V. ANGELES UNIVERSITY FOUNDATION VS. ANGELES CITY, G.R. NO.
189999, 27 JUNE
2012
Facts:
Petitioner Angeles University Foundation (AUF) is an educational institution established
on May 25, 1962 and was converted into a non-stock, non-profit education foundation
under the provisions of Republic Act (RA) No. 6055 on December 4, 1975.
On August 2005, petitioner filed with the Office of the City Building Official in the City of
Angeles Pampanga 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 by the said office.
Petitioner claimed, through a letter addressed to respondents City Treasurer and Acting
City Building Official, that it is exempted from the payment of the building permit and
locational clearance fees and cited legal opinions rendered by the Department of Justice
(DOJ).
Respondents referred the matter to the Bureau of Local Government Finance (BLGF) of
the Department of Finance, which in turn endorsed the query to the DOJ. DOJ replied
and affirmed the claim of the petitioner.
Despite the petitioner’s plea, however, respondents refused to issue the building
permit. Petitioner then appealed the matter to the City Mayor but received no written
response. Consequently, petitioner paid under protest a total of P826,662.99 and the
Building Permit and other documents were issued afterwards.
Petitioner formally requested the respondents to refund the fees it paid under protest
through letters dated June 15, 2006 and August 7, 2006. But the respondents denied the
claim for refund.
On August 31, 2006, petitioner filed a Complaint before the trial court seeking for the
refund of P826,662.99 plus interest at a rate of 12% per annum, and for attorneys fee in
the amount of P300,000.00 and litigation expenses.
On September 21, 2007, the trial court rendered judgment in favor of the petitioner.
Respondents appeal to the CA which reversed the trial court’s decision. Petitioner filed a
motion for reconsideration but was denied.
So the petitioner filed a petition for review on certiorari before the Supreme Court.
Issue:
Whether or not the building permit fee is a tax from which petitioner is exempt.
Discussion:
The building permit fee is neither a tax nor a charge on property. Based on Sections 102,
103 and 104, 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.
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.
The court cited the case of CHEVRON PHILIPPINES, INC. VS. BASES CONVERSION
DEVELOPMENT AUTHORITY and explained the difference between tax and regulation:
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.
In GEROCHI V. DEPARTMENT OF ENERGY, the Court stated:
THE CONSERVATIVE AND PIVOTAL DISTINCTION BETWEEN THESE TWO (2) POWERS
RESTS IN THE PURPOSE FOR WHICH THE CHARGE IS MADE. 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, THE FACT THAT
REVENUE IS INCIDENTALLY RAISED DOES NOT MAKE THE IMPOSITION A TAX.
Held:
The petition was denied and the decision of the Court of Appeals was affirmed.
