2ND CASE VS. CITY GOV’T

THE court battle begins.

The Lyceum-Northwestern University has made good its threat to sue the Dagupan City government in connection with the latter’s continued imposition of business taxes, which the university claims is not provided for in the city’s tax ordinance.

The civil suit for Declaration of Nullity of certain provisions of the Revenue Code of Dagupan with prayer for temporary restraining order (TRO) and preliminary injunction was filed last Wednesday by the Educational and Medical Development Corporation, the holding company of LNU, represented by Atty. Gonzalo Duque, university president.

Named respondents in the civil suit before the Regional Trial Court (RTC) was the City of Dagupan, represented by Mayor Benjamin Lim and City Treasurer Romelita Alcantara.

In filing the case, Duque was accompanied by his lawyer Manuel F. Manuel and Dr. Mac Arthur Samson, president of the University of Luzon (UL), the first educational institution in Dagupan that filed a similar suit against the Dagupan City government.

LNU was ordered to pay a filing fee of P134,000.

UL’s case is now being heard by RTC Judge Emma Torio of Branch 41.

Duque said he would have postponed the filing in the spirit of the Christmas season but he decided to do it after receiving another notice of delinquency from the city government on Dec. 2.

The notice from city hall threatened to garnish the university’s property if it will not settle the amount of P88,000 representing the claimed school’s deficiency.

NO DUE PROCESS

In its suit, LNU has questioned the city’s imposition of business tax, equivalent to 2 percent of the gross sales and or receipts of business establishments, based on City Ordinance No. 1855, the Revenue Code of Dagupan enacted in 2005.

LNU asserts that the ordinance’s sub-paragraph “I” of paragraph “h”, Sec. 109 is void because “it was enacted in violation of due process, the equal protection clause, and the restriction of the exercise of the power of taxation”.

Duque contented that the ordinance was passed without due process because no private school representative was invited during the committee or public hearings before the Sangguniang Panlungsod enacted Ordinance No.1855 and the ordinance was not published in any publication as required by law.

The assertion was certified by Acting Sangguniang Secretary Rizalino Uson and corroborated by the author of the ordinance, former Councilor Michael Fernandez, who was then chairman on ways and means.

Fernandez admitted that the private schools were not invited “because they were not contemplated to be taxed”.

Duque told newsmen that the academic institution is not only asking for the declaration of the ordinance as null and void but also to ask for a TRO “in defense of what they (city) has been doing to the university”.

REFUND

Further, LNU is seeking a refund of taxes paid to the city government since 2001.

In the period 2001 to 2005, when the city still had no tax code, the city had already been collecting business taxes from his school, which Duque said is tantamount to “illegal exaction”.

“They (city government) had been illegally exacting from us (from 2001 to 2005) without the benefit of an ordinance using only provision of the Local Government Code (Republic Act 1760) which is general in character,” Duque said, contending that an ordinance is needed “to tax everybody in Dagupan”.

The ordinance, even after it was passed, does not have a provision for the imposition of business taxes to private schools, Duque added.

LNU maintained that in imposing business taxes to the private schools, the city government relies merely on the side provision of the ordinance that says any other businesses may be taxed not exceeding 2 percent of the gross sales.

On August 8 this year, Duque wrote to Mayor Benjamin Lim demanding a refund of the amounts paid by LNU.

The university maintained that its payment of business taxes constituted a clear case of “solution indebiti”, which means that if something is received where there is no right to demand it, and it was delivered through mistake, the obligation to return it arises as provided for in Article 2154 of the Civil Code of the Philippines.

Further, Duque pointed out that the ordinance suffered legal infirmities because it was published in only one newspaper of general circulation in Dagupan, not three as required by law.

At presstime, the office of the city mayor has not issued a statement in response to the complaint filed.

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