THE Supreme Court (SC) has affirmed its decision declaring as unconstitutional the provisions of Republic Act 9167 mandating local government units (LGUs) to remit amusement tax to the Film Development Council of the Philippines (FDCP).
However, in a 12-page decision penned by Associate Justice Estela Perlas-Bernabe, the Court en banc directed the Cebu City government to remit to the FDCP the amount of P76.8 million, which the FDCP was entitled to prior to the Court’s final decision declaring as invalid and unconstitutional Sections 13 and 14 of RA 9167, or An Act Creating the Film Development Council of the Philippines.
Court records showed that sometime in 1993, the City of Cebu, in its exercise of its power to impose amusement taxes under Section 140 of the Local Government Code, passed City Ordinance 69 titled “Revised Omnibus Tax Ordinance of the City of Cebu.”
Sections 42 and 43, Chapter 11 of the ordinance requires proprietors, lessees or operators of theaters, cinemas, concert halls, circuses, boxing stadiums and other places of amusement to pay an amusement tax.
Meanwhile, RA 9167 was passed by Congress on June 7, 2002, creating the FDCP.
Sections 13 and 14 of RA 9167 provided for the tax treatment of certain graded films. Film producers were to be entitled to an incentive equivalent to the amusement tax imposed and collected by the cities, subject to various rates depending on the grade of their film, to be remitted to the FDCP.
The FDCP argued that from the time RA 9167 took effect up to the present, only the City of Cebu, among the covered cities, has failed to comply with the mandate of the law.
Thus, the FDCP sent demand letters for unpaid amusement tax reward with 5-percent surcharge for each month of delinquency due to the producers.
Because of the persistent refusal of the proprietors and cinema operators to remit the amounts as FDCP demanded, and Cebu City’s assertion of a claim on the amounts in question, the Cebu City government filed a petition before the Regional Trial Court (RTC) of Cebu City Branch 14 and sought for the declaration of Sections 13 and 14 of RA 9167 as invalid and unconstitutional.
Similarly, respondent Colon Heritage filed before the Cebu RTC Branch 5 seeking to declare the same provisions unconstitutional.
“Accordingly, Cebu City’s motion seeking non-application of the operative fact doctrine in favor of FDCP to retain the subject amusement taxes it withheld, as well as to collect payments accruing to it during the covered period within which Section 13 and 14 of RA 9167 up until the finality of the main decision is denied,” the SC said.
In this regard, the SC’s directive to Cebu City to turn over to FDCP the amount of P76,836,807.08, which represented the amount that should have been remitted by SM Prime Holdings Inc. to FDCP at that time, remains,” it added.
On the other hand, the Court ruled that FDCP failed to raise new arguments that would warrant the reconsideration of its decision declaring Sections 13 and 14 of RA 9167 invalid and unconstitutional.
“On the constitutionality issue, FDCP’s arguments in its motion are mere rehash of its position in the main and, hence, cannot be sustained,” the Court declared.
In declaring the said provisions unconstitutional, the High Tribunal said that in the legislation of RA 9167, Congress, in effect, earmarked the income on amusement taxes imposed by LGUs in favor of the FDCP and the producers of graded films—as though it were legally within its control—under the guise of setting a limitation on the LGU’s exercise of their delegated taxing power.
The SC ruled that Sections 13 and 14 infringe on the principle of local autonomy enshrined in the 1987 Constitution:
“This, undoubtedly, is a usurpation of the latter’s exclusive prerogative to apportion their funds, an impermissible intrusion into the LGU’s constitutionally protected domain which puts to naught the guarantee of fiscal autonomy to municipal corporations enshrined in our basic law,” it held.