png image problem, very newbie question

I've got a png image with its background color set to RGB 0, 0, 0. When I try to use the image the images background keeps showing through, why? Below is my Draw method, any help would be greatly appreciated.

Thanks

' draw the city
Method Draw()
SetBlend MASKBLEND
SetAlpha 1
SetScale .4, .4
SetRotation 0
DrawImage city, x, y
End Method