Hospital asks court anew for tax exemption

A PRIVATE hospital run by Catholic nuns has asked a Cebu City court to enforce an order that exempts them from paying business taxes to the Cebu City government.

Cornelio Mercado, legal counsel of Perpetual Succour Hospital (PSH), said Cebu City Hall refused to issue a business permit early this month unless the hospital pays taxes. The Cebu City government claimed that a decision by Regional Trial Court Judge Simeon Dumdum of Branch 7 is not final since the ruling is still being reviewed by the Court of Appeals (CA).

Wrong forum

But Mercado said the city government should have filed the appeal before the Court of Tax Appeals and not the CA.

Judge Dumdum ruled that the city cannot impose Tax Ordinance 113, which amended the Omnibus Tax Ordinance of Cebu City and mandates all propriety schools and hospital to pay business tax to the city.

The PSH is a religious, non-stock and non-profit institution run by the Roman Catholic congregation Sisters of St. Paul de Chartres since 1963 as a healing ministry and apostolate to the sick.

Judge Dumdum said not even the Court of Tax Appeals and the Securities and Exchange Commission declared PSH as a non-stock, non-profit institution which operates exclusively for religious and charitable purpose.

Void ordinance

The Department of Justice declared the City’s Omnibus Tax Ordinance as null.

Under section 193 of the Local Government Code, non-stock and non-profit hospitals are exempted from local government taxation

The Cebu City Treasurer’s Office earlier issued a certificate of delinquency to PSH for unpaid business taxes from 2000 to 2009 which reached P62 million.

The city questioned the status of the PSH as a non-stock, non-profit corporation since the hospital doesn’t act as one since it operates a pharmacy, general merchandise store and real estate leases, among others.

But even if PSH doesn’t function as a non-stock, non-profit organization, Dumdum said its status does not change its nature and standing under the law.

In 2010, PSH filed a civil case against the city government for imposing business taxes on private schools and hospitals.

The PSH earlier intervened as co-petitioners in a case filed by seven schools and hospitals in Cebu City against the city government for collecting business taxes.

The case is pending before Regional Trial Court Judge Generosa Labra of Branch 23. PSH is one of four hospitals and three schools that petitioned the court to nullify an amendment to the Cebu City Omnibus Tax Code.

The amended tax code reclassified schools and hospitals as “service-oriented industries” subject to business tax based on their gross sales.