As a backgrounder, one may recall that on July 22, 2013, the BIR issued RMO No. 20-2013 requiring all nonstock, non-profit corporations and associations enumerated in Section 30 of the 1997 Tax Code, as amended, in eluding those which have been issued tax exemption rulings (TER) or certificates of tax exemption prior to June 30, 2012 to file an application for a TER with the Revenue District Office (RDO) where they are registered.

The TER issued shall be valid for a period of three years. After the lapse of the three year period, the non-stock, non-profit corporation or association must apply for a renewal by filing another application for TER. The new TER shall be valid for another period of three years, unless sooner revoked or cancelled.

A little over a year after its issuance, RMO No. 20-2013 was declared unconstitutional by the Makati Regional Trial Court (RTC). According to the Makati RTC, RMO No. 20-2013 imposed a prerequisite to the enjoyment by nonstock, nonprofit educational institutions of their constitutional privilege of tax exemption because in the eventthe prerequisites are not complied with, the constitutional privilege of tax exemption granted to nonstock, nonprofit educational institutions is diminished or defeated.

Tax Exemption Rulings