Court junks Cebu City Hall’s move to collect business tax from private hospital

January 15, 2011 11:04 am 

CEBU CITY, Jan. 14 – A regional trial court (RTC) in Cebu City has struck down the Cebu City Government’s attempt to enforce its tax ordinance on a private hospital.

Judge Simeon Dumdum Jr. ruled that City Tax Ordinance 113 cannot be imposed on Perpetual Succor Hospital Inc. (PSH), even if the latter “does not behave as a non-stock, non-profit corporation.”

City Tax Ordinance 113, which amends the Omnibus Tax Ordinance of Cebu City, imposes business tax on proprietary schools and hospitals.

Dumdum, presiding judge of the RTC Branch 7, denied the motion of City Hall lawyers, seeking to reverse an earlier court order granting the PSH’s petition for a writ of preliminary injunction.

Dumdum said that even if PSH does not function as a non-stock, non-profit organization, “its (status) does not change its nature and standing under the law (as a non-stock, non-profit corporation).”

Dumdum affirmed his earlier order, dated Aug. 4, 2010, preventing the City Government from enforcing its tax ordinance on PSH.

City Hall had questioned the status of the PSH as a non-stock, non-profit corporation, saying that the hospital does not operate as one because it runs a pharmacy, general merchandise store and real estate leases, among others.

City Hall, in its motion to dismiss, also said PSH has not been able to present proof it is a non-stock, non-profit corporation.

Dumdum, in his four-page order, said the Securities and Exchange Commission recognizes PSH as a non-stock, non-profit entity.

”The court, unless petitioner’s status is directly contested in proper proceedings, must give due recognition to this,” said Dumdum.

If City Hall intends to tax the hospital for its pharmacy and general merchandise stores, among others, then, Dumdum said, notices of unpaid business taxes should be stated and “not put a blanket over the whole hospital and bring, within their scope, even purely hospital operations.”

The court said that if City Hall insists on collecting business tax from a non-stock, non-profit corporation, it would have to move for review of the Local Government Code.

The PSH filed a petition or injunction in court to prevent the Cebu City Government and the City Treasurer’s Office from imposing business taxes on the hospital

PSH’s counsel, Cornelio Mercado, questioned the validity of the City’s Omnibus Tax Ordinance, which imposes business taxes “on any business … a percentage of two and one half of the gross receipts or sales’ of private schools and hospitals.

The City Treasurer’s Office issued a certificate of delinquency to the hospital management last April 13 for unpaid business taxes from 200 to 2009, amounting to about P62 million. (PNA) DCT/EB/bh


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