Title
Alta Vista Golf and Country Club vs. City of Cebu
Case
G.R. No. 180235
Decision Date
Jan 20, 2016
A non-profit golf club challenges Cebu City's amusement tax on golf courses, arguing it exceeds LGC authority; SC rules tax invalid, orders refund.
city of cebu
amusement tax
golf course

Case Summary (A.C. No. 9119)

Factual Background

ALTA VISTA GOLF AND COUNTRY CLUB was a non-stock, non-profit corporation operating a golf course in Cebu City. The Sangguniang Panlungsod of Cebu City enacted the Revised Omnibus Tax Ordinance on June 21, 1993, and subsequently amended Section 42 by City Tax Ordinance Nos. LXXXII and LXXXIV to impose an amusement tax on various venues, expressly including golf courses at a rate of twenty percent. In an Assessment Sheet dated August 6, 1998, the City assessed petitioner for deficiency business taxes for 1998, including an amusement tax on the golf course of P2,612,961.24 based on gross receipts of P13,064,806.20.

Administrative Correspondence and Protest

Respondent TERESITA C. CAMARILLO, as City Treasurer, repeatedly sought collection of the assessed deficiencies, and treated petitioner’s October 17, 2005 letter as a formal Protest of Assessment. By ruling dated December 5, 2005, the City Treasurer denied the protest on the grounds that the doctrine in Philippine Basketball Association v. Court of Appeals did not exempt petitioner from local amusement tax, that Section 42 enjoyed a presumption of constitutionality, and that petitioner failed to avail itself of the remedy under Section 187 of the Local Government Code by appealing to the Secretary of Justice within thirty days from effectivity. The Treasurer issued a final demand for payment and warned that nonpayment would result in nonissuance of the Mayor’s business permit and other remedies.

Closure Order and Petitioner’s Court Action

On December 28, 2005, respondent HON. MAYOR TOMAS R. OSMENA issued a Closure Order citing, among other alleged violations, operation without a business permit and nonpayment of deficiency amusement tax amounting to P2,953,586.86. Petitioner filed the present Petition for Injunction, Prohibition, Mandamus, and Declarations of Nullity of the Closure Order, the Assessment, and Section 42, with prayer for TRO and preliminary injunction on January 13, 2006, later amending the Petition on January 19, 2006. Petitioner denied liability for amusement tax on the ground that golf courses did not fall within the class of "places of amusement" as defined in the Local Government Code and that the assessment and closure order violated due process and were otherwise illegal.

Respondents’ Motion to Dismiss and Grounds

Respondents moved to dismiss on multiple grounds including lack of subject matter jurisdiction of the RTC, failure to exhaust administrative remedies, noncompliance with Section 187 of the Local Government Code requiring appeal to the Secretary of Justice within thirty days, alleged failure to pay under protest as required by Section 252 of the Local Government Code and Section 75 of Republic Act No. 3857, and alleged lack of authority of the individual who filed suit on petitioner’s behalf.

RTC Ruling on TRO and Motion to Dismiss

The RTC denied the prayer for a temporary restraining order on March 16, 2006, holding that petitioner, having operated without a business permit, had no legal right in its favor warranting injunctive relief and that the Mayor acted within his police power to refuse issuance of permits or to close businesses in violation of ordinances. The RTC thereafter granted respondents’ Motion to Dismiss by Resolution dated March 14, 2007, and denied reconsideration on October 3, 2007. The RTC relied on the Court’s decisions in Reyes v. Court of Appeals and Hagonoy Market Vendor Association v. Municipality of Hagonoy, Bulacan, treating the prescriptive and procedural periods in Section 187 as mandatory and concluding petitioner’s failure to appeal to the Secretary of Justice within thirty days was fatal to its cause.

Jurisdictional and Procedural Issue before the Supreme Court

Petitioner invoked direct review to the Supreme Court by way of Petition for Review on Certiorari under Rule 41, Section 2(c), asserting that the issues presented were purely legal and therefore appealable directly to the Court. The Supreme Court accepted that the case raised pure questions of law, noting the parties agreed that the controversy involved only legal issues and that the matter was submitted on memoranda.

The Court’s View on Section 187 and Exceptions

The Court reaffirmed that Section 187 ordinarily imposes mandatory procedural prerequisites for contesting local tax ordinances, citing Reyes and Hagonoy. The Court nonetheless recognized established exceptions to the exhaustion rule where the issues presented are purely legal and squarely within the judicial competence, or where exceptional circumstances justify relaxation of procedural preconditions. Relying on precedents including Ongsuco v. Malones and Cagayan Electric Power and Light Co., Inc. v. City of Cagayan De Oro, the Court held that the present case merited such an exception because it raised pure questions of law that demanded immediate resolution and because the substantive question—whether a local government may validly impose amusement tax on golf courses—was of public importance.

Substantive Interpretation of Amusement Tax Provisions

The Court analyzed the taxing authority under the Local Government Code, particularly Section 140 which authorized amusement tax on proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at specified rates. The Court relied on the definitional provision in Section 131(c) that characterized "amusement places" as venues "where one seeks admission to entertain oneself by seeing or viewing the show or performance." Applying the principle of ejusdem generis and following the reasoning in Pelizloy Realty Corporation v. The Province of Benguet and Philippine Basketball Association v. Court of Appeals, the Court concluded that the enumerated examples share the typifying characteristic of venues primarily used for staging spectacles or performances to be viewed by an audience. Playing golf is an active sport activity and not the passive viewing of staged performances; therefore golf courses do not fall within the class of "other places of amusement" contemplated by Section 140 and Section 131(c).

On the Residual Power to Tax and Its Limits

The Court addressed respondents’ possible reliance on the residual taxing power under Section 186 of the Local Government Code, which permits levy of taxes on subjects not specifically enumerated, subject to limitations. The Court held that respondents could not invoke the residual power because Section 140, together with Section 131(c), already explicitly governed amusement tax; hence the City could not expand the class of amusement places t

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