SC stops Quezon City from auctioning off U.P. Technohub

MANILA, Philippines – The Supreme Court (SC) ruled that the University of the Philippines (UP) is exempt from real property tax as it permanently stopped the Quezon City government from auctioning off the UP-Ayala Land Technohub property.

The QC government had assessed UP to have P117.18 million worth of unpaid real estate taxes from the Technohub property. Under the Local Government Code, the local government unit is authorized to auction off delinquent properties in order to compel the entities to pay their tax obligations to the city.

The SC, however, voided the statements of delinquency for the property, saying that the university is exempt from real property taxes. The SC issued a temporary restraining order on the sale in 2014.

“Considering that the subject land and the revenue derived from the lease thereof are used by UP for educational purposes and in support of its educational purposes, UP should not be assessed, and should not be made liable for real property tax on the land subject of this case,” the SC said in a 1st Division ruling penned by Senior Associate Justice Antonio Carpio.

Section 4, Article XIV of the 1987 Constitution states, “All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties.”

The SC said the tax exemption does not cover the assets acquired from the improvements done under the contract of lease between UP and Ayala Land.

Technohub was approved by the Philippine Economic Zone Authority to be an information technology hub.

UP’s share from Technohub’s revenues is used to supplement the state university’s budget.

The conflict came in when the property was leased to Ayala Land, which is a private company.

The QC government insisted that the property became taxable when it was leased to Ayala Land, since the beneficial use of the property was granted to a taxable entity.

But the SC said UP’s charter, Republic Act No. 9500, bolstered its claim of tax exemption.

“[The law] gave a specific tax exemption to UP which covers the land subject of the present case. The City Assessor and the City Treasurer overlooked this specific exemption awarded to UP by Republic Act No. 9500,” said the High Court. – Rappler.com