FIRST DIVISION 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,
G.R. No. 180235, January 20, 2016 concert halls, circuses and other similar places of entertainment, an
amusement tax at the rate of thirty percent (30%), golf courses and polo
ALTA VISTA GOLF AND COUNTRY CLUB, Petitioner, v. THE CITY OF grounds at the rate of twenty percent (20%), of their gross receipts
on entrance, playing green, and/or admission fees; PROVIDED,
CEBU, HON. MAYOR TOMAS R. OSMEÑA, IN HIS CAPACITY AS MAYOR
HOWEVER, That in case of movie premieres or gala shows for the benefit of
OF CEBU, AND TERESITA C. CAMARILLO, IN HER CAPACITY AS THE
CITY TREASURER, Respondents. 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
DECISION
admission fees, subject to the approval of the Sangguniang Panlungsod;
PROVIDED FURTHER, That in case payment of the amusement tax is made
LEONARDO-DE CASTRO, J.: promptly on or before the date hereinbelow prescribed, a rebate of five
percent (5%) on the aforementioned gross receipts shall be given to the
Before the Court is a Petition for Review on Certiorari of the proprietors, lessees or operators of theaters; PROVIDED FURTHERMORE,
Resolution1 dated March 14, 2007 and the Order2 dated October 3, 2007 of that as an incentive to theater operators who own the real property and/or
the Regional Trial Court (RTC), Cebu City, Branch 9 in Civil Case No. CEB- building where the theater is located, an additional one percent (1%) rebate
31988, dismissing the Petition for Injunction, Prohibition, Mandamus, shall be given to said operator/real property owner concerned for as long as
Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment, their theater/movie houses are then (10) years old or older or the theater or
and Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with movie house is located at the city's redevelopment area bounded on the
Prayer for Temporary Restraining Order and Writ of Preliminary north by Gen. Maxilom Street up to the port area; on the south by V. Rama
Injunction3 filed by petitioner Alta Vista Golf and Country Club against Avenue up to San Nicolas area; and on the west by B. Rodriguez St. and
respondents City of Cebu (Cebu City), then Cebu City Mayor Tomas R. General Maxilom Avenue; PROVIDED FINALLY, that the proceeds of this
Osmeña (Osmeña), and then Cebu City Treasurer Teresita Camarillo additional one percent (1%) rebate shall be used by the building/property
(Camarillo). owner-theater operator to modernize their theater facilities. (Emphases
supplied.)
Petitioner is a non-stock and non-profit corporation operating a golf course
in Cebu City.
In an Assessment Sheet7 dated August 6, 1998, prepared by Cebu City
Assessor Sandra I. Po, petitioner was originally assessed deficiency business
On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted City
taxes, fees, and other charges for the year 1998, in the total amount of
Tax Ordinance No. LXIX, otherwise known as the "Revised Omnibus Tax
P3,820,095.68, which included amusement tax on its golf course amounting
Ordinance of the City of Cebu" (Revised Omnibus Tax Ordinance).
to P2,612,961.24 based on gross receipts of P13,064,806.20.8 chanroblesvirtuallawlibrary

Section 42 of the said tax ordinance on amusement tax was amended by

Through the succeeding years, respondent Cebu City repeatedly attempted
City Tax Ordinance Nos. LXXXII4and LXXXIV5 (which were enacted by
to collect from petitioner its deficiency business taxes, fees, and charges for
the Sangguniang Panlungsod of Cebu City on December 2, 1996 and April
1998, a substantial portion of which consisted of the amusement tax on the
20, 1998, respectively6) to read as follows:
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 Less: Payment based on computer assessment 74,858.61
Ordinance, as amended, was irregular, improper, and illegal.
Short payment P 12,723.18

Petitioner reasoned that under the Local Government Code, amusement tax
25% surcharge 3,180.80
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 72% interest 11,450.00
performance. Petitioner further cited the ruling in Philippine Basketball
Association (PBA) v. Court of Appeals9 that under Presidential Decree No. Penalty for understatement 500.00

231, otherwise known as the Local Tax Code of 1973, the province could
Amount Due P 27,854.85
only impose amusement tax on admission from the proprietors, lessees, or
operators of theaters, cinematographs, concert halls, circuses, and other Add: Amusement Tax on golf course P 1,373,761.24
places of amusement, but not professional basketball games. Professional
basketball games did not fall under the same category as theaters, 25% surcharge (P6,868,806.20 x 20%) 343,440.31

cinematographs, concert halls, and circuses as the latter basically belong to

72% Interest 1,236,385.12 2,953,586.67
artistic forms of entertainment while the former catered to sports and
gaming. GRAND TOTAL P2,981,441.5210

