Angeles University Foundation v City of Angeles ISSUE/S & RATIO:
Taxation | June 27, 2012| VIllarama
Nature of Case: Legislative Power - Taxation
Digest Maker: Marte Caronongan
SUMMARY: Petitioner AUF applied for a building permit for the construction
of an 11-storey building in its campus. It claimed that it was exempted from
paying the permit fee, which they believed were a form of tax, due to the
nature of the institution as a non-stock non-profit education foundation. SC
denied the petition as the permit fee was deemed a form of regulation and not
a tax.
DOCTRINE: If generation of revenue is the primary purpose and regulation is
merely incidental, the imposition is a tax; but if regulation is the primary
purpose and revenue is incidentally raised does not make the imposition a
tax.
FACTS:
● Petitioner AUF is an educational institution established on 5/25/1962
and was converted into a non-stock non-profit education foundation
under RA 6055 on 12/4/1975
● 8/2005 AUF filed for an application for a building permit for the
construction of an 11-storey building in its main campus. A Building
Permit Fee Assessment and an order of payment for Locational
Clearance Fees was issued to AUF
● AUF claimed through a letter addressed to respondents City Treasurer
and Acting City Building Official that AUF is exempted from the
payment of the fees, citing legal opinions by the DOJ
● They argue that the fees are a tax, as it generates revenue for the
government
● Respondents referred the matter to the Bureau of Local Government
Finance (BLGF) of the Department of Finance, which was in turn
referred to the DOJ. DOJ affirmed the claim of AUF
● Despite AUF’s plea, respondents did not issue the permit. AUF paid
under protest P826,662.99. The permit was issued afterwards
● AUF formally requested for a refund through letters sent 6/15/06 and
8/07/06, but were denied
● 8/31/06 AUF filed a complaint before the RTC seeking for a refund.
RTC rendered judgement in favor of AUF, but the CA reversed the
decision on appeal. CA stated that while AUF is a tax-free entity, it is not
exempt from regulatory fees like building permit fees.
● AUF filed an MR but was denied. Hence current petition
Issue: WON the building permit fee is a tax which AUF is exempted from
paying. NO.
Ratio:
The building permit fee is neither a tax nor a charge on property. Based on
Sections 102, 103 and 104 of the National Building Code, the building permit fee
is a regulatory imposition on certain activities the owner may conduct either to
build such structures or to repair, alter, renovate or demolish the same. Since
building permit fees are not charges on property, they are not impositions from
which petitioner is exempt.
(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.)
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.
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.
NOTE: