SECOND DIVISION LEPANTO CONSOLIDATED MINING COMPANY, Petitioner, - versus G.R. No. 180639 Present: CARPIO, J.

, Chairperson, NACHURA, PERALTA, ABAD, an !ENDO"A, JJ. Pro&u%'ate : )une *+, *,-,

un er its #ontra#t, it nee s. Base

not have to 'et a per&it to e.tra#t an to e.tra#t an

use san

an

'rave% (ro& 0ithin the &inin' #%ai& (or its operationa% an on this a vi#e, Lepanto pro#ee e 'rave%, an other earth &ateria%s (ro& the &inin' site. Lepanto use the 8uarrie

in(rastru#ture re&ove san ,

&ateria%s to /a#7-(i%% stopes:portions o( the

earth e.#avate as a resu%t o( &inin':rep%a#in' 0hat ha /een &ine to &aintain the inte'rit$ o( the 'roun . It a%so use san an 'rave% to #onstru#t an &aintain #on#rete stru#tures nee e in its &inin' operation, su#h as a tai%in's a&, a##ess roa s, an o((i#es. Its use o( 8uarr$ resour#es, rea i%$ avai%a/%e 0ithin its &inin' #%ai&, 0as &ore pra#ti#a% an #heaper than havin' to outsour#e the&. Respon ent !auri#io A&/an%o#, the provin#ia% treasurer o( Ben'uet, sent a e&an %etter to Lepanto, as7in' it to pa$ the provin#e P-,+,-,;+<.** as san an 'rave% ta., (or the 8uarr$ &ateria%s that it e.tra#te (ro& its &inin' site (ro& -++= to *,,,. Lepanto sent a %etter-protest to the provin#ia% treasurer, /ut the %atter enie the sa&e, insistin' on pa$&ent. Lepanto (i%e a petition 0ith the Re'iona% Tria% Court 1RTC2 o( Ben'uet to

HON. MAURICIO B. AMBANLOC , in his #apa#it$ as the Provin#ia% Treasurer o( Ben'uet, Respon ent.

. --------------------------------------------------------------------------------------- . DECISION ABAD, J.:

This #ase is a/out the %ia/i%it$ o( a &inin' #orporation (or ta.es i&pose /$ a provin#e (or the e.tra#tion o( san an 'rave% (ro& areas #overe /$ its &inin' %ease 0ith the nationa% 'overn&ent an use e.#%usive%$ in its &inin' operations. The !"#$ !%& #he C!$e The nationa% 'overn&ent issue to petitioner Lepanto Conso%i ate !inin' Co&pan$ 1Lepanto2 a &inin' %ease #ontra#t #overin', a&on' others, its 3TI4E!5 %ease &inin' #%ai& at 6itio Na$a7, Barrio Pa%asan Lepanto the 16u$o#2, !uni#ipa%it$ o( !an7a$an, Ben'uet. The #ontra#t 'rante

8uestion the assess&ent.>-? The RTC ru%e that Lepanto 0as %ia/%e (or the a&ount assesse , 0ith interest at the rate o( * per#ent per &onth (ro& the ti&e the ta. shou% have /een pai . Lepanto appea%e the RTC e#ision to the Court o( Ta. Appea%s 1CTA2 0here it 0as ra((%e to its 6e#on Division. >*? The 6e#on Division a((ir&e the ru%in' o( the RTC 0ith the &o i(i#ation that the interest o( * per#ent per &onth sha%% not e.#ee <@ &onths.><? Lepanto appea%e the e#ision o( the 6e#on Division to the CTA En not /e o/taine ,

ri'ht to e.tra#t an use (or its purposes a%% &inera% eposits 0ithin the /oun ar$ %ines o( its &inin' #%ai&. Upon in8uir$, the !ines an 9eo-s#ien#es Bureau o( the Depart&ent o( Environ&ent an Natura% Resour#es 1DENR2 a vise Lepanto that, Banc.>A? Three Busti#es o( the CTA vote to a((ir& the e#ision /ut three Busti#es issente . Be#ause the nee e vote o( (our &e&/ers #ou%

the En Banc is&isse the appea%, resu%tin' in the a((ir&an#e o( the e#ision o( the 6e#on Division. LepantoCs &otion (or re#onsi eration &et the sa&e (ate, hen#e, this appea%. The I$$'e P(e$e%#e& The so%e issue presente in this #ase is 0hether or not Lepanto is %ia/%e (or the ta. i&pose operations. The Co'(#)$ R'*+%,$ O%e. Lepanto #%ai&s that the ta. on san an 'rave% app%ie on%$ to /$ the Provin#e o( Ben'uet on the san an 'rave% that it e.tra#te (ro& 0ithin the area o( its &inin' #%ai& an use e.#%usive%$ in its &inin'

