Appeals court junks Philippine Heart Center’s tax exemption bid

MANILA, Philippines – The Court of Appeals (CA) on Thursday, March 31, dismissed the plea of the Philippine Heart Center (PHC) to be exempted from paying real property tax .

The 14-page decision said the specialty hospital failed to exhaust its administrative remedies, such as filing a petition first before the Local Board of Assessment Appeals, then bringing it up to the Central Board of Assessment Appeals, and finally to the Court of Tax Appeals. 

“The premature invocation of the intervention of the court is fatal to one’s cause of action. The doctrine of exhaustion of administrative remedies is based on practical and legal reasons. The availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies,” the CA 13th Division said, dismissing the petition based on technicality.

The appeals court said it is “not insensitive” to PHC championing its cause “by securing a definitive ruling on its claim for tax exemption.”

It added, “Regrettably, this vehemence was not complemented with circumspection to make sure that the correct remedy under the rules was availed of.”

The PHC, a Level 4 government-owned and controlled corporate specialty hospital, was created through former President Ferdinand Marcos’ Presidential Decree 673 issued in 1975.

The case involving the hospital stems from the demand of the Quezon City government for PHC to pay P36.5 million of real property taxes in 2004, even after Marcos granted exemption to the hospital.

Prior to this, PHC entered an amicable settlement with the local government, agreeing to provide services (hospitalization, surgical, medical) to qualified Quezon City residents in place of paying its assessed tax liabilities.

In 2006, the hospital learned from the Office of the Government Corporate Counsel that it is exempt from paying real property taxes, following the Supreme Court ruling in Manila International Airport Authority vs Court of Appeals.

This prompted PHC to suspend its tax payments in Quezon City, only to be issued by the local government final notices of delinquency with corresponding warrants of levy. The hospital brought the case to the appeals court.

The CA dismissed the case in a September 2012 ruling, citing the same reason: failure to exhaust administrative remedies. But the hospital asked for a reconsideration, citing the following:

• Issue is whether or not PHC is exempt from payment of real property taxes.
• CA should intervene because public welfare is at stake, and the hospital “fears that the operations of the hospital might be left to untrained hands.”

The appeals court in 2013 reversed its earlier decision and granted the appeal of PHC, saying the hospital’s non-compliance in exhausting its administrative remedies was justified. The Quezon City government then asked the CA to reconsider this decision. – Rappler.com