THE Supreme Court (SC) voided a Quezon City plan to auction a site owned by the University of the Philippines (UP) and occupied by the UP-Ayala Land Techno Hub, ruling that UP is exempt from paying real estate tax, undermining the city’s argument that the university owes it P117.18 million.

In an 18-page decision dated June 19 and written by Associate Justice Antonio T. Carpio, the court’s second division said UP is exempt from real property tax on land currently leased to Ayala Land, Inc. (ALI).

Under Section 25 (a) of Republic Act No. 9500 or the UP Charter of 2008, the university’s revenue and assets used for educational purposes are tax-exempt.

“Thus, when the City Treasurer addressed to UP the Statement of Delinquency dated 27 May 2014 and the Final Notice of Delinquency dated 11 July 2014 and required UP to pay real property tax on the subject land, UP was already authorized by the legislature to validly claim exemption from real property taxes on the land leased to ALI,” the court said.

“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 court added.

The SC, on the other hand, said under the contract of lease between UP and ALI, all improvements in the property shall be owned by ALI during the lease. It also said that the improvements are not “assets” owned by UP and the tax exemption does not apply to the improvements.

The City Treasurer of Quezon City asked the university to pay P117.18 million in real property tax covering the years 2009 to 2013 and the first three quarters of 2014.

The decision was concurred in by Associate Justices Estela M. Perlas-Bernabe, Alfredo Benjamin S. Caguioa, Jose C. Reyes, Jr. and Amy C. Lazaro-Javier. — Vann Marlo M. Villegas