Case Summary (G.R. No. 154259)
Relevant Background and Legislation
The controversy traces back to City Ordinance No. LXIX, enacted by Cebu City in 1993, which enforced an amusement tax of 30% on gross receipts from various entertainment venues. Subsequently, RA 9167 was enacted in 2002, establishing FDCP and introducing provisions allowing for the diversion of amusement taxes from LGUs to FDCP for the benefit of film producers. Despite this, Cebu City sought to retain the amusement taxes, leading to the initiation of litigation by FDCP against various entities for unpaid amusement taxes.
Judicial Proceedings and Initial Rulings
The Regional Trial Court (RTC) of Cebu City ruled in two decisions in 2012 that Sections 13 and 14 of RA 9167 were unconstitutional. FDCP subsequently challenged these decisions by filing petitions for review on certiorari, leading to the consolidation of the cases in the Supreme Court.
Main Decision and Constitutional Analysis
On June 16, 2015, the Supreme Court upheld the RTC's ruling, declaring the contested provisions unconstitutional on the basis of local fiscal autonomy. The court highlighted that these sections effectively siphoned amusement tax revenues meant for local governments, thereby infringing upon the fiscal rights of LGUs. It was emphasized that although FDCP had acted within what was perceived as lawful provisions, those provisions lacked constitutional validity.
Application of the Operative Fact Doctrine
In its disposition, the Court invoked the doctrine of operative fact, which acknowledges the existence of a statute prior to its declaration of unconstitutionality, thus validating certain outcomes that occurred under it. The Court determined that the amounts already received by FDCP from LGUs need not be returned, recognizing the practical implications for those who had relied on the law prior to its invalidation.
Dissolution of Tax Obligations and Equity Considerations
The Court clarified that cinema operators who retained amusement taxes prior to the declaration of unconstitutionality must remit those amounts to FDCP. However, it also provided that those who had previously paid these taxes to LGUs should not be mandated to pay again to FDCP, to avoid the issue of double taxation. This reflects the Court's equitable approach to ensure that taxpayers were not penalized for adhering to a law that was later found unconstitutional.
Motions for Reconsideration
FDCP, CHRC, and Cebu City filed motions for reconsideration following the Main Decision. FDCP sought to impose surcharges on those who failed to remit taxes; CHRC insisted it had remitted taxes appropriately and should not face duplicate liabilities; Cebu City contested the application of the operative fact doctrine, arguing it violated principles of equity a
...continue readingCase Syllabus (G.R. No. 154259)
Introduction
- The case involves a dispute between the Film Development Council of the Philippines (FDCP) and various respondents, including Colon Heritage Realty Corporation (CHRC) and the City of Cebu, regarding the constitutionality of certain provisions of Republic Act No. 9167.
- The specific provisions in question are Sections 13 and 14, which pertain to the amusement tax on graded films and the authority of FDCP to collect these taxes.
Background of the Case
- In 1993, Cebu City enacted City Ordinance No. LXIX, which imposed an amusement tax of 30% on the gross receipts from admission fees to various entertainment venues.
- RA 9167, enacted on June 7, 2002, established FDCP and mandated that amusement taxes on graded films be withheld by theater operators and remitted to FDCP instead of local government units (LGUs).
- FDCP alleged that all cities complied with RA 9167 except Cebu City, which insisted on collecting the amusement tax for itself.
Proceedings Before the Regional Trial Court
- Respondents CHRC and Cebu City filed petitions for declaratory relief, seeking to declare Sections 13 and 14 of RA 9167 unconstitutional.
- The Regional Trial Court (RTC) of Cebu City ruled in favor of the respondents, declaring the contested sections invalid.
Supreme Court's Main Decision (June 16, 2015)
- The Supreme Court upheld the RTC's decision, declaring Sections 13 and 14 unconstitutional for violating local fiscal autonomy.
- The Court reasoned that these provisions unlawfully allowed FDCP to confiscate taxes due to LGUs, disrupting the established fiscal framework.
- The Court applied the doctrine of operative fact, which recognizes the effects of a law prior to its being declared unconstitutional