Case Digest (G.R. No. 215383)
Facts:
Hon. Kim S. Jacinto-Henares, in Her Official Capacity as Commissioner of the Bureau of Internal Revenue v. St. Paul College of Makati, G.R. No. 215383, March 08, 2017, Supreme Court Second Division, Carpio, J., writing for the Court.
Petitioner is Kim S. Jacinto-Henares in her official capacity as Commissioner of Internal Revenue (CIR); respondent is St. Paul College of Makati (SPCM), a non-stock, non-profit educational institution. The petition for review was filed under Rule 45 of the Rules of Court.
On 22 July 2013 the then-CIR issued Revenue Memorandum Order (RMO) No. 20-2013 prescribing policies and guidelines for issuance of Tax Exemption Rulings to qualified non-stock, non-profit corporations and associations under Section 30 of the National Internal Revenue Code (NIRC) of 1997, as amended. RMO No. 20-2013 (as later amended by RMO No. 28-2013) required, among other things, application and approval by the BIR for a Tax Exemption Ruling, prescribed documentary requirements, set three-year validity and renewal mechanics for rulings, and provided that failure to file annual information returns could result in automatic loss of income tax-exempt status.
On 29 November 2013, SPCM filed a civil action before the Regional Trial Court (RTC), Branch 143, Makati City, seeking to declare RMO No. 20-2013 unconstitutional and praying for temporary restraining order (TRO) and preliminary injunction. SPCM alleged that RMO No. 20-2013 imposed registration and approval prerequisites and an automatic forfeiture of constitutional tax-exempt status, adding requirements beyond those in Department of Finance Order No. 137-87 (Rules and Regulations Implementing Section 4(3), Article XIV of the 1987 Constitution).
The RTC granted a TRO on 27 December 2013 and, on 22 January 2014, issued a writ of preliminary injunction, finding that RMO No. 20-2013 appeared to divest non-stock, non-profit educational institutions of their constitutional tax exemption; the RTC denied the CIR’s motion for reconsideration. On 25 July 2014 the RTC rendered a Decision declaring RMO No. 20-2013 unconstitutional and made permanent the preliminary injunction; the RTC’s dispositive portion declared RMO No. 20-2013 unconstitutional under Article XIV, Section 4(3) of the Constitution and nullified subsequent RMOs implementing it.
The CIR moved for reconsideration which the RTC denied in a Joint Resolution dated 29 October 2014. Meanwhile, the CIR issued RMO No. 34-2014 (18 September 2014) clarifying certain provisions of RMO No. 20-2013, as amended.
Petitioner brought this Rule 45 petition assailing the RTC Decision and Joint Resolution. While the petition was pending, the current CIR, Caesar R. Dulay, issued RMO No. 44-2016 (25 July 2016), expressly excluding non-stock, non-profit educational institutions from the coverage of RMO No. 20-2013, reiterating that the constitutional exemption is confin...(Pro-only)
Issues:
- Is the petition moot and academic in view of the issuance of RMO No. 44-2016 which excludes non-stock, non-profit educational institutions from the coverage of RMO No. 20-2013?
- Whether the trial court correctly concluded that RMO No. 20-2013 imposes a prerequisite before a non-stock, 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 requirements under ...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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