Sec 4 (3) and (4)

(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law.

Proprietary educational institutions , including those cooperatively owned, may likewise be entitled to such exemptions subject to the limitations provided by law including restrictions on dividends and provisions for reinvestment.
(4) Subject to conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax.

Tax Breaks for Private Schools Rationale of the Provision

3 fold rationale
To preserve the democratic choices of the students To enable educational institutions to improve their quality To make quality education affordable to students

 Geographically, there are 2,180 HEIs in the country

Distribution of Higher Education Institutions by Region and Sector (As of August 2010)
Region III Public 59 Private 168 Total 227

NCR
CAR ARMM

34
19 15

278
33 50

312
52 65

Caraga
Total

14
607

43
1573

57
2180

Institutions covered
3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties Non-stock Non-profit no income accrues to the benefit of any member of the corporation Educational Institutions when used in laws granting tax exemptions refers to ". . . School, seminary, college or educational establishment

Coverage of tax exemptions

All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties Coverage of exemption expanded from what is covered by ART 6 SEC 28 (3) which refers taxes on land, buildings, and improvements Exemption does not take into account how ASSETS and REVENUES are sourced

 used actually, directly, and exclusively for educational purposes Both ASSET and REVENUES ACTUALLY includes assets or revenues being held in reserve for educational purposes

G.R. No. 100091 October 22, 1992 CENTRAL MINDANAO UNIVERSITY vs. DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD The DARAB ordered the segregation of 400 hectares of suitable, compact and contiguous portions of the Central Mindanao University (CMU for brevity) land and their inclusion in the Comprehensive Agrarian Reform Program (CARP for brevity) for distribution to qualified beneficiaries. DARAB contends that the portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte Phils., Inc.) was not used actually, directly, and exclusively for educational purpose. As to the determination of when and what lands are found to be necessary for use by the CMU, the school is in the best position to resolve and answer the question and pass upon the problem of its needs in relation to its avowed objectives for which the land was given to it by the State.

G.R. No. L-39086 June 15, 1988 ABRA VALLEY COLLEGE, INC., vs. HON. JUAN P. AQUINO
The Municipal treasurer of Bangued, Abra caused to be served upon the Abra Valley Junior College, Inc. a Notice of Seizure on the property of said school for the satisfaction of real property taxes thereon. On the other hand, private respondents maintain that the college lot and building in question which were subjected to seizure and sale to answer for the unpaid tax are used: (1) for the educational purposes of the college; (2) as the permanent residence of the President and Director thereof, Mr. Pedro V. Borgonia, and his family including the in-laws and grandchildren; and (3) for commercial purposes because the ground floor of the college building is being used and rented by a commercial establishment, the Northern Marketing Corporation Exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purposes. Thus, the use of the second floor of the main building in the case at bar for residential purposes of the Director and his family, may find justification under the concept of incidental use, which is complimentary to the main or primary purposeeducational, the lease of the first floor thereof to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purpose of education.

G.R. No. 95022 March 23, 1992 COMMISSIONER OF INTERNAL REVENUE vs. THE HON. COURT OF APPEALS, THE COURT OF TAX APPEALS, GCL RETIREMENT PLAN, Petitioner, the Commissioner of Internal Revenue, seeks a reversal of the Decision of respondent Court of Appeals entitled "Commissioner of Internal Revenue vs. GCL Retirement which affirmed the Decision of the latter Court, ordering a refund, in the sum of P11,302.19, to the GCL Retirement Plan representing the withholding tax on income from money market placements and purchase of treasury bills, imposed pursuant to Presidential Decree No. 1959. The deletion in Pres. Decree No. 1959 of the provisos regarding tax exemption and preferential tax rates under the old law, therefore, can not be deemed to extent to employees' trusts. Said Decree, being a general law, can not repeal by implication a specific provision, Section 56(b) now 53 [b]) in relation to Rep. Act No. 4917 granting exemption from income tax to employees' trusts. . If an employees' trust like the GCL enjoys a tax-exempt status from income, we see no logic in withholding a certain percentage of that income which it is not supposed to pay in the first place.

Other incentives
(4) Subject to conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax. Exemption from donors and estate taxes Covers donation or bequest whether mortis causa or inter vivos