LNU wins tax case vs. city hall
PARTIAL VICTORY FOR SCHOOLS
THE Lyceum Northwestern University (LNU) scored a victory over the Dagupan City government as Regional Trial Court Judge Genoveva Coching-Maramba declared as null and void Section 109 (h) and (i) of the Revenue Code of Dagupan City of 2005, which was being used as basis by city hall in imposing taxes on all private schools in the city.
The court decision, issued on June 29, 2012, was for the case filed by Educational and Medical Development Corporation, the holding company of LNU represented by Atty. Gonzalo T. Duque, against the City of Dagupan, represented by Mayor Benjamin Lim and City Treasurer Romelita Alcantara.
Civil Case No. 2007-0420-D filed by the corporation’s lawyer Manuel Manuel sought to declare the nullity of the pertinent section of the Revenue Code with prayer for a temporary restraining order.
In her decision, Maramba ruled that Section 109 (h) and (i) “is hereby declared null and void for lack of public hearing as required under the Local Government Code.”
She further enjoined the respondents “from further enforcing the said provision against the petitioner”.
Other private schools, colleges and universities in Dagupan are now expected to invoke the court decision in withholding tax payment to the city government next year.
The University of Luzon, through its president Mac Arthur Samson, filed a similar complaint before the sala of RTC Judge Emma Torio and the decision is still pending.
The Court stated that it cannot simply ignore the respondents’ failure to comply with the requirements of public hearing since it is in violation of the university’s right to due process.
PAST PAYMENTS
However, on the petitioner’s allegation that the payments made from January 21, 2002 to July 15, 2011 constituting a clear case of solutio indebiti under Art. 2154 of the Civil Code of the Philippines of the Revenue Code of Dagupan City and, therefore should be refunded, the Court opined that no refund could be granted since the petitioner paid the assessed taxes on the said period without any protest, and it is only now that it seeks annulment of the subject provision of the Revenue Code.
The principle of solutio indebiti in the Civil Code that Duque cited states, “If something is received where there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arise.”
The Revenue Code of the City Government of Dagupan, contained in City Ordinance No. 1855, was approved and passed by the Sangguniang Panlungsod in a special session held December 13, 2005.
According to the petitioner, the sub-paragraphs of Section 109 failed to identify or classify the objects (persons, entities or businesses) of the tax imposed and assailed its validity for being violative of due process and the equal protection clause.
At the same time, the petitioner argued that notices of public hearing were never sent to educational institutions in Dagupan City when the Code was being drafted in violation of Section 186 of the Local Government Code requiring public hearing before the enactment of any tax ordinance.
Moreover, petitioner alleged that the Revenue Code is not effective, as it has not been published in three newspapers of general circulation as required.
DEFENSE
In its defense, the city government claimed that the cited provisions objected to are commonly known as “all-embracing or catch-all provisos normally used by legislators in the formulation of laws, the objective of which is to cover and embrace such other items that may have not been mentioned in the preceding paragraphs.”
At the same time, they said that the payments made by the petitioner represent its business taxes and regulatory fees are clear manifests of their acquiescence to their taxability.
They likewise argued that while the Ordinance was not published in three newspapers of general circulation as provided in the Revenue Code of Dagupan City was nevertheless published in full in the Sunday Punch in the January 8, 2006 issue.
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