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La Sallian Educational Innovators Foundation vs. CIR
G.R. No. 202792, February 27, 2019

FACTS:
The Commissioner of Internal Revenue (CIR) assessed petitioner La Sallian Educational Innovators Foundation, Inc. (De La Salle University-College of St. Benilde Foundation) with deficiency income and value-added taxes on the ground that the foundation, a non-stock non-profit entity was actually a profit-oriented organization because it collected expensive tuition fees from its students and that seventy percent (70%) of the foundation’s earning went to administrative purposes.

ISSUE:
Whether or not petitioner is no longer tax-exempt.

RULING:
The Court held that the taxpayer is still tax-exempt as it falls under the classification of non stock, non-profit educational institution and the income it seeks to be exempted from taxation is used actually, directly and exclusively for educational purposes. Petitioner fulfilled these requirements: its articles of incorporation provides its principal purpose; its capital is not divided into shares; no part of its income was distributed to its members, trustees and officer; and the member of the board do not receive any compensation for the performance of their duties, including attendance in meetings.

Tax privilege granted by the Constitution itself to non-stock non-profit educational institution is necessary to promote quality and affordable education in the country. A profit on the part of an educational institution will ensure liquidity on the part of the institution and will ensure that they have enough resources to improve and develop quality education. The tax exemption will redound to the benefit of the students, without tax exemption students will be charged unreasonable tuition fees.

Full Text: La Sallian Educational Innovators Foundation vs. CIR G.R. No. 202792, February 27, 2019