PBA vs CTA

On June 21, 1989, the petitioner received an assessment letter from the Commissioner of Inter-nal Revenue (respondent Commissioner) for the payment of deficiency amusement tax. On July 18, 1989, petitioner contested the assessment by filing a protest with respondent Commissioner who denied the same on November 6, 1989. On January 8, 1990, petitioner filed a petition for review with the Court of Tax Appeals (respondent CTA) questioning the denial by respondent Commissioner of its tax protest.

ISSUES: WON the amusement tax on admission tickets to PBA games a national or local tax? Otherwise put, who between the national government and local government should petitioner pay amuse-ment taxes?

HELD:

All things studiedly considered, the Court rules that the petitioner is liable to pay amusement tax to the national government, and not to the local government, in accordance with the rates pre-scribed by PD 1959.

Petitioner contends that PD 231, otherwise known as the Local Tax Code of 1973, transferred the power and authority to levy and collect amusement taxes from the sale of admission tickets to places of amusement from the national government to the local governments.

"Sec. 13. Amusement tax on admission. -The province shall impose a tax on admission to be collected from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement xxx."

The foregoing provision of law in point indicates that the province can only impose a tax on ad-mission from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement. The authority to tax professional basketball games is not therein included, as the same is expressly embraced in PD 1959, which amended PD 1456.

It is clear under the law that the "proprietor, lessee or operator of xxx professional basketball games" is required to pay an amusement tax equivalent to fifteen per centum (15%) of their gross receipts to the Bureau of Internal Revenue, which payment is a national tax. The said payment of amusement tax is in lieu of all other percentage taxes of whatever nature and de-scription.

A historical analysis of pertinent laws does reveal the legislative intent to place professional bas-ketball games within the ambit of a national tax. The Local Tax Code, which became effective on June 28, 1973, allowed the province to collect a tax on admission from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement. On January 6, 1976, the operation of petitioner was placed under the supervision and regulation of the Games and Amusement Board by virtue of PD 871, with the proviso (Sec-tion 8) that "xxx all professional basketball games conducted by the Philippine Basketball Asso-ciation shall only be subject to amusement tax of five per cent of the gross receipts from the sale of admission tickets." Then, on June 11, 1978, PD 1456 came into effect, increasing the amusement tax to ten per cent, with a categorical referral to PD 871, to wit, "[t]en per centum in the case of professional basketball games as envisioned in Presidential Decree No. 871 xxx." Later in 1984, PD 1959 increased the rate of amusement tax to fifteen percent by making refer-

ence also to PD 871. With the reference to PD 871 by PD 1456 and PD 1959, there is a recog-nition under the laws of this country that the amusement tax on professional basketball games is a national, and not a local, tax. Even up to the present, the category of amusement taxes on professional basketball games as a national tax remains the same. This is so provided under Section 125[10] of the 1997 National Internal Revenue Code. Section 140[11] of the Local Gov-ernment Code of 1992 (Republic Act 7160), meanwhile, retained the areas (theaters, cine-matographs, concert halls, circuses and other places of amusement) where the province may levy an amusement tax without including therein professional basketball games.

It bears stressing that the government can never be in estoppel, particularly in matters involving taxes. It is a well-known rule that erroneous application and enforcement of the law by public of-ficers do not preclude subsequent correct application of the statute, and that the Government is never estopped by mistake or error on the part of its agents.