The  Supreme Court (SC) has upheld  the Court of Appeals (CA) decision denying Angeles University a refund for the payment of its building permit and locational clearance fees as well as real-property taxes.
In the 16-page decision by Justice Martin Villarama Jr., the SC’s First Division affirmed the CA’s decision that reversed the decision of Branch 57 of the Regional Trial Court of Angeles City declaring the Angeles University Foundation exempt from payment of building permit and other fees and ordering the City of Angeles to refund the same with interest at the legal rate.
The foundation sought for a refund on the ground that the building permit and other fees were really taxes since they were used to generate revenue and that Section 193 of the Local Government Code of 1991 provides that non-stock and non-profit educational institutions, like itself, are exempt from payment of these types of taxes.
The high court held that the CA committed no reversible error in finding the foundation liable to pay the protested permit and fees since the exemption from payment of regulatory fees was not among the incentives granted it under Republic Act 6055 and the Local Government Code (An Act To Provide For The Conversion Of Educational Institutions From Stock Corporations To Non-Profit Foundations) when it was promulgated on Aug. 4, 1969.
The Court stressed that exemption of “other charges” to include the payment of building permits and  locational clearance fees as claimed by the foundation was improper because Section 8 of RA 6055 was qualified by the words “imposed by the government on all property used exclusively for the educational activities of the foundation.” In effect, the SC said, building fees were not impositions on property but instead are  regulatory impositions on the activity the government regulates. A charge of a fixed sum is an exercise of police power if the purpose is primarily to regulate, even though revenue is generated incidentally.
The Court also ruled that for exemption from real property tax under Section 234(b) of the Local Government Code of 1991 to apply, the real property must “actually, directly, and exclusively used for... educational purposes.”
As clarified in Lung Center of the Philippines vs Quezon City, what is meant by “actual, direct, and exclusive” use of the property was direct and immediate and actual application of the property itself to the purpose of which the charitable institution was organized, the SC said. The use of the income from the real property was not determinative for tax exempt purposes.
The Court found Angeles University Foundation to be not entitled to a refund for its payment of real property tax because it was not able to prove that its real property is actually, directly and exclusively used for educational purposes.
It held that the land of  the foundation was correctly assessed  for real property taxes for the taxable period during which the land is not being devoted soly for the latter’s educational activities.