PHILIPPINE BASKETBALL ASSOCIATION, PETITIONER, VS. COURT OF APPEALS, COURT OF TAX APPEALS, AND COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

At bar is a petition for review on certiorari under Rule 45 of the Rules of Court seeking a review of the decision^[1]
of the Court of Appeals in CA-G.R. SP No. 34095 which affirmed the
decision of the Court of Tax Appeals in C.T.A. Case No. 4419.

The facts that matter are as follows:

On June 21, 1989, the petitioner received an assessment letter
from the Commissioner of Internal Revenue (respondent Commissioner) for
the payment of deficiency amusement tax computed thus:

Deficiency Amusement Tax
Total gross receipts 1987	P19,970,928.00
15% tax due thereon	2,995,639.20
Less: Tax paid	__602,063.35
Deficiency amusement tax	P 2,393,575.85
Add:….75% surcharge	1,795,181.89
20% interest (2 years)	1,675,503.10
Total Amount Due & Collectible	P 5,864,260.84

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^[2] with the Court of Tax Appeals (respondent CTA) questioning the denial by respondent Commissioner of its tax protest.

On December 24, 1993, respondent CTA dismissed petitioner’s petition, holding:

“WHEREFORE, in all the foregoing, herein petition for review is
hereby DISMISSED for lack of merit and the Petitioner is hereby ORDERED
to PAY to the Respondent the amount of P5,864,260.84 as deficiency
amusement tax for the year 1987 plus 20% annual delinquency interest
from July 22, 1989 which is the due date appearing on the notice and
demand of the Commissioner (i.e. 30 days from receipt of the assessment)
until fully paid pursuant to the provisions of Sections 248 and 249 (c)
(3) of the Tax Code, as amended.”^[3]

Petitioner presented a motion for reconsideration^[4] of the said decision but the same was denied by respondent CTA in a resolution^[5]
dated April 8, 1994. Thereafter and within the reglementary period for
interposing appeals, petitioner appealed the CTA decision to the Court
of Appeals.

On November 21, 1994, the Court of Appeals rendered its questioned Decision,^[6]
affirming the decision of the CTA and dismissing petitioner’s appeal.
Petitioner filed a Motion for Reconsideration of said decision but to no
avail. The same was denied by the Court of Appeals in a Resolution^[7] dated January 31, 1995. Hence, this petition.

Undaunted, petitioner found its way to this Court via the present petition, contending that:

“1. Respondent Court of Appeals erred in holding that the
jurisdiction to collect amusement taxes of PBA games is vested in the
national government to the exclusion of the local governments.

“2. Respondent Court of Appeals erred in holding that Section 13 of
the Local Tax Code of 1973 limits local government units to theaters,
cinematographs, concert halls, circuses and other places of amusement in
the collection of the amusement tax.

“3. Respondent Court of Appeals erred in holding that Revenue
Regulations No. 8-88 dated February 19, 1988 is an erroneous
interpretation of law.

“4. Respondent Court of Appeals erred in giving retroactive effect to the revocation of Revenue Regulations 8-88.

“5. Respondent Court of Appeals erred when it failed to consider
the provisions of P.D. 851 the franchise of Petitioner, Section 8 of
which provides that amusement tax on admission receipts of Petitioner is
5%.

“6. Respondent Court of Appeals erred in holding that the cession
of advertising and streamer spaces in the venue to a third person is
subject to amusement taxes.

“7. Respondent Court of Appeals erred in holding that the cession
of advertising and streamer spaces inside the venue is embraced within
the term ‘gross receipts’ as defined in Section 123 (6) of the Tax Code.

“8. Respondent Court of Appeals erred in holding that the amusement tax liability of Petitioner is subject to a 75% surcharge.”

The issues for resolution in this case may be simplified as follows:

1. Is 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 amusement taxes?
2. Is the cession of advertising and streamer spaces to Vintage Enterprises, Inc. (VEI) subject to the payment of amusement tax?
3. If ever petitioner is liable for the payment of deficiency
   amusement tax, is it liable to pay a seventy-five percent (75%)
   surcharge on the deficiency amount due?

