Court prohibits City from collecting real estate tax

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Saturday, June 15, 2013

THE court issued a writ of preliminary injunction prohibiting the Cebu City Government from collecting real property tax on the building owned by printer manufacturer Lexmark International (Philippines) Inc.

Nicole Marie Cimafranca-Go, clerk of court of the Regional Trial Court (RTC) Branch 7, commanded court sheriff El Cid Caballes to serve the writ on Mayor Michael Rama, the Cebu City Council and the City Treasurer’s Office.

The writ, dated June 3, bars the city treasurer from assessing and collecting real property tax on Lexmark Plaza II at the Cebu Business Park from the second quarter of 2012 onwards, while the main case is being heard.


The writ was issued in compliance to the order of RTC Branch 7 Judge Simeon Dumdum Jr. giving Lexmark “a right to be protected—the right not to be imposed a tax unauthorized by law.”


City Hall said it has not yet received the court order.

The case stemmed from the civil action filed by Lexmark, which asked the court to nullify City Ordinance 2016 requiring Philippine Economic Zone Authority (Peza)-registered enterprises to pay real property taxes.

Lexmark asked the court to determine the legality of the ordinance and to issue a writ of preliminary injunction.

Named defendants to the suit were Mayor Rama, the Cebu City Council and the City Treasurer’s Office.

In its petition, Lexmark said the city treasurer cannot impose real property tax on its building because Peza-registered enterprises are exempted from real estate tax under Republic Act 7916 or the Special Economic Zone Act of 1995.


City Ordinance 2016, on the other hand, declares Peza-registered enterprises in the economic zones of the city exempted from all local taxes, except real property taxes.

City Hall lawyers asked the court to dismiss the case, saying Lexmark failed to exhaust administrative remedies prior to the filing of the civil action.

On Aug. 25, 2010, the City Assessor’s Office issued a notice of tax assessment for Lexmark Plaza II.

Lexmark said that as a Peza-registered enterprise, five percent of its gross income goes to taxes.

Lexmark paid P4.9 million in real estate tax for 2009 to 2011 and the assessed real property tax for the first quarter of 2012, amounting to P5.2 million, “under protest” to avoid being closed by City Hall.

But the court pointed out that Lexmark is not required to exhaust administrative remedies because its petition involves “a pure question of law.”

Published in the Sun.Star Cebu newspaper on June 15, 2013.

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