G.R. No. 180639 - Lepanto Consolidated Mining Co. vs. Ambanloc

Lepanto Consolidated Mining Company (Lepanto) was issued a mining lease by the national government covering its "TIKEM" mining claim located at Sitio Nayak, Barrio Palasan (Suyoc), Municipality of Mankayan, Benguet.
The mining lease granted Lepanto the exclusive right to extract and utilize all mineral deposits within the boundaries of its mining claim.

The Mines and Geo-sciences Bureau of the Department of Environment and Natural Resources (DENR) advised Lepanto that no permit was needed to extract sand and gravel for its own operational use under the lease.
Based on this advice, Lepanto proceeded to extract sand, gravel, and other earth materials to use in various mining operations, including back-filling stopes for mine safety and constructing infrastructure such as tailings dams, access roads, and offices.

Respondent Mauricio B. Ambanloc, in his capacity as the Provincial Treasurer of Benguet, issued a demand letter requiring Lepanto to pay a tax amounting to P1,901,893.22 for sand and gravel extracted between 1997 and 2000.
Lepanto filed a letter-protest against the tax demand, which was subsequently denied by the provincial treasurer.

Lepanto brought the issue before the Regional Trial Court (RTC) of Benguet to question the legitimacy of the tax assessment.
The RTC ruled that Lepanto was liable for the assessed tax plus interest at 2% per month from the time the tax was due.
On appeal, the Court of Tax Appeals (CTA) Second Division affirmed the RTC’s ruling, modifying the interest computation by capping it at 36 months.
Lepanto further appealed to the CTA En Banc; the appeal resulted in a split decision (three Justices in favor, three dissenting) which led to the dismissal of the appeal due to the absence of the required majority vote, thereby affirming the decision of the Second Division.
Lepanto’s subsequent motion for reconsideration was likewise denied, prompting the final appeal in the case.

Whether Lepanto is liable for the sand and gravel tax imposed by the Province of Benguet despite its assertion that the extraction was not commercial but solely for use in its mining operations.

Determination if the tax, as imposed under the Revised Benguet Revenue Code, applies indiscriminately to both commercial and non-commercial extractions.
Whether the nature of Lepanto’s extraction activity—integral to its mining operation—can be considered incidental and thus exempt from a separate excise tax on quarry resources.

Whether the absence of a separate local government permit for the extraction constitutes grounds for exempting Lepanto from the tax, given its mining lease granted by the national government.

The issue of whether the exemption claimed by Lepanto, based on the Bureau of Mines and Geo-Science’s advisory under Mines Administrative Order MRD-27, extends to local taxation requirements.
Whether Lepanto’s rights under its mining lease imply an exemption from the local requirement to secure a permit, especially in relation to the extraction of sand and gravel for operational purposes.