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.
Petitioner cited BIR Memorandum Circular No. 49-73 providing that the
power to levy and collect amusement tax on admission tickets was
transferred to the local governments by virtue of the Local Tax Code;
and BIR Ruling No. 231-86 which held that “the jurisdiction to levy
amusement tax on gross receipts from admission tickets to places of
amusement was transferred to local governments under P.D. No. 231, as
amended.”^[8] Further,
petitioner opined that even assuming arguendo that respondent
Commissioner revoked BIR Ruling No. 231-86, the reversal, modification
or revocation cannot be given retroactive effect since even as late as
1988 (BIR Memorandum Circular No. 8-88), respondent Commissioner still
recognized the jurisdiction of local governments to collect amusement
taxes.

The Court is not persuaded by petitioner’s asseverations.

The laws on the matter are succinct and clear and need no elaborate disquisition. Section 13 of the Local Tax Code provides:

“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 admission 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 thus:

“SEC. 44. Section 268 of this Code, as amended, is hereby further amended to read as follows:

‘Sec. 268. Amusement taxes. — There shall be collected from the
proprietor, lessee or operator of cockpits, cabarets, night or day
clubs, boxing exhibitions, professional basketball games, Jai-Alai, race tracks and bowling alleys, a tax equivalent to:

‘1. Eighteen per centum in the case of cockpits;

‘2. Eighteen per centum in the case of cabarets, night or day clubs;

‘3. Fifteen per centum in the case of boxing exhibitions;

‘4. Fifteen per centum in the case of professional basketball
games as envisioned in Presidential Decree No. 871. Provided, however,
That the tax herein shall be in lieu of all other percentage taxes of
whatever nature and description;

‘5. Thirty per centum in the case of Jai-Alai and race tracks; and

‘6. Fifteen per centum in the case of bowling alleys of
their gross receipts, irrespective of whether or not any amount is
charged or paid for admission. For the purpose of the amusement tax, the
term gross receipts’ embraces all the receipts of the proprietor,
lessee or operator of the amusement place. Said gross receipts also
include income from television, radio and motion picture rights, if any.
(A person or entity or association conducting any activity subject to
the tax herein imposed shall be similarly liable for said tax with
respect to such portion of the receipts derived by him or it.)

‘The taxes imposed herein shall be payable at the end of each
quarter and it shall be the duty of the proprietor, lessee, or operator
concerned, as well as any party liable, within twenty days after the end
of each quarter, to make a true and complete return of the amount of
the gross receipts derived during the preceding quarter and pay the tax
due thereon. If the tax is not paid within the time prescribed above,
the amount of the tax shall be increased by twenty-five per centum, the increment to be part of the tax.

‘In case of willful neglect to file the return within the period
prescribed herein, or in case a false or fraudulent return is willfully
made, there shall be added to the tax or to the deficiency tax, in case
any payment has been made on the basis of the return before the
discovery of the falsity or fraud, a surcharge of fifty per centum
of its amount. The amount so added to any tax shall be collected at the
same time and in the same manner and as part of the tax unless the tax
has been paid before the discovery of the falsity or fraud, in which
case, the amount so assessed shall be collected in the same manner as
the tax.” (underscoring ours)

From the foregoing it is clear 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 description.

While Section 13 of the Local Tax Code mentions “other places of
amusement”, professional basketball games are definitely not within its
scope. Under the principle of ejusdem generis, where general
words follow an enumeration of persons or things, by words of a
particular and specific meaning, such general words are not to be
construed in their widest extent, but are to be held as applying only to
persons or things of the same kind or class as those specifically
mentioned.^[9] Thus, in
determining the meaning of the phrase “other places of amusement”, one
must refer to the prior enumeration of theaters, cinematographs, concert
halls and circuses with artistic expression as their common
characteristic. Professional basketball games do not fall under the same
category as theaters, cinematographs, concert halls and circuses as the
latter basically belong to artistic forms of entertainment while the
former caters to sports and gaming.

