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Case Name CIR V. ST. PAUL COLLEGE OF MAKATI

Case No. (Date) G.R. NO. 215383, MARCH 8, 2017
Ponente CARPIO, J.
Doctrine Non-stock, non-profit educational institutions are tax-exempt as
mandated by the 1987 Constitution.

RELEVANT FACTS
 On July 22, 2013, Petitioner CIR, through Hon. Kim S. Jacinto-Henares, as
Commissioner, issued RMO No. 20-2013, entitled: “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
NIRC of 1997, as Amended”
 On November 29, 2013, Respondent St. Paul College of Makati, a non-stock,
non-profit educational institution filed a Civil Action to Declare
Unconstitutional RMO No. 20-2013 with Prayer for Issuance of Temporary
Restraining Order and Writ of Preliminary Injunction. They alleged that the
said RMO poses a requisite to the enjoyment of the privilege of tax-
exemption under Sec. 4(3) of Article XIV of the Constitution – the submission
of an application for tax exemption to the BIR, subject to approval by the CIR
in the form of a Tax Exemption Ruling (TIR), valid for a period of three years
and subject to renewal.
 According to SPCM, the said RMO makes the failure to file an annual
information return a ground for a non-stock, non-profit educational
institution like theirs to automatically lose its income tax-exempt status.
 RTC Ruling: Issued a TRO against the implementation of RMO No. 20-2013
and granted the writ of preliminary injunction. Declared the RMO No. 20-
2013 unconstitutional. The requisites served as a diminution of the
constitutional privilege which even Congress cannot diminish by legislation.
 On September 18, 2014, the CIR issued RMO No. 34-2014 which clarified
certain provisions of RMO No. 20-2013, as amended by RMO No. 28-2013
 RTC MR Ruling: Denied

Issue Ratio

Whether or not RMO ● It is moot and academic.

No. 20-2013 is
indeed
unconstitutional?
The SC took judicial notice of RMO No. 44-2016, which provides that RMO
No. 20-2013 has been amended to exclude non-stock, non-profit
educational institutions. Under RMO No. 44-2016, it states:

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."

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. Courts generally decline jurisdiction over such case or dismiss it on
the ground of mootness.

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 Decision finding RMO No.
20-2013 unconstitutional because it violated the non-stock, non-
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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.

RULING

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.