G.R. No. 126232 November 27, 1998
THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVES, and MANUEL DJ SIAYNGCO in their capacity as PROVINCIAL GOVERNOR, PROVINCIAL TREASURER, PROVINCIAL LEGAL ADVISER, respectively, petitioners, vs. THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION), REPUBLIC CEMENT CORPORATION, respondents.

FACTS

The Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3, the Revenue Code of Bulacan Province, effective July 1, 1992. Section 21 of the ordinance levied a tax of 10% of the fair market value per cubic meter on ordinary stones, sand, gravel, earth, and other quarry resources “extracted from public lands or from beds of seas, lakes, rivers, streams, creeks and other public waters within its territorial jurisdiction.” Pursuant to this, the Provincial Treasurer assessed respondent Republic Cement Corporation (RCC) P2,524,692.13 for extracting limestone, shale, and silica from several parcels of private land in the province during 1992-1993. RCC contested the assessment, arguing the province had no authority to tax quarry resources from private lands. After its protest was denied, RCC filed a petition for declaratory relief with the Regional Trial Court (RTC) of Bulacan. The RTC dismissed the petition, ruling declaratory relief was improper due to an alleged breach of the ordinance. RCC then filed a petition for certiorari with the Supreme Court, which referred it to the Court of Appeals (CA). During the CA proceedings, the parties entered into an agreement, approved by the CA, limiting the issue to whether the provincial government could impose taxes on quarry resources extracted from private lands pursuant to Section 21 of the ordinance. RCC also paid half the assessed tax under protest. The CA ruled that the Province of Bulacan had no legal authority to impose such taxes on resources from private lands and declared the assessment null and void. The Province’s motion for reconsideration was denied, prompting this petition.

ISSUE

Whether the Province of Bulacan, under its Provincial Ordinance No. 3, has the legal authority to impose and assess taxes on stones, sand, gravel, earth, and other quarry resources extracted from private lands.

RULING

The Supreme Court DISMISSED the petition and AFFIRMED the decision of the Court of Appeals. The Province of Bulacan has no authority to levy taxes on quarry resources extracted from private lands based on Provincial Ordinance No. 3. The Court held that:
1. The Local Government Code (LGC) of 1991, specifically Section 133(h), expressly withholds from local government units the power to levy taxes on minerals, mineral products, and quarry resources. This is a blanket prohibition, with the exception only for taxes imposed on businesses engaged in the extraction of such resources under Section 151 (formerly Section 134) of the LGC. The power to tax the resources themselves is reserved to the national government.
2. Provincial Ordinance No. 3, Section 21, by its own explicit text, applies only to quarry resources extracted from “public lands or from beds of seas, lakes, rivers, streams, creeks and other public waters.” It cannot be extended to cover resources extracted from private lands. Tax statutes are construed strictly against the government, and burdens are not to be presumed beyond what the statute clearly declares.
3. The Regalian doctrine cannot be invoked to extend the ordinance’s coverage to private lands for tax purposes.
4. The procedural issues raised by the petitioners (e.g., propriety of the remedy, jurisdiction of the CA) were found to be without merit. The Court noted that the parties had voluntarily submitted and limited the issue for the CA’s resolution, estopping them from later questioning the CA’s authority to decide it. The assessment was a nullity for being beyond the province’s taxing power, and declaring it so did not constitute a collateral attack on the ordinance itself.