City legal officer says: No legal obstacle to tax compromise

CEBU, Philippines - City legal officer Joseph Bernaldez is recommending the approval of the proposed compromise agreement between the city government and two schools and a hospital regarding the payment of business taxes.

City Administrator Francisco Fernandez said Bernaldez finds no legal obstacle should the city allow the University of Cebu, Cebu Institute of Technology, and Saint Vincent Hospital to settle their obligations by paying half of the amount in cash and settle the rest in kind.

The City Council is expected to discuss the proposed compromise agreement during its regular session on Wednesday.

UC president Augusto Go earlier said he and CIT President Gregorio Escario have agreed to settle the other half of their tax obligations by granting scholarships to recipients identified by the city.

Fernandez said the Saint Vincent Hospital is also amenable to the proposal by providing discounts to bills of certain patients.

The proposed compromise agreement would reportedly cover tax obligations starting 1997.

In 2006, the city amended its tax ordinance, which reclassified the hospitals and schools as industries that are already subject to taxation based on gross sales.

However, most of the hospital and school operators are seeking exemption from the ordinance, saying they are not for profit, but Mayor Tomas Osmeña rejected their arguments and said the city is bent on collecting the taxes.

Among the schools and hospitals that still owe the city millions of unpaid business taxes include the Cebu Doctors’ University, Velez College, Cebu Institute of Technology, Southwestern University, Sacred Heart Hospital, Cebu Doctors’ Hospital, Cebu North General Hospital and Velez General Hospital.

Osmeña himself said his decision to collect the taxes is a “political suicide,” but is something he is doing because it will benefit the public.

Osmeña is not discounting the possibility that the decision would affect his candidacy for representatives for the city’s south district, as those affected by it may unite themselves in going against him. — Rene U. Borromeo/JMO (THE FREEMAN)