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Facts: YMCA is a non-stock, non-profit institution, which conducts various programs and activities that are beneficial to the public, especially the young people, pursuant to its religious, educational and charitable objectives. Private respondent earned from leasing out a portion of its premises to small shop owners, like restaurants and canteen operators and from parking fees collected from non-members. The commissioner of internal revenue (CIR) issued an assessment to private respondent. Private respondent formally protested the assessment.

Issue: WON the rental income of the YMCA from its real estate subject to tax? Is YMCA a charitable organization?

Held: No. For the YMCA to be granted the exemption it claims under the aforecited provision, it must prove with substantial evidence that (1) it falls under the classification non-stock, non-profit educational institution; and (2) the income it seeks to be exempted from taxation is used actually, directly, and exclusively for educational purposes. However, the Court notes that not a scintilla of evidence was submitted by private respondent to prove that it met the said requisites. Is YMCA an educational institution? The term educational institution or institution of learning has acquired a well-known technical meaning, of which the members of the Constitutional Commission are deemed cognizant.[38] Under the Education Act of 1982, such term refers to schools.[39] The school system is synonymous with formal education,[40] which refers to the hierarchically structured and chronological graded learnings organized and provided by the formal school system and for which certification is required in order for the learner to progress through the grades or move to the higher levels.[41]