(Emphasis supplied.)
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: Petitioner, through counsel, wrote respondent Camarillo a letter11 dated
October 17, 2005 still disputing the amusement tax assessment on its golf
course for 1998 for being illegal. Petitioner, in a subsequent letter dated
Restaurant - P4,021,830.65 P 40,950.00
November 30, 2005, proposed that:
Permit Fee 2,000.00
While the question of the legality of the amusement tax on golf courses is
Liquor-P1,940,283.80 20,160.00
still unresolved, may we propose that Alta Vista Golf and Country Club settle
first the other assessments contained in your Assessment Sheet issued on
Permit Fee 2,000.00
October 11, 2005.
Commission/Other Income 14,950.00

At this early stage, we also request that pending resolution of the legality of
P1,262,764.28
the amusement tax imposition on golf courses in [the Revised Omnibus Tax
Permit Fee 1,874.00
Ordinance, as amended], Alta Vista Golf and Country Club be issued the
required Mayor's and/or Business Permit.12 chanrobleslaw

Retail Cigarettes - P42,076.11 - Permit 84.15

Non-Securing of Permit 979.33 Respondent Camarillo treated the letter dated October 17, 2005 of petitioner
as a Protest of Assessment and rendered on December 5, 2005 her ruling
Sub-Total P 82,997.98 denying said Protest on the following grounds: (a) a more thorough and
comprehensive reading of the PBA case would reveal that the Court actually 2. Nonpayment of deficiency on Business Taxes and
ruled therein that PBA was liable to pay amusement tax, but to the national Fees amounting to Seventeen Thousand Four
government, not the local government; (b) Section 42 of the Revised Hundred Ninety-Nine Pesos and Sixty-Four Centavos
Omnibus Tax Ordinance, as amended, enjoyed the presumption of (Php17,499.64), as adjusted, despite repeated demands
constitutionality and petitioner failed to avail itself of the remedy under in violation [of] Sections 4 and 8 of City Tax Ordinance No.
Section 187 of the Local Government Code to challenge the legality or 69, as amended;
validity of Section 42 of the Revised Omnibus Tax Ordinance, as amended,
by filing an appeal with the Secretary of Justice within 30 days from 3. Nonpayment of deficiency on Amusement Tax and the
effectivity of said ordinance; and (c) the Office of the City Attorney issued a penalties relative therewith totaling Two Million Nine
letter dated July 9, 2004 affirming respondent Camarillo's position that Hundred Fifty-Three Thousand Five Hundred Eighty-
petitioner was liable to pay amusement tax on its golf course.13Ultimately, Six Pesos and Eighty-Six Centavos
respondent Camarillo held: (Php2,953,586.86) in violation of Sections 4 and 8 in
relation to Section 42 of City Tax Ordinance No. 69, as
WHEREFORE, upon consideration of the legal grounds as above-mentioned, amended, business permit-violation of the Article 172,
we reiterate our previous stand on the validity of the ASSESSMENT SHEET Revised Penal Code of the Philippines. (Emphases supplied.)
pertaining to the Tax Deficiencies for CY 1998 and this ruling serve as the
FINAL DEMAND for immediate settlement and payment of your amusement
tax liabilities and/or delinquencies otherwise we will constrained (sic) the The Closure Order established respondent Mayor Osmeña's authority for
non-issuance of a Mayor's Business Permit for nonpayment of the said issuance of the same and contained the following directive:
deficiency on amusement tax and/or other tax liabilities as well as to file the
appropriate filing of administrative and judicial remedies for the collection of As the chief executive of the City, the Mayor has the power and duty to:
the said tax liability and the letter treated as a Protest of Assessment that Enforce all laws and ordinances relative to the governance of the city x x x
was duly submitted before this office is hereby DENIED.14 chanrobleslaw
and, in addition to the foregoing, shall x x x Issue such executive orders for
the faithful and appropriate enforcement and execution of laws and
Shortly after, on January 12, 2006, petitioner was served with a Closure ordinances x x x. These are undeniable in the LOCAL GOVERNMENT CODE,
Order15 dated December 28, 2005 issued by respondent City Mayor Osmefia. Section 455, par. (2) and par. (2)(iii).
According to the Closure Order, petitioner committed blatant violations of
the laws and Cebu City Ordinances, to wit: Not only that, these powers can be exercised under the general welfare
clause of the Code, particularly Section 16 thereof, where it is irrefutable
that "every government unit shall exercise the powers expressly granted,
1. Operating a business without a business permit for
those necessarily implied therefrom, as well as powers necessary,
five (5) years, from year 2001-2005, in relation to
appropriate, or incidental of its efficient and effective governance, and those
Chapters I and II and the penalty clauses under Sections 4,
which are essential to the promotion of the general welfare."
6, 8, 66 (f) and 114 of the City Tax Ordinance No. 69,
otherwise known as the REVISED CITY TAX ORDINANCE OF
This CLOSURE ORDER precisely satisfies these legal precedents. Hence now,
THE CITY OF CEBU, as amended by CO. 75;
in view whereof, your business establishment is hereby declared closed in
direct contravention of the above-specified laws and city ordinances. Please

