Tuesday, August 21, 2007 RTC rejects Cebu City bid
THE petition to stop Cebu City Hall from collecting taxes from proprietary schools and hospitals will go to trial.
Regional Trial Court Judge Generosa Labra denied the City Government’s petition to dismiss a case filed last year by eight schools and hospitals asking the court to stop City Hall from implementing amendments to the Cebu City Omnibus Tax Code.
In a two-page order, Labra said there are matters that are should be threshed out in a full trial.
In their motion to dismiss, City Hall argued that the filing of the case in court was premature because there was still a pending case with the Office of Justice Secretary involving the same issues raised in the petition.
The City Council approved in September last year an amendatory ordinance reclassifying proprietary schools and hospitals as service-oriented industries and, therefore, subject to business taxes..
The tax code now specifically states that these establishments are subject to business taxes of only three-fourths to one percent of their annual gross sales, on top of the fixed tax amount.
Under the original tax ordinance, 2.5 percent was collected.
Another ground cited for dismissal of the court case is the petitioners’ failure to exhaust all administrative remedies, in gross violation of Section 187 of the Local Government Code.
But the petitioners argued that the respondent’s assertion that their motion for reconsideration was still unresolved does not mean it remains pending.
“The procedure dictates that appropriate proceedings be filed by the aggrieved party within 30 days from receipt of the decision, or after the lapse of 60 days if no action has been taken by the Secretary of Justice, and did not state that a motion for reconsideration is allowed,” Labra said in her ruling.
“Respondents may not realize it but they are the ‘aggrieved party’ and assuming that the motion for reconsideration is allowed, 60 days had lapsed from filing with no action taken by the Secretary of Justice. Despite the lapse of the period, respondents did not file the appropriate proceedings but sat idly and did nothing. In other words, they miserably failed to observe and follow the very procedure they invoked,” she said.
However, in February this year, Justice Secretary Raul Gonzalez nullified the tax measure because no public hearing was held before it was approved.
In a resolution, Gonzalez said that “unquestionably, the City Government violated the constitutional right of the schools and hospitals to due process when it approved the tax ordinance without holding a public hearing.”
The City Council had approved the amendatory ordinance sponsored by Councilor Jose Daluz III. It was former councilor Jocelyn Pesquera’s version that went through public hearing.
The petitioners had described their institutions as non-stock and non-profit schools and hospitals.
In their petition, representatives of the establishments, which include Cebu Doctors’ Hospital, Cebu Doctors’ University, Cebu Institute of Technology, Southwestern University, Sacred Heart Hospital, said the amendments are illegal since these run counter to the provisions of the Local Government Code.
They argued that Section 193 of the code grants tax exemptions to non-stock and non-profit hospitals and educational institutions. (KNT)
