FACTS:

The petitioner, Pelizloy Realty Corporation, owns and operates a resort and hotel in Benguet province. It filed a petition questioning the legality of Section 59, Article X of Provincial Tax Ordinance No. 05-107 of Benguet, which levied a tax on the admission fees collected by certain establishments. Pelizloy argued that the provision imposed a prohibited percentage tax under the Local Government Code (LGC). The Province of Benguet argued that the provision did not levy a percentage tax but only applied to the gross receipts of the admission fees collected. It also claimed that provinces have the authority to impose amusement taxes on admission fees to these establishments.

The petitioner sought clarification on whether Section 59 levied a percentage tax and whether provinces are authorized to impose amusement taxes on admission fees to these establishments.

The power to tax rests with the state, and provinces, cities, municipalities, and barangays have limited taxing power delegated to them by the Constitution or statute. The 1987 Constitution grants local government units the power to create their own sources of revenue and levy taxes, subject to guidelines and limitations provided by Congress. Congress enacted the Local Government Code to govern local taxation and fiscal matters, including the requirement that taxation be uniform, equitable, and based on ability to pay. The collection of local taxes should also be for public purposes and not excessive, unjust, oppressive, confiscatory, or contrary to law, public policy, national economic policy, or the restraint of trade.

ISSUES:

1. Whether Section 59, Article X of the Tax Ordinance levies a prohibited percentage tax.

2. Whether resorts, swimming pools, bath houses, hot springs, and tourist spots are subject to amusement taxes under Section 140 of the Local Government Code (LGC).

3. Whether resorts, swimming pools, bath houses, hot springs, and tourist spots can be considered as "other places of amusement" under Section 140 of the Local Government Code (LGC).

4. Whether the definition of "amusement places" in Section 131(c) of the LGC is applicable in determining the scope of "other places of amusement" under Section 140 of the LGC.

5. Whether the second paragraph of Section 59, Article X of the Benguet Provincial Revenue Code of 2005, which imposes amusement taxes on admission fees to resorts, swimming pools, bath houses, hot springs, and tourist spots, is valid.

6. Whether the second paragraph of Section 59, Article X of the Benguet Provincial Revenue Code of 2005 is valid with respect to admission fees for boxing.

RULING:

1. Yes, Section 59, Article X of the Tax Ordinance levies a prohibited percentage tax. The concept of a percentage tax is defined as a tax measured by a certain percentage of the gross selling price or gross value in money of goods sold, bartered, or imported; or of the gross receipts or earnings derived by any person engaged in the sale of services. Amusement taxes, which are fixed at a certain percentage of the gross receipts incurred by specified establishments, are considered percentage taxes based on their treatment in the National Internal Revenue Code (NIRC). However, provinces are not barred from levying amusement taxes even if they are a form of percentage taxes as Section 133 (i) of the LGC allows it.

2. The determination of whether amusement taxes may be levied on admissions to resorts, swimming pools, bath houses, hot springs, and tourist spots hinges on whether the phrase 'other places of amusement' in Section 140 of the LGC encompasses these establishments. Under the principle of ejusdem generis, the general word or phrase should be construed to include or be restricted to persons, things, or cases akin to, resembling, or of the same kind or class as those specifically mentioned. Since resorts, swimming pools, bath houses, hot springs, and tourist spots are not expressly mentioned in Section 140, it is doubtful whether they can be considered as 'other places of amusement' subject to amusement taxes.

3. Resorts, swimming pools, bath houses, hot springs, and tourist spots cannot be considered as "other places of amusement" under Section 140 of the LGC. The enumeration of "theaters, cinemas, concert halls, circuses, and boxing stadia" does not include resorts, swimming pools, bath houses, hot springs, and tourist spots.

4. The definition of "amusement places" in Section 131(c) of the LGC is applicable in determining the scope of "other places of amusement" under Section 140 of the LGC. The term "other places of amusement" must be interpreted in light of the definition of "amusement places" as venues primarily used for the staging of spectacles or the holding of public shows, exhibitions, performances, and other events meant to be viewed by an audience.

5. The second paragraph of Section 59, Article X of the Benguet Provincial Revenue Code of 2005, in so far as it imposes amusement taxes on admission fees to resorts, swimming pools, bath houses, hot springs, and tourist spots, is declared null and void. However, it is sustained with respect to admission fees from boxing stadia.

PRINCIPLES:

• The principle of ejusdem generis applies in statutory construction, wherein general terms following a specific enumeration are interpreted to include only things of the same kind as those specifically mentioned.

• In interpreting tax laws, any doubt or ambiguity arising from the grant of taxing power to a province must be resolved against the province. The interpretation of tax laws should be strict and should not allow for arbitrary application or inflict injustice on taxpayers.

• The validity of a provision in a revenue code can be determined based on the specific language used in the provision.

• The imposition of amusement taxes may be limited to specific types of businesses or forms of entertainment.

• In interpreting and applying tax laws, the specific language used by the lawmakers must be strictly followed.