Angeles University Foundation v. City of Angeles
NEW DOCTRINEFacts
The Antecedents: Petitioner Angeles University Foundation (AUF), a non-stock, non-profit educational foundation, applied for building permits for the construction of an 11-storey building and renovation of a school building. The City of Angeles assessed various fees, including building permit and locational clearance fees. AUF claimed exemption based on Republic Act (R.A.) No. 6055 and previous legal opinions from the Department of Justice (DOJ). Respondents refused to issue the permits without payment, prompting AUF to pay under protest. Procedural History: AUF filed a complaint for refund. The Regional Trial Court (RTC) ruled in favor of AUF, declaring it exempt from building permit and other fees and ordering a refund. The Court of Appeals (CA) reversed the RTC, holding that AUF, though tax-exempt, is not exempt from regulatory fees and that its claim for real property tax exemption was not sufficiently proven. The Petition: AUF filed a petition for review on certiorari, arguing that the CA erred in withdrawing its privilege of exemption granted by R.A. No. 6055 and in misapplying the principle of ejusdem generis. AUF also contended that the building permit fees are essentially taxes and that its property is exempt from real property tax.
Issue(s)
Whether petitioner Angeles University Foundation (AUF) is exempt from the payment of building permit and related fees imposed under the National Building Code. Whether the parcel of land owned by petitioner AUF, which has been assessed for real property tax, is likewise exempt.
Ruling
The petition is DENIED. The Decision dated July 28, 2009 and Resolution dated October 12, 2009 of the Court of Appeals in CA-G.R. CV No. 90591 are AFFIRMED.
Ratio Decidendi
On the issue of exemption from building permit and related fees: The Court held that petitioner AUF is not exempt from the payment of building permit and related fees. While R.A. No. 6055 grants exemption from "all taxes, import duties, assessments, and other charges imposed by the Government on all income derived from or property, real or personal, used exclusively for the educational activities of the Foundation," building permit fees are not taxes but regulatory fees imposed under the exercise of police power. The National Building Code (P.D. No. 1096) clearly defines the purpose of building permits as safeguarding life, health, property, and public welfare by regulating the location, site, design, quality of materials, construction, use, occupancy, and maintenance of buildings and structures. The Court distinguished these fees from taxes, noting that their primary purpose is regulation, even if revenue is incidentally generated. The bases for assessment, such as character of occupancy, cost of construction, floor area, and height, are related to the regulatory function, and AUF failed to present evidence that these fees were arbitrarily determined or unrelated to the activity being regulated, or that the rates were unreasonable or in excess of the cost of regulation and inspection. The Court also noted that the exemption under R.A. No. 6055 did not explicitly include regulatory fees, and the principle of ejusdem generis was correctly applied by the CA to limit the scope of "other charges" to those of a similar nature as taxes, import duties, and assessments, which are primarily revenue-generating. On the issue of exemption from real property tax: The Court affirmed the CA's ruling that AUF is not entitled to a refund of the real property tax paid under protest. Section 28(3), Article VI of the 1987 Constitution and Section 234(b) of the Local Government Code of 1991 provide that lands, buildings, and improvements are exempt from taxation only if they are actually, directly, and exclusively used for educational purposes. The Court reiterated its ruling in Lung Center of the Philippines v. Quezon City, emphasizing that the burden is on the institution to prove this exclusive use by clear and unequivocal proof. AUF failed to discharge this burden, as it did not sufficiently prove that the subject real property, which was occupied by informal settlers, was actually, directly, and exclusively used for educational purposes during the taxable period. The Court clarified that it is the actual use of the property itself, not the use of the income derived from it, that determines tax-exempt status. Therefore, the assessment for real property taxes was correct for the period during which the land was not devoted solely to educational activities.
Main Doctrine
Non-stock, non-profit educational institutions, while exempt from taxes, are not exempt from regulatory fees such as building permit and locational clearance fees, as these are impositions for the exercise of police power and not taxes for revenue purposes. Furthermore, exemption from real property tax requires actual, direct, and exclusive use for educational purposes.