Golf v. City Of Cebu

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Review on Certiorari of the Resolution1 dated March 14, 2007 and the Order2 dated October 3, 2007 of the Regional Trial Court (RTC), Cebu City, Branch 9 in Civil Case No. CEB-31988, dismissing the Petition for Injunction, Prohibition, Mandamus, Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment, and Declaration of Nullity of Section 42 of Cebu City Tax: Ordinance, with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction3 filed by petitioner Alta Vista Golf and Country Club against respondents City of Cebu (Cebu City), then Cebu City Mayor Tomas R. Osmeña (Osmeña), and then Cebu City Treasurer Teresita Camarillo (Camarillo). Petitioner is a non-stock and non-profit corporation operating a golf course in Cebu City. On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted City Tax: Ordinance No. LXIX, otherwise known as the "Revised Omnibus Tax: Ordinance of the City of Cebu"

(Revised Omnibus Tax: Ordinance). Section 42 of the said tax ordinance on amusement tax was amended by City Tax Ordinance Nos. LXXXII4 and LXXXIV5 (which were enacted by the Sangguniang Panlungsod of Cebu City on December 2, 1996 and April 20, 1998, respectively6) to read as follows: Section 42. Rate of Tax.

- There shall be paid to the Office of the City Treasurer by the proprietors, lessees or operators of theaters, cinemas, concert halls, circuses and other similar places of entertainment, an amusement tax at the rate of thirty percent (30%), golf courses and polo grounds at the rate of twenty percent (20% ), of their gross receipts on entrance, playing green, and/or admission fees; PROVIDED, HOWEVER, That in case of movie premieres or gala shows for the benefit of a charitable institution/foundation or any government institution where higher admission fees are charged, the aforementioned rate of thirty percent (30%) shall be levied against the gross receipts based on the regular admission fees, subject to the approval of the Sangguniang Panlungsod; PROVIDED FURTHER, That in case payment of the amusement tax is made promptly on or before the date hereinbelow prescribed, a rebate of five percent (5%) on the aforementioned gross receipts shall be given to the proprietors, lessees or operators of theaters; PROVIDED FURTHERMORE, that as an incentive to theater operators who own the real property and/or building where the theater is located, an additional one percent (1 %) rebate shall be given to said operator/real property owner concerned for as long as their theater/movie houses are then (10) years old or older or the theater or movie house is located at the city's redevelopment area bounded on the north by Gen.

Maxilom Street up to the port area; on the south by V. Rama Avenue up to San Nicolas area; and on the west by B. Rodriguez St. and General Maxilom Avenue; PROVIDED FINALLY, that the proceeds of this additional one percent (1 %) rebate shall be used by the building/property owner-theater operator to modernize their theater facilities. (Emphases supplied.) In an Assessment Sheet7 dated August 6, 1998, prepared by Cebu City Assessor Sandra I. Po, petitioner was originally assessed deficiency business taxes, fees, and other charges for the year 1998, in the total amount of P3,820,095.68, which included amusement tax on its golf course amounting to P2,612,961.24 based on gross receipts of P13,064,806.20.8 Through the succeeding years, respondent Cebu City repeatedly attempted to collect from petitioner its deficiency business taxes, fees, and charges for 1998, a substantial portion of which consisted of the amusement tax on the golf course.

Petitioner steadfastly refused to pay the amusement tax arguing that the imposition of said tax by Section 42 of the Revised Omnibus Tax Ordinance, as amended, was irregular, improper, and illegal. Petitioner reasoned that under the Local Government Code, amusement tax can only be imposed on operators of theaters, cinemas, concert halls, or places where one seeks to entertain himself by seeing or viewing a show or performance. Petitioner further cited the ruling in Philippine Basketball Association (PBA) v. Court of Appeals9 Through a letter dated October 11, 2005, respondent Camarillo sought to collect once more from petitioner deficiency business taxes, fees, and charges for the year 1998, totaling P2,981,441.52, computed as follows: Restaurant - P4,021,830.65 P 40,950.00 Permit Fee 2,000.00 Liquor-Pl,940,283.80 20,160.00 Permit Fee 2,000.00 Commission/Other Income 14,950.00 P 1,262,764.28 Permit Fee 1,874.00 Retail Cigarettes - P42,076.

11 - Permit 84.15 Non-Securing of Permit 979.33 Sub-Total P 82,997.98 Less: Payment based on computer assessment 74,858.61 Short payment P 12,723.18 25% surcharge 3,180.80 72% interest 11,450.00 Penalty for understatement 500.00 Amount Due P 27 ,854.85 Add: Amusement Tax on golf course P 1,373,761.24 25% surcharge (P6,868,806.20 x 20%) 343,440.31 72% Interest 1,236,385.12