University of the Philippines v. City Treasurer of Quezon City
NEW DOCTRINEFacts
The Antecedents: The University of the Philippines (UP) is the registered owner of a parcel of land in Quezon City, which it leased to Ayala Land, Inc. (ALI) for the development of a science and technology park. The City Treasurer of Quezon City issued a Statement of Delinquency and subsequently a Final Notice of Delinquency to UP, demanding payment of real property taxes on this land for the years 2009 through 2013 and early 2014. UP contested these demands, asserting its exemption from real property taxes under Republic Act No. 9500, the University of the Philippines Charter of 2008, and citing an opinion from the Bureau of Local Government Finance that ALI, as the lessee, was the party accountable for the taxes. Procedural History: The City Treasurer of Quezon City issued a Statement of Delinquency to UP on May 27, 2014, and a Final Notice of Delinquency on July 11, 2014, demanding payment of real property taxes. UP received the Final Notice of Delinquency on July 22, 2014, and subsequently filed a petition for certiorari and prohibition with the Supreme Court within the prescribed period. The Supreme Court issued a temporary restraining order enjoining the City Treasurer from proceeding with the sale of the land. The City Treasurer initially failed to file a comment, leading to several resolutions imposing fines. Eventually, a Comment was filed, arguing that the Supreme Court was not a trier of facts, that UP failed to file a motion for reconsideration, and that UP was not exempted from real property tax under the Local Government Code. UP filed a Reply addressing these points. The Petition: UP filed a petition for certiorari and prohibition under Rule 65 of the 1997 Rules of Civil Procedure, seeking to annul the Statement of Delinquency and the Final Notice of Delinquency issued by the City Treasurer of Quezon City. The core issue raised by UP was whether it is liable for real property tax imposed on the subject property leased to ALI. UP argued that its tax exemption is granted by Republic Act No. 9500, which supersedes provisions of the Local Government Code that might otherwise subject the property to tax due to its beneficial use by a taxable entity. UP contended that the land and the revenue derived from its lease are used for educational purposes or in support thereof, thus falling under the exemption provided by its charter.
Issue(s)
Whether petitioner University of the Philippines is liable for real property tax imposed on the subject property leased to Ayala Land, Inc. Whether the petition for certiorari and prohibition is the proper remedy.
Ruling
The petition is GRANTED. The University of the Philippines is declared EXEMPT from real property tax imposed by the City Treasurer of Quezon City on the parcel of land covered by TCT No. RT-107350 (192689), which is currently leased to Ayala Land, Inc. Accordingly, the Statement of Delinquency dated May 27, 2014, as well as the Final Notice of Delinquency dated July 11, 2014, issued by the City Treasurer of Quezon City to the University of the Philippines in connection with the parcel of land covered by TCT No. RT-107350 (192689) are declared VOID. The City Treasurer of Quezon City is permanently restrained from levying on or selling at public auction the parcel of land covered by TCT No. RT-107350 (192689) to satisfy the payment of the real property tax delinquency.
Ratio Decidendi
On the issue of whether petitioner University of the Philippines is liable for real property tax imposed on the subject property leased to Ayala Land, Inc.: The Supreme Court ruled that UP is exempt from real property tax on the subject land. The Court emphasized that Republic Act No. 9500, the UP Charter of 2008, granted UP specific tax exemptions that superseded the general provisions of the Local Government Code. Section 25(a) of RA 9500 explicitly states that all revenues and assets of UP used for educational purposes or in support thereof are exempt from all taxes and duties. The Court found that the development of the leased land into a science and technology park, as envisioned in the lease contract, clearly serves an educational purpose or is in support thereof. Therefore, UP's tax exemption under RA 9500 is applicable, and there is no longer a need to determine the tax status of the possessor or beneficial user, unlike under the Local Government Code provisions. The Court distinguished this case from the National Power Corporation v. Province of Quezon case, noting that RA 9500 provided UP with the necessary congressional authority for this exemption, which was lacking in the NPC case. The Court clarified that this exemption applies to UP's assets, meaning the land itself, and does not extend to improvements introduced by the lessee, ALI, as those improvements are owned by ALI during the lease term. On the issue of whether the petition for certiorari and prohibition is the proper remedy: The Supreme Court held that the present case involves a pure question of law, not a question of fact, making certiorari and prohibition the appropriate remedies. The core issue was whether UP, as a chartered academic institution with specific legislated tax exemptions, is legally liable for real property tax on the leased land. The Court stated that findings of fact were not necessary for the determination of this issue. The Court also implicitly addressed the respondent's argument that a full-blown trial was necessary by asserting its jurisdiction over pure questions of law. The Court's ability to decide the case without needing to delve into factual disputes further validated the use of the extraordinary remedies sought by UP.
Main Doctrine
The University of the Philippines, as a chartered academic institution with specific legislated tax exemptions under Republic Act No. 9500 (UP Charter of 2008), is exempt from real property tax on its land assets used for educational purposes or in support thereof, even when leased to a private entity, as the specific exemption granted by its charter supersedes general provisions of the Local Government Code regarding beneficial use by taxable persons.