7(o3 #he 9e&$ o7 $e!$, *!8e$, (+.e($, $#(e!3$, "(ee8$, !%& o#he( 2'9*+" ;!#e($ ;+#h+% +#$ #e((+#o(+!* <'(+$&+"#+o%. But the CTA 6e#on Division ru%in' over%oo7s the (a#t that Repu/%i# A#t =-@, is not the provin#ia% 'overn&entCs /asis (or ta.in' LepantoCs e.tra#tion. It is /ut the 'enera% %a0 that e%e'ates to provin#es the po0er to i&pose ta.es on the e.tra#tion o( 8uarr$ resour#es. As it happens, the s#ope an va%i it$ o( su#h e%e'ation is not the issue in this #ase. The 8uestion o( LepantoCs %ia/i%it$ (or ta. shou% /e eter&ine /ase on the revenue &easure itse%(, 0hi#h in this #ase, 0as the Revise Ben'uet Revenue Co e 1the revenue #o e2. >E? The re%evant provisions o( this provin#ia% revenue #o e rea s: A(#+"*e D. T!- o% S!%&, G(!.e* !%& O#he( /'!((0 Re$o'("e$. ---SECTION 3. Imposition of Tax. The(e $h!** 9e *e.+e& ! #!- o7 #e% 4106 2e("e%# o7 7!+( 3!(8e# .!*'e +% #he *o"!*+#0 2e( "'9+" 3e#e( o7 o(&+%!(0 $#o%e$, $!%&, ,(!.e*, e!(#h, !%& o#he( :'!((0 (e$o'("e$, - - - !22*+e& 7o( !%& e-2e"#e& #o 9e e-#(!"#e& o( (e3o.e& 7(o3 2'9*+" *!%&$ - - - ;+#h+% #he #e((+#o(+!* <'(+$&+"#+o% o7 Be%,'e# P(o.+%"e. Th+$ 2(o.+$+o% 3!0 %o# !22*0 +% "!$e o7 ,(!#'+#o'$ 2e(3+#$ 7o( ,o.e(%3e%# 2(o<e"#$ ;+#h+% Be%,'e# P(o.+%"e. SECTION =. Conditions for the Issuance of Permit. ---4,6 The 2e(3+##ee $h!** ;+#h+% #e% 4106 &!0$ !7#e( #he e%& o7 e!"h 3o%#h $'93+# #o #he P(o.+%"+!* T(e!$'(e(, #he M'%+"+2!* T(e!$'(e( !%& B!(!%,!0 T(e!$'(e( ;he(e #he 3!#e(+!*$ !(e e-#(!"#e&, "o2+e$ o7 $;o(% $#!#e3e%# $#!#+%, #he :'!%#+#0 +% #e(3$ o7 "'9+" 3e#e( !%& 8+%& o7 3!#e(+!*$ e-#(!"#e& o( (e3o.e& 90 h+3> #he !3o'%# o7 #!- o( 7ee$ 2!+&> #he :'!%#+#0 !%& 8+%& o7 3!#e(+!*$ $o*& o( &+$2o$e& o7 &'(+%, #he 2e(+o& "o.e(e& 90 $!+& (e2o(#> #he $e**+%, 2(+"e 2e( "'9+"

#o&&er#ia% e.tra#tions. In its #ase, it e.tra#te these &ateria%s (or use so%e%$ in its &inin' operations. Lepanto i not supp%$ other users (or so&e pro(it. Thus, its e.tra#tions 0ere not #o&&er#ia% an shou% not /e su/Be#t to provin#ia% ta.. The CTACs 6e#on &a$ /e i&pose Division he% , ho0ever, that san an 'rave% ta.es

even on non-#o&&er#ia% e.tra#tions. 6in#e 6e#tion -<; o( the an 'rave% (ro& pu/%i# %an s, 0ithout istin'uishin'

Lo#a% 9overn&ent Co e 1Repu/%i# A#t =-@,2 authoriDe provin#es to i&pose a ta. on the e.tra#tion o( san /et0een persona% an #o&&er#ia% uses, then the ta. shou% /e ee&e to #over e.tra#tions (or /oth purposes. The provision rea s: Se". 138. T!- o% S!%&, G(!.e* !%& O#he( /'!((0 Re$o'("e$. 1 The 2(o.+%"e 3!0 *e.0 !%& "o**e"# %o# 3o(e #h!% #e% 2e("e%# 41056 7!+( 3!(8e# .!*'e +% #he *o"!*+#0 2e( "'9+" 3e#e( o7 o(&+%!(0 $#o%e$, $!%& ,(!.e*, e!(#h, !%& o#he( :'!((0 (e$o'("e$, !$ &e7+%e& '%&e( #he N!#+o%!* I%#e(%!* Re.e%'e Co&e, !$ !3e%&e&, e-#(!"#e& 7(o3 2'9*+" *!%&$ o(

