ANGELES UNIVERSITY FOUNDATION vs.

CITY OF ANGELES
G.R. No. 189999 June 27, 2012
VILLARAMA, JR., J.:

Facts: Petitioner Angeles University Foundation (AUF), an educational institution established on May
25, 1962 converted into a non-stock, non-profit education foundation, applied for a building permit with
the Office of the City Building Official for the construction of an 11-storey building in Angeles City,
Pampanga. A Building Permit Fee Assessment amounting to P126,839.20 and Locational Clearance
Fee amounting to 238,741.64 were issued. Petitioner claimed exemption from the payment of the
building permit and locational clearance fees reminding them of a prior exemption from payment of
building permit fees granted to them

Upon referral to DOJ, Justice Secretary Raul M. Gonzalez granted the exemption.
Respondents refused to issue the building permits. Petitioner appealed to City Mayor Carmelo F.
Lazatin but to no vail.

Petitioner paid for the permits. The Building Permit was issued. Petitioner requested the
respondents to refund the fees. Respondent City Treasurer denied the refund. Petitioner filed a
Complaint seeking the refund of P826,662.99 plus interest at the rate of 12% per annum.

Respondents asserted that petitioner cannot be exempted because it was not included in the
enumeration in Sec. 209 of the National Building Code. Since the disputed assessments are regulatory
in nature therefore petitioners are not exempted. Petitioner countered that the subject building permit
are taxes as subject to IRR-LGC to which they are exempt.

RTC ruled in favor of the petitioner. Upon appeal, CA reversed the ruling holding that it is not
exempt from the payment of regulatory fees. CA noted that under R.A. No. 6055, petitioner was
granted exemption only from income tax derived from its educational activities and real property used
exclusively for educational purposes. While petitioner may be exempt from the payment of real
property tax, they merely alleged that they intended the property to house the facilities of the university
but cannot utilize the same because of the informal settlers. CA found did not grant the refund and
ordered it to pay property taxes. The Motion for Reconsideration was denied by the CA.

Issues: (1) Whether petitioner is exempt from the payment of building permit and related fees
imposed under the National Building Code; and (2) Whether petitioner is exempted from real property
tax.

Ruling: 1) No. Petitioner is not exempted from the payment of building permit fees although it is
exempted by R.A. No. 6055 from payment of taxes on property relative to its educational activities
since it is superseded by Presidential Decree (P.D.) No. 1096 requiring any person to obtain a building
permit for any construction, alteration or repair of any building or structure, the exemption of which are
(1) public buildings and (2) traditional indigenous family dwellings none of which petitioner falls into.

The court discussed the difference between the power of taxation and police power. If the
purpose is primarily to raise revenue, then it is 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. The building permit fees imposed by the National Government under the National Building
Code, revenue is incidentally generated for the benefit of local government units. Exemption from
payment of regulatory fees was not among those "incentives" granted to petitioner under R.A. No.
6055. CA did not commit reversible error.
2) Whether petitioner is exempted from the payment of real property tax.

No.The Court rules that in order to be entitled to exemption, as provided by the 1973 and1987
Constitutions and Rep. Act No. 7160, the petitioner should prove, by clear and unequivocal proof, that
(a) it is a charitable institution; and (b) its real properties
are ACTUALLY, DIRECTLY and EXCLUSIVELY used for charitable purposes. "Exclusive" is defined
as possessed and enjoyed to the exclusion of others; debarred from participation or enjoyment; and
"exclusively" is defined, "in a manner to exclude; as enjoying a privilege exclusively." If real property
is used for one or more commercial purposes, it is not exclusively used for the exempted purposes
but is subject to taxation. The words "dominant use" or "principal use" cannot be substituted for the
words "used exclusively" without doing violence to the Constitutions and the law. Solely is synonymous
with exclusively.

Petitioner failed to prove that its real property is actually, directly and exclusively used for
educational purposes. The Court denied the petition.