Angeles University vs.

City Of Angeles

G.R. No. 189999, June 27, 2012

Facts:

Angeles University was converted into a non-stock, non-profit education foundation under the provisions
of Republic Act (R.A.) No. 6055. Petitioner filed with the Office of the City Building Official an
application for a building permit for the construction of an 11-storey building of the Angeles University
Foundation Medical Center in its main campus the said office issue a Building permit fee and Locational
Clearance Fee. Petitioner make a letter to respondent City Tresurer Juliet G. Quinssat and City Building
Official Donato Z. Dizon alleging that it is exempt from payment of the building permit and locational
clearance fee. Petitioner also reminded the respondent that they have previously issued building permit
acknowledging such exemption from payment of building permit fees. The DOJ and trial court render
decision in favor to petitioner for exempting in payment. But the CA reverse the decision of court in favor
to respondent. Petitioner file a MR but it was denied by CA.

Issue:

WON the Angeles University is exempted in Building permit fee and Locational Clearance Fee.

Held:

No. Under R.A. No. 6055, petitioner was granted exemption only from income tax derived from its
educational activities and real property used exclusively for educational purposes. Regardless of the
repealing clause in the National Building Code, the CA held that petitioner is still not exempt because a
building permit cannot be considered as the other charges mentioned in Sec. 8 of R.A. No. 6055 which
refers to impositions in the nature of tax, import duties, assessments and other collections for revenue
purposes, following the ejusdem generisrule. The CA further stated that petitioner has not shown that the
fees collected were excessive and more than the cost of surveillance, inspection and regulation. And
while petitioner may be exempt from the payment of real property tax, petitioner in this case merely
alleged that the subject property is to be used actually, directly and exclusively for educational
purposes, declaring merely that such premises is intended to house the sports and other facilities of the
university but by reason of the occupancy of informal settlers on the area, it cannot yet utilize the same
for its intended use. Thus, the CA concluded that petitioner is not entitled to the refund of building permit
and related fees, as well as real property tax it paid under protest.

R.A. No. 6055 granted tax exemptions to educational institutions like petitioner which converted to non-
stock, non-profit educational foundations. Section 8 of said law provides:

SECTION 8. The Foundation shall be exempt from the payment of all taxes, import duties, assessments,
and other charges imposed by the Government onall income derived from or property, real or personal,
used exclusively for the educational activities of the Foundation.(Emphasis supplied.)

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 Local Government Code of 1991 (R.A. No. 7160), 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.

PAGCOR vs. BIR

645 SCRA 338

Facts:

The Philippine Amusement and Gaming Corporation (PAGCOR) was created by P.D. No. 1067-A.
Obviously, it is a government owned and controlled corporation (GOCC).

R.A. 8424 or the National Internal Revenue Code of 1997 (NIRC) became effective. Section 27 thereof
provides that GOCCs are not exempt from paying income taxation but it exempted the following
GOCCs:

1. GSIS
2. SSS
3. PHILHEALTH
4. PCSO
5. PAGCOR

But R.A. 9337, a law amending certain provisions of R.A. 8424, was passed. Section 1 thereof excluded
PAGCOR from the exempt GOCCs hence PAGCOR was subjected to pay income taxation. The Bureau of
Internal Revenue issued the implementing rules and regulations (IRR) for R.A. 9337. In the said IRR, it
identified PAGCOR as subject to a 10% value added tax (VAT) upon items covered by Section 108 of the
NIRC (Sale of Services and Use or Lease of Properties).

PAGCOR questions the constitutionality of Section 1 of R.A. 9337 as well as the IRR. PAGCOR avers
that the said provision violates the equal protection clause. PAGCOR argues that it is similarly situated
with SSS, GSIS, PCSO, and PHILHEALTH, hence it should not be excluded from the exemption.

Issue:

Whether or not PAGCOR should be subjected to income taxation.

Held:

Yes. Section 1 of R.A. 9337 is constitutional. It was the express intent of Congress to exclude PAGCOR
from the exempt GOCCs hence PAGCOR is now subject to income taxation.

PAGCORs contention that the law violated the constitution is not tenable. The equal protection clause
provides that all persons or things similarly situated should be treated alike, both as to rights conferred
and responsibilities imposed.
The general rule is, all GOCCs are subject to income taxation. However, certain classes of GOCCs may
be exempt from income taxation based on the following requisites for a valid classification under the
principle of equal protection:

1) It must be based on substantial distinctions.

2) It must be germane to the purposes of the law
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.

When the Supreme Court looked into the records of the deliberations of the lawmakers when R.A. 8424
was being drafted, the SC found out that PAGCORs exemption was not really based on substantial
distinctions. In fact, the lawmakers merely exempted PAGCOR from income taxation upon the request of
PAGCOR itself. This was changed however when R.A. 9337 was passed and now PAGCOR is already
subject to income taxation.

Anent the issue of the imposition of the 10% VAT against PAGCOR, the BIR had overstepped its
authority. Nowhere in R.A. 9337 does it state that PAGCOR is subject to VAT. Therefore, that portion of
the IRR issued by the BIR is void. In fact, Section 109 of R.A. 9337 expressly exempts PAGCOR from
VAT. Further, PAGCORs charter exempts it from VAT.

To recapitulate, PAGCOR is subject to income taxation but not to VAT.