the 1987 Constitution expressly exempt all revenues and assets of non-stock, non-profit educational institutions from taxes provided that they are actually, directly and exclusively used for educational purposes

No less than the 1987 Constitution expressly exempt all revenues and assets of non-stock, non-profit educational institutions from taxes provided that they are actually, directly and exclusively used for educational purposes, to wit:^[42]

Section 4.(1) The State recognizes the complementary roles of public and private institutions in the educational system and shall exercise reasonable supervision and regulation of all educational institutions.

x x x x
(3) 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.(Emphasis and underscoring supplied)

This constitutional exemption is reiterated in Section 30 (H) of the 1997 Tax Code, as amended, which provides as follows:

Sec. 30. Exemptions from Tax on Corporations. - The following organizations shall not be taxed under this Title in respect to income received by them as such:

x x x x
(H) A non[-]stock and non[-]profit educational institution[.]

Clearly, non-stock, non-profit educational institutions are not required to pay taxes on all their revenues and assets if they are used actually, directly and exclusively for educational purposes.

According to the BIR, petitioner Foundation has failed to comply with the constitutional requirements for being a profit-oriented educational institution. Hence, it is no longer a tax-exempt entity, and is subject to a 10% income tax rate as a taxable proprietary educational institution.^[43]

The Court disagrees.

Petitioner Foundation has presented adequate legal and factual basis to prove that it remains as a tax exempt entity under Article XIV, Section 4, Paragraph 3 of the 1987 Constitution.

Based on jurisprudence and tax rulings, a taxpayer shall be granted with this tax exemption after proving that: (1) it falls under the classification of 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.^[44]

[ G.R. No. 202792, February 27, 2019 ]

LA SALLIAN EDUCATIONAL INNOVATORS FOUNDATION (DE LA SALLE UNIVERSITY-COLLEGE OF ST. BENILDE) INC., PETITIONER, VS. COMMISIONER OF INTERNAL REVENUE, RESPONDENT.