FDCP vs SM Prime with the provisions of the LGC

April 3, 2013 | Villarama, J. | Section 5 of Article 10 RATIO:

1. This case has failed in its procedural aspect. The court held that there are
PETITIONER: Film Development Council of the Philippines issues involving litis pendetia that has to be resolved before the
RESPONDENTS: SM Prime Holdings constitutionality issues may be raised. The case is therefore referred to be
determined back to the lower courts.
SUMMARY:
SM prime holdings owns and operates cinemas in Cebu city, the LGC provides RULING
that owners and proprietors of cinemas are subject to amusment tax as provided
by the LGC (Local Government Code). RA. 9167 created FDCP which has a Petition is denied.
mandate that is an incentive reward system. Because of this the CEB is established
to review and grade films, those films that are given the grade of A and B are
entitled to tax incentives. FDCP demanded the tax incentives of 89 of the said
films shown in Sm Cinemas from SM prime.
DOCTRINE: Each local government unit shall have the power to create its own
sources of revenues and to levy taxes, fees and charges subject to such guidelines
and limitations as the Congress may provide, consistent with the basic policy of
local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local
governments.

FACTS:
1. Petitioner argued that Section 14 of R.A. No. 9167 is valid and
constitutional. As to respondent's defense of prior payment, petitioner
asserted that the execution of a MOA with the proprietors, owners and
lessees of theaters and cinema houses is not a condition sine qua non for a
valid enforcement of the provisions of R.A. No. 9167. The IRR cited by
respondent cannot prevail over the clear import of the law on which it is
based, and hence respondent cannot invoke it to excuse non-payment of the
amusement tax incentive rewards due to the producers of graded films
which should have been remitted to petitioner in accordance with Section
14 of R.A. No. 9167. Petitioner pointed out that from the time R.A. No.
9167 took effect up to the present, all the cities and municipalities in
Metropolitan Manila and highly urbanized and independent component
cities in the Philippines, with the sole exception of Cebu City and a number
of theater establishments therein, have unanimously acceded to and have
faithfully complied with the mandate of said law notwithstanding the
absence of a MOA.
2. Respondent filed its Reply to petitioner's Comment maintaining that its
remittance of the amusement tax incentive reward to the City of Cebu
extinguished its obligation to petitioner, and arguing that the case should be
dismissed on the additional ground of litis pendentia.

ISSUE:
1. WoN Section 13 and 14 of RA 9167 are unconstitutional since it is in conflict