Compromise deal on payment of business taxes hits snag

CEBU, Philippines -    Owing to legal technicalities, the City Council yesterday deferred the approval of the proposed compromise agreement between the city and two private universities and a private hospital in connection with the payment of their business taxes.

   Councilor Edgardo Labella, chairman of the Council’s committee on laws, said the University of Cebu and Saint Vincent Hospital should be excluded in the compromise agreement between the city and Cebu Institute of Technology because UC and Saint Vincent Hospital are not parties of the case pending before the court.

   Labella instructed city legal officer Joseph Bernaldez to separate the draft agreement between the city and UC and Saint Vincent from that of the city and CIT.

   “Akong gipausab ang draft sa compromise agreement kay ang city legal office man maoy naghimo sa dokumento ug karon nang sunod session ang final discussion,” Labella explained.

   CIT is one of the schools and hospitals whose owners and administrators filed a case in court to question an existing city ordinance that requires them to pay business taxes to the city. They claimed that they are exempted from taxes because their institutions are non-profit.

   The issue that the court needs to resolve is whether or not the petitioners are indeed exempted from the payment of business tax due to the petitioners’ contention that they are proprietary in nature.

   Late last year, however, CIT President Gregorio Escario decided to back out of the case purposely to enter into a compromise agreement with the city.

   In the spirit of civic cooperation and as an aid to Cebu City, Escario and UC President Augusto Go then agreed to pay without necessarily admitting the power of the city to collect business taxes from them, which is equivalent to 75 centavos for every P100 of their gross receipts.

   It was also observed that the provisions in the original compromise agreement have been changed because in the new draft, the term “gross receipts” only covers collections from tuition fees and shall not include receipts from donations, grants and proceeds from sale of extraordinary assets.

   For hospitals, for instance, the term gross receipts shall not cover payments of professional fees.

The payment will start from year 2007 wherein CIT, UC and Saint Vincent Hospital have agreed to pay half of the amount in cash and settle the other half through a scholarship program for deserving residents of Cebu City.   (FREEMAN NEWS)