[Punongbayan & Araullo]
More often than not, trustees and officers of non-stock non-profit (NSNP) institutions are appalled when they receive a letter from the Bureau of Internal Revenue (BIR) assessing them of deficiency taxes. Unfortunately, these trustees and officers are under the impression that as NSNP organizations, they are immune from all duties and taxes.
But are non-stock non-profit organizations really exempt from the payment of all taxes?
A non-stock non profit organization is a type of corporation which may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic services, or other similar purposes such as trade, industry, agricultural and like chambers. No part of its income is distributable to its members, trustees or officers and any profits earned by such corporation as an incident to its operations shall be used for the furtherance of the purposes for which it was organized.
Under our Constitution, charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. A similar grant of tax exemption is provided specifically for NSNP educational institutions stating that all income and assets of these educational organizations used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties. (Section 4(3), Article XIV of the Constitution)