G.R. No. 203754 - Film Development Council of the Philippines vs. Colon Heritage Realty Corp.

Congress passed Republic Act No. 9167 on June 7, 2002, which created the Film Development Council of the Philippines (FDCP).
Sections 13 and 14 of RA 9167 provided that the amusement tax on certain graded films, which would otherwise accrue to the local government units (LGUs) under Section 140 of RA 7160 (the Local Government Code), be deducted and withheld by theater operators and remitted to FDCP to provide an incentive or reward to film producers.

The Supreme Court, in its decision rendered on June 16, 2015, declared Sections 13 and 14 of RA 9167 as invalid and unconstitutional.
The invalidity was based on the finding that these provisions violated the principle of local fiscal autonomy by effectively channeling amusement taxes away from LGUs.
Notwithstanding the unconstitutionality, the Court applied the doctrine of operative fact, recognizing that:

FDCP and film producers were not required to return amounts already received in compliance with RA 9167.
Taxes collected and retained by theater operators during the effectivity of RA 9167 prior to the decision should be remitted to FDCP.

On October 15, 2019, the Court issued a Resolution denying with finality the motion for reconsideration filed by FDCP and the motion for partial reconsideration filed by the City of Cebu, thereby rendering the unconstitutionality issue of Sections 13 and 14 final and executory.
Despite the finality, FDCP issued a Memorandum on December 11, 2019, directing theater owners to process amusement tax remittances for films graded before December 10, 2019, with a warning of legal action for non-compliance.
In response, SM Prime Holdings, Inc. (SMPHI) filed an Urgent Motion for Clarification, contending that:

The graded films exhibited during the Metro Manila Film Festival, which started on December 25, 2019 and ended on January 7, 2020, were subject to a remittance period that would make the amusement taxes payable only 30 days after the exhibition (on or about February 6, 2020).
FDCP’s claim to taxes for films exhibited after the finality of the decision conflicted with the operative fact doctrine and the Court’s earlier rulings.

FDCP maintained that the amusement tax accrues at the point of sale, meaning that the theater owners are duty bound at that time to withhold the tax and remit it to the FDCP.
It argued that since the tax accrues with the sale, the remittance obligation arises immediately upon completion of the sale, regardless of the later exhibition schedule.

SMPHI asserted that for films graded before the finality cutoff (December 10, 2019), the obligation to remit should arise only when the films are actually exhibited.
Thus, since the films were exhibited after the finality of the Court’s decision, the tax remittance was not yet due for these particular films.

Whether SMPHI is required to remit to FDCP amusement taxes that were withheld or became due for remittance after December 10, 2019, specifically for graded films exhibited during the Metro Manila Film Festival.

Whether the operative fact doctrine, which allowed FDCP to claim the amusement taxes collected during the effectivity of RA 9167, extends to cover films that were graded before December 10, 2019 but exhibited after the finality of the Court’s earlier decision.

The proper interpretation of Section 14 of RA 9167—particularly the significance of the phrase “during the period the graded film is exhibited”—and its implications on the timing of tax remittance.