Council clashes over MOA on tax payments

CEBU, Philippines - Members of the City Council, during last Wednesday’s session, clashed over the issue whether or not to give authorization to the City Treasurer’s Office on behalf of the City of Cebu to enter into a memorandum of agreement with propriety schools that sets the terms for the latter’s payment of taxes to the city government.

The MOA being referred to is the draft submitted by the CTO to the council for approval which indicates the agreement between parties involved wherein the University of Cebu-Banilad Campus, St. Vincent Hospital and Cebu Institute of Technology are to give the city the amount of taxes, fees and charges pursuant to City Tax Ordinance CXIII and under the terms and conditions as specified under the MOA.

The draft was submitted to the city council and was then referred to the Committee on Laws for comments and recommendations.

The MOA allows schools to pay the city the tax required from them despite the pending civil case 33418 before Regional Trial Court Branch 23 which presented the issue on whether propriety schools and hospitals within the city are taxable if they are propriety in nature.

“As contained in the MOA, the UC-Banilad, St. Vincent Hospital and CIT, in the spirit of civic cooperation and as an aid to the City, the mentioned institutions, out of beneficent munificence and goodwill and without necessarily admitting the power of the city of Cebu to tax them, have agreed to the stipulations,” according to the committee report.

The terms in the MOA provide that the amount to be paid shall refer to the taxes and fees and charges due for the years 2007 to 2009. On the payment, the MOA says that 50 percent of the amount will be paid in two installments – first is upon the approval of the MOA and second within the third month after the first payment.

The other 50 percent will be in the form of scholarship programs to deserving high school graduates of the city under specific terms and free and charitable hospital services to be made available and given to constituents of the city. 

Last Wednesday, the Committee on Laws through its vice chairman Councilor Gerardo Carillo has recommended giving authorization to the CTO for the proper disposition of the MOA because the committee sees nothing wrong with the agreement as it will benefit the city above other reasons.

But Councilor Joey Daluz III argued that if the MOA shall be entered into, what will happen to City Ordinance CXIII when the city will only be tolerating non-recognition of the ordinance by schools as provided in the terms of the MOA.

“What will happen to our ordinance? Because they are not recognizing the ordinance but they are willing to pay for certain conditions,” Daluz said.

Councilor Rodrigo Abellanosa raised the same issue on whether the city shall allow these schools to continue to refuse to recognize the power of the city to tax schools and hospitals.

But Carillo explained that the city will not lose anything because while they allow the court to decide whether the city has the power to impose taxes, UC-Banilad, CIT and St. Vincent hospital shall continue its commitment even after 2009 “unless the court declares with finality, nullifying the imposition of the tax ordinance.”

To further study the implications of the MOA, the council is set to deliberate the proposal once more before it is finally approved. — Jessica Ann R. Pareja/BRP(FREEMAN NEWS)