Private schools not covered by tax ordinance
TAX CODE AUTHOR ISSUES CLARIFICATION
PRIVATE schools in Dagupan City will likely turn the table on the city government with the admission of former Councilor Michael Fernandez that these institutions were “not contemplated to be covered” by City Ordinance No. 1855, the Revenue Code of Dagupan.
He made the clarification in a meeting with Dr. Gonzalo Duque, president of the Lyceum-Northwestern University, last Wednesday after the latter appeared before the Sangguniang Panglungsod to protest the insistence of the Lim administration of the Dagupan City government to collect business taxes from private schools.
Fernandez told Duque that during the discussions on the tax code, no educational, religious or charitable institution was invited during the public hearing “because they were not contemplated to be covered by the proposed city ordinance.”
This, according to Duque, confirmed what he earlier pointed out that no representative from the private schools was invited during the marathon public hearing held from October 11 to 14, 2005, violating the due process provision of the constitution, thus making it defective.
The former councilor, who authored the ordinance and was then chairman of the committee on ways and means of the Sangguniang Panlungsod (SP), said, “I think it is my responsibility to shed light on the matter to finally put the issue to rest.”
Fernandez said, “There is no specific provision either (in Ordinance No. 1855) citing any educational, religious or charitable institution, whether they are profit or non-profit – specifically on educational institution – because they play a major role in educating the society and the citizenry of Dagupan.”
He explained that while all institutions share the burden of paying regulatory fees, such as sanitary permits for example, these are not taxes as they fall under the police power of the city government as authorized by the local government code.
NOT INVITED
Duque asked for certified copies of documents showing that they were really invited when the proposed ordinance was being heard but Rizalino Uson, acting secretary of the SP, attested that no invitations were sent to the schools.
Councilor Jesus Canto said if the schools were not indeed invited then they should not be taxed.
However, Councilor Brian Lim, son of the mayor, contended that it does not matter whether or not the schools were invited since the revenue code has long been adopted before Duque made his claim.
UL CASE
Last month, the University of Luzon headed by Dr. Mac Arthur Samson filed a civil case on the issue against the Dagupan City government, Mayor Lim, City Administrator Vladimir Mata and City Treasurer Romelita Alcantara.
The case is now set for hearing at the sala of Regional Trial Court Judge Emma Torio.
Duque added that LNU is also contemplating on filing a similar case, which will include the council members as respondents but only incidental to the case.
Duque said the SP should defer any action pending the court’s decision.
“We may run counter to what the RTC may decide eventually. Since the jurisdiction has been passed to the local RTC, we should allow it to decide the case and act accordingly once judgment has been served,” he said.
Duque said if the court finds the assessment on private schools by the city government as illegal, he will ask the city government to reimburse all the business taxes paid by LNU worth about P400,000 per quarter, which they had been religiously paying since Ordinance 1855 took effect.
“We have to proceed with the suit because taxmen of Mayor Lim continue to harass me by sending me letters requiring me to present our gross receipts, including our articles of incorporation,” he added.
IRR
Though elated by Fernandez’s admission, Duque said he remains puzzled on what possible legal basis the city government may have used in levying business taxes on private schools.
He suspects that the problem lies in the Implementing Rules and Regulation (IRR) set by the Mayor’s office could have a provision on the imposition of business taxes on private schools.
Fernandez, however, said it is illegal to make provisions in the implementing rules that were not provided in the approved ordinance.
The IRR for the tax code was issued by Lim in 2006.
Councilor Lim earlier said the doctrine of estoppel and laches, or the unreasonable delay in pursuing a right or claim, may already have forfeited any claim for tax exemption.
However, Duque, a lawyer, asserts that the law on estoppel will not apply on them because in this particular case, they paid the business taxes on the assumption that there is a law applied on them and the same is legal, which was what the city government made to appear.
City Ordinance No. 1855 was published in full in The PUNCH on January 8, 2006. (with report from PIA-Pangasinan)
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