CIR v. CA, CTA and YMCA of The Philippines
CIR v. CA, CTA and YMCA of The Philippines
CIR v. CA, CTA and YMCA of The Philippines
(g) Civic league or organization not organized for profit but operated exclusively for the promotion
of social welfare;
(h) Club organized and operated exclusively for pleasure, recreation, and other non-profitable
purposes, no part of the net income of which inures to the benefit of any private stockholder or member;
2. The exemption claimed by the YMCA is expressly disallowed by the very wording of the last paragraph
of then Section 27 of the NIRC which mandates that the income of exempt organizations (such as the YMCA)
from any of their properties, real or personal, be subject to the tax imposed by the same Code.
3. A reading of said paragraph ineludibly shows that the income from any property of exempt organizations, as
well as that arising from any activity it conducts for profit, is taxable. This makes from the property of the
organization taxable, regardless of how that income is used whether for profit or for lofty non-profit
purposes.
4. Respondent Court of Appeals committed reversible error when it allowed, on reconsideration, the tax
exemption claimed by YMCA on income it derived from renting out its real property, on the solitary but
unconvincing ground that the said income is not collected for profit but is merely incidental to its operation.
5. what is exempted is not the institution itself . . .; those exempted from real estate taxes are lands,
buildings and improvements actually, directly and exclusively used for religious, charitable or
educational purposes. Justice Davide, Jr. with Fr. Bernas concurring.
6. We reiterate that private respondent is exempt from the payment of property tax, but not income tax on the
rentals from its property. The bare allegation alone that it is a non-stock, non-profit educational institution
is insufficient to justify its exemption from the payment of income tax.
CASE LAW/ DOCTRINE: The rental income is taxable regardless of whence such income is derived and how it is
used or disposed of. Where the law does not distinguish, neither should the courts.
DISSENTING/CONCURRING OPINION:
BELLOSILLO, J., dissenting: I vote to deny the petition. In the instant case, there is no dispute as to the validity
of the findings of the Court of Tax Appeals that private respondent Young Men's Christian Association (YMCA) is
an association organized and operated exclusively for the promotion of social welfare and other non-profitable
purposes, particularly the physical and character development of the youth YMCA has continuously organized
and undertaken throughout the country various programs for the youth through actual workshops, seminars,
training, sports and summer camps, conferences on the cultivation of Christian moral values, drug addiction, outof-school youth, those with handicap and physical defects and youth alcoholism.
income derived from property whether real or personal connotes profit from business or from investment of the
same. If we are to apply the ordinary meaning of income from property as profit to the language of the last
paragraph of Sec. 27 of the NIRC, then only those profits arising from business and investment involving property
are taxable. In the instant case, there is no question that in leasing its facilities to small shop owners and in
operating parking spaces, YMCA does not engage in any profit-making business.
KEYWORDS/NOTES:
CIR v. CA, CTA and YMCA of the Philippines