Province of Bulacan v. Republic Cement Corporation
REITERATIONFacts
The Antecedents: The Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3, enacting the Revenue Code of Bulacan Province, which imposed a 10% tax on quarry resources extracted from public lands. Subsequently, the Provincial Treasurer assessed Republic Cement Corporation (Republic Cement) P2,524,692.13 for extracting limestone, shale, and silica from private lands. Republic Cement contested the assessment, believing the province lacked authority to tax quarry resources from private lands. The Provincial Treasurer denied the contestation. Procedural History: Republic Cement filed a petition for declaratory relief with the Regional Trial Court (RTC) of Bulacan, which was dismissed on the ground that declaratory relief was improper as a breach had already occurred. Republic Cement then filed a petition for certiorari with the Supreme Court, which was referred to the Court of Appeals (CA). During proceedings before the CA, the Province of Bulacan issued a warrant of levy against Republic Cement. An agreement and modus vivendi was reached, wherein Republic Cement paid P1,262,346.00 under protest, and both parties agreed to limit the issue for resolution by the CA to whether the provincial government could impose taxes on quarry resources extracted from private lands. The CA rendered judgment declaring the Province of Bulacan without legal authority to impose and assess taxes on quarry resources extracted from private lands, nullifying the assessment against Republic Cement. The CA denied the province's motion for reconsideration. The Petition: The Province of Bulacan filed a petition for certiorari with the Supreme Court seeking to reverse the CA's decision and resolution.
Issue(s)
Whether the Court of Appeals erred in not dismissing the petition for certiorari filed by Republic Cement; and whether the petition filed by Republic Cement was violative of Circular 2-90. Whether the trial court's order of dismissal had become final and executory. Whether the Court of Appeals exceeded its appellate jurisdiction; and whether the Province of Bulacan is estopped from raising procedural issues. Whether the Court of Appeals erred in its interpretation of Section 134 of the Local Government Code; specifically, whether the Province's taxing power extends to quarry resources from private lands. Whether the Court of Appeals erred in sustaining Republic Cement's allegations, thereby depriving the Province of Bulacan of its power to create revenue sources. Whether the declaration of nullity of the assessment constituted a collateral attack on Provincial Ordinance No. 3. Whether the Regalian Doctrine should be considered in favor of the Province of Bulacan. Whether the agreement and modus vivendi, signed by the Governor and Provincial Legal Officer, is binding on the Province of Bulacan. Whether the province can impose its own excise tax on quarry resources extracted from private lands, considering Section 151 of the NIRC.
Ruling
The Supreme Court dismissed the petition for lack of merit and affirmed the decision of the Court of Appeals in toto. The Province of Bulacan was declared without legal authority to impose and assess taxes on quarry resources extracted from private lands.
Ratio Decidendi
On the propriety of the remedy and Circular 2-90: The Court clarified that Republic Cement correctly filed an appeal by certiorari under Rule 45, not a petition for certiorari under Rule 65, against the RTC's dismissal order. While Rule 45 generally limits issues to questions of law, the Supreme Court, under Circular 2-90, has the discretion to refer petitions raising factual issues to the Court of Appeals. The petitioners' contention that the CA should have dismissed the petition based on Circular 2-90 was found misleading as they overlooked the provision allowing for such referral. On the finality of the trial court's order: The Court found that because the petition was not erroneously filed, the trial court's order did not become final and executory. On the Court of Appeals' jurisdiction and estoppel: The Court held that the Province of Bulacan was estopped from questioning the Court of Appeals' jurisdiction. This was because the parties, through a joint manifestation and motion, agreed to limit the issue before the appellate court to the specific question of whether the province could tax quarry resources from private lands. This agreement, approved by the CA, brought the issue within its purview. The doctrine of estoppel prevents a party from invoking a court's jurisdiction to obtain affirmative relief and then later questioning that same jurisdiction when the outcome is adverse. On the Province's taxing power over quarry resources from private lands and Section 134 of the Local Government Code: The Court affirmed that a province's authority to tax quarry resources is limited to those extracted from public lands, as explicitly provided in Section 158 of the Local Government Code. While Section 186 of the Code allows local government units to levy other taxes not specifically enumerated, this power is subject to limitations. Crucially, Section 133(h) of the Local Government Code prohibits local government units from levying excise taxes on articles already taxed under the National Internal Revenue Code (NIRC). On the Province's power to create revenue sources: The Court's affirmation that the province's taxing power is limited to quarry resources from public lands does not deprive the Province of Bulacan of its power to create revenue sources, as it can still tax quarry resources from public lands. On the declaration of nullity of the assessment as a collateral attack: The Court clarified that the CA's decision did not constitute a collateral attack on Provincial Ordinance No. 3; rather, it questioned the assessment made by the Province based on the ordinance, finding the assessment ultra vires. Furthermore, Section 21 of the Provincial Ordinance itself, like Section 138 of the Local Government Code, referred only to quarry resources extracted from public lands. On the Regalian Doctrine: The Court rejected the Province's invocation of the Regalian Doctrine to justify taxing quarry resources from private lands. It reiterated that tax statutes are construed strictissimi juris against the government, meaning any tax must be expressly and clearly declared by statute. On the binding effect of the agreement and modus vivendi: The Court found that the agreement and modus vivendi, though signed by the Governor without explicit authorization from the Sangguniang Panlalawigan, was binding on the Province of Bulacan. This was because the Provincial Legal Officer, acting as counsel for the petitioners, also signed the agreement. It is a well-settled rule that attorneys have exclusive control over procedural matters, and their decisions, even if adverse to the client, generally bind the client. Limiting the issues for resolution is considered a procedural question falling within the attorney's exclusive authority. On the province's ability to impose excise tax on quarry resources from private lands: Since Section 151 of the NIRC imposes an excise tax on all mineral products and quarry resources, regardless of origin (public or private lands), a province cannot impose its own excise tax on quarry resources extracted from private lands. The province's taxing power is thus limited to quarry resources from public lands.
Main Doctrine
A province may levy taxes on quarry resources extracted from public lands, but not from private lands, due to limitations imposed by the Local Government Code and the National Internal Revenue Code, which already imposes an excise tax on all quarry resources regardless of origin.