Hospital operates sans permit

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Wednesday, January 29, 2014

PERPETUAL Succour Hospital, Inc. (PSH) is allegedly operating without a mayor’s permit.

This came after the Cebu City Government refused to issue the hospital a permit this year since the facility has reportedly not yet paid its business taxes of about P62 million.

Hospital lawyer Cornelio Mercado criticized the City for “unjustly” denying the document to the PSH despite the court order that prevented the city treasurer from collecting the business taxes.


Mercado was referring to the decision of Judge Regional Trial Court (RTC) Branch 7 Judge Simeon Dumdum Jr., who issued an injunction that stopped the City’s bid to collect the business taxes from the hospital.

On Oct.14, 2013, Dumdum ruled that the City cannot impose Tax Ordinance 113, which amended the Omnibus Tax Ordinance of Cebu City, on the hospital.

The ordinance imposes business tax on proprietary schools and hospitals.

The case stemmed from the petition for injunction the PSH filed in court to prevent the City and the City Treasurer’s Office (CTO) from collecting taxes from the hospital.

Mercado questioned the validity of the City’s Omnibus Tax Ordinance, which imposes business taxes “on any business… a percentage of two and one half of the gross receipts or sales” of private schools and hospitals.

The CTO issued a certificate of delinquency to the hospital on April 13 last year for unpaid business taxes from 2000 to 2009, amounting to P62 million.

City Hall questioned the status of the PSH as a non-stock, non-profit corporation, saying the hospital does not operate as one because it runs a pharmacy, general merchandise store and real estate leases, among others.

The City said PSH failed to present proof it is a non-stock, non-profit corporation.

Dumdum said that even if PSH does not function as a non-stock, non-profit organization, “its (status) does not change its nature and standing under the law (as a non-stock, non-profit corporation).

Dumdum also pointed out the City already assessed the alleged tax liability of the hospital even before it could verify whether it is a non-stock and non-profit institution.  

The judge also said that even the Court of Tax Appeals (CTA) declared PSH a non-stock, non-profit institution that “operated exclusively for religious and charitable purpose.”

Likewise, the Department of Justice had declared City’s Omnibus Tax Ordinance as null.

The judge also ordered the City to reimburse the hospital P41,290 as docket fees and P76,440 as bond premium.

Dumdum also affirmed his order, dated Aug. 4, 2010, preventing the City from enforcing its tax ordinance on PSH.

Dumdum, in his four-page decision, said the Securities and Exchange Commission recognizes PSH as a non-stock, non-profit entity.

City Hall lawyers appealed the trial court’s decision before the Court of Appeals.

In the latest pleading, lawyer Mercado asked Judge Dumdum to issue a writ of execution to compel the City to issue a permit to the hospital.

The City Government refused and insisted that the hospital pay business taxes, arguing
that Dumdum’s decision is not yet final.

The mayor’s permit is a one of the documents required by the insurance companies, credit lines, renewal of licenses for dangerous drugs, among others.

Mercado also said the City’s move to file an ordinary appeal with the appeals court is a “wrong remedy.”

Citing Sec.3(a)(3),Rule 4 of the Revised Rules of the Court of Tax Appeals (CTA), Mercado said the review of decisions, resolutions or orders of trial courts in local tax cases should be filed with the CTA Division.

And the decision of Dumdum already attained its finality after the lapsed of the 30 days period for the City to appeal the court ruling, said Mercado.

“The wrong remedy did not toll the running of the period...and PSH is entitled to the fruits and the full enforcement of the judgment to start with the issuance of the mayor’s permit,” Mercado’s pleading read.

Published in the Sun.Star Cebu newspaper on January 29, 2014.

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