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Three large mining firms in Cebu sued the Cebu provincial government and its officials led by Gov. Gwendolyn Garcia for imposing new taxes and ?environmental enhancement fees? that they described as ?unconstitutional.?
The petitioners asked the Cebu Regional Trial Court (RTC) to uphold their rights against questionable and overlapping or double taxation in separate suits filed on Friday.
The Cebu provincial government, Gov. Gwendolyn Garcia and Provincial Treasurer Roy Salubre were named respondents in the separate complaints filed by Dolomite Mining Corp., Apo Land and Quarry Corp., and Solid Earth Development Corp.
Apo Land also included members of the Cebu Provincial Board as respondents in its complaint.
All three companies are large-scale miners of dolomite, a form of limestone that is mainly used as concrete aggregate, in southern Cebu.
The mining firms want the court to strike down Provincial Ordinance No. 2008-10, or the 2008 Revenue Code of Cebu, which Dolomite Mining described as ?unreasonable, unjust, oppressive, excessive, and confiscatory, and prohibits trade.?
Apo Land, which operates in Naga City, and Solid Earth, with mines in San Fernando town, raised similar contentions in separate petitions for declaratory relief, asking the court to nullify the 2008 Revenue Code of Cebu (RCC).
?The question of reasonableness of a tax ordinance is open to judicial inquiry. An ordinance imposing fees may be struck down as being excessive and confiscatory when it has an adverse effect on the economic growth of the local government unit, in particular, and of the nation, in general, and is contrary to the economic policy of the government,? said the petition filed by Dolomite Mining, which operates in the towns of Alcoy and Dalaguete.
The ordinance was approved by the provincial board on Sept. 22, 2008 and took effect in January 2009.
The petitioners questioned the overlap in taxing powers as the mining companies also pay excise taxes to the national government.
?A province may not ordinarily impose taxes on stones, sand, gravel, earth and other quarry resources, as the same are already taxed under the National Internal Revenue Code (NIRC),? the Dolomite petition said.
While the province can impose excise taxes on quarry resources on public lands, they said the local government unit could not do so on private lands within the jurisdiction of the province.
The big mining firms also argued that the quarry permits required under RCC applied only to operators of mining areas five hectares or smaller.
?Under the Mining Tax in relation to the Local Government Code, the authority of local government units to issue permits for mining and quarry operations within their respective territorial jurisdiction is limited to mining claims covering an area of not more than five hectares,? the Dolomite petition argued.
Capitol Consultant Rory Jon Sepulveda welcomed the filing of the suits saying it would be best if the court would interpret the legality of the RCC.
?We are expecting that (cases). The governor can't do anything but enforce the tax code. The governor will just roll down and give in to their (petitioners) position. They have their contentions, we have ours. These will be resolved in a civil and proper manner,? Sepulveda said.
He said the province would stand by its claim that the RCC is ?legal.?
?We have the power to levy? The taxes that we impose are different from that of the national. This is not a fight. This is just a way of the parties to find a resolution (to the different claims). There are many ways to interpret the issue. It's neither black nor white. Let the court interpret the shades of gray,? he said.
Sepulveda said Capitol is willing to accept whatever will be the decision the court, as the ruling could be hailed as a precedent-setting jurisprudence on the imposition of taxes.
He added the Cebu provincial board is also willing to revisit the issue on the RCC.
To the petitioners, however, RCC is blatantly ?contrary to law and unconstitutional? as it requires mining and quarry operators to secure a governor's permit and pay mining fees, including the so-called ?environmental enhancement fees.?
Under Section 124, the RCC imposes 10 percent tax on the local fair market value per cubic meter of all ordinary stones, sand, gravel, earth and other quarry resources extracted within the territorial jurisdiction of Cebu province.
The taxation covers all holders of permits, licenses, contracts or agreements issued by entities other than the Province of Cebu, except those that hold ?gratuitous permits? issued by the Capitol.
The Revenue Code also imposes a 2-percent tax on metallic and on non-metallic minerals.
An ?environmental enhancement? will also be collected from ?all industries, businesses and development projects, conducted within the territorial jurisdiction of the Province of Cebu, that impacts on the environment.?
The fee is P5 per cubic meter for ordinary stones, sand, gravel, earth and other quarry resources.
The fee rises to P25 per metric ton for metallic and non-metallic minerals.
Another 25 centavos per cubic meter will be collected as fee for ?disposal of wastewater? and 50 centavos per board feet for the cutting of trees within a communal forest and private lands.
The province has already sent letters requiring the mining firms to pay for a ?Governor's Permit? and imposed assessment for the extraction of quarry resources.
The petitioners also found the RCC questionable because there were no public hearings conducted before it was made into law.
?A provincial ordinance enacted without public hearing is void,? said Dolomite Mining.
Assuming that public hearings were held, the petitioners said the RCC is still unconstitutional and invalid because of previous rulings of the Supreme Court that limit or restrict the regulatory and taxing authority of the local government units.
Under Philippine Mining Act of 1995, they said the Department of Environment and Natural Resources (DENR) is the primary agency responsible for the ?conservation, management, development, and proper use of the state's mineral resources.?
The petitioners said the province cannot regulate the operations of mining entities involving areas exceeding the threshold of five hectares and that the Capitol is not authorized to issue quarry permits to holders of mineral agreements.
?No quarry permit shall be issued or granted on any area covered by a mineral agreement. As such, it is not required to obtain any quarry permit, contrary to what the RCC seeks to impose,? Dolomite Mining said.
The petitioners are all holders of Mineral Production Sharing Agreements (MPSA) and Mineral Processing Permits (MPP) issued by the Mines and Geosciences Bureau of the DENR.
Moreover, the petitioners said that the RCC is an excise tax, which is already being collected by the national government.
In fact, the petitioners pointed out, the Mining Act and the Local Government Code already grant the province its 40 percent share in the excise taxes collected by the national government from large-scale mining companies.
Therefore, the mining firms argued, the imposition by the province of the subject taxes and fees on large-scale mining operations amounts to an authorized exaction and collection and is clearly outside the scope of the province's taxing and revenue-raising powers to impose.
In March 2009, six large-scale mining companies in Cebu also contested the province?s tax code, particular the environmental enhancement fees.?
But these companies stopped short of going to court and instead went to the Minerals Development Council under the Office of the President to ?assist and intervene? to stop the taxes that they said would ?kill the goose that lays the golden egg.?
In September last year, the National Mining Development Council was set to review the revised Revenue Code of Cebu Province but no ruling has so far been made yet.
Sepulveda said talks with the six mining companies were still on-going.
