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Film Development
Film Development
FACTS:
1993: Cebu City passed City Ordinance No. 69: Revised Omnibus Tax Ordinance of the City of Cebu,
Sections 42 and 43, Chapter 11 of the Ordinance required proprietors, lessees or operators of theaters,
cinemas, concert halls, circuses, boxing stadia and other places of amusement to pay amusement tax
equivalent to 30% of the gross receipts of the admission fees to the Office of the City Treasurer of Cebu
City.
the rule in Sections 13 and 14 is that ALL amusement taxes levied by covered cities and municipalities shall be
given by proprietors, operators or lessees of theatres and cinemas to FDCP, which shall then reward said
amount to the producers of graded films
1. For grade "A" films, ALL amusement taxes collected by ALL covered LGUs on said films shall be
given to the producer thereof. The LGU, therefore, is entitled to NOTHING from its own imposition.
2. For grade "B" films, SIXTY FIVE PERCENT (65%) of ALL amusement taxes derived by ALL covered
LGUs on said film shall be given to the producer thereof.
the remaining 35% may be expended for the Council's operational expenses
In this case, however, the LGU is still NOT entitled to any portion of the imposition
According to the petitioner, from the time RA 9167 took effect, all cities and municipalities has
complied with the law except for Cebu City
Petitioners demand letters for the unpaid amusement tax reward to the proprietors and cinema
operators but the demand fell on deaf ears
The city then filed with the RTC a petition for declaratory relief with application for a writ of
preliminary injunction to declare secs. 13 and 14 of RA 9167 as invalid and unconstitutional.
Colon heritage also filed with RTC to declare the same sections unconstitutional
RTC: ruled in favor of Cebu City and Colon heritage to declare Sections 13 and 14 of RA 9167 invalid
and unconstitutional.
Petitioners contended that the particular tax arrangement under RA 9167 was enacted for public purpose.
That is the promotion and support of local film industry as well as encouragement of the production of
quality films that will promote the growth and development of the local film industry
The ISSUE in this in accordance with our syllabus is that: W/N the doctrine of operative fact applies in relation
to the declaration of Sections 13 and 14 of RA 9167 as invalid and unconstitutional.
HELD:
- This doctrine nullifies the effects of an unconstitutional law or an executive act by recognizing
that the existence of a statute prior to a determination of unconstitutionality is an operative fact
and may have consequences that cannot always be ignored. It applies when a declaration of
unconstitutionality will impose an undue burden on those who have relied on the invalid law
- In this case, to return the amounts received to the respective taxing authorities would certainly
impose a financial burden upon them who in good faith, complied with the republic act 9167