Amusement Tax Authority: Defining Places of Amusement Under the Local Government Code

The Supreme Court's 2013 ruling in Pelizloy Realty Corporation v. Province of Benguet (G.R. No. 183137) settles an important question for local governments and business owners alike: can a province impose an amusement tax on resorts, swimming pools, bath houses, hot springs, and tourist spots? The answer is no. The decision clarifies the scope of provincial taxing authority under the Local Government Code (LGC) and provides a clear standard for what counts as an "amusement place."

The Dispute: A Resort in Benguet Challenged a Local Tax

Pelizloy Realty Corporation operates Palm Grove Resort in Tuba, Benguet, which features swimming pools, a spa, and function halls. In 2005, the Province of Benguet enacted its Revenue Code, which imposed a 10% amusement tax on gross receipts from admission fees to "resorts, swimming pools, bath houses, hot springs, and tourist spots."

Pelizloy challenged the ordinance, arguing that the province exceeded its authority. The company filed an appeal with the Secretary of Justice under of the LGC, and when no decision came within the prescribed 60-day period, it treated the silence as a denial and went to court.

The Core Legal Question: What Is a?

The case turned on the interpretation of of the LGC, which allows provinces to levy an amusement tax on "theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement." The question was whether resorts and similar recreational facilities fell under the catch-all phrase "other places of amusement."

The Province of Benguet argued that they did, pointing to the LGC's broad definition of in the Code. is precisely such an exception, expressly authorizing provinces to impose amusement taxes on specified venues.

The decisive issue, then, was whether resorts and similar places fit within are venues "where one seeks admission to entertain oneself by seeing or viewing the show or performances." The common thread among theaters, cinemas, concert halls, circuses, and boxing stadia is that they are primarily venues for staging spectacles or performances meant to be viewed by an audience.

Resorts, swimming pools, bath houses, hot springs, and tourist spots do not share this characteristic. While people may be visually engaged in these places, they are not primarily venues where operators stage shows or performances for an audience. The Court also noted that taxing power granted to local governments must be construed strictly against the local government unit, citing the long-standing principle from Icard v. City Council of Baguio.

The Court therefore declared the second paragraph of, Article X of the Benguet Revenue Code null and void insofar as it imposed amusement taxes on resorts, swimming pools, bath houses, hot springs, and tourist spots. Notably, the Court upheld the same provision with respect to boxing admissions, since boxing stadia are expressly covered by.

Practical Takeaways

• Provinces cannot impose amusement taxes on resorts, swimming pools, bath houses, hot springs, or tourist spots. These are not "places of amusementother places of amusement" is limited to venues primarily for staging shows or performances** meant to be viewed by an audience, such as theaters, cinemas, concert halls, circuses, and boxing stadia.
• Local government taxing powers are construed strictly. When in doubt, courts will resolve ambiguity against the local government unit imposing the tax.
• Amusement taxes are percentage taxes, but they are an express exception to the general prohibition on local percentage taxes under (i) of the LGC.
• Businesses operating recreational facilities should review local tax ordinances to ensure that any amusement tax imposed on them is within the LGC's enumerated list.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.