FILM DEVELOPMENT COUNCIL V.
SM PRIME
HOLDINGS
Motion to Dismiss (formerly Rule
16)
G.R. No. Ponente Date
G.R. No. 197937 VILLARAMA, JR. J. APRIL 3, 2013
Petitioners Respondents
FILM DEVELOPMENT COUNCIL OF THE SM PRIME HOLDINGS
PHILIPPINES
DOCTRINE: The underlying principle of litis pendentia is the theory that a party is not
allowed to vex another more than once regarding the same subject matter and for the
same cause of action.
Facts of the case
SM Prime Holdings is the owner and operator of cinema houses at SM Cebu in Cebu
City.
Congress approved R.A. No. 9167 which created the Film Development Council of the
Philippines, herein petitioner. Whose mandate includes the development and
implementation of ““an incentive and reward system for the producers based on merit
to encourage the production of quality films.”
The Cinema Evaluation Board (CEB) was established to review and grade films in
accordance with criteria and standards and procedures it shall formulate subject to the
approval of petitioner.
Film Development through the OSG sent a demand letter to SM Prime for the payment
of amusement tax rewards due to the producers of 89 films.
The City of Cebu filed a declaratory relief petition in Cebu City RTC docketed as Civil
Case No. CEB-35529 against the petitioner seeking the unconstitutionality of Section
14 of RA 9161 because the revenue from the collection of amusement taxes that would
otherwise accrue to and form part of the general fund of the LGU concerned would
now be directly awarded to a private entity―the producers of graded film.
A temporary restraining order (TRO) was then issued by the Cebu City RTC enjoining Film
Development and its duly constituted agents from collecting the amusement tax incentive
award from the owners, proprietors or lessees of theaters and cinema houses within the
City of Cebu.
Film Development then sued SM Prime for the payment of unpaid amusement taxes before
the RTC of Pasig. While also praying for the dismissal of the petition filed by the City of
Cebu.
SM Prime filed a motion to dismiss of case field against them by Film Development for the
unpaid amusement taxes, stating that SM Prime already paid the taxes to the City of Cebu.
In its comment, Film Development argued that Sec. 14 of RA 9167 is valid and
constitutional.
Respondent filed its Reply to petitioner’s Comment maintaining that its remittance of
the amusement tax incentive reward to the City of Cebu extinguished its obligation to
petitioner, and argued that the case should be dismissed on the additional ground of
litis pendentia.
The Pasig City RTC issued the assailed order granting the motion to dismiss , holding
that the action before the Cebu City RTC is the appropriate vehicle for litigating the
issues between the parties in the suit regarding the unpaid amusement taxes.
Moreover, said court found all the elements of litis pendentia present and accordingly
dismissed the complaint.
Hence the direct recourse to the SC.
I. Issue/s
WON THE RTC ERRED IN DISMISING THE SUIT FOR THE UNPAID AMUSEMEMENT
TAX ON THE GROUND OF LITIS PENDENTIA
II. Ratio/Legal Basis
NO. Court ruled that, Litis pendentia, as a ground for the dismissal of a civil action,
refers to a situation where two actions are pending between the same parties for
the same cause of action, so that one of them becomes unnecessary and
vexatious. It is based on the policy against multiplicity of suits 2 and authorizes a
court to dismiss a case motu proprio.
The requisites in order that an action may be dismissed on the ground
of litis pendentia are: (a) the identity of parties, or at least such as
representing the same interest in both actions; (b) the identity of rights asserted
and relief prayed for, the relief being founded on the same facts, and (c) the
identity of the two cases such that judgment in one, regardless of which party is
successful, would amount to res judicata in the other.
Petitioner submits that while there is identity of parties in Civil Case Nos. CEB-
35529 and 72238, the second and third requisites are absent. It points out that
in the former, it is not claiming any monetary award but merely prayed for the
dismissal of the declaratory relief petition. Moreover, since the issues raised in
the former case are purely legal, petitioner is not necessarily called upon to
present testimonial or documentary evidence to prove factual matters.
Petitioner thus concludes that the judgment in former case would not amount
to res judicata in the latter case. Petitioner further notes that when a judgment
dismissing the former case is appealed and the assailed provisions of R.A. No.
9167 are declared constitutional by this Court, petitioner will not be
automatically awarded the unpaid amusement taxes it is claiming against
respondent in Civil Case No. 72238.
Petitioner’s submissions fail to persuade. The underlying principle of litis
pendentia is the theory that a party is not allowed to vex another more
than once regarding the same subject matter and for the same cause of
action. This theory is founded on the public policy that the same subject
matter should not be the subject of controversy in courts more than
once, in order that possible conflicting judgments may be avoided for
the sake of the stability of the rights and status of persons, and also to
avoid the costs and expenses incident to numerous suits.
IV. Disposition
WHEREFORE, the petition for review on certiorari is DENIED. The Orders dated
February 21, 2011 and July 25, 2011 of the Regional Trial Court of Pasig City, Branch
166 are hereby AFFIRMED.
V. Notes (OPTIONAL)
- Res Juricata - is the principle that a cause of action may not be relitigated once it has been
judged on the merits.
- RA 9167, Section 14. Amusement Tax Deduction and Remittances. - All revenue from the
amusement tax on the graded film which may otherwise accrue to the cities and
municipalities in Metropolitan Manila and highly urbanized and independent component cities
in the Philippines pursuant to Section 140 of Republic Act. No. 7160 during the period the
graded film is exhibited, shall be deducted and withheld by the proprietors, operators or
lessees of theaters or cinemas and remitted within thirty (30) days from the termination
of the exhibition to the Council which shall reward the corresponding amusement tax
to the producers of the graded film within fifteen (15) days from receipt thereof.
Proprietors, operators and lessees of theaters or cinemas who fail to remit the amusement
tax proceeds within the prescribed period shall be liable to a surcharge equivalent to five
percent (5%) of the amount due for each month of delinquency which shall be paid to the
Council. (Emphasis supplied.)