cease and desist from further operating your business immediately upon requiring payment under protest of the tax assessed; and (e) failure to
receipt of this order. establish the authority of Ma. Theresa Ozoa (Ozoa) to institute the case on
behalf of petitioner.19
chanroblesvirtuallawlibrary

This closure order is without prejudice to the constitutional/statutory right of

the City to file criminal cases against corporate officers, who act for and its In its Opposition to the Motion to Dismiss, petitioner countered that the RTC,
behalf, for violations of Section 114 of the REVISED CITY TAX ORDINANCE a court of general jurisdiction, could take cognizance of its Petition in Civil
OF THE CITY OF CEBU and Section 516 of the LOCAL GOVERNMENT CODE, Case No. CEB-31988, which not only involved the issue of legality or
with penalties of imprisonment and/or fine. illegality of a tax ordinance, but also sought the declaration of nullity of the
Closure Order and the issuance of writs of injunction and prohibition.
FOR STRICT AND IMMEDIATE COMPLIANCE.16 chanrobleslaw Petitioner likewise asserted that Section 195 of the Local Government Code
on the protest of assessment does, not require payment under protest.
Section 252 of the same Code invoked by respondents applies only to real
The foregoing developments prompted petitioner to file with the RTC on
property taxes. In addition, petitioner maintained that its Petition in Civil
January 13, 2006 a Petition for Injunction, Prohibition, Mandamus,
Case No. CEB-31988 could not be barred by prescription. There is nothing in
Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment,
the Local Government Code that could deprive the courts of the power to
and Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with
determine the constitutionality or validity of a tax ordinance due to
Prayer for Temporary Restraining Order and Writ of Preliminary Injunction,
prescription. It is the constitutional duty of the courts to pass upon the
against respondents, which was docketed as Civil Case No. CEB-
validity of a tax ordinance and such duty cannot be limited or restricted.
31988.17 Petitioner eventually filed an Amended Petition on January 19,
Petitioner further contended that there is no need for exhaustion of
2006.18Petitioner argued that the Closure Order is unconstitutional as it had
administrative remedies given that the issues involved are purely legal; the
been summarily issued in violation of its right to due process; a city mayor
notice of closure is patently illegal for having been issued without due
has no power under the Local Government Code to deny the issuance of a
process; and there is an urgent need for judicial intervention. Lastly,
business permit and order the closure of a business for nonpayment of
petitioner pointed out that there were sufficient allegations in the Petition
taxes; Section 42 of the Revised Omnibus Tax Ordinance, as amended, is
that its filing was duly authorized by petitioner. At any rate, petitioner
null and void for being ultra vires or beyond the taxing authority of
already attached to its Opposition its Board Resolution No. 104 authorizing
respondent Cebu City, and consequently, the assessment against petitioner
Ozoa to file a case to nullify the Closure Order. Thus, petitioner prayed for
for amusement tax for 1998 based on said Section 42 is illegal and
the denial of the Motion to Dismiss.20
unconstitutional; and assuming arguendothat respondent Cebu City has the
chanroblesvirtuallawlibrary

power to impose amusement tax on petitioner, such tax for 1998 already
Respondents, in their Rejoinder to Petitioner's Opposition to the Motion to
prescribed and could no longer be enforced.
Dismiss,21 asserted that the Closure Order was just a necessary
consequence of the nonpayment by petitioner of the amusement tax
Respondents filed a Motion to Dismiss based on the grounds of (a) lack of
assessed against it. The Revised Omnibus Tax Ordinance of respondent Cebu
jurisdiction of the RTC over the subject matter; (b) non-exhaustion of
City directs that no permit shall be issued to a business enterprise which
administrative remedies; (c) noncompliance with Section 187 of the Local
made no proper payment of tax and, correspondingly, no business
Government Code, which provides the procedure and prescriptive periods for
enterprise may be allowed to operate or continue to operate without a
challenging the validity of a local tax ordinance; (d) noncompliance with
business permit. The fundamental issue in the case was still the nonpayment
Section 252 of the Local Government Code and Section 75 of Republic Act
by petitioner of amusement tax. Respondents relied on Reyes v. Court of
No. 3857, otherwise known as the Revised Charter of the City of Cebu,
Appeals,22 in which the Court categorically ruled that the prescriptive periods
fixed in Section 187 of the Local Government Code are mandatory and
prerequisites before seeking redress from a competent court. Section 42 of On March 20, 2006, petitioner paid under protest to respondent Cebu City,
the Revised Omnibus Tax Ordinance, as amended, was passed on April 20, through respondent Camarillo, the assessed amusement tax, plus penalties,
1998, so the institution by petitioner of Civil Case No. CEB-31988 before the interest, and surcharges, in the total amount of P2,750,249.17.25 cralawred

RTC on January 13, 2006 - without payment under protest of the assessed
amusement tax and filing of an appeal before the Secretary of Justice within Since the parties agreed that the issues raised in Civil Case No. CEB-31988
30 days from the effectivity of the Ordinance - was long barred by were all legal in nature, the RTC already considered the case submitted for
prescription. resolution after the parties filed their respective Memorandum.26 chanroblesvirtuallawlibrary

After filing by the parties of their respective Memorandum, the RTC issued On March 14, 2007, the RTC issued a Resolution granting the Motion to
an Order23 dated March 16, 2006 denying the prayer of petitioner for Dismiss of respondents. Quoting from Reyes and Hagonoy Market Vendor
issuance of a Temporary Restraining Order (TRO). The RTC found that when Association v. Municipality of Hagonoy, Bulacan,27 the RTC sustained the
the business permit of petitioner expired and it was operating without a position of respondents that Section 187 of the Local Government Code is
business permit, it ceased to have a legal right to do business. The RTC mandatory. Thus, the RTC adjudged:
affirmed respondent Mayor Osmeña's authority to issue or grant business
licenses and permits pursuant to the police power inherent in his office; and From the above cited cases, it can be gleaned that the period in the filing of
such authority to issue or grant business licenses and permits necessarily the protests is important. In other words, it is the considered opinion of this
included the authority to suspend or revoke or even refuse the issuance of court [that] when a taxpayer questions the validity of a tax ordinance
the said business licenses and permits in case of violation of the conditions passed by a local government legislative body, a different procedure directed
for the issuance of the same. The RTC went on to hold that: in Section 187 is to be followed. The reason for this could be because the tax
ordinance is clearly different from a law passed by Congress. The local
[Petitioner] was given opportunities to be heard when it filed a protest [of] government code has set several limitations on the taxing power of the local
the assessment which was subsequently denied. To the mind of this court, government legislative bodies including the issue of what should be taxed.
this already constitutes the observance of due process and that [petitioner]
had already been given the opportunity to be heard. Due process and In this case, since the Petitioner failed to comply with the procedure outlined
opportunity to be heard does not necessarily mean winning the argument in in Section 187 of the Local Government Code and the fact that this case was
one's favor but to be given the fair chance to explain one's side or views filed way beyond the period to file a case in court, then this court believes
with regards [to] the matter in issue, which in this case is the legality of the that the action must fail.
tax assessment.
Because of the procedural infirmity in bringing about this case to the court,
It is therefore clear that when this case was filed, [petitioner] had no more then the substantial issue of the propriety of imposing amusement taxes on
legal right in its favor for the courts to protect. It would have been a the green fees could no longer be determined.
different story altogether had [petitioner] paid the tax assessment for the
green fees even under protest and despite payment and [respondent] Mayor WHEREFORE, in view of the aforegoing, this case is hereby DISMISSED.28 chanrobleslaw

refused the issuance of the business permit because all the requisites for the
issuance of the said permit are all complied with.24
The RTC denied the Motion for Reconsideration of petitioner in an Order
chanroblesvirtuallawlibrary

dated October 3, 2007.

extraordinary writs against first level courts should be filed in the RTC and
Petitioner is presently before the Court on pure questions of law, viz.: those against the latter should be filed in the Court of Appeals. The rule is
not iron-clad, however, as it admits of certain exceptions.
I. WHETHER OR NOT THE POWER OF JUDICIAL REVIEW OVER
THE VALIDITY OF A LOCAL TAX ORDINANCE HAS BEEN Thus, a strict application of the rule is unnecessary when cases brought
RESTRICTED BY SECTION 187 OF THE LOCAL before the appellate courts do not involve factual but purely legal questions.
GOVERNMENT CODE. (Citations omitted.)

II. WHETHER OR NOT THE CITY OF CEBU OR ANY LOCAL "A question of law exists when the doubt or controversy concerns the correct
GOVERNMENT CAN VALIDLY IMPOSE AMUSEMENT TAX TO application of law or jurisprudence to a certain set of facts; or when the
THE ACT OF PLAYING GOLF.29 issue does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted[;]" and it may be
brought directly before this Court, the undisputed final arbiter of all
There is merit in the instant Petition. questions of law.31chanroblesvirtuallawlibrary

The RTC judgment on pure The present case is an exception

questions of law may be directly to Section 187 of the Local Government
appealed to this Court via a petition Code and the doctrine of exhaustion of
for review on certiorari. administrative remedies.

Even before the RTC, the parties already acknowledged that the case Section 187 of the Local Government Code reads:
between them involved only questions of law; hence, they no longer
presented evidence and agreed to submit the case for resolution upon Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and
submission of their respective memorandum. Revenue Measures; Mandatory Public Hearings. - The procedure for approval
of local tax ordinances and revenue measures shall be in accordance with
It is incontestable that petitioner may directly appeal to this Court from the the provisions of this Code: Provided, That public hearings shall be
judgment of the RTC on pure questions of law via its Petition for Review conducted for the purpose prior to the enactment thereof: Provided,
on Certiorari. Rule 41, Section 2(c) of the Rules of Court provides that "[i]n further, That any question on the constitutionality or legality of tax
all cases where only questions of law are raised or involved, the appeal shall ordinances or revenue measures may be raised on appeal within thirty (30)
be to the Supreme Court by petition for review on certiorari in accordance days from the effectivity thereof to the Secretary of Justice who shall render
with Rule 45." As the Court declared in Bonifacio v. Regional Trial Court of a decision within sixty (60) days from the date of receipt of the
Makati, Branch 14930: appeal: Provided, however, That such appeal shall not have the effect of
suspending the effectivity of the ordinance and the accrual and payment of
The established policy of strict observance of the judicial hierarchy of courts, the tax, fee, or charge levied therein: Provided, finally, That within thirty
as a rule, requires that recourse must first be made to the lower-ranked (30) days after receipt of the decision or the lapse of the sixty-day period
court exercising concurrent jurisdiction with a higher court. A regard for without the Secretary of Justice acting upon the appeal, the aggrieved party
judicial hierarchy clearly indicates that petitions for the issuance of may file appropriate proceedings with a court of competent jurisdiction.
 of its agencies and provision of basic services to its inhabitants are largely
Indeed, the Court established in Reyes that the aforequoted provision is a derived from its revenues and collections. Thus, it is essential that the
significant procedural requisite and, therefore, mandatory: validity of revenue measures is not left uncertain for a considerable length of
time. Hence, the law provided a time limit for an aggrieved party to assail
Clearly, the law requires that the dissatisfied taxpayer who questions the the legality of revenue measures and tax ordinances.33 (Citations omitted.)
validity or legality of a tax ordinance must file his appeal to the Secretary of
Justice, within 30 days from effectivity thereof. In case the Secretary
Nevertheless, in later cases, the Court recognized exceptional circumstances
decides the appeal, a period also of 30 days is allowed for an aggrieved
that justify noncompliance by a taxpayer with Section 187 of the Local
party to go to court. But if the Secretary does not act thereon, after the
Government Code.
lapse of 60 days, a party could already proceed to seek relief in court. These
three separate periods are clearly given for compliance as a prerequisite
The Court ratiocinated in Ongsuco v. Malones,34 thus:
before seeking redress in a competent court. Such statutory periods are set
to prevent delays as well as enhance the orderly and speedy discharge of
It is true that the general rule is that before a party is allowed to seek the
judicial functions. For this reason the courts construe these provisions of
intervention of the court, he or she should have availed himself or herself of
statutes as mandatory.
all the means of administrative processes afforded him or her. Hence, if
resort to a remedy within the administrative machinery can still be made by
A municipal tax ordinance empowers a local government unit to impose
giving the administrative officer concerned every opportunity to decide on a
taxes. The power to tax is the most effective instrument to raise needed
matter that comes within his or her jurisdiction, then such remedy should be
revenues to finance and support the myriad activities of local government
exhausted first before the court's judicial power can be sought. The
units for the delivery of basic services essential to the promotion of the
premature invocation of the intervention of the court is fatal to one's cause
general welfare and enhancement of peace, progress, and prosperity of the
of action. The doctrine of exhaustion of administrative remedies is based on
people. Consequently, any delay in implementing tax measures would be to
practical and legal reasons. The availment of administrative remedy entails
the detriment of the public. It is for this reason that protests over tax
lesser expenses and provides for a speedier disposition of controversies.
ordinances are required to be done within certain time frames. In the instant
Furthermore, the courts of justice, for reasons of comity and convenience,
case, it is our view that the failure of petitioners to appeal to the Secretary
will shy away from a dispute until the system of administrative redress has
of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to
been completed and complied with, so as to give the administrative agency
their cause.32 (Citations omitted.)
concerned every opportunity to correct its error and dispose of the case.
However, there are several exceptions to this rule.
The Court further affirmed in Hagonoy that:
The rule on the exhaustion of administrative remedies is intended to
At this point, it is apropos to state that the timeframe fixed by law for preclude a court from arrogating unto itself the authority to resolve a
parties to avail of their legal remedies before competent courts is not a controversy, the jurisdiction over which is initially lodged with an
"mere technicality" that can be easily brushed aside. The periods stated in administrative body of special competence. Thus, a case where the issue
Section 187 of the Local Government Code are mandatory. Ordinance No. 28 raised is a purely legal question, well within the competence; and
is a revenue measure adopted by the municipality of Hagonoy to fix and the jurisdiction of the court and not the administrative agency,
collect public market stall rentals. Being its lifeblood, collection of revenues would clearly constitute an exception. Resolving questions of law,
by the government is of paramount importance. The funds for the operation which involve the interpretation and application of laws, constitutes

essentially an exercise of judicial power that is exclusively allocated De Oro,35 the Court initially conceded that as in Reyes, the failure of
to the Supreme Court and such lower courts the Legislature may taxpayer CEPALCO to appeal to the Secretary of Justice within the statutory
establish. period of 30 days from the effectivity of the ordinance should have been
fatal to its cause. However, the Court purposefully relaxed the application of
In this case, the parties are not disputing any factual matter on the rules in view of the more substantive matters.
which they still need to present evidence. The sole issue petitioners
raised before the RTC in Civil Case No. 25843 was whether Municipal Similar to Ongsuco and CEPALCO, the case at bar constitutes an exception
Ordinance No. 98-01 was valid and enforceable despite the absence, prior to to the general rule. Not only does the instant Petition raise pure questions of
its enactment, of a public hearing held in accordance with Article 276 of the law, but it also involves substantive matters imperative for the Court to
Implementing Rules and Regulations of the Local Government Code. This is resolve.
undoubtedly a pure question of law, within the competence and
jurisdiction of the RTC to resolve. Section 42 of the Revised Omnibus
Tax Ordinance, as amended, imposing
Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly amusement tax on golf courses is null
establishes the appellate jurisdiction of this Court, and impliedly recognizes and void as it is beyond the authority of
the original jurisdiction of lower courts over cases involving the respondent Cebu City to enact under the
constitutionality or validity of an ordinance:
ChanRoblesVirtualawlibrary Local Government Code.
Section 5. The Supreme Court shall have the following powers:
The Local Government Code authorizes the imposition by local government
xxxx units of amusement tax under Section 140, which provides:

(2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the Sec. 140. Amusement Tax. - (a) The province may levy an amusement tax
law or the Rules of Court may provide, final judgments and orders of lower to be collected from the proprietors, lessees, or operators of theaters,
courts in: cinemas, concert halls, circuses, boxing stadia, and other places of
amusement at a rate of not more than thirty percent (30%) of the gross
(a) All cases in which the constitutionality or validity of any treaty, receipts from admission fees.
international or executive agreement, law, presidential decree, proclamation,
order, instruction, ordinance, or regulation is in question. (b) In the case of theaters or cinemas, the tax shall first be deducted and
withheld by their proprietors, lessees, or operators and paid to the provincial
treasurer before the gross receipts are divided between said proprietors,
In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v. Intermediate
lessees, or operators and the distributors of the cinematographic films.
Appellate Court, and Commissioner of Internal Revenue v. Santos, the Court
has affirmed the jurisdiction of the RTC to resolve questions of
(c) The holding of operas, concerts, dramas, recitals, painting, and art
constitutionality and validity of laws (deemed to include local ordinances) in
exhibitions, flower shows, musical programs, literary and oratorical
the first instance, without deciding questions which pertain to legislative
presentations, except pop, rock, or similar concerts shall be exempt from
policy. (Emphases supplied, citations omitted.)
the payment of the tax hereon imposed.

In Cagayan Electric Power and Light Co., Inc. (CEPALCO) v. City of Cagayan (d) The sangguniang panlalawigan may prescribe the time, manner, terms
and conditions for the payment of tax. In case of fraud or failure to pay the enumeration of particular subjects but would have used only general terms.
tax, the sangguniang panlalawigan may impose such surcharges, interests [2 Sutherland, Statutory Construction, 3rd ed., pp. 395-400].
and penalties as it may deem appropriate.
In Philippine Basketball Association v. Court of Appeals, the Supreme Court
had an opportunity to interpret a starkly similar provision or the counterpart
(e) The proceeds from the amusement tax shall be shared equally by the
provision of Section 140 of the LGC in the Local Tax Code then in effect.
province and the municipality where such amusement places are located.
Petitioner Philippine Basketball Association (PBA) contended that it was
(Emphasis supplied.)
subject to the imposition by LGUs of amusement taxes (as opposed to
amusement taxes imposed by the national government). In support of its
"Amusement places," as defined in Section 131 (c) of the Local Government contentions, it cited Section 13 of Presidential Decree No. 231, otherwise
Code, "include theaters, cinemas, concert halls, circuses and other places of known as the Local Tax Code of 1973, (which is analogous to Section 140 of
amusement where one seeks admission to entertain oneself by seeing or the LGC) providing the following: ChanRoblesVirtualawlibrary

viewing the show or performance." Section 13. Amusement tax on admission. — The province shall impose a
tax on admission to be collected from the proprietors, lessees, or operators
The pronouncements of the Court in Pelizloy Realty Corporation v. The of theaters, cinematographs, concert halls, circuses and other places of
Province of Benguet36 are of particular significance to this case. The Court, amusement xxx.
in Pelizloy Realty, declared null and void the second paragraph of Article X,
Applying the principle of ejusdem generis, the Supreme Court rejected PBA's
Section 59 of the Benguet Provincial Code, in so far as it imposes
assertions and noted that:
amusement taxes on admission fees to resorts, swimming pools, bath
ChanRoblesVirtualawlibrary

[I]n determining the meaning of the phrase 'other places of amusement',

houses, hot springs, and tourist spots. Applying the principle of ejusdem
one must refer to the prior enumeration of theaters, cinematographs,
generis, as well as the ruling in the PBA case, the Court expounded on the
concert halls and circuses with artistic expression as their common
authority of local government units to impose amusement tax under Section
characteristic. Professional basketball games do not fall under the same
140, in relation to Section 131(c), of the Local Government Code, as follows:
category as theaters, cinematographs, concert halls and circuses as the
latter basically belong to artistic forms of entertainment while the former
Under the principle of ejusdem generis, "where a general word or phrase
caters to sports and gaming.
follows an enumeration of particular and specific words of the same class or
where the latter follow the former, the general word or phrase is to be However, even as the phrase 'other places of amusement' was already
construed to include, or to be restricted to persons, things or cases akin to, clarified in Philippine Basketball Association, Section 140 of the LGC adds to
resembling, or of the same kind or class as those specifically mentioned." the enumeration of 'places of amusement' which may properly be subject to
amusement tax. Section 140 specifically mentions 'boxing stadia' in addition
The purpose and rationale of the principle was explained by the Court to "theaters, cinematographs, concert halls [and] circuses" which were
in National Power Corporation v. Angas as follows: ChanRoblesVirtualawlibrary
already mentioned in PD No. 231. Also, 'artistic expression' as a
The purpose of the rule on ejusdem generis is to give effect to both the characteristic does not pertain to 'boxing stadia'.
particular and general words, by treating the particular words as indicating
the class and the general words as including all that is embraced in said In the present case, the Court need not embark on a laborious effort at
class, although not specifically named by the particular words. This is statutory construction. Section 131 (c) of the LGC already provides a clear
justified on the ground that if the lawmaking body intended the general definition of 'amusement places':
terms to be used in their unrestricted sense, it would have not made an

xxxx amusement. As petitioner asserted, people do not enter a golf course to see
or view a show or performance. Petitioner also, as proprietor or operator of
Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia the golf course, does not actively display, stage, or present a show or
are bound by a common typifying characteristic in that they are all performance. People go to a golf course to engage themselves in a physical
venues primarily for the staging of spectacles or the holding of sport activity, i.e., to play golf; the same reason why people go to a gym or
public shows, exhibitions, performances, and other events meant to court to play badminton or tennis or to a shooting range for target practice,
be viewed by an audience. Accordingly, 'other places of amusement' yet there is no showing herein that such gym, court, or shooting range is
must be interpreted in light of the typifying characteristic of being similarly considered an amusement place subject to amusement tax. There
venues "where one seeks admission to entertain oneself by seeing is no basis for singling out golf courses for amusement tax purposes from
or viewing the show or performances" or being venues primarily other places where people go to play sports. This is in contravention of one
used to stage spectacles or hold public shows, exhibitions, of the fundamental principles of local taxation: that the "[taxation shall be
performances, and other events meant to be viewed by an audience. uniform in each local government unit."38 Uniformity of taxation, like the
kindred concept of equal protection, requires that all subjects or objects of
As defined in The New Oxford American Dictionary, 'show' means "a taxation, similarly situated, are to be treated alike both in privileges and
spectacle or display of something, typically an impressive one"; while liabilities.39
chanroblesvirtuallawlibrary

'performance' means "an act of staging or presenting a play, a conceit, or

other form of entertainment." As such, the ordinary definitions of the Not lost on the Court is its declaration in Manila Electric Co. v. Province of
words 'show' and 'performance' denote not only visual engagement Laguna40 that under the 1987 Constitution, "where there is neither a grant
(i.e., the seeing or viewing of things) but also active doing (e.g., nor a prohibition by statute, the tax power [of local government units] must
displaying, staging or presenting) such that actions are manifested be deemed to exist although Congress may provide statutory limitations and
to, and (correspondingly) perceived by an audience. guidelines." Section 186 of the Local Government Code also expressly grants
local government units the following residual power to tax:
Considering these, it is clear that resorts, swimming pools, bath houses, hot
springs and tourist spots cannot be considered venues primarily "where one Sec. 186. Power to Levy Other Taxes, Fees, or Charges. - Local government
seeks admission to entertain oneself by seeing or viewing the show or units may exercise the power to levy taxes, fees, or charges on any
performances". While it is true that they may be venues where people are base or subject not otherwise specifically enumerated herein or
visually engaged, they are not primarily venues for their proprietors or taxed under the provisions of the National Internal Revenue Code,
operators to actively display, stage or present shows and/or performances. as amended, or other applicable laws: Provided,that the taxes, fees, or
charges shall not be unjust, excessive, oppressive, confiscatory or contrary
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do to declared national policy: Provided, further, That the ordinance levying
not belong to the same category or class as theaters, cinemas, concert halls, such taxes, fees or charges shall not be enacted without any prior public
circuses, and boxing stadia. It follows that they cannot be considered as hearing conducted for the purpose. (Emphasis supplied.)
among the 'other places of amusement' contemplated by Section 140 of the
LGC and which may properly be subject to amusement taxes.37 (Emphases
Respondents, however, cannot claim that Section 42 of the Revised Omnibus
supplied, citations omitted.)
Tax Ordinance, as amended, imposing amusement tax on golf courses, was
enacted pursuant to the residual power to tax of respondent Cebu City. A
In light of Pelizloy Realty, a golf course cannot be considered a place of local government unit may exercise its residual power to tax when there is
neither a grant nor a prohibition by statute; or when such taxes, fees, or
charges are not otherwise specifically enumerated in the Local Government
Code, National Internal Revenue Code, as amended, or other applicable
laws. In the present case, Section 140, in relation to Section 131(c), of the
Local Government Code already explicitly and clearly cover amusement tax
and respondent Cebu City must exercise its authority to impose amusement
tax within the limitations and guidelines as set forth in said statutory
provisions.

WHEREFORE, in view of all the foregoing, the Court GRANTS the instant
Petition, and REVERSES and SETS ASIDE the Resolution dated March 14,
2007 and the Order dated October 3, 2007 of the Regional Trial Court, Cebu
City, Branch 9 in Civil Case No. CEB-31988. The Court DECLARES NULL
and VOID the following: (a) Section 42 of the Revised Omnibus Tax
Ordinance of the City of Cebu, as amended by City Tax Ordinance Nos.
LXXXII and LXXXIV, insofar as it imposes amusement tax of 20% on the
gross receipts on entrance, playing green, and/or admission fees of golf
courses; (b) the tax assessment against petitioner for amusement tax on its
golf course for the year 1998 in the amount of Pl,373,761.24, plus
surcharges and interest pertaining to said amount, issued by the Office of
the City Treasurer, City of Cebu; and (c) the Closure Order dated December
28, 2005 issued against Alta Vista Golf and Country Club by the Office of the
Mayor, City of Cebu. The Court also ORDERS the City of Cebu to refund to
Alta Vista Golf and Country Club the amusement tax, penalties, surcharge,
and interest paid under protest by the latter in the total amount of
P2,750,249.17 or to apply the same amount as tax credit against existing or
future tax liability of said Club.

SO ORDERED