3e#e(> #he %!3e$ !%& !&&(e$$e$ o7 #he 9'0e($> !%& #he :'!%#+#0 !%& 8+%& o7 3!#e(+!*$ *e7# +% $#o"8. ---SECTION ?. Mode, Time and Place of Pa ment. The #!- $h!** 9e 2!+& #o #he P(o.+%"+!* T(e!$'(e( o( h+$ &'*0 !'#ho(+@e& (e2(e$e%#!#+.e 9e7o(e #he !22(o.!* 90 #he P(o.+%"+!* Go.e(%o( o7 #he 2e(3+# #o e-#(!"# o( (e3o.e #he 3!#e(+!*$ !22*+e& 7o( !%& 9e7o(e #he $!+& 3!#e(+!*$ !(e e-#(!"#e& o( (e3o.e&. - - SECTION 6. Surchar!es and Interests. !+*'(e #o 2!0 #he #!- !$ 2(o.+&e& he(e+% $h!** $'9<e"# #he 2e(3+##ee #o ! $'("h!(,e o7 T;e%#0A7+.e 4B?56 2e("e%# o7 #he o(+,+%!* !3o'%# o7 #!- &'e 2*'$ T;o 4B56 2e("e%# 2e( 3o%#h o7 #he '%2!+& !3o'%# +%"*'&+%, #he $'("h!(,e$ '%#+* $'"h !3o'%# +$ 7'**0 2!+&, 9'# +% %o "!$e $h!** #he #o#!* !3o'%# o( 2o(#+o% #he(eo7 e-"ee& #h+(#0A$+- 4366 3o%#h$. - - Lepanto insists that the su/Be#t ta. inten e to #over on%$ #o&&er#ia%

app%i#a/i%it$ o( the a &inistrative an #o e.

reportoria% re8uire&ents o( that revenue

T;o. Lepanto #%ai&s that the ta. #an on%$ /e %evie a'ainst e.tra#tions /$ persons or entities re8uire to app%$ (or per&its to re&ove 8uarr$ resour#es. 6in#e the &inin' %ease #ontra#t 0ith the nationa% 'overn&ent 'rante it the ri'ht to e.tra#t an uti%iDe a%% &inera% eposits (ro& 0ithin its &inin' #%ai&, Lepanto #%ai&s that it i not nee to app%$ (or a separate per&it (ro& the %o#a% 'overn&ent. Para'raph + o( its !inin' Lease Contra#t provi es that: Th+$ Le!$e he(e90 ,(!%#$ '%#o #he LESSEE, h+$ $'""e$$o($ o( !$$+,%$, #he (+,h# #o e-#(!"# !%& '#+*+@e 7o( #he+( o;% 9e%e7+# !** 3+%e(!* &e2o$+#$ ;+#h+% #he 9o'%&!(0 *+%e$ o7 #he 3+%+%, "*!+3C$ "o.e(e& 90 #h+$ Le!$e "o%#+%'e& .e(#+"!**0 &o;%;!(&. But this &ere%$ e#%ares that LepantoCs e.tra#tion an use o( &inera%

e.tra#tions sin#e the provin#ia% revenue #o e re(erre to 3(air &ar7et va%ue o( the resour#es,5 38uantit$ so% or ispose ,5 3a&ount %e(t in sto#7,5 3se%%in' pri#e,5 an 3/u$ersC in(or&ation.5 Not ne#essari%$. The provin#ia% revenue #o e provi es that the su/Be#t ta. ha to /e pai prior to the issuan#e o( the per&it to e.tra#t san an 'rave%. Its Arti#%e D, 6e#tion *, enu&erates (our 7in s o( per&its: #o&&er#ia%, in ustria%, spe#ia%, an 'ratuitous. 6pe#ia% per&its #overe on%$ persona% use o( the e.tra#te &ateria%s an i not a%%o0 the per&itees to se%% &ateria%s #o&in' (ro& his #on#ession.>@? A&on' app%i#ants (or per&its, ho0ever, on%$ 'ratuitous per&its 0ere e.e&pt (ro& the san an 'rave% ta.. It (o%%o0s that persons 0ho app%ie (or spe#ia% per&its nee e to pa$ the ta., even thou'h the$ i not e.tra#t &ateria%s (or #o&&er#ia% purposes. Thus, the ta. nee e to /e pai re'ar %ess o( the

eposits /ears the #onsent o( the nationa% 'overn&ent, in %ine 0ith the prin#ip%e that e.p%oration o( natura% resour#es #an on%$ /e se#urin' 'overn&ent per&its. Lepanto invo7es the Bureau o( !ines an &inin' #o&pan$ i 9eo-6#ien#esC vie0 that the one un er the #ontro% an supervision o( the 6tate. The #ontra#t &a7es no &ention o( an$ e.e&ption (ro&

