ANGELES UNIVERSITY FOUNDATION vs. CITY OF ANGELES et. al
G.R. No. 189999, June 27, 2012
Facts:
- Petitioner is an educational institution and was converted into a non-stock, non-profit education foundation under the provisions of R.A. 6055
- Sometime in August 2005, petitioner filed with the Office of the City Building Official an application for a building permit for the construction of an 11-storey building
- Said office issued a Building Permit Fee Assessment in the amount of P126,839.20 and P238,741.64 as Locational Clearance Fee.
- Petitioner claimed that it is exempt from the payment of the building permit and locational clearance fees, citing legal opinions rendered by the DOJ.
- Petitioner also reminded the respondents that they have previously issued building permits acknowledging such exemption from payment of building permit fees on the construction of petitioner’s 4-storey AUF Information Technology Center building
- Petitioner stresses that the tax exemption granted to educational stock corporations which have converted into non-profit foundations was broadened to include any other charges imposed by the Government as one of the incentives for such conversion.
Issues:
1. Whether petitioner is exempt from the payment of building permit and related fees imposed under the National Building Code; and
2. Whether the parcel of land owned by petitioner which has been assessed for real property tax is likewise exempt.
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Ruling:
R.A. No. 6055 granted tax exemptions to educational institutions like petitioner which converted to non-stock, non-profit educational foundations.
On February 19, 1977, P.D 1096 was issued adopting the National Building Code of the Philippines. The said Code requires every person, firm or corporation, including any agency or instrumentality of the government to obtain a building permit for any construction, alteration or repair of any building or structure.
Exempted from the payment of building permit fees are:
(1) Public buildings and
(2) Traditional indigenous family dwellings.
Not being expressly included in the enumeration of structures to which the building permit fees do not apply, petitioner’s claim for exemption rests solely on its interpretation of the term “other charges imposed by the National Government” in the tax exemption clause of R.A. No. 6055.
A “charge” is broadly defined as the “price of, or rate for, something,” while the word “fee” pertains to a “charge fixed by law for services of public officers or for use of a privilege under control of government.” As used in the LGC, charges refers to pecuniary liability, as rents or fees against persons or property, while fee means a charge fixed by law or ordinance for the regulation or inspection of a business or activity.
Note that the “other charges” mentioned in Sec. 8 of R.A. No. 6055 is qualified by the words “imposed by the Government on all property used exclusively for the educational activities of the foundation.”
Building permit fees are not impositions on property but on the activity subject of government regulation. While it may be argued that the fees relate to particular properties, i.e., buildings and structures, they are actually imposed on certain activities the owner may conduct either to build such structures or to repair, alter, renovate or demolish the same.
That a building permit fee is a regulatory imposition.
Thus, ancillary permits such as electrical permit, sanitary permit and zoning clearance must also be secured and the corresponding fees paid before a building permit may be issued.
Since building permit fees are not charges on property, they are not impositions from which petitioner is exempt.
As to petitioner’s argument that the building permit fees collected by respondents are in reality taxes because the primary purpose is to raise revenues for the local government unit, the same does not hold water.
A charge of a fixed sum which bears no relation at all to the cost of inspection and regulation may be held to be a tax rather than an exercise of the police power. In this case, the Secretary of Public Works and Highways who is mandated to prescribe and fix the amount of fees and other charges that the Building Official shall collect in connection with the performance of regulatory functions, has promulgated and issued the Implementing Rules and Regulations which provide for the bases of assessment of such fees
Petitioner failed to demonstrate that the bases of assessment were arbitrarily determined or unrelated to the activity being regulated. Neither has petitioner adduced evidence to show that the rates of building permit fees imposed and collected by the respondents were unreasonable or in excess of the cost of regulation and inspection.
In distinguishing tax and regulation as a form of police power, the determining factor is the purpose of the implemented measure. If the purpose is primarily to raise revenue, then it will be deemed a tax even though the measure results in some form of regulation. On the other hand, if the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police power of the state, even though incidentally, revenue is generated.
Concededly, in the case of building permit fees imposed by the National Government under the National Building Code, revenue is incidentally generated for the benefit of local government units.
Section 208: the Building Official is hereby authorized to retain not more than twenty percent of his collection for the operating expenses of his office.
The remaining eighty percent shall be deposited with the provincial, city or municipal treasurer and shall accrue to the General Fund of the province, city or municipality concerned.
Now, on petitioner’s claim that it is exempted from the payment of real property tax assessed against its real property presently occupied by informal settlers.
Petitioner failed to discharge its burden to prove that its real property is actually, directly and exclusively used for educational purposes. While there is no allegation or proof that petitioner leases the land to its present occupants, still there is no compliance with the constitutional and statutory requirement that said real property is actually, directly and exclusively used for educational purposes. The respondents correctly assessed the land for real property taxes for the taxable period during which the land is not being devoted solely to petitioner’s educational activities.
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