G.R. No. L-59463 - Province of Nueva Ecija vs. Imperial Mining Company, Inc.

Plaintiff-Appellant: Province of Nueva Ecija.
Defendant-Appellee: Imperial Mining Company, Inc. (IMC).
The case is an appeal from the decision of the Court of First Instance of Nueva Ecija, Branch VIII, in Civil Case No. C-4 for the collection of real property tax.
The Court of Appeals certified the case to the Supreme Court because it involves a purely legal question.

In 1968, IMC leased 192 hectares of placer mining claims in Carranglan, Nueva Ecija from the Government through the Department of Agriculture and Natural Resources.
The lease granted IMC the right to explore, develop, mine, extract, and dispose of mineral products on the subject land.
The contract explicitly provided that “the Lessee shall pay real estate tax on all buildings and other improvements built on the land leased.”
Notably, the lease contract was silent regarding the payment of realty tax on the mineral land itself, reflecting the legal framework of the time.

In 1974, the Provincial Assessor of Nueva Ecija declared the leased property in the name of IMC, leading to an assessment for real property tax.
Subsequently, in September 1976, Nueva Ecija instituted suit for the collection of real property tax covering the period 1970-1976 in the amount of P38,836.22.
The trial court dismissed the complaint based on:

The lease contract’s terms under the prevailing legal regime.
The provisions of Section 87 of the old Mining Act (Commonwealth Act No. 137), which exempted leased mineral lands from real estate tax.

When IMC obtained its lease in 1968, the applicable law was the Assessment Law (Commonwealth Act No. 470), where realty taxation was based on ownership or interest tantamount to ownership.
Under Commonwealth Act No. 137, leased mineral lands were not subject to real estate tax due to the prevailing tax principle.
However, in 1974, a new Real Property Tax Code (Presidential Decree No. 464) took effect, which changed the basis of taxation by:

Taxing real property on the basis of its actual use, regardless of who is the owner.
Classifying real property including mineral lands for assessment purposes.
Prescribing a 50% assessment level for mineral lands, whether leased or unleased, provided they are declared for taxation.

PD 464 provides specific exemptions, including exemptions for real property owned by the government and for certain leased lands that are converted for specific uses.
Presidential Decree No. 939 later exempted pasture and/or grazing lands used for livestock production for a limited period, underscoring that if leased lands were entirely exempt from taxation, such specific exemptions would not be necessary.
The case also considered PD 463 (Mineral Resources Development Decree of 1974), which provides exemptions from taxes on mining claims and improvements, but IMC was not found entitled to such tax exemption during the period in question.

Since PD 464 took effect on June 1, 1974, and its assessment provisions applied to assessments made after January 1, 1974, the liability for real property tax on the leased mineral land is deemed to commence on January 1, 1975 under Section 24 of PD 464.
The lease, executed under old law, did not constitute a contractual guarantee of permanent exemption from real property taxation, as the Department of Agriculture and Natural Resources was not authorized to bind the legislative body against future amendments in taxation law.

Whether IMC, as a lessee of mineral land that forms part of the public domain, is liable for real property tax under the new Real Property Tax Code (Presidential Decree No. 464) despite the lease being executed under the regime of the old law.

Whether the silence in the lease contract regarding the taxability of the mineral land (in contrast to the explicit imposition of tax on improvements) binds IMC to an exemption from real property tax when the legal basis for taxation changed.

Whether the provisions of PD 464, which tax real property on the basis of actual use and include mineral lands in its classification and assessment scheme, override the previous exemption granted under Commonwealth Act No. 137 and the earlier Assessment Law.