Capitol says PETCO ought to pay CICC's taxes

CEBU, Philippines - Capitol consultant Rory Jon Sepulveda, yesterday said that if somebody has to pay taxes for the Cebu International Convention Center, it should be the Philippine Exhibitors Trade Corp. (PETCO) as it manages, promotes and markets the CICC.

“If PETCO is engaged in business, they should be subjected to business taxes,” Sepulveda said.

However, Sepulveda said that PETCO is not engaged in private business because all the income of the CICC goes to the provincial government which then gives PETCO a fixed fee authorized by the CICC Management Board.

The management board is composed of the governor and the Mandaue City mayor as co-chairmen with three members each from the city and province.

Sepulveda cited the implied rule that ever since, local governments have not been taxed on its income, be it derived from taxes, fees, other charges or from the result of operation of its economic enterprises.

Section 133 of the Local Government Code states that “taxes, fees or charges of any kind on the national government, its agencies and instrumentalities, and local government units” are the common limitations on the taxing powers of the LGUs.

Sepulveda also cited the fundamentals of taxation in which “government agencies and instrumentalities are generally exempt from taxation” for reason that “to levy a tax upon public property for the payment of the tax so laid and thus, the government would be taxing itself.”

Meanwhile, even if both the provincial government and the Mandaue City government signed a joint venture agreement over the construction of the CICC five years ago such an agreement has no legal personality at all.

Regal Oliva, newly-installed Mandaue City treasurer, yesterday said he saw a COA report dated July 13, 2010 that the joint venture agreement signed last January 24, 2007 between the provincial government and the city government for the creation of the CICC Management Board to oversee the operations and management of the CICC has no legal personality at all as it was never been registered with the Securities and Exchange Commission.

This as he also explained that the Mayor Jonas Cortes should not be dragged into this case as this is a treasury function and the mayor need not sign every time they send notices of collection.

“It was just a spur of the moment when I mentioned to you reporters that CICC has not secured a business permit and has not paid its taxes due to the city government as we are talking about tax collections during our press conference,” Oliva yesterday said.

He said that it would also be unfair that the city impose taxes on low income businesses and not go after the big businesses.

He also said regarding the province, they do not know who to charge as no one even came to secure a business permit from them.

He only came to know last Thursday afternoon that the said facility was being managed by PETCO thus a demand letter was immediately sent to their office and a representative went to their office yesterday to get the list of requirements for securing a business permit.

However, Oliva said that he was also told by the said representative that they are still waiting for their financial records from their head office in Manila before they settle accounts with the city. 

Oliva said that with PETCO’s failure to pay the city, he would be charging them P2.4 million because being city treasurer he can use a “presumptive level income approach” and it would be up to them to disprove his claim by opening their books of accounts.

 Oliva recently revealed that the CICC has been operating without a business permit and has failed to pay its taxes due to the Mandaue City government since it opened in 2007. He also said the CICC failed to secure a business permit and pay income taxes to the city government.

Cebu City south district Rep. Tomas Osmeña could not help but make fun of the CICC after learning it was constructed without the necessary permits and the province did not pay taxes for it.

Osmeña said the people of Mandaue City were just “swindled” by Cebu Governor Gwendolyn Garcia who built the structure worth P900 million for the 2007 summit of the leaders of the Association of South East Asian Nations.

He said that while Park Mall, just beside CICC, has generated employment and pays taxes to Mandaue City, the CICC did not.

“While the Park Mall has contributed taxes and employment to the city. The CICC? Zero, zero, zero,” Osmeña said. —(FREEMAN)