G.R. No. 180235 - Alta Vista Golf and Country Club vs. City of Cebu

Case Summary (G.R. No. 180235)

Key Individuals and Context

Petitioner: Alta Vista Golf and Country Club, a non-stock, non-profit corporation operating a golf course in Cebu City.
Respondents: City of Cebu; then Mayor Tomas R. Osmeña (in official capacity); then City Treasurer Teresita C. Camarillo (in official capacity).
Context: Dispute over the imposition and collection of amusement tax on golf-course green fees under Section 42 of the Revised Omnibus Tax Ordinance of Cebu City, as amended.

Key Dates and Procedural Milestones

Enactment of Revised Omnibus Tax Ordinance: June 21, 1993; amendments to Section 42 enacted Dec. 2, 1996 and April 20, 1998 (with retroactive effect to Oct. 9, 1997 declared by later ordinance).
Assessment dated August 6, 1998 (deficiency assessment including amusement tax on golf course).
Tax collection demand dated October 11, 2005; protest by petitioner October 17, 2005; denial of protest December 5, 2005.
Closure Order issued December 28, 2005; served January 12, 2006.
Petition filed in the Regional Trial Court (RTC) January 13, 2006; amended petition January 19, 2006.
Petitioner paid the assessed amount under protest March 20, 2006.
RTC Resolution dismissing case: March 14, 2007; denial of reconsideration October 3, 2007.
Appeal to the Supreme Court raising purely legal questions.

Applicable Law and Constitutional Basis

1987 Philippine Constitution (as the decision post-dates 1990 and the Local Government Code is interpreted within this constitutional framework).
Local Government Code (Republic Act No. 7160): Section 131(c) (definition of “amusement places”), Section 140 (amusement tax), Section 186 (residual taxing power), and Section 187 (procedure and timeline for challenging local tax ordinances).
Relevant municipal tax ordinance provision: Section 42 of Cebu City’s Revised Omnibus Tax Ordinance (as amended), which imposed a 20% amusement tax on golf courses’ gross receipts for entrance/playing green/admission fees.
Controlling jurisprudence cited: Philippine Basketball Association v. Court of Appeals (PBA), Pelizloy Realty Corporation v. Province of Benguet, Reyes v. Court of Appeals, Hagonoy Market Vendor Association, Ongsuco v. Malones, CEPALCO v. City of Cagayan de Oro, and related authorities as applied by the Court.

Nature of Petitioner’s Claims and Relief Sought

Petitioner challenged (a) the validity of Section 42 insofar as it taxes golf-course green fees as “amusement” receipts, (b) the legality of the assessment imposing that tax for 1998, and (c) the legality of the Closure Order issued by the Mayor for nonpayment.
Requested remedies included declarations nullifying the closure order, the assessment, and Section 42’s application to golf courses, and injunctive relief against enforcement, together with refund or tax credit for amounts paid under protest.

Assessment, Administrative Protest, and Closure Order

The City Assessor issued an assessment dated August 6, 1998, which included an amusement tax computed on golf-course gross receipts. The City Treasurer sought collection and, after petitioner protested (letter of Oct. 17, 2005), denied the protest (Dec. 5, 2005) on grounds including presumed constitutionality of the ordinance, petitioner’s failure to utilize Section 187 remedies, and advice from the City Attorney.
A Closure Order dated December 28, 2005 ordered cessation of operations for alleged violations including operating without a business permit and nonpayment of the assessed amusement tax and penalties; the Mayor relied on his enforcement powers and provisions of the Local Government Code.

Procedural Defenses Raised by Respondents Below

Respondents moved to dismiss in the RTC asserting lack of jurisdiction, petitioner’s failure to exhaust administrative remedies, noncompliance with Section 187 (failure to appeal within 30 days to the Secretary of Justice), failure to pay under protest as prescribed, and alleged lack of authority of the individual who filed the suit on petitioner’s behalf.

RTC Ruling and Rationale

The RTC denied petitioner’s request for a temporary restraining order and ultimately dismissed the petition for procedural grounds. The RTC held that Section 187’s prescribed administrative remedies and timelines are mandatory and that petitioner had not complied; the RTC also found that petitioner had no legal right to operate without a business permit and that the Mayor’s actions in denying or withholding permits and ordering closure were within the Mayor’s police and enforcement powers. The RTC therefore declined to reach the substantive question of whether golf-course green fees are subject to amusement tax.

Jurisdictional and Procedural Analysis by the Supreme Court

The Supreme Court recognized that the issues before it were purely legal questions and thus properly brought by petition for review on certiorari from the RTC judgment. Rule 41, Section 2(c) of the Rules of Court permits direct appeal to the Supreme Court when only questions of law are involved. The Court further explained that while Section 187 and exhaustion of administrative remedies are ordinarily mandatory, exceptions exist where the issue is a pure question of law or where substantial constitutional or legal matters require prompt judicial resolution.

