Thursday, May 31, 2007 7 schools, hospitals go to court v. tax
CEBU City’s schools and hospitals again asked the Regional Trial Court (RTC) to intervene against the City Tax Ordinance directing them to pay 2.5 percent of their total income.
Seven schools and hospitals filed a petition before the RTC to declare the tax ordinance null.
The petitioners are Cebu Doctors’ University, Cebu Institute of Technology, Southwestern University, Sacred Heart Hospital, Cebu Doctors’ Hospital, Cebu North General Hospital and Cebu (Velez) General Hospital.
Named respondents in the civil suit are the City of Cebu, Mayor Tomas Osmeña, Vice Mayor Michael Rama, the City Council and Acting City Treasurer Tessie Camarillo.
The petitioners are challenging the validity of the tax ordinance, citing the Department of Justice (DOJ) resolution that the ordinance was “not valid” due to the lack of a public hearing.
The petitioners claimed they should not be taxed as they are included in the clause of exemption.
They quoted the Constitution: “Proprietary educational institutions, including those cooperatively owned, may likewise be entitled to such exemptions subject to limitations provided by law including restrictions on dividends and provisions for reinvestment.”
It was their second lawsuit against the ordinance.
They had sought the dismissal of the first civil suit against the City, saying they preferred to exhaust all remedies such as an appeal before the DOJ, as provided for by the Supreme Court.
The DOJ ruled that the tax measure covering proprietary schools and hospitals was null and void because no public hearing was held before the ordinance was approved.
But the City did not heed the DOJ resolution, saying it was not binding.
The council believes that only the court can rule whether an ordinance is null and void.
“In treating petitioners as businesses, respondents summarily discarded without explanation petitioners’ distinction as service-oriented establishments and have thereby violated the equal protection guarantee,” contended the schools and hospitals.
Aside from asking the court to nullify the tax ordinance, the petitioners also sought “to declare certain acts of respondents illegal and unjust.”
Among those “unjust acts” are the treasury office’s collection of taxes and the council’s move to allow the City Treasurer to collect “illegal exactions.”
The petitioners also asked that they be reimbursed P300,000 as litigation expenses. (JGA)
