Case Summary (G.R. No. 189999)
Petitioner
Established in 1962 and converted into a non-stock, non-profit educational foundation under R.A. No. 6055 in 1975, AUF operates an educational campus in Angeles City, Pampanga.
Respondents
The City Treasurer and the Acting City Building Official of Angeles City responsible for assessing and collecting building permit, locational clearance, fire code, electrical, sanitary and real property taxes.
Key Dates
• August 2005: AUF applied for an 11-storey medical center building permit.
• November 15, 2005: AUF claimed exemption citing DOJ opinions.
• December 6, 2005: DOJ, through Secretary Gonzalez, affirmed exemption opinions.
• June 2006: AUF paid under protest ₱826,662.99.
• September 21, 2007: Trial court ruled in favor of AUF.
• July 28, 2009: Court of Appeals reversed.
• June 27, 2012: Supreme Court decision under the 1987 Constitution.
Applicable Law
• R.A. No. 6055 (conversion of educational corporations)
• P.D. No. 1096 (National Building Code)
• Local Government Code of 1991 (R.A. No. 7160)
• 1987 Philippine Constitution, Art. VI, Sec. 28(3) on real property tax exemption
Factual Background
AUF filed for a building permit and locational clearance in August 2005. City offices assessed fees totaling P126,839.20 (building permit), P238,741.64 (locational clearance), and later P645,906.84 (including fire, electrical) plus P130,930.64 in real property taxes. AUF sought exemption based on earlier DOJ opinions and previous permit issuances in 2000 and 2004. The City refused and AUF paid under protest.
Procedural History
AUF’s request for refund was denied. In August 2006, it filed a complaint for refund plus interest and attorney’s fees. The trial court granted exemption and ordered refund with interest. The Court of Appeals reversed, holding that building permit fees are regulatory, not taxes, and AUF’s property was not “actually, directly and exclusively” used for educational purposes. AUF then petitioned the Supreme Court.
Issues Presented
- Whether AUF is exempt from payment of building permit and related fees under R.A. No. 6055.
- Whether AUF’s land occupied by informal settlers is exempt from real property tax under the Constitution.
Exemption from Building Permit Fees
R.A. No. 6055, Sec. 8, exempts the Foundation from “all taxes, import duties, assessments, and other charges imposed by the Government on … property used exclusively for the educational activities of the Foundation.” The National Building Code, however, imposes building permit fees as regulatory charges under police power, not taxes on property. Only public buildings and traditional indigenous dwellings are expressly exempt.
Regulatory Nature vs. Tax Character
A building permit fee is assessed to regulate construction and ensure compliance with safety, zoning, sanitation, structural and environmental standards. The Implementing Rules prescribe fee bases—character of occupancy, cost of construction, floor area, height—reflecting regulation, not revenue-raising. AUF failed to prove fees were arbitrary or exceeded regulatio
...continue readingCase Syllabus (G.R. No. 189999)
Factual Background
- Angeles University Foundation (AUF) was established May 25, 1962 and converted into a non-stock, non-profit educational foundation under Republic Act No. 6055 on December 4, 1975.
- In August 2005, AUF applied for a building permit to construct an 11-storey AUF Medical Center on its main campus at MacArthur Highway, Angeles City, Pampanga.
- The City Building Official assessed a Building Permit Fee of ₱126,839.20; the City Planning & Development Office assessed a Locational Clearance Fee of ₱238,741.64.
- On November 15, 2005, AUF claimed exemption from these fees, citing DOJ Legal Opinions No. 157 (s. 1981) and No. 147 (s. 1982) and prior permits issued without fee on AUF’s Information Technology Center (2000) and Professional Schools building (2004).
- The City Treasurer referred the matter to the Bureau of Local Government Finance (BLGF), which endorsed the DOJ opinion via Justice Secretary Gonzalez’s letter of December 6, 2005; BLGF reiterated in its January 6, 2006 indorsement that it could not review the DOJ resolution.
- Respondents nonetheless refused to issue the disputed permits; AUF appealed to the City Mayor without response, then paid under protest on various charges (Building Permit, Electrical Fee, Locational Clearance, Fire Code Fee) totaling ₱645,906.84, plus Real Property Tax assessments totaling ₱130,930.64 (Grand Total ₱826,662.99).
- Having secured the permits, AUF formally requested refund on June 9, 2006; the City Treasurer denied the refund in June and August 2006.
Procedural History
- August 31, 2006: AUF filed Complaint in RTC Angeles City, Branch 57 (Civil Case No. 12995) for refund of ₱826,662.99, 12% interest from June 14, 2006, attorney’s fees (₱300,000), litigation expenses, and costs.
- September 21, 2007: RTC rendered judgment declaring AUF exempt from building permit and other fees, ordering refund of ₱826,662.99 plus 12% legal interest, attorney’s fees of ₱70,000, litigation expenses, and costs.
- Respondents appealed to the Court of Appeals (CA-G.R. CV No. 90591).
- July 28, 2009: Court of Appeals reversed, holding AUF not exempt from regulatory fees under the National Building Code; also denied real property tax exemption for land not used exclusively for educational purposes.
- October 12, 2009: CA denied motion for reconsideration.
- AUF filed petition for review on certiorari under Rule 45 before the Supreme Court.