Exception to Section 187 and Exhaustion Doctrine in This Case

The Court concluded that this case fit within recognized exceptions to strict application of Section 187 and the exhaustion doctrine because: (a) the question whether a golf course is a “place of amusement” subject to amusement tax is a pure question of law; and (b) the matter implicated substantial substantive legal principles (scope of taxing power and statutory construction of “amusement places”) warranting judicial determination notwithstanding procedural defaults. Consequently, the Court proceeded to resolve the substantive issue on the merits.

Statutory Interpretation of “Amusement Places” and Application of Ejusdem Generis

The Court analyzed Section 140 and Section 131(c) of the Local Government Code, which limit amusement tax to proprietors/operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement. Section 131(c) defines “amusement places” as venues where one seeks admission to entertain oneself by seeing or viewing a show or performance. Applying the principle of ejusdem generis and prior precedent (notably PBA and Pelizloy Realty), the Court emphasized that the enumerated examples share a typifying characteristic: venues primarily used for staging spectacles, shows, or performances meant to be viewed by an audience. The phrase “other places of amusement” is to be interpreted consistent with that class.

Application to Golf Courses and Uniformity Principle

The Court reasoned that golf courses do not fall within the typifying characteristic: patrons enter to engage in a physical sport (playing golf), not to view a staged performance or show presented by the proprietor or operator. Analogous venues for active sport participation (e.g., gyms, courts, shooting ranges) are not traditionally characterized as “places of amusement” for amusement-tax purposes, and there was no principled basis for singling out golf courses. The Court further observed that singling out golf courses would contravene the uniformity requirement in local taxation: similarly situated subjects or objects of taxation should be treated alike.

Limits on Residual Taxing Power Invoked by Respondents

Although Section 186 of the Local Government Code grants local government

Case Syllabus (G.R. No. 180235)

Case Caption, Decision and Authorship

Supreme Court, First Division; G.R. No. 180235; Decision dated January 20, 2016.
Title as shown above; petitioner: Alta Vista Golf and Country Club (a non-stock, non-profit corporation operating a golf course in Cebu City).
Respondents: City of Cebu; then Mayor Tomas R. Osmeaa (in his capacity as Mayor); then City Treasurer Teresita C. Camarillo (in her capacity as City Treasurer).
Opinion penned by Justice Leonardo-De Castro. Concurrence by Chief Justice Sereno, and Justices Bersamin, Perlas-Bernabe, and Jardeleza.

Procedural Posture (Lower Courts and Reliefs Sought)

Petition for Review on Certiorari from RTC, Cebu City, Branch 9, in Civil Case No. CEB-31988, seeking review of:
- RTC Resolution dated March 14, 2007 (granting respondents' Motion to Dismiss).
- RTC Order dated October 3, 2007 (denying petitioner's motion for reconsideration).
Underlying suit filed by petitioner in the RTC on January 13, 2006 (Amended Petition filed January 19, 2006) titled: 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 Injunction.
Reliefs sought in RTC action included: annulment of a Closure Order; annulment of tax assessment; declaration that Section 42 of the Revised Omnibus Tax Ordinance (as amended) is null and void; injunctions and mandamus to prevent enforcement and secure issuance of permits.

Ordinances, Amendments and Relevant Municipal Provision (Section 42)

June 21, 1993: Sangguniang Panlungsod enacted City Tax Ordinance No. LXIX (Revised Omnibus Tax Ordinance of the City of Cebu).
Section 42 as amended by City Tax Ordinance Nos. LXXXII (signed October 9, 1997 by Mayor Alvin B. Garcia) and LXXXIV (signed May 4, 1998; effectivity retroactive to October 9, 1997) read to impose amusement tax as follows:
- 30% on proprietors/lessees/operators of theaters, cinemas, concert halls, circuses, and other similar places of entertainment.
- 20% on golf courses and polo grounds, of their gross receipts on entrance, playing green, and/or admission fees.
- Various provisos: special rules for premieres/gala shows, rebates for timely payment and for theater owners under certain conditions, and the use of a 1% rebate for modernization (as reproduced in the source).

Assessment, Amounts and Collection Efforts

Assessment Sheet dated August 6, 1998 (prepared by Cebu City Assessor Sandra I. Po) originally assessed petitioner with deficiency business taxes, fees and other charges for 1998 totaling 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.
Through succeeding years, the City repeatedly attempted to collect the 1998 deficiencies; a substantial portion consisted of amusement tax on the golf course.
Letter dated October 11, 2005 from City Treasurer Camarillo presented another computation of deficiency business taxes, fees and charges for 1998 totaling P2,981,441.52. The Oct. 11, 2005 computation included:
- Various restaurant and retail items and penalties (sub-total computation and short payment calculations).
- Amusement tax on golf course P1,373,761.24, plus surcharges and 72% interest components in the computation that produced the grand total of P2,981,441.52 (as presented in the Assessment Sheet excerpt).

