This research is based on the information provided by the client.

1. The issue in this case is that the provincial treasurer will be

imposing a 1% Soil Depletion tax based on gross receipts of ore shipments.
This imposition is based on the Ordinance No. 08-58 which is being
assailed by our client.

2. She/he mentioned that the taxes based on the gross value or

ore shipments are double taxation because as provided under the Mining
Act, government share in Mineral Reservations are limited to 5% Mineral
Reservation fee.

3. However, double taxation will not be applicable in this case

because the same is not taxed by the same authority but by the National
Government and the Province of Dinagat Islands.

The Requisites of Direct Double Taxation are:

1. Two taxes must be imposed on the same subject matter;

Answer: YES. The taxes are imposed on mineral products and quarry
resources.

2. Taxed for same purpose;

Answer: YES. To levy a tax to any person/s either individual or

juridical entity who are engaging business at extracting and or shipping out
of all mineral products.

3. Taxed by the same taxing authority;

Answer: NO

Under the Philippine Mining Act of 1995, the tax is levied by the
National Government while the Ordinance is levied by the Province of
Dinagat Islands.
 In the case of Pepsi-Cola Bottling Co. of the Phil., Inc. vs.
Mun. of Tanauan, Leyte1, double taxation becomes obnoxious only
where the taxpayer is taxed twice for the benefit of the same
governmental entity or by the same jurisdiction for the same purpose, but
not in a case where one tax is imposed by the State and the other by the
City or Municipality.

Double taxation was also reiterated in the case of Eusebio

Villanueva, et. al vs. City of Iloilo 2, where it held that while it is true
that the plaintiffs-appellees are taxable under the aforesaid provisions of
the National Internal Revenue Code as real estate dealers, and still taxable
under the ordinance in question, the argument against double taxation
may not be invoked. The same tax may be imposed by the national
government as well as by the local government. There is nothing inherently
obnoxious in the exaction of license fees or taxes with respect to the same
occupation, calling or activity by both the State and a political subdivision
thereof.

4. Taxed within the same jurisdiction;

Answer: YES, it is within the territorial jurisdiction of the province of

Dinagat Islands.

5. Taxed during the same taxing period;

Answer: Not provided in the information

6. The taxes must be of the same kind or character;

Answer: YES. Both are excise tax specifically an Ad Valorem Tax.

1
G.R. No. L-31156, February 27, 1976.
2
G.R. No. L-26521, December 28, 198
 The subject matter in our case is an excise tax because the tax is
based on the value of goods, in the case of our client, it is based on the
gross value of ore shipments.

a) Excise Tax is a tax on the production, sale or consumption of a

commodity in a country.

b) Excise tax is applicable on goods manufactured or produced in the

Philippines for domestic sale or consumption or for any other
disposition; and on goods imported.

There are two types of excise tax, these are:

a) Specific Tax – refers to the excise tax imposed which is based on

weight or volume capacity or any other physical unit of
measurement.

b) Ad Valorem Tax – refers to the excise tax which is based on selling

price or other specified value of the goods/articles.

On the other hand, Section 80 of R.A 7942 of Government

Share in Mineral Production Sharing Agreement3, it provides that
the total government share in a mineral production sharing agreement
shall be the excise tax on mineral products as provided in Republic Act No.
7729, amending Section 151(a) of the National Internal Revenue Code, as
amended.

Therefore, both are in the nature of an excise tax.

4. In addition, our client mentioned the case of Nickel Asia

Corporation which also assailed the imposition of soil depletion tax for
being invalid as it is beyond authority of the provincial government or any
LGU to impose soil depletion since it is in the nature of an excise tax. They
mentioned that the limitation on the taxing powers of LGUs was expressly
provided under Section 133(h) of the Local Government Code.

3
An Act Instituting a New Sytem ofMineral Resources Exploration, Development, Utilization and Conservation.
SEC. 133. Common Limitations on the Taxing Powers of Local
Government Units. –

Unless otherwise provided herein, the exercise of the

taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:
xxxx

(h) Excise taxes on articles enumerated under the National

Internal Revenue Code, as amended, and taxes, fees or
charges on petroleum products;

However, the above article is subject to exceptions. As provided

under Chapter 2 – Specific provisions on the Taxing and Other
Revenue-Raising Powers of Local Government Units, it specifically
states that:

“Article One – Provinces

xxx

Sec. 138. Tax on Sand, Gravel and Other Quarry

Resources. – The province may levy and collect not more
than ten percent (10%) of fair market value in the locality per
cubic meter of ordinary stones, sand, gravel, earth, and other
quarry resources, as defined under the National Internal
Revenue code, as amended, extracted from public lands or
from the beds of seas, lakes, rivers, streams, creeks, and other
public waters within its territorial jurisdiction. The permit to
extract sand, gravel and other quarry resources shall be issued
exclusively by the provincial governor, pursuant to the
ordinance of the sangguniang panlalawigan. The proceeds of
the tax on sand, gravel and other quarry resources shall be
distributed as follows: (1) Province – Thirty percent (30%); (2)
Component City or Municipality where the sand, gravel, and
other quarry resources are extracted – Thirty percent (30%);
and (3) Barangay where the sand, gravel, and other quarry
resources are extracted – Forty percent (40%).”
 In the case of Lepanto Consolidated Mining Company vs.
Ambanloc4, the Supreme Court held that provincial governments can levy
excise taxes on quarry resources from public lands independently from the
national government.

In view of the foregoing, the province can levy excise tax from the
extraction and/or shipping out mineral products since it is expressly
provided by the Local Government Code.

4
G.R. No. 180639, June 29, 2010.