Literature is life. It is the gateway of looking the world outside. We can learn, understand and appreciate the world. Reading literature is the best way to know who we are, what we are, and what we used to be. Using descriptive correlational research design, the study ventured on assessing the literary appreciation skills and reading performance of university students in literature, which may provide input to propose innovative learning tasks in enhancing their literary competence. Ninety students enrolled in the literature subject of the three college departments of one campus of a public higher education institution in the Philippines, were the participants of the study. Findings revealed that the students have a moderate level of skill in literary appreciation areas but a relatively low skill level in recognizing author's point of view, ability to judge the text, recognizing personal philosophy based on literary text read, and relating the stories to their personal lives. Meanwhile, students showed fair performance in literature learning, while literary appreciation skills and reading performance differed when students are grouped according to their college affiliations. Furthermore, a positive relationship exits between literary appreciation skills and reading performance of the students. This study proposes the implementation of twenty-nine innovative learning tasks for literature classes. The different learning tasks were presented in this paper for classroom use.