G.R. No. 222548 . June 22, 2022.
FRITZ BRYN ANTHONY M. DELOS SANTOS, PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FACTS

Petitioner Fritz Bryn Anthony M. Delos Santos, a condominium unit resident, assails the validity of Revenue Memorandum Circular No. 65-2012 (the Circular) issued by the Commissioner of Internal Revenue. The Circular clarified that association dues, membership fees, and other assessments collected by condominium corporations are subject to Income Tax and Value-Added Tax (VAT), as they constitute income payments for beneficial services. Following the Circular, the condominium association informed unit owners that it would no longer shoulder the VAT on association dues starting January 2016. Delos Santos received and paid a billing statement that included the additional VAT. He filed a Petition for Certiorari directly before the Supreme Court, arguing the Circular is unconstitutional for violating substantive due process, as it imposes a tax without legal basis. He contends association dues are merely contributions held in trust for maintenance costs, not payments for goods or services, and thus not subject to VAT. The Office of the Solicitor General joined the petitioner in urging the Court to declare the Circular void. The Commissioner of Internal Revenue argued that the petition was an improper remedy and defended the Circular’s validity as a legitimate interpretation of the Tax Code. During the pendency of the case, the Tax Reform for Acceleration and Inclusion (TRAIN) Law was enacted, expressly exempting such association dues from VAT. Furthermore, in a prior case (G.R. Nos. 215801 and 218924, promulgated January 15, 2020), the Supreme Court had already declared the same Circular invalid, ruling that the Commissioner gravely abused discretion in issuing it.

ISSUE

Whether the Petition for Certiorari assailing the validity of Revenue Memorandum Circular No. 65-2012 should be granted.

RULING

The Supreme Court declared the petition moot and academic. The Court found it unnecessary to resolve the petition on the merits because a supervening event—the enactment of the TRAIN Law, which expressly exempts association dues, membership fees, and other charges collected by condominium corporations from VAT—had rendered the issue moot. Furthermore, in a prior decision (Bureau of Internal Revenue v. First E-Bank Tower Condominium Corp.), the Court had already definitively ruled that the Commissioner of Internal Revenue gravely abused its discretion in issuing the same Circular, as it did not merely interpret but changed the long-standing rules of the Bureau of Internal Revenue. Consequently, the Circular was already declared invalid. The Court, therefore, dismissed the petition for being moot.