City can't collect tax from Succour — CA

The Cebu City government can no longer run after the Perpetual Succour Hospital, Inc. (PSHI) for its tax delinquency from 2000 to 2009 amounting to P64 million following the trial court’s decision attained its finality.

Associate Justice Edward Contreras of the Court of Appeals (CA) special 19th division dismissed the appeal filed by the City of Cebu for lack of jurisdiction.

“It has been explicitly decreed that within the judicial system, the law intends the Court of Tax Appeals to have exclusive jurisdiction to resolve all tax problems. Accordingly, this court has to dismiss the city’s appeal since when a court has no jurisdiction over the subject matter, the only power it has is to dismiss the action,” read portion of the seven-page decision.

Because of the city’s availment of a wrong mode of appeal, the CA rendered the appealed decision of the Regional Trial Court (RTC) “final and executory.” This was supported by a Supreme Court decision in Mitsubishi Motors Philippines Corporation versus Bureau of Customs.

RTC issued an order in October 2013, prohibiting the City of Cebu, city treasurer and its agents from collecting “percentage or business taxes” from the hospital, citing that PSHI is a non-stock, non-profit corporation, which, under the law, is exempted from business taxes.

The city government was also ordered by the RTC to reimburse PSH for the expenses it incurred in filing the case amounting to P117,730.

The case stemmed from a petition for prohibition, injunction and damages filed the PSHI against the city government after it received Certificates of Delinquency from the city treasurer’s office for alleged non-payment of business taxes from 2000 to 2003 amounting to P27,486,211.56 and P36,531,520.27 for 2003 to 2009.

PSHI argued that as a nonstock, non-profit corporation, the hospital is exempted from paying business taxes by virtue of Section 193 of the Local Government Code.

The city said it does not automatically exempt the hospital from taxation. As a procedure, the city said the treasurer will check its books of accounts to determine whether or not the institution is operating for profit.

However, the city said PSHI “consistently refused” to have its books of accounts examined.