Rule: Tax Exemption if claimed must be expressly granted in a statute stated in a language TOO CLEAR TO BE MISTAKEN.
Private respondent YMCA, a non-stock, non-profit institution which conducts various programs beneficial to the public pursuant to its religious, educational, and charitable objectives LEASES OUT a portion of its premises to small shop owners, like restaurants and canteen operators deriving substantial income from such.
So seeing this, the Commissioner of Internal Revenue (CIR) issued an assessment to private respondent (YMCA) for Deficiencies on the following: 1. Income tax, 2. Expanded withholding taxes on rentals and professional fees and 3. Withholding tax on wages.
YMCA opposed arguing that its rental income is not subject to tax mainly because of the provisions of Section 27 of the NIRC (National Internal Revenue Code) which provides that “civic leagues or organizations not organized for profit but operate exclusively for promotion of social welfare and those organized exclusively for pleasure, recreation and other non-profitable businesses SHALL NOT BE TAXED.”
ISSUE: Is the contention of YMCA tenable?
HELD: NO. Tax Exemptions are:
1. STRICTLY CONSTRUED:
Because taxes are the LIFEBLOOD of the nation. The court has always applied the Doctrine of Strict Interpretation in construing tax exemptions stated in the language of the law.
2. MANIFEST & UNMISTAKABLE:
Furthermore, a claim of statutory exemption from taxation should be Manifest and Unmistakable from the language of the law on which it is based.
3. BASED ON LANGUAGE TOO CLEAR TO BE MISTAKEN:
Thus the claimed exemption “must expressly be granted in a statute stated in a language TOO CLEAR TO BE MISTAKEN.”
YMCA loses this case.
(boy, that's as quickest as we can get)
(boy, that's as quickest as we can get)
