SC declares UP exempt from tax on Technohub lot, says it’s used for educational purposes
The Supreme Court (SC) has ruled that the University of the Philippines (UP) is exempted from paying real property taxes (RPT) on the property now hosting UP-Ayala Land Technohub, saying it is being used for educational purposes.
In a recent 18-page decision, the SC 2nd Division declared void the Quezon City government’s attempts in 2014 to impose a P117.18-million tax and auction off the property to satisfy the liabilities.
The 380,630-square meter property is currently leased to Ayala Land, Inc. (ALI) and houses call centers, office buildings, restaurants, a park and a hotel.
The SC applied Section 25(a) of Republic Act (RA) Number 9500, which exempted UP from paying taxes on “assets used for educational purposes or in support thereof.”
In declaring Technohub to be used for educational purposes, the SC cited the lease contract’s stated intent to develop “a prestigious and dynamic science and technology park, where research and technology-based collaborative projects between technology and the academe thrive.”
“The development of the subject land is clearly for an educational purpose, or at the very least, in support of an educational purpose,” read the decision penned by Associate Justice Antonio Carpio.
The City Assessor and City Treasurer of Quezon City argued that Sections 205 and 234 of the Local Government Code (LGC) provide for the removal of the government entity’s tax exemption, if the beneficial use is granted to a taxable entity like ALI.
But, the SC pointed out that the UP charter is a special law which prevails over the older LGC because it is the “latest expression of legislative will.”
The SC clarified that this was not similar to the case of National Power Corporation (Napocor), which was not allowed to invoke its tax-exempt status when it assumed the liabilities of the taxable contractor Mirant Pagbilao Corporation.
Such a setup would have been “essentially wrong” in Technohub’s case too, were it not for the passage of RA 9500 that “obliterated” the LGC’s provisions.
“The legislature established a tax system that allows UP to validly claim exemption from real property taxes on the land leased to ALI. Republic Act No. 9500 is UP’s congressional authority for this particular exemption from real property tax,” the SC said.
The decision meant the September 29, 2014 temporary restraining order (TRO) that prevented the city government from proceeding with the public auction would be made permanent.