Petitioner's Administrative Protests and Correspondence

Petitioner consistently refused to pay the amusement tax on grounds that Section 42, as amended, was irregular, improper and illegal because under the Local Government Code (LGC), amusement tax only applies to places where one seeks to entertain oneself by seeing or viewing a show or performance.
Petitioner relied on Philippine Basketball Association (PBA) v. Court of Appeals (392 Phil. 133, 139-141 (2000)), where the Court held that professional basketball games are not akin to theaters, cinematographs, concert halls and circuses (artistic spectacles), and thus not within the local amusement tax category under the Local Tax Code.
Petitioner sent a letter dated October 17, 2005 (treated as a Protest of Assessment by Camarillo) and a letter dated November 30, 2005 proposing to settle non-amusement assessments first and requesting issuance of required permits pending resolution of the legality of the amusement tax imposition on golf courses.

Treasurer's Ruling and Final Demand

Respondent Camarillo, treating petitioner's October 17, 2005 letter as a formal Protest of Assessment, rendered a ruling dated December 5, 2005 denying the Protest on multiple grounds:
- Reinterpretation of the PBA case: Camarillo's reading asserted the PBA ruling held PBA liable to pay amusement tax to the national government, not local government.
- Section 42 enjoys a presumption of constitutionality and petitioner failed to avail itself of the remedy under Section 187 of the LGC (appeal to Secretary of Justice within 30 days from effectivity of ordinance).
- The Office of the City Attorney issued a letter dated July 9, 2004 affirming the City's position that petitioner was liable to pay amusement tax on its golf course.
Camarillo's December 5, 2005 ruling served as a final demand for immediate settlement, warned of non-issuance of a Mayor's Business Permit for nonpayment, and threatened administrative and judicial remedies for collection; the Protest of Assessment was denied.

Closure Order and Its Contents

Closure Order dated December 28, 2005 (served January 12, 2006) issued by Mayor Osmeaa declared Alta Vista Golf and Country Club closed for specified violations, including:
- Operating a business without a business permit for five years (2001–2005), in relation to specified Chapters and Sections of City Tax Ordinance No. 69, as amended.
- Nonpayment of deficiency on business taxes and fees amounting to P17,499.64 (adjusted).
- Nonpayment of deficiency on amusement tax and penalties totaling P2,953,586.86, in violation of relevant ordinance provisions.
- Business permit violations referencing Article 172, Revised Penal Code.
The Closure Order expressly invoked the Mayor's power under the Local Government Code (Section 455 and Section 16) to enforce laws and ordinances, issue executive orders for enforcement, and act for general welfare; it warned of criminal filings and ordered immediate cessation of business operations.

RTC Proceedings: Filing, Motions and Issues Raised

Petitioner filed the RTC action on January 13, 2006 (Civil Case No. CEB-31988) and amended petition on January 19, 2006.
Petitioner’s principal claims in the RTC:
- The Closure Order is unconstitutional, issued summarily without due process.
- The Mayor lacks power under the LGC to deny issuance of business permits or order closure for nonpayment of taxes.
- Section 42 of the Revised Omnibus Tax Ordinance (as amended) is ultra vires (beyond Cebu City’s taxing authority) and thus null and void; the assessment is therefore illegal/unconstitutional.
- Alternatively, the amusement tax for 1998 had prescribed and could not be enforced.
Respondents filed a Motion to Dismiss on grounds of:
- Lack of RTC jurisdiction over the subject matter.
- Non-exhaustion of administrative remedies.
- Noncompliance with Section 187 of the LGC (procedures and prescriptive periods for challenging a local tax ordinance).
- Noncompliance with Section 252 of the LGC and Section 75 of the City Charter requiring payment under protest of the tax assessed (payment under protest requirement).
- Failure to establish authority of Ma. Theresa Ozoa to institute the case on behalf of petitioner (standing/authority).

Parties' Contentions in Opposition and Rejoinder at RTC

Petitioner’s opposition to Motion to Dismiss argued:
- RTC, as court of general jurisdiction, could take cognizance because the petition sought declaratory relief on the Closure Order and injunctive writs, and involved legal questions.
- Section 195 of the LGC (on protest of assessment) does not require payment under protest; Section 252 invoked by respondents applies only to real property taxes.
- No prescription barred the Petition; there is no rule in the LGC depriving courts from determining constitutionality or validity of tax ordinance because such adjudication is the courts' constitutional duty.
- No need to exhaust administrative re
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