3. LEPANTO CONSOLIDATED MINING COMPANY vs.

AMBANLOC- Local Business Taxation

GR No. 180639

FACTS:
Lepanto Consolidated Mining had a mining lease contract for a mining claim in Benguet. They used the sand and
gravel mined to construct and maintain concrete structures needed in its mining operations such as a tailings
dam, access roads, and offices. The provincial treasurer of Benguet then asked Lepanto Consolidated Mining to
pay sand and gravel tax for the quarry materials extracted from the mining site. The counterargument was that
the said tax applied only to commercial extractions and since Lepanto did not supply other users for some profit,
the tax should not apply.
ISSUE:
Is Lepanto liable for the tax imposed by Benguet on the sand and gravel that it extracted from within the area
of its mining claim used exclusively in its mining operations?

HELD:
YES. The CTA erred in applying the provision of the Local Government Code (Section 138