36
Id. at 48.
37
Id. at 50.
38
358 Phil. 562 (1998).
Rollo, p. 46 (G.R. No. 196596).

39
40
Id. at 51-55.
41
Id. at 50.
42
Id. at 55-56.
43
The Commissioner cites Section 4 of RR No. 9-2000 which states that the "on-line electronic DST imprinting machin
surety, fidelity, or annuity company; b) the Philippine Stock Exchange (in the case of shares of stock and other securi
Rollo, pp. 57-65 (G.R. No. 196596).

44
45
Id. at 65-66.
46
Id. at 14-16 (G.R. No. 198841).
47
Id. at 24, 30.
48
Id. at 25-26.
49
Id. at 41-48.
50
Id. at 34-48.
51
Id. at 9-43 (G.R. No. 198941).
52
Id. at 272-276 (G.R. No. 196596). DLSU claims that the Commissioner failed to state that the allegations in the pet
notes that a pleading required to be verified but lacks proper verification is treated as an unsigned pleading.
53
Id. at 276-279.
54
Id. at 279-285.
55
Id. at 282.
56
Id. at 286-289.
57
Id. at 287.
58
Id. at 290.
59
Id. at 291.
60
Id. at 283.
61
Id. at 296-301.
62
Id. at 297-298.
63
Id. at 301-302.
64
Id. at 192-197 (G.R. No. 198841).
65
Id. at 192-193.
66
Id. at 197-207.
67
Id. at 82-93 (G.R. No. 198941).
68
Id. at 89-90.
69
In Commissioner v. St. Luke's Medical Center, Inc., 695 Phil. 867, 885 (2012), the Court quoted Section 27 (B) of t
Rollo, p. 37 (G.R. No. 196596).

70
71
Previous cases construing the nature of the exemption of tax-exempt entities under Section 30 (then Section 27) o
real property taxation. See: YMCA, supra note 37, St. Luke's, supra note 68; Angeles University Foundation v. City of
Supra note 38.

72
73
Article VI, Section 28 (3) of the Constitution, provides: "Charitable institutions, churches and parsonages or conven
Supra note 38, at 579-580.

74
75
Id. at 575-578.
76
Id. at 581-582.
77
Id. at 580-581.
78
For purposes of construing Article XIV, Section 4 (3) of the Constitution, we treat income and revenues as synonym
personal..." (p. 1185) and income as "the return in money from one's business, labor, or capital invested; gains, profi
See Record of the Constitutional Commission No. 69, Volume IV, August 29, 1986.
79
See IV Record 401, 402, as cited by DLSU, Rollo, p. 283 (G.R. No. 196596). The following comments of the Constitu
80
MR. GASCON: ... There are many schools which are genuinely non-profit and non-stock but which may have been tax
tax exemption, we also assure the students of lower tuition fees. That is the intent.
COMM. NOLLEDO: ... So I think, what is important here is the philosophy behind the duty on the part of the State to e
exemption.
81
As the Constitution is not primarily a lawyer's document, its language should be understood in the sense that it ma
Black's Law Dictionary, Fifth Edition, defines "Revenues" as, "Return or yield, as of land; profit as that which returns
82
430, 19 A.2d 857, 860)
83
Section 32, Tax Code
84
Sections 106 and 108, Tax Code.
85
Section 143 cf. Section 131(n), Local Government Code.
Black's Law Dictionary, Fifth Edition, defines "Assets" as, "Property of all kinds, real and personal, tangible and intan
86
applicable or subject to the payment of his or his debts."
87
Section 208 cf. Sections 233 and 235, Local Government Code.
88
Section 107, Tax Code
89
Section 104, PD 1464, otherwise known as the Tariff and Customs Code of the Philippines.
90
245 Phil. 83 (1988).
91
Id. at 91-92.
92
Section 27 (B) further provides that the term unrelated trade, business or other activity means any trade, business
93
CONSTITUTION, Article VIII, Section 5 (2).
94
In Kida, et al. v. Senate of the Philippines, et al., 675 Phil. 316, 365-366 (2011), we held that the primacy of the C
changed by amendment or repeal through the applicable constitutional process.
95
Revenue Audit Memorandum Order No. 2-95.
Rollo, p. 79 (G.R. No. 198841). See Section 13 of the tax Code.