not re8uire it to 'et an$ o( the per&its that !ines eter&ine the

A &inistrative Or er !RD-*= &i'ht re8uire. >=? But that BureauCs vie0 app%ie on%$ to per&its un er !RD-*=. The Bureau has no authorit$ to app%i#a/i%it$ o( %o#a% or inan#es. Besi es, even the Bureau itse%( states that the e.e&ption (ro& !RD-*= is not a/so%ute as it sha%% not app%$ i( the san an 'rave% 0ere to /e ispose o( #o&&er#ia%%$. An e.e&ption (ro& the re8uire&ents o( the provin#ia% 'overn&ent shou% have a #%ear /asis, 0hether in %a0, or inan#e, or

even (ro& the #ontra#t itse%(. Un(ortunate%$ (or Lepanto, it (ai%e entit%e&ent to su#h e.e&ption.

to sho0 its

Th(ee. Lepanto re%ies on the prin#ip%e that 0hen a #o&pan$ is ta.e on its &ain /usiness, it is no %on'er ta.a/%e (or en'a'in' in an a#tivit$ that is /ut a part o(, in#i enta% to, an ne#essar$ to su#h &ain /usiness. Lepanto points out that, sin#e it i not e.tra#t an use san an 'rave% as in epen ent a#tivities /ut as inte'ra% parts o( its &inin' operations, it shou% not /e su/Be#te to a separate ta. on the sa&e. But in the #ases 0here this prin#ip%e has /een app%ie , the ta.es 0hi#h 0ere stri#7en o0n 0ere in the nature o( /usiness ta.es. The reasonin' /ehin those #ases 0as that the in#i enta% a#tivit$ #ou% separate an not /e treate as a /usiness istin#t (ro& the &ain /usiness o( the ta.pa$er. Here the ta. is an

e.#ise ta. i&pose on the privi%e'e o( e.tra#tin' san an 'rave%. An it is sett%e that provin#ia% 'overn&ents #an %ev$ e.#ise ta.es on 8uarr$ resour#es in epen ent%$ (ro& the nationa% 'overn&ent.>;? DHERE ORE, the Court DENIES the petition an A IRMS the e#ision

o( the Court o( Ta. Appea%s En Banc in CTA EB *,- ate !a$ -=, *,,=. SO ORDERED.

LEPANTO CONSOLIDATED MINING COMPANY VS. AMBANLOC 4CASE DIGEST6 LOCAL BUSINESS TAEATION In a ition, the PetitionerCs ar'u&ent that 0hen a #o&pan$ is ta.e on its &ain

/usiness it #an no %on'er /e ta.a/%e (or en'a'in' in an a#tivit$ that is /ut part o(, in#i enta% to, an ne#essar$ to su#h &ain /usiness, 0as he% to /e inapp%i#a/%e. The Court sai that the #ases 0here the a/ove prin#ip%e has /een app%ie invo%ve /usiness ta.es an thus the in#i enta% a#tivities #ou% not /e treate as separate an istin#t (ro& the &ain /usiness. Here the ta. /ein' i&pose 0as an e.#ise ta.

ACTSF Lepanto Conso%i ate !inin' ha a &inin' %ease #ontra#t (or a &inin' #%ai& in Ben'uet. The$ use the san an 'rave% &ine to #onstru#t an &aintain #on#rete stru#tures nee e in its &inin' operations su#h as a tai%in's a&, a##ess roa s, an o((i#es. The provin#ia% treasurer o( Ben'uet then as7e Lepanto Conso%i ate !inin' to pa$ san an 'rave% ta. (or the 8uarr$ &ateria%s e.tra#te (ro& the &inin' site. The #ounterar'u&ent 0as that the sai ta. app%ie on%$ to #o&&er#ia% e.tra#tions an sin#e Lepanto i not supp%$ other users (or so&e pro(it, the ta. shou% not app%$. ISSUEF Is Lepanto %ia/%e (or the ta. i&pose /$ Ben'uet on the san an 'rave% that it e.tra#te (ro& 0ithin the area o( its &inin' #%ai& use e.#%usive%$ in its &inin' operationsF

%evie on the privi%e'e o( e.tra#tin' 'rave% an san .

HELDF GE6. The CTA erre in app%$in' the provision o( the Lo#a% 9overn&ent Co e 16e#tion -<;2 sin#e the /asis o( Ben'uet provin#e e&anates (ro& the Revise Ben'uet Revenue Co e itse%(. This not0ithstan in', the provin#ia% revenue &easure sti%% i not istin'uish /et0een #o&&er#ia% an non-#o&&er#ia% e.tra#tions.