Compromise deal on taxes of 2 schools, hospital is stalled

CEBU, Philippines - The lawyers of two proprietary schools and a hospital in Cebu City strongly objected the city’s definition of the phrase “gross receipts” in the proposed compromise agreement for the payment of their business taxes, because it will include the collection of taxes in case they will decide to sell their properties.

City treasurer Ofelia Oliva explained that during their meeting last Tuesday with the lawyers of the University of Cebu, Cebu Institute of Technology and Saint Vincent Hospital, she insisted that the city will collect business taxes out of the sale of “extraordinary assets” of schools and hospitals.

“Wala g’yod ko mosugot kay kinahanglang mokolekta g’yod ang syudad og business tax gikan sa halin sa mga building o yuta nga gipanag-iya sa ospital ug tunghaan kay ang gipalit nila ana gikan man sa income nila sa tuition fees ug bayad sa mga pasyente,” Oliva explained.

City Councilor Edgardo Labella has decided to defer his proposed resolution that authorize Mayor Tomas R. Osmeña to sign the compromise agreement because of the latest development pending the outcome of the negotiations with the lawyers of said proprietary schools and hospitals.

 UC president Augusto W. Go earlier said, he and CIT president Gregorio Escario have agreed that half of their tax obligations to the city will be settled by granting scholarships and it would be the city officials, who will be tasked to screen the beneficiaries.

Such mode of payment would be also followed by the Saint Vincent Hospital where half of its business tax obligations would be settled in kind, meaning some of its patients may avail of discounts of their bills and the hospital will just deduct the amount from their payables to the city.

But the lawyers of said institutions opposed to the definition of gross receipts that states it will cover “receipts from tuition and registration fees, and receipts from sales of extraordinary assets.”

The compromise agreement also provides that the city, through the city treasurer’s office, has the right to examine the books of said proprietary schools and hospitals to determine the validity, propriety and authenticity of gross receipts declared as well as all deductions from gross receipts claimed therein.”

“Grabeha usab nila uy, hutdon na man lang nila’g ipa-exempt nga ang kwentahon gani sa ilang business taxes magsugod na man lang sa tuig 2007,” the city treasurer said.

The city in 2006 amended its tax ordinance, which reclassified the hospitals and schools as industries that are already subject to taxation based on gross sales, but the hospital and school operators objected claiming that they are exempted from such kind of tax because these are not for profit.

Aside from CIT, UC and Saint Vincent, the other schools and hospitals that have millions of pesos of unpaid business taxes are Cebu Doctors’ University, Velez College, Southwestern University, Sacred Heart Hospital, Cebu Doctors’ Hospital, Cebu North General Hospital and Velez General Hospital. — Rene U. Borromeo/NLQ   (FREEMAN NEWS)