Perpetual Succour not taxable

CEBU, Philippines - The city government can no longer collect business taxes from Perpetual Succour Hospital, Inc. (PSHI), at least according to the Regional Trial Court.

Yesterday, RTC Judge Simeon Dumdum ordered the city to stop collecting business taxes from the hospital because PSHI is a non-stock, non-profit corporation, which, under the law, is exempted from business taxes.

“Hence, the court enjoins the City of Cebu, the City Treasurer and their agents, from doing any act to collect from PSHI, percentage or business taxes under Sec. 65, Omnibus Tax Ordinance of the City of Cebu, as amended by Sec. 14, City Tax Ordinance No. LXXXII, and related ordinances,” Dumdum’s decision reads.

The court also ordered the city to reimburse the hospital P41,290 representing docket fees and P76,440 as bond premium, the amounts it spent when it filed the case for prohibition, injunction and damages against the city government.

The hospital filed the case against the city 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.

It argued that as a non-stock, non-profit corporation, it is exempted from business taxes by virtue of Section 193 of the Local Government Code.

“As a non-stock, non-profit institution, PSHI has no capitalization divided into shares and no retained earnings or profits. Whatever earnings it may have are reported to the provincial superior and the mother house of the congregation in Rome,” said Sister Brenda Mondares, a member of the Sisters of St. Paul de Charters (SPC) and currently the department head of the Perpetual Succour Hospital (PSH).

Aside from issuing the Certificate of Delinquency, the hospital said the city government also threatened to levy their real property or garnish their funds to satisfy its alleged tax liability of more than P60 million.

The hospital said its operation would be affected seriously if the court would not intervene.

Tessie Camarillo, the Assistant City Treasurer for Operations, said they considered PSH as a taxable entity for being a business operating for profit.

Camarillo said they could not exempt the hospital automatically from taxes because they needed to check its book of accounts to make sure it is not operating for profit, something that the hospital allegedly refused to let the city do.

She added that while the Bureau of Internal Revenue (BIR) had declared PSH as being exempted from taxes, the same was “not binding” as far as the city government is concerned because the city imposes and collects different taxes.

She also pointed out that the hospital even gave monetary benefits ranging from P3 million to P4 million a year to its members by way of congregation support from 2001 to 2008.

But Dumdum said there was no evidence on record that other persons, other than the beneficiaries of the hospital’s charitable activities, have benefited directly or indirectly from its income.

Dumdum also cited a ruling of the Court of Appeals that the hospital is a non-profit institution.

“From the foregoing, it is clear that petitioner PSH is not organized for profit. It has no capital stock divided to shares,” Dumdum said.  (FREEMAN)