96
See the Taxpayers Bill of Rights at http://www.bir.gov.ph/index.P/taxpayer-bill-of-rights.html last accessed on June

97
98
Cited in Commissioner of Internal Revenue v. Sony Philippines, Inc., supra note 30, at 531.
99
Section 222, Tax Code.
100
Rollo, p. 78 (G.R. No. 198841).
101
Id. at 75-79.
102
Id. at 73-74.
103
Id. at 155-159 (G.R. No. 196596).
104
Asian Construction and Development Corp. v. COMFAC Corp., 535 Phil. 513, 517-518 (2006) citing Tison v. Court o
105
Id. citing Arwood Industries, Inc. v. D.M Consunji, Inc., G.R. No. 142277, December 11, 2002, 394 SCRA 11, 18.
106
Id. at 518.
107
Rollo, p. 302 (G.R. No. 196596), CTA Division Resolution dated June 9, 2010, quoted by DLSU.
108
Supra note 103.
109
386 Phil. 719 (2000).
110
Id. at 726.
111
See Section 8, Republic Act No. 1125, published in Official Gazette, S. No. 175 / 50 OG No. 8, 3458 (August, 1954)
112
Supra note 91, at 726.
113
556 Phil. 439 (2007).
114
579 Phil. 442 (2008).
115
Section 76 in relation to Section 229 of the Tax Code.
116
Commissioner of Internal Revenue v. Asian Transmission Corporation, 655 Phil. 186, 196 (2011).
117
Commissioner of Internal Revenue v. Toledo Power, Inc., G.R. No. 183880, January 20, 2014, 714 SCRA 276, 292,
118
Rollo, p. 143-144 (G.R. No. 196596).
119
Id. at 144 (G.R. No. 196596), the amount is rounded-off from P93,860,675.40.
120
Id. at 143 (G.R. No. 196596). Capital Fund - Capital Projects Account.
121
Id. at 144 (G.R. No. 196596).
122
Rule 3, Section 2 of the Revised Rules of the CTA, A.M. No. 05-11-07-CTA, November 22, 2005.
123
Rollo, pp. 86, 145 (G.R. No. 196596).
124
Id. at 81 (G.R. No. 198841).
125
Id. at 101, page 9 of CTA Division Amended Decision.
126
Id. at 98 (G.R. No. 198841).
127
Id. at 87. According to the CTA, the income earned from the lease of premises to MTO-Sports Complex and La Cas
obtained for the purpose of constructing the Sports Complex.
128
Id.
129
Id.
130
Id. at 86.
131
Id. at 85-86.
132
The tax base of P4,841,066.65 was computed as follows:
Rental inco
Less: Rent
Rental inco
Less: Subst
Tax base fo
133
The substantiated portion of CF-CPA disbursements amounting to P1,761,308.37 was computed as follows:
Rental income
Multiply by: R
Substantiated
134
The ratio of 26.68% was computed as follows:
Substantiated disburse
Divide by: Total disbur
Ratio
135
For brevity, the exact amount of P10,610,379.00 shall hereinafter be expressed as P10.61 million.
136
137
138
Supra note 130.
139
Rollo, pp. 82-83 (G.R. No. 198841). Ateneo was assessed deficiency income tax and VAT under Section 2.2 of DOF
140
Id. at 83 (G.R. No. 198841).
141
Id. at 83 (G.R. No. 198841).
142
See Ateneo case (CTA Case Nos. 7246 & 7293, March 11, 2010). Id. at 140-154 (G.R. No. 198841).
143
Id. at 145 (G.R. No. 198841).
144
Id. at 85-90 (G.R. No. 198841).
145
Id. at 47 (G.R. No. 198841).
146
Id.
147
Churchill v. Concepcion, 34 Phil. 969. 976 (1916); Eastern Theatrical Co. vs. Alfonso, 83 Phil. 852, 862 (1949); Aba
148
British American Tobacco v. Camacho, 603 Phil. 38, 48-49 (2009).
149
Commissioner of Internal Revenue v. Court of Appeals, 329 Phil. 987, 1010 (1996).
150
Section 173, Tax Code.
151
Sections 179 and 195, Tax Code.
Rollo, p. 89 (G.R. No. 198841).

152
I agree with the ponencia that Article IV, Section 4(3) of the 1987 Constitution grants tax exemption on all assets and all reve
taxpayer needs only to prove that the revenue is actually, directly, and exclusively used for educational purposes to be exemp
I disagree, however, on two (2) points:
First, Letter of Authority No. 2794, which covered the "Fiscal Year Ending 2003 and Unverified Prior Years," is void in its entire
Second, the Court of Tax Appeals erred in finding that only a portion of the rental income derived by De La Salle University, In
An audit process to which a particular taxpayer may be subjected begins when a letter of authority is issued by the Commissio
determine the taxpayer's correct internal revenue tax liabilities.1
In this regard, Revenue Audit Memorandum Order No. 1-00 provides that a letter of authority authorizes or empowers a desig
Revenue Membrandum Order No. 43-90, on policy guidelines for the audit/investigation and issuance of letters of authority to
C. Other policies for issuance of L/As.
1. All audits/investigations, whether field audit or office audit, should be conducted under a Letter of Au
2. The duplicate of each internal revenue tax which is specifically indicated in the L/A shall be attached
3. A Letter of Authority should cover a taxable period not exceeding one taxable year. The practice of is
....
4. Any re-assignment/transfer of cases to another RO(s), and revalidation of L/As which have already e
....
D. Preparation and issuance of L/As.
1. All L/As for cases selected and listed pursuant to RMO No. 36-90 to be audited in the revenue regions
2. The Regional Director shall prepare and sign the L/As for returns recommended by the RDO for assig
Assessment Branch, who in tum shall indicate the date of issue of the L/A prior to its issuance.
3. The L/As for investigation of taxpayers by National Office audit offices (including the audit division in
or the Commissioner. The L/As for investigation of taxpayer by the intelligence and Investigation Offi
4. For the proper monitoring and coordination of the issuance of Letter of Authority, the only BIR officia
but only upon prior authorization by the Commissioner himself. (Emphasis supplied)
Thus, under Revenue Memorandum Order No. 43-90, both the taxable period and the kind of tax must be specifically stated.
A much earlier Revenue Memorandum Order was even more explicit:

The Letter of Authority must be carefully pr pared and erasures shall be avoided as much as possible, particularly in t
phrases as "last five years," "1962 and up," "1962 and previous years" and all others of similar import shall not be all
The revenue officer so authorized must not go beyond the authority given; otherwise, the assessment or examination is a null
Here, Letter of Authority No. 2794,5 which was the basis of the Bureau of Internal Revenue to examine DLSU's books of accou
It is my view that the entire Letter of Authority No. 2794 should be struck down as void for being broad, indefinite, and uncert
period, it must specify all the periods or years covered.
The prescribed procedures under Revenue Memorandum Order No. 43-90, including the requirement of definitely specifying th
unreasonable delay in the investigation and processing of tax cases.6
Inasmuch as tax investigations entail an intrusion into a taxpayer's private affairs, which are protected and guaranteed by the
Letter of Authority No. 2794 effectively allowed the revenue officers to examine, verity, and scrutinize DLSU's books of accoun
As early as 1933, this Court in Sy Jong Chuy v. Reyes7 held that the extraordinary inquisitorial power conferred by law upon c
the use of "subpoena duces tecum" by internal revenue officers, its discussion is apropos:
The foregoing discussion will disclose that there are two factors involved in the correct solution of the question before
court or an internal revenue officer his private books and papers, is their relevancy; and the second fact which must b
Speaking to the fact of relevancy, there is absolutely no showing of the nature of any official investigation which is be
ground of irrelevancy, it is for the movant or the internal revenue officer to show facts sufficient to enable the court to
an investigation now pending under the Income Tax and Internal Revenue Laws." This is insufficient.
But it is in the second respect that the subpoena is most fatally defective. It will be recalled that it required the produ
they are needed in the business of the corporation. In the parlance of equity, the subpoena before us savored of a fish
unreasonably broad in scope. The internal revenue officer had it within his power to examine any or all of the books o
understood and sufficiently reasonable not to interfere with the ordinary course of business. But this method was not
1929, and for the books of the current year, and if this could be done, the intrusion into private affairs with disastrous
This Court held that the subpoena duces tecum issued by a special deputy of the Collector of Internal Revenue, which comman
further held that the subpoena was not properly issued because the Collector failed to show the relevance of the Chinese book
Generally speaking, there are two readily understandable points of view of the question at issue. The first is the viewp
burden. To accomplish their duty it will often be incumbent upon the internal revenue officers, for the efficient admini
[these] we are the first to concede. In proper cases, the officers of the Bureau of Internal Revenue should receive the
specifies with the particularity required by law the books which are to be produced.
The second viewpoint is not that of the government on which is imposed the duty to collect taxes, but is the viewpoin
offices of the government for inspection. To permit that would be to place a weapon in the hands of a miscellaneous n
law have done so by throwing around him a wall which makes his home and his private papers his castle. It should be
Answering the question at issue, we do so without vacillation by holding that the subpoena duces tecum was not prop
because a ruling should be avoided which in any manner appears to sanction an unreasonable search and seizure. In
books, will be sustained. The courts function to protect the individual citizen of whatever class or nationality against a
If we were to uphold the validity of a letter of authority covering a base year plus unverified prior years, we would in essence
in the discharge of their tasks. There is nothing more devious than the scenario where government ignores as much its own ru
In Viduya v. Berdiago:10
It is not for this Court to do less than it can to implement and enforce the mandates of the customs and revenue laws
The inevitability and indispensability of taxation is conceded. Under the law, the Bureau of Internal Revenue has access to all
officers must strictly comply with the requirements of the law and its own rules,14 with due regard to taxpayers' constitutional
There is nothing in the law-nor do I see any great difficulty-that could have prevented the Commissioner from cancelling Lette
DLSU is not liable for deficiency income tax and value-added tax.
The following facts were established:
(1) DLSU derived its

income from its
lease contracts for
canteen and
bookstore services
with the following
concessionaires:
i. Alarey, Inc.
ii. Capri International, Inc.
iii. Zaide Food Corporation
iv. La Casita Roja
v. MTO International Product Mobilizer, Inc.
(2) The rental income from the concessionaires was added to the Depository Fund - PE
(3) DLSU's rental income from MTO- PE Sports Complex and La Casita, which was trans
for educational purposes.15
(4) DLSU's rental income from Alarey, Inc., Zaide Food Corporation, Capri Internationa
These facts were supported by the findings of the Court commissioned independent CPA (ICPA), Atty. Raymund S. Gallardo of
From the journal vouchers/official receipts, we have traced that the income received from Alarey, Capri, MTO-Booksto
LL-3-A, LL-3-B and LL-3-C).
On the other hand, we have traced that the rental income received from MTO-PE Sports and La Casita [was] tempora
fiscal year 2002, the rental income from the said lessees was directly recorded under the DF-PE Sports account (Exhib
With regard to the disbursements from the CF-CPA Fund, the ICPA examined DLSU's disbursement vouchers as well as subsid
Nature of Ex
Building Improvement
Furniture, Fixtures & E
Air conditioner
Computer Equipment
Total per subsidiary
Building Improvement
Furniture, Fixtures & E
Air conditioner
Computer Equipment
Total per disbursem
Difference
Based on the subsidiary ledger (Exhibits "LL-29-A, LL-29-B and LL-29-C"), total expenses under the CF-CPA amounted to P14
not available. It was represented by the management that such amounts were strictly spent for renovation. However, due to t
Hence, in its Decision dated January 5, 2010, the Court of Tax Appeals First Division upheld the Commissioner's assessment o
and Capri were indeed used for educational purposes."21
DLSU moved for reconsideration. Subsequently, it formally offered to the Court of Tax Appeals First Division, among others,22
1) Summary Schedule to Support Misplaced Vou
2) Schedule of Disbursement Vouchers Examine
These pieces of evidence were admitted by the Court of Tax Appeals in its Resolution dated June 9, 2010.27
DLSU's controller, Francisco C. De La Cruz, Jr. testified:

