NEW YORK City has agreed to accept $9 million from the government of the Philippines, representing about 85 percent of unpaid property taxes and interest on a portion of its Fifth Avenue UN Mission and consulate occupied by profit-making businesses, Mayor Michael Bloomberg said.

The agreement follows a ruling last February by US District Court Judge Jed Rakoff in Manhattan awarding the city $10.9 million in taxes and interest.

The dispute had gone before the US Supreme Court, which in June 2007 established that cities may sue foreign governments to collect taxes on property used for non-governmental purposes.

In 2003, the city sued to collect taxes covering 1974 to 1996 on commercial enterprises such as the Philippine National Bank and Philippine Airlines inside the Philippines Center at 556 Fifth Avenue.

The city has sought more than $100 million from governments, including $37 million from India and $4 million from Mongolia, which remain on appeal. Turkey settled for $5.05 million in 2003.

“These are tough economic times, and I have asked city agencies to stretch every tax dollar further—but I also want to make sure that we pursue those who fail to pay their taxes,” Bloomberg said in a news release.

The Philippines had argued its building was exempt from taxation and the city’s statutory 18-percent interest rate amounted to “punitive damages,” which by law may not be assessed against foreign nations.

Telephone calls and e-mail seeking comment from the Philippine consulate were unanswered.

“This settlement affirms the city’s long-standing position that if foreign governments use their properties for non-exempt purposes, they must pay property taxes,” said city law department head Michael Cardozo, who argued the Supreme Court case.

New York City hosts the largest diplomatic community in the world-192 permanent missions to the United Nations and 110 consulates, the mayor’s office said in a news release.

The mayor is founder and majority owner of Bloomberg News’ parent, Bloomberg LP. Bloomberg