A historical analysis of pertinent laws does reveal the
legislative intent to place professional basketball 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 (Section 8) that “xxx all professional
basketball games conducted by the Philippine Basketball Association
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 reference also to PD 871.
With the reference to PD 871 by PD 1456 and PD 1959, there is a
recognition 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 Government Code of 1992 (Republic Act 7160), meanwhile,
retained the areas (theaters, cinematographs, concert halls, circuses
and other places of amusement) where the province may levy an amusement
tax without including therein professional basketball games.

Likewise erroneous is the stance of petitioner that respondent Commissioner’s issuance of BIR Ruling No. 231-86^[12] and BIR Revenue Memorandum Circular No. 8-88^[13]
— both upholding the authority of the local government to collect
amusement taxes — should bind the government or that, if there is any
revocation or modification of said rule, the same should operate
prospectively.

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 officers 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.^[14]

Untenable is the contention that income from the cession of
streamer and advertising spaces to VEI is not subject to amusement tax.
The questioned proviso may be found in Section 1 of PD 1456 which
states:

“SECTION 1. Section 268 of the National Internal Revenue Code of
1977, as amended, is hereby further amended to read as follows:

‘Sec. 268. Amusement taxes. — There shall be collected from the
proprietor, lessee or operator of cockpits, cabarets, night or day
clubs, boxing exhibitions, professional basketball games, Jai-Alai, race
tracks and bowling alleys, a tax equivalent to:

xxx  xxx  xxx

of their gross receipts, irrespective of whether or not any amount is charged or paid for admission. For
the purpose of the amusement tax, the term gross receipts’ embraces all
the receipts of the proprietor, lessee or operator of the amusement
place. Said gross receipts also include income from television,
radio and motion picture rights, if any. (A person, or entity or
association conducting any activity subject to the tax herein imposed
shall be similarly liable for said tax with respect to such portion of
the receipts derived by him or it.)” (underscoring ours)

The foregoing definition of gross receipts is broad enough to embrace
the cession of advertising and streamer spaces as the same embraces all
the receipts of the proprietor, lessee or operator of the amusement
place. The law being clear, there is no need for an extended
interpretation.^[15]

The last issue for resolution concerns the liability of
petitioner for the payment of surcharge and interest on the deficiency
amount due. Petitioner contends that it is not liable, as it acted in
good faith, having relied upon the issuances of the respondent
Commissioner. This issue must necessarily fail as the same has never
been posed as an issue before the respondent court. Issues not raised in
the court a quo cannot be raised for the first time on appeal.^[16]

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 prescribed
by PD 1959.

WHEREFORE, the Petition is DENIED, and the
Decisions of the Court of Appeals and Court of Tax Appeals dated
November 21, 1994 and December 24, 1993, respectively AFFIRMED. No
pronouncement as to costs.

SO ORDERED.

Panganiban, and Gonzaga-Reyes, JJ., concur.

Melo, (Chairman), and Vitug, JJ., in the result.

---

^[1] Penned by Associate
Justice Pedro A. Ramirez and concurred by Associate Justices Quirino D.
Abad Santos, Jr. and Eugenio S. Labitoria.

^[2] Rollo, pp. 44-62.

^[3] CTA Decision penned
by Associate Judge Ramon O. de Veyra and concurred by Presiding Judge
Ernesto D. Acosta and Associate Judge Manuel K. Gruba; Rollo, pp. 70-78.

^[4] Rollo, pp. 79-89.

^[5] Ibid., p. 90.

^[6] Ibid., pp. 33-40.

^[7] Ibid., p. 43.

^[8] See also BIR Revenue Memorandum Circular No. 8-88.