Q9: Please tell us the relevance of Exhibit "XX".

A9: Exhibit "XX" provides an overview of what accounts do those inadv
software of Petitioner.
Q10: Please tell us the relevance of Exhibits "YY", "ZZ" and "AAA".
A10: These are the details of the accounts pertaining to the inadvertent
from Petitioner's accounting software.
These details include the Charge Account, the Classification of Exp

Voucher Date, the Check Number, the Check Date, the Cost, and t
The specifics which accompany the entries were all taken from the
Exhibit "YY" pertains to the details of the accounts for Fiscal Year
Samples of the information provided in these pieces of evidence are as follows:
a. For Fiscal Year Ended May 31,2001 (Exhibit YY)
Charge Account Classification of Cost Center per

Expense per Chart of Chart of Accounts of
Account of the the University
University
100-213-940 Furniture, Fixture and PFO Capital Projects

Equipment
b. For Fiscal Year Ended May 31, 2002 (Exhibit ZZ)

University
100-213-943 Airconditioner PFO Capital Projects

c. For Fiscal Year Ended May 31, 2003 (Exhibit AAA)

University
100-026-950 COMPUTER PRINTER VC Academics

C
However, the Court of Tax Appeals First Division was unconvinced. It simply stated that DLSU failed to sufficiently account for
discussing the probative value or weight of these additional pieces of evidence.32 Thus:
With regard the unsubstantiated disbursements from the CF-CPA, Petitioner alleged that the supporting documents w
software.
The Court is not convinced.
According to ICPA's findings, the petitioner was able to show only the disbursements from the CF-CPA amounting to P
The Court of Tax Appeals First Division concluded that only the portion of the rental income pertaining to the substantiated dis
ledgers to the total rental income, thus:
Using the amounts determined for the Fiscal Year 2003,
P6,259
---------
P23,463
Hence, for 2003, the portion of the rental income that was not sufficiently proven to have been used for educational purposes
On appeal, the Court of Tax Appeals En Banc simply ruled that "petitioner again failed to fully account for and substantiate all
P6,259,078.30."36 However, these findings of the ICPA were made when Exhibits "XX," "YY," "ZZ," and "AAA" had not yet been
discussion on the probative value or weight of these additional exhibits.
As a rule, factual findings of the Court of Tax Appeals are entitled to the highest respect and will not be disturbed on appeal. S
judgment is premised on a misapprehension of facts;38 or (3) when the tax court failed to notice certain relevant facts that, if
The Court of Tax Appeals should have considered the additional pieces of evidence, which have been duly admitted and forme
In Edwards v. McCoy:41
[T]he object of a hearing is as much to have evidence considered as it is to present it. The right to adduce evidence, w
In Ang Tibay v. Court of Industrial Relations,43 this Court similarly ruled that "not only must the party be given an opportunity
The Rules of Court allows the presentation of secondary evidence:

....
Section 5. When original document is unavailable. - When the original document has been lost or destroyed, or canno
or by the testimony of witnesses in the order stated. ChanRobles Virtualawl ibra ry
For secondary evidence to be admissible, there must be satisfactory proof of: (a) the execution and existence of the original;
affirmed of these pieces of evidence presupposes that all three prerequisites have been established by DLSU, that is, that DLS
There can be no just determination of the present action if we ignore Exhibits "XX," "YY," "ZZ," and "AAA," which were submit
Vouchers from DLSU's accounting software. The Commissioner did not dispute the veracity or correctness of the detailed entri
of these exhibits shows that the disbursements from the CF-CPA Account were used for educational purposes.
These additional pieces of evidence, taken together with the findings of the ICPA, corroborate the findings of the Court of Tax
Petitioner's Controller, Mr. Francisco De La Cruz, stated the following in his judicial affidavit:
Q: You mentioned that one of your functions as Controller is to ensure that [petitioner]'s utilization of income
A: Of particular importance are the following:
1. [Petitioner] has a long-standing policy to obtain funding for all disbursements for ed
2. In funding all disbursements for educational purposes, [petitioner] first exhausts its
3. [Petitioner] extends regular financial assistance by way of grants, donations, dole-ou
The evaluation of petitioner's audited financial statements for the years 2001, 2002, and 2003 shows that it uses fund
2.6 Fund Accounting
To ensure observance of limitations and restrictions placed on the use of resources available to the [Petitione
into funds that are in accordance with specified activities and objectives. Separate accounts are maintained fo
group.47ChanRobles Vi rtua lawlib rary
ACCORDINGLY, I vote to GRANT the Petition of De La Salle University, Inc. and to SET ASIDE the deficiency assessments i
Endnotes:
1
TAX CODE, sec. 13 provides:
Section 13. Authority of a Revenue Officer. - Subject to the rules and regulations to be prescribed by the Secretary of
within the jurisdiction of the district in order to collect the correct amount of tax, or to recommend the assessment of
2
Revenue Audit Memorandum Order No. 1-00 (2000), VIII (C)(2.2) provides:
2.2 A Letter of Authority authorizes or empowers a designated Revenue Officer to examine, verify and scrutm1ze a ta
3
Revenue Memorandum Order No. 2-67 (1967), Amendment to Field Circular No. V-157 as amended by RMC No. 22-
4
Commissioner of Internal Revenue v. Sony Philippines, Inc., 649 Phil. 519, 530 (2010) [Per J. Mendoza, Second Divis
5
Per Decision, the date of the issuance is not on record.
6
See Revenue Memorandum Circular No. 04-81, Guidelines in the Proper Enforcement of Tax Laws (July 8, 1980).
7
59 Phil. 244 (1933) [Per J. Malcolm, En Banc].
8
Id. at 257-259.
9
Id. at 259-260.
10
165 Phil. 533 (1976) [Per J. Fernando, Second Division).
11
Id. at 542.
12
TAX CODE, sec. 5; Commissioner of Internal Revenue v. Hantex Trading Co., Inc., 494 Phil. 306 (2005) [Per J. Call
Commissioner of Internal Revenue v. United Salvage and Towage (Phils.), Inc., 738 Phil. 335, 353 (2014) [Per J. Pe
13
Commissioner of Internal Revenue v. Metro Star Superama, Inc., 652 Phil. 172, 184 (2010) [Per J. Mendoza, Secon
14
Rollo (G.R. No. 196596), pp. 143-144, CTA En Banc Decision dated July 29, 2010.
15
16
Id. at 144.
17
Id. at 119, CTA Decision dated January 5, 2010.
18
Id. at 122.
Rollo (G.R. No. 198841), p. 46.

19
20
Id. at 132.
21
Id.
Rollo (G.R. No. 196596), pp. 140, 142-144. The other documents offered were: Statement of Receipts, Disbursemen
22
23
Id. at 166.
24
Id. at 167-169.
25
cralaw red Id. at 170-172.
26
Id. at 174-179.
27
Id. at 140.
28
Id. at 183, Judicial Affidavit of witness Francisco C. De La Cruz, Jr. dated 15 April 2010.
29
Id. at 169.
30
Id. at 172.
31
Id. at 179.
32
Id. at 145.
33
Id.
34
Id.
Rollo (G.R. No. 198841), p. 86.

35
36
Id.
Commissioner of Internal Revenue v. Mitsubishi Metal Corp., 260 Phil. 224, 235 (1990) [Per J. Regalado, Second Div
37
Miguel J. Ossorio Pension Foundation, Inc. v. Court of Appeals, 635 Phil. 573, 585 (2010) [Per J. Carpio, Second Div
38
BPI-Family Savings Bank, Inc. v. Court of Appeals, 386 Phil. 719, 727 (2000) [Per J. Panganiban, Third Division].
39
See Ginete v. Court of Appeals, 351 Phil. 36, 56 (1998) [Per J. Romero, Third Division].
40
41
22 Phil. 598 (1912) [Per J. Moreland, First Division].
42
Id. at 600-601.
43
69 Phil. 635 (1940) [Per J. Laurel, En Banc].
44
Id. at 642.
Rollo (G.R. No. 196596), p. 91.

45
46
Id.
Rollo (G.R. No. 198841), pp. 127-128.

47
SECOND DIVISION
March 8, 2017
G.R. No. 215383
HON. KIM S. JACINTO-HENARES, in her official capacity as COMMISSIONER OF THE

