Non-profit kasi: SC sets aside P122M tax against Benilde

The Supreme Court (SC) has set aside the government’s P122.4-million tax assessment against De La Salle College of Saint Benilde (DLS-CSB) on the ground that it is a non-stock, non-profit educational institution.

In a recent decision, the SC reversed the Court of Tax Appeals’ (CTA) April 19, 2012 ruling that upheld the Bureau of Internal Revenue’s (BIR) tax assessment for the year 2002.

Article XIV, Section 4 of the 1987 Constitution
provides that “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.”

The BIR argued that St. Benilde failed to comply with this requirement and thus, the 10% income tax should be imposed on it as a taxable proprietary educational institution.

It cited St. Benilde’s supposed profit of P643 million in tuition, as well as its P775-million bank deposits.

However, the SC said the supposed profit actually pertained to the gross receipts, or total payments received without expenses being deducted.

It said the BIR overlooked the fact that St. Benilde also incurred P582.9 million in administrative and non-administrative expenses in 2002, which meant the college was not as profitable as it was made out to be.

Since much of the tuition funded St. Benilde’s operating expenses, the SC ruled that “it is evident that [the] income is actually, directly, and exclusively used or earmarked for promoting its educational purpose.”

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