^[9] PNOC Shipping and
Transport Corporation vs. Court of Appeals, 297 SCRA 402, 422 citing:
Republic vs. Migriño, 189 SCRA 289, 296-297.

^[10] SEC. 125.
Amusement taxes. – There shall be collected from the proprietor, lessee
or operator of cockpits, cabarets, night or day clubs, boxing
exhibitions, professional basketball games, Jai-Alai and race tracks, a
tax equivalent to:

a) Eighteen percent (18%) in the case of cockpits;

b) Eighteen percent (18%) in the case of cabarets, night or day clubs;

c) Ten percent (10%) in the case of boxing exhibitions, provided,
however, that boxing exhibitions wherein World or Oriental
Championships in any division is at stake shall be exempt from amusement
tax; provided, further, that at least one of the contenders for World
or Oriental Championship is a citizen of the Philippines and said
exhibitions are promoted by a citizen/s of the Philippines or by a
corporation or association at least sixty percent (60%) of the capital
of which is owned by such citizens;

d) Fifteen percent (15%) in the case of professional basketball
games as envisioned in Presidential Decree No. 871; provided, however,
that the tax herein shall be in lieu of all other percentage taxes of
whatever nature and description; and

e) Thirty percent (30%) in the case of Jai-Alai and race tracks
of their gross receipts, irrespective of whether or not any amount is
charged for admission.

For the purpose of the amusement tax, the term “gross receipts”
embraces all the receipts of the proprietor, lessee or operator of the
amusement place. Said gross receipts also include income from
television, radio and motion picture rights, if any. A person or entity
or association conducting any activity subject to the tax herein imposed
shall be similarly liable for said tax with respect to such portion of
the receipts derived by him or it.

The taxes imposed herein shall be payable at the end of each
quarter or month and it shall be the duty of the proprietor, lessee or
operator concerned, as well as any party liable, within twenty (20) days
after the end of each quarter, to make a true and complete return of
the amount of the gross receipts derived during the preceding quarter
and pay the tax due thereon. (Effective January 1, 1998)

^[11] SEC. 140.
Amusement Tax. – (a) The province may levy an amusement tax to be
collected from the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of
amusement at a rate of not more than thirty percent (30%) of the gross
receipts from admission fees.

(b) In the case of theaters or cinemas, the tax shall first be
deducted and withheld by their proprietors, lessees, or operators and
the distributors of the cinematographic films.

(c) The holding of operas, concerts, dramas, recitals, painting
and art exhibitions, flower shows, musical programs, literary and
oratorical presentations, except pop, rock, or similar concerts shall be
exempt from the payment of the tax herein imposed.

(d) The sangguniang panlalawigan may prescribe the time, manner,
terms and conditions for the payment of tax. In case of fraud or failure
to pay the tax, the sangguniang panlalawigan may impose such
surcharges, interests and penalties as it may deem appropriate.

(e) The proceeds from the amusement tax shall be shared equally
by the province and the municipality where such amusement places are
located.

^[12] “xxx…..xxx…..xxx

xxx this Office is of the opinion and hereby holds that the
jurisdiction to levy amusement tax on gross receipts from admission
tickets to places of amusement was indeed transferred to local
government under P.D. No. 231, as amended. xxx”

^[13] [“xxx the sole
jurisdiction for collection of amusement tax on admission receipts in
places of admission rests exclusively on the local government to the
exclusion of the national government.”

^[14] E. Rodriguez, Inc.
vs. Collector of Internal Revenue, 28 SCRA 1119; United Christian
Missionary Society vs. Social Security Commission, 30 SCRA 982.

^[15] Domingo vs. Commission on Audit, 297 SCRA 163; Republic vs. Court of Appeals, 299 SCRA 199.

^[16] Ruby Industrial
Corporation vs. Court of Appeals, 284 SCRA 445; Salao vs. Court of
Appeals, 284 SCRA 493; Heirs of Pascasio Uriarte vs. Court of Appeals,
284 SCRA 511.