BUREAU OF INTERNAL REVENUE, Petitioner
vs
ST. PAUL COLLEGE OF MAKATI, Respondent
RESOLUTION
CARPIO, J.:
The Case
This petition for review1 assails the Decision dated 25 July 20142 and Joint Resolution dated 29
October 20143 of the Regional Trial Court, Branch 143, Makati City (RTC), in Civil Case No. 13-
1405, declaring Revenue Memorandum Order (RMO) No. 20-2013 unconstitutional.
The Facts
On 22 July 2013, petitioner Kim S. Jacinto-Henares, acting in her capacity as then Commissioner of
Internal Revenue (CIR), issued RMO No. 20-2013, "Prescribing the Policies and Guidelines in the
Issuance of Tax Exemption Rulings to Qualified Non-Stock, Non-Profit Corporations and
Associations under Section 30 of the National Internal Revenue Code of 1997, as Amended."
On 29 November 2013, respondent St. Paul College of Makati (SPCM), a non-stock, non-profit
educational institution organized and existing under Philippine laws, filed a Civil Action to Declare
Unconstitutional [Bureau of Internal Revenue] RMO No. 20-2013 with Prayer for Issuance of
Temporary Restraining Order and Writ of Preliminary Injunction4 before the RTC. SPCM alleged that
"RMO No. 20-2013 imposes as a prerequisite to the enjoyment by non-stock, non-profit educational
institutions of the privilege of tax exemption under Sec. 4(3) of Article XIV of the Constitution both a
registration and approval requirement, i.e., that they submit an application for tax exemption to the
BIR subject to approval by CIR in the form of a Tax[]Exemption Ruling (TER) which is valid for a
period of [three] years and subject to renewal."5 According to SPCM, RMO No. 20-2013 adds a
prerequisite to the requirement under Department of Finance Order No. 137-87,6 and makes failure
to file an annual information return a ground for a non-stock, nonprofit educational institution to
"automatically lose its income tax-exempt status."7
In a Resolution dated 27 December 2013,8 the RTC issued a temporary restraining order against the
implementation of RMO No. 20- 2013. It found that failure of SPCM to comply with RMO No. 20-
2013 would necessarily result to losing its tax-exempt status and cause irreparable injury.
In a Resolution dated 22 January 2014,9 the RTC granted the writ of preliminary injunction after
finding that RMO No. 20-2013 appears to divest non-stock, non-profit educational institutions of their
tax exemption privilege. Thereafter, the RTC denied the CIR's motion for reconsideration. On 29
April 2014, SPCM filed a Motion for Judgment on the Pleadings under Rule 34 of the Rules of Court.
The Ruling of the RTC
In a Decision dated 25 July 2014, the RTC ruled in favor of SPCM and declared RMO No. 20-2013
unconstitutional. It held that "by imposing the x x x [prerequisites alleged by SPCM,] and if not
1âwphi1
complied with by nonstock, non-profit educational institutions, [RMO No. 20-2013 serves] as
diminution of the constitutional privilege, which even Congress cannot diminish by legislation, and
thus more so by the [CIR] who merely exercise[s] quasi-legislative function."10
The dispositive portion of the Decision reads:
WHEREFORE, in view of all the foregoing, the Court hereby declares BIR RMO No.
20-2013 as UNCONSTITUTIONAL for being violative of Article XIV, Section 4,
paragraph 3. Consequently, all Revenue Memorandum Orders subsequently issued
to implement BIR RMO No. 20-2013 are declared null and void.
The writ of preliminary injunction issued on 03 February 2014 is hereby made

permanent.
SO ORDERED.11
On 18 September 2014, the CIR issued RMO No. 34-2014,12 which clarified certain provisions of
RMO No. 20-2013, as amended by RMO No. 28-2013.13
In a Joint Resolution dated 29 October 2014, the RTC denied the CIR's motion for reconsideration,
to wit:
WHEREFORE, viewed in the light of the foregoing premises, the Motion for
Reconsideration filed by the respondent is hereby DENIED for lack of merit.
Meanwhile, this Court clarifies that the phrase "Revenue Memorandum Order"
referred to in the second sentence of its decision dated July 25, 2014 refers to
"issuance/s" of the respondent which tends to implement RMO 20-2013 for if it is
otherwise, said decision would be useless and would be rendered nugatory.
SO ORDERED.14
Hence, this present petition.

The Issues
The CIR raises the following issues for resolution:
WHETHER THE TRIAL COURT CORRECTLY CONCLUDED THAT RMO [NO.] 20-
2013 IMPOSES A PREREQUISITE BEFORE A NONSTOCK, NON-PROFIT
EDUCATIONAL INSTITUTION MAY AVAIL OF THE TAX EXEMPTION UNDER
SECTION 4(3), ARTICLE XIV OF THE CONSTITUTION.
WHETHER THE TRIAL COURT CORRECTLY CONCLUDED THAT RMO NO. 20-
2013 ADDS TO THE REQUIREMENT UNDER DEPARTMENT OF FINANCE
ORDER NO. 137-87.15
The Ruline of the Court
We deny the petition on the ground of mootness.
We take judicial notice that on 25 July 2016, the present CIR Caesar R. Dulay issued RMO No. 44-
2016, which provides that:
SUBJECT: Amending Revenue Memorandum Order No. 20- 2013, as amended

(Prescribing the Policies and Guidelines in the Issuance of Tax Exemption Rulings to
Qualified Non-Stock, Non-Profit Corporations and Associations under Section 30 of
the National Internal Revenue Code of 1997, as Amended)
In line with the Bureau's commitment to put in proper context the nature and tax status of non-profit,
non-stock educational institutions, this Order is being issued to exclude non-stock, non-profit
educational institutions from the coverage of Revenue Memorandum Order No. 20-2013, as
amended.
SECTION 1. Nature of Tax Exemption. --- The tax exemption of non-stock, non-profit educational
institutions is directly conferred by paragraph 3, Section 4, Article XIV of the 1987 Constitution, the
pertinent portion of which reads:
"All revenues and assets of non-stock, non-profit educational institutions used

actually, directly and exclusively (or educational purposes shall be exempt from taxes
and duties."
This constitutional exemption is reiterated in Section 30 (H) of the 1997 Tax Code, as amended,
which provides as follows:
"Sec. 30. Exempt from Tax on Corporations. - The following organizations shall not
be taxed under this Title in respect to income received by them as such:
xxx xxx xxx
(H) A non-stock and non-profit educational institution; x x x."
It is clear and unmistakable from the aforequoted constitutional provision that non-
stock, non-profit educational institutions are constitutionally exempt from tax on all
revenues derived in pursuance of its purpose as an educational institution and used
actually, directly and exclusively for educational purposes. This constitutional
exemption gives the non-stock, non-profit educational institutions a distinct character.
And for the constitutional exemption to be enjoyed, jurisprudence and tax rulings
affirm the doctrinal rule that there are only two requisites: (1) The school must be
non-stock and non-profit; and (2) The income is actually, directly and exclusively
used for educational purposes. There are no other conditions and limitations.
In this light, the constitutional conferral of tax exemption upon non-stock and non-
profit educational institutions should not be implemented or interpreted in such a
manner that will defeat or diminish the intent and language of the Constitution.
SECTION 2. Application for Tax Exemption. --- Non-stock, nonprofit educational

institutions shall file their respective Applications for Tax Exemption with the Office of
the Assistant Commissioner, Legal Service, Attention: Law Division.
SECTION 3. Documentary Requirements. --- The non-stock, nonprofit educational

institution shall submit the following documents:
a. Original copy of the application letter for issuance of Tax

Exemption Ruling;
b. Certified true copy of the Certificate of Good Standing issued by

the Securities and Exchange Commission;
c. Original copy of the Certification under Oath of the Treasurer as to

the amount of the income, compensation, salaries or any emoluments
paid to its trustees, officers and other executive officers;
d. Certified true copy of the Financial Statements of the corporation

for the last three (3) years;
e. Certified true copy of government recognition/permit/accreditation

to operate as an educational institution issued by the Commission on
Higher Education (CHED), Department of Education (DepEd), or
Technical Education and Skills Development Authority (TESDA);
Provided, that if the government recognition/permit/accreditation to
operate as an educational institution was issued five (5) years prior to
the application for tax exemption, an original copy of a current
Certificate of Operation/Good Standing, or other equivalent document
issued by the appropriate government agency (i.e., CHED, DepEd, or
TESDA) shall be submitted as proof that the non-stock and non-profit
education is currently operating as such; and
f. Original copy of the Certificate of utilization of annual revenues and

assets by the Treasurer or his equivalent of the non-stock and
nonprofit educational institution.
SECTION 4. Request for Additional Documents. --- In the course of review of the
application for tax exemption, the Bureau may require additional information or
documents as the circumstances may warrant.
SECTION 5. Validity of the Tax Exemption Ruling. --- Tax Exemption Rulings or
Certificates of Tax Exemption of non-stock, nonprofit educational institutions shall
remain valid and effective, unless recalled for valid grounds. They are not required to
renew or revalidate the Tax exemption rulings previously issued to them.
The Tax Exemption Ruling shall be subject to revocation if there are material
changes in the character, purpose or method of operation of the corporation which
are inconsistent with the basis for its income tax exemption.
SECTION 6. Transitory Provisions. --- To update the records of the Bureau and for
purposes of a better system of monitoring, non-stock, nonprofit educational
institutions with Tax Exemption Rulings or Certificates of Exemption issued prior to
June 30, 2012 are required to apply for new Tax Exemption Rulings.
SECTION 7. Repealing Clause. --- Any revenue issuance which is inconsistent with
this Order is deemed revoked, repealed, or modified accordingly.
SECTION 8. Effectivity. --- This Order shall take effect immediately. (Emphases
supplied)
A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that an adjudication of the case or a declaration on the issue would be of no
practical value or use.16 Courts generally decline jurisdiction over such case or dismiss it on the
ground of mootness.17
With the issuance of RMO No. 44-2016, a supervening event has transpired that rendered this
petition moot and academic, and subject to denial. The CIR, in her petition, assails the RTC
1âwphi 1
Decision finding RMO No. 20-2013 unconstitutional because it violated the non-stock, non-
profit educational institutions' tax exemption privilege under the Constitution. However,
subsequently, RMO No. 44-2016 clarified that non-stock, nonprofit educational institutions are
excluded from the coverage of RMO No. 20-2013. Consequently, the RTC Decision no longer
stands, and there is no longer any practical value in resolving the issues raised in this petition.
WHEREFORE, we DENY the petition on the ground of mootness. We SET ASIDE the Decision
dated 25 July 2014 and Joint Resolution dated 29 October 2014 of the Regional Trial Court, Branch
143, Makati City, declaring Revenue Memorandum Order No. 20-2013 unconstitutional. The writ of
preliminary injunction is superseded by this Resolution.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
DIOSDADO M. PERALTA
Associate Justice
JOSE CATRAL MENDOZA BIENVENIDO L. REYES*

Associate Justice Associate Justice
MARVIC M.V.F. LEONEN
Associate Justice
ATTESTATION
I attest that the conclusions in the above Resolution had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Resolution had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.
MARIA LOURDES P.A. SERENO

Chief Justice
Footnotes
*
Designated Fifth Member per Special Order No. 2416-BB dated 4 January 2017.
1
Rollo, pp. 11-50. Under Rule 45 of the 1997 Rules of Civil Procedure.
2
Id. at 58-61. Penned by Presiding Judge Maximo M. De Leon.
3
Id. at 62-66.
4
Id. at 85-100.
5
Id. at 87. RMO No. 20-2013, Section 10 states: "Tax Exemption Rulings may be renewed
upon filing of a subsequent Application for Tax Exemption/Revalidation, under same
requirements and procedures provided herein. Otherwise, the exemption shall be deemed
revoked upon the expiration of the Tax Exemption Ruling. The new Tax Exemption Ruling
shall be valid for another period of three (3) years, unless sooner revoked or cancelled."
6
Rules and Regulations Implementing Section 4(3), Article XIV of the New Constitution.
Dated 16 December 1987.
7
RMO No. 20-2013, Section 11 states: "lfa corporation or association which has been issued
a Tax Exemption Ruling fails to file its annual information return, it shall automatically lose its
income tax-exempt status beginning the taxable year for which it failed to file an annual
information return, in addition to the sanctions imposed under Section 250 of the NIRC, as
amended."
8
Rollo, pp. 110-112.
9
Id. at 113-115.
10
Id. at 61.
11
Id.
12
"Clarifying Certain Provisions of Revenue Memorandum Order (RMO) No. 20-2013, as
amended by RMO No. 28-2013, on the issuance of Tax Exemption Rulings for Qualified
Non-Stock, Non-Profit Corporations and Associations under Section 30 of the National
Internal Revenue Code of 1997, as amended."
13
RMO No. 28-2013 (dated 29 October 2013) amends Section 10 of RMO No. 20-2013 as
follows: "SEC. 10. Tax Exemption Rulings may be renewed upon filing of a subsequent
Application for Tax Exemption/Revalidation, under same requirements and procedures
provided herein. Failure to renew the Tax Exemption Ruling shall be deemed revocation
thereof upon the expiration of the three (3)-year period. The new Tax Exemption Ruling shall
be valid for another period of three (3) years, unless sooner revoked or cancelled."
14
Rollo, p. 66.
15
Id. at 30.
16
Timbol v. Commission on Elections, 751 Phil. 456 (2015); Carpio v. Court of Appeals, 705
Phil. 153 (2013), citing Osmena III v. Social Security System of the Philippines, 559 Phil. 723
(2007); Abdul v. Sandiganbayan, 722 Phil. 485 (2013).
Carpio v. Court of Appeals, 705 Phil. 153 (2013), citing Osmei'ia Ill v. Social Security
17
System of the Philippines, 559 Phil. 723 (2007).

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FIRST DIVISION

ANGELES UNIVERSITY G.R. No. 189999

VILLARAMA, JR., J.:

The factual antecedents:

Petitioner Angeles University Foundation (AUF) is an educational institution

In separate letters dated November 15, 2005 addressed to respondents City

Respondent City Treasurer referred the matter to the Bureau of Local

Consequently, petitioner paid under protest[9] the following:

Building Permit and Electrical Fee P 217,475.20

School Building (renovation)

Building Permit and Electrical Fee P 37,857.20

a. Plaintiff is exempt from the payment of building permit and other

b. Finding the Defendants liable for attorneys fees in the amount of

c. Ordering the Defendants to pay the costs of the suit.

Hence, this petition raising the following grounds:

I. IN REVERSING THE TRIAL COURTS DECISION DATED 21 SEPTEMBER

A. INDEED, RA 6055 REMAINS VALID AND IS IN FULL FORCE AND

B. THE COURT OF APPEALS APPLICATION OF THE PRINCIPLE

C. EVEN ASSUMING THAT THE BUILDING PERMIT AND OTHER

II. THE COURT OF APPEALS DENIAL OF PETITIONER AUFS EXEMPTION

Section 103. Scope and Application

Section 301. Building Permits

No person, firm or corporation, including any agency orinstrumentality of

That a building permit fee is a regulatory imposition is highlighted by the fact

As to petitioners argument that the building permit fees collected by

Petitioner failed to demonstrate that the above bases of assessment were

In Chevron Philippines, Inc. v. Bases Conversion Development

The conservative and pivotal distinction between these two

Concededly, in the case of building permit fees imposed by the National

Subject to existing budgetary, accounting and auditing rules and

Petitioners reliance on Sec. 193 of the Local Government Code of 1991 is

Section 28(3), Article VI of the 1987 Constitution provides:

(3) Charitable institutions, churches and parsonages or convents

Section 234(b) of the Local Government Code of 1991 implements the

MARTIN S. VILLARAMA, JR.

LUCAS P. BERSAMIN JOSE PORTUGAL PEREZ

TERESITA J. LEONARDO-DE CASTRO

[G.R. No. 124043. October 14, 1998]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. COURT OF

1980 Deficiency Fixed Tax P353,15;

While the following assessments are hereby sustained:

WHEREFORE, the appealed decision is hereby REVERSED in so far as it dismissed

1980 Deficiency Income Tax P 353.15

but the same is AFFIRMED in all other respect.[7]

The Petition is meritorious.

Notwithstanding the provision in the preceding paragraphs, the income of whatever

Cases Cited by Private

Before the Court are consolidated petitions for review on certiorari:1

(3) All revenues and assets of non-stock,

SO ORDERED.9 ChanRoblesVirtualawl ibra ry

CTA En Banc Case No. 622

Tax on rental income

DST on loan and mortgage transactions

Admissibility of DLSU's supplemental evidence

CTA En Banc Case No. 671

On the validity of the Letter of Authority

On the applicability of the Ateneo case

On the CTA Division's appreciation of the evidence

G.R. No. 196596

The Commissioner submits the following arguments:

G.R. No. 198841

DLSU argues as that:

DLSU's Comment on G.R. No. 196596