The Supreme Court has permanently stopped the Quezon City government from auctioning the University of the Philippines-Ayala Land TechnoHub property to compensate for the P117.18-million unpaid real estate taxes of the country’s premier university.
In a July 14, 2019 decision authored by Associate Justice Antonio Carpio, the Court’s First Division ruled that UP is exempt from real property tax imposed by the treasurer of Quezon City on the parcel of land currently leased to Ayala Land Inc.
The SC voided the statement of delinquency issued by the Quezon City government on May 27, 2014 as well as the final notice of delinquency issued on July 11, 2014 covering the said property.
“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 tribunal declared.
The High Court also said that under the contract of lease between UP and ALI, all improvement on the leased land shall be owned by, and shall be for the account of the ALI during the term of the lease.
According to the tribunal, the improvements are not “assets” owned by UP, thus, the tax exemption under Republic Act No. 9500 does not extend to these improvements during the term of the lease.
Court records showed that the Quezon City government through its treasurer notified the UP administration that the property will be auctioned off to answer for the unpaid real estate taxes.
On July 22, 2014, UP received the final notice of delinquency dated July 11, 2014 from the Office of City Treasurer demanding the payment of the amount.
The Office of the Solicitor General insisted that UP is exempt from taxes based on Republic Act No. 9500 or the UP Charter, thus, the issuance of a temporary restraining order and/or a writ of preliminary injunction is warranted to enjoin the QC government from disposing the property.
Under Section 25(a) of the law, revenues and assets of the university are exempts from “all taxes and duties.”
The chief state lawyer said the exemption applies to UP’s properties whether used for educational purposes “or in support thereof.”
The UP-Ayala Land Technohub was developed as an information technology hub and a part of the larger science and technology park located along Commonwealth Avenue.
The Technohub is a PEZA-approved Information Technology Park, with locations and amenities ideal for science and tech companies.
UP’s share in the revenues of the property, as well as the lease paid by Ayala Land, supplement the university’s budget.
The QC government insisted that the subject property became taxable when it was leased to Ayala Land, since the beneficial use of the property was granted to a taxable entity.
However, the SC ruled that “Republic Act No. 9500 . . . 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.”