Mandaue threatens to auction Subangdaku abattoir if Cebu City refuses to pay P2.8M in back taxes

Cebu City will not pay taxes to Mandaue City.

This was the blunt reply of Cebu City’s attorney to a demand letter sent to City Hall last Friday by neighboring Mandaue City asking them to secure a business permit for its slaughterhouse in barangay Subangdaku and to pay real property taxes.

“There is no legal basis for Mandaue to collect real property taxes from us on the abattoir. Based on the Local Government Code, real property tax cannot be collected from real property owned by a local government unit,” said Jerone Castillo, the city legal officer of Cebu City.

He went on to open a copy of the 1991 Local Government Code and showed reporters Section 234 which specifies exemptions from local taxes, which include “real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted for consideration or otherwise, to a taxable person.”

Castillo said Cebu City is a “political subdivision” and is therefore covered by the provisions of the aforecited law.

Regal Oliva, the city treasurer of Mandaue City who is also a lawyer, disagrees.

“They are not exempted from real property taxes because they are engaged in a proprietary nature of business. The slaughterhouse is not for public service, but for an economic enterprise so it’s taxable
Oliva, who wants to collect over P2.8 million in real property taxes from 2001, has given Cebu City 10 days to comply with their demand.

“Kung dili sila mobayad, mapugos kog i-auction ang property,” he said.

(If they will not pay up, I’ll be forced to put the property up for auction.)

Cebu City’s North Bus Terminal which is also in Mandaue City’s barangay Subangdaku, is also in the same situation as the city slaughterhouse.

The bus terminal was constructed as part of the Metro Cebu Development Project (MCDP-2) loan package.
Mandaue City owns the terminal, but it is being leased by Cebu City.

Mandaue City started going after the Cebu City slaughterhouse after Mayor Jonas Cortes issued a statement last Monday that he’s had enough with Michael Rama, his counterpart in Cebu City, who have been blaming Mahiga Creek for the heavy flooding in the provincial capital city.

The Mandaue City government billed Cebu City for real property taxes due from 2001 to 2014.
Diwa Cuevas, city treasurer of Cebu City, confirmed receipt of the demand letter and billing statement, but she refused to show the documents to reporters. She said Mandaue City is billing Cebu City a total of P2,853,329.93.

“I just received this (yesterday afternoon). They said we have to pay within 10 days from receipt of their letter. I still have to forward this to the legal office,” Cuevas said.

Illustrating his position why Mandaue City’s move is against the law, Cebu City attorney Castillo said there are also several real properties owned by different government units within Cebu City like the Cebu Provincial Capitol and the Cebu South Bus Terminal which are not being taxed.

Even if Cebu City is indeed taxable, Castillo pointed out that the Local Government Code also provides a prescription period for collection of real property tax.

He said according to Section 270 of the Code, “basic real property tax and any other tax levied under this Title shall be collected within five years from the date they become due.” After the period, no tax can be collected on the real property.

Moreover, Castillo said they need not secure a business permit as the city slaughterhouse is not a business enterprise.

He said the Local Government Code defines public markets, slaughterhouses and other municipal or city enterprises as basic services and facilities.

“Section 17 of the local government code states that local government units shall endeavor to provide basic services to their constituents. And a slaughterhouse is part of that. It’s not a business, it’s a basic service. Therefore, it doesn’t need a business permit,” Castillo said.

Dr. Pilar Romero, chief of Cebu City’s Department of Veterinary Medicine and Fisheries (DVMF) who is also the officer-in-charge of the Abattoir Operations Division (AOD), said they haven’t been billed by Mandaue City since they started operation in the 1980s.

This was confirmed by Dr. Alice Utlang, her predecessor in the AOD and DVMF, who said they never had problems with taxes and payments with the Mandaue City Hall.

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