'City can't tax Perpetual'

THE Cebu City Government was shut out from enforcing its tax ordinance on a private hospital after a Cebu City judge ruled the institution is "undoubtedly" a non-stock, non-profit corporation.

Judge Simeon Dumdum Jr. of the Regional Trial Court Branch 7 has granted the petition for issuance of a writ of preliminary injunction Perpetual Succour Hospital, Inc. (PSH) filed in June this year against the City, over the implementation of the city's tax ordinance.

r"In all, the court finds that Perpetual has a right that needs protection during the pendency of this case," Judge Dumdum said in his four-page order dated July 8.

Cebu City Mayor Michael Rama, on the other hand, said he will just wait for a copy of the court decision and refer it to the City Attorney's Office for appropriate action.

Petition

The PSH has lodged a petition against the Cebu City Government and the City Treasurer's Office before the Regional Trial Court for imposing business taxes on the hospital.

PSH, through its lawyer, Cornelio Mercado, earlier 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 proprietary schools and hospitals.

The city treasurer's office issued a certificate of delinquency to the hospital management last April 13 for failing to pay business taxes from 2000 to 2009 amounting to about P62 million.

The City Government sent a certificate of delinquency to the PSH and warned it would levy its land or building if unpaid business taxes remained unsettled.

Victory

Mercado, in a phone interview yesterday, said they were glad about their latest legal victory. He also pointed out the City Government can still file an appeal or a motion for reconsideration on Dumdum's order.

Judge Dumdum, in his order, directed the issuance of a writ of preliminary injunction, which stops the City Government from collecting taxes from the hospital based on its certificate of delinquency to the PSH.

The issuance of an injunction will be completed once PSH puts up a bond amounting to P20 million.

Citing Section 65 of Revised Omnibus Tax Ordinance 69, as amended by Section 14 of City Ordinance 82, the City Treasurer's Office issued a certificate of delinquency to PSH for alleged non-payment of business taxes from 2000 to 2009.

The PSH, being a non stock, non-profit institutionis exempted from business tax, Mercado said.

Documents

To support its claim, the PSH presented its Articles of Incorporation, which show that it is a non-stock, non-profit corporation

The articles of incorporation do not mention capital stock divided into shares, said Dumdum. They merely state that "the corporation shall be maintained by whatever amount it may obtain from fees for services rendered and any money and or property it may receive by donations or investments."

But the City Government, in its memorandum, argued that it wasn't enough for PSH to claim that it is a non-stock, non-profit to be exempted from business tax.

The City said it should comply with the requirements set by the law on proprietary institutions.

Since PSH is registered, Dumdum said the Securities and Exchange Commission (SEC) recognizes its status as a non-stock, non-profit corporation.

"The law prohibits this. Perpetual has a right not to be taxed. If respondents persist in collecting the business tax from Perpetual, they would violate this right."

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