Title
Supreme Court
Province of Bulacan vs. Court of Appeals
Case
G.R. No. 126232
Decision Date
Nov 27, 1998
Bulacan Province imposed a 10% tax on quarry resources from private lands; RCC contested, arguing lack of authority. Courts ruled province cannot tax private land quarrying under Local Government Code.

Case Summary (G.R. No. 126232)

Background and Legal Framework

On June 26, 1992, the Sangguniang Panlalawigan of Bulacan enacted Provincial Ordinance No. 3, the Revenue Code of Bulacan Province, which levies a 10% tax based on the fair market value per cubic meter of stones, sand, gravel, earth, and quarry resources extracted from public lands or public waters within the territorial jurisdiction. RCC was assessed P2,524,692.13 for extracting such materials from private lands, which it contested, arguing the province lacked authority to impose taxes on quarry products from private lands.

Procedural History

RCC challenged the tax assessment before the Regional Trial Court (RTC) via a petition for declaratory relief. The RTC dismissed the petition, prompting RCC to file a petition for certiorari with the Supreme Court. The Supreme Court referred the case to the Court of Appeals, which, after negotiations, limited the issue to whether the provincial government could impose and assess taxes on quarry resources extracted from private lands. The Court of Appeals ruled that the province lacked legal authority to impose and assess such taxes on quarry resources extracted from private lands, rendering the tax assessment null and void. The petitioners filed motions for reconsideration that were denied, leading to the appeal before the Supreme Court.

On the Proper Mode of Review and Jurisdiction

The petitioners contended that RCC should have appealed the RTC dismissal order rather than filing a petition for certiorari, asserting the dismissal was a final order appealable instead of an issue for certiorari. The Court clarified that RCC correctly utilized an appeal by certiorari under Rule 45, a mode of appeal, rather than a special civil action for certiorari under Rule 65, which is distinct and available only when no appeal exists. Petitioners’ reliance on Circular 2-90 to dismiss the appeal was rejected because the Supreme Court has discretion to refer improperly raised factual issues to the Court of Appeals, as was done in this case. The Court also held that the trial court’s dismissal never became final due to the pending appeal.

On the Scope of Court of Appeals’ Jurisdiction

Petitioners argued the Court of Appeals exceeded its jurisdiction by declaring the tax assessment null and void, contending it could only review the RTC’s dismissal order. The Court emphasized the agreement and modus vivendi—signed by the petitioners’ legal counsel and officials—limited the issue to the authority of the province to levy taxes on quarry resources from private lands. The petitioners are therefore estopped from questioning the jurisdiction, having submitted to the appellate court’s authority to resolve such issue. The Court further explained that procedural decisions made by the attorney are binding on the client despite claims of lack of authorization by the Sangguniang Panlalawigan.

On the Authority of the Province to Levy Tax on Quarry Resources Extracted from Private Lands

The central legal issue concerns whether a province can impose taxes on quarry materials extracted from private lands. The Court examined Sections 133, 134, 138, 129, and 186 of the Local Government Code (LGC) of 1991. Section 134 allows provinces to levy taxes enumerated in the Code; Section 138 specifically authorizes the levy of up to 10% of the fair market value on quarry resources extracted from public lands or public waters within the territorial jurisdiction.

Section 133 restricts local taxing powers, prohibiting excise taxes on articles already taxed under the National Internal Revenue Code (NIRC). The Court found this restriction crucial and noted that quarry resources, regardless of origin, are subject to excise tax under Section 151 of the NIRC, imposing a 2% excise tax on all nonmetallic minerals and quarry resources, including those extracted from private lands.

The Court held that, while the province can impose quarry tax on resources extracted from public lands under the LGC, it cannot tax quarry resources extracted from private lands since these are already subject to national excise tax, and local taxing authority is constrained by the LGC provisions. The authority to create other sources of revenue under Sections 129 and 186 of the LGC does not override these express restrictions, as additional taxes must not contradict national laws, be excessive, or unjust.

On the Alleged Collateral Attack on Provincial Ordinance No. 3 and the Regalian Doctrine

Petitioners argued the Court of Appeals’ nullification of the tax assessment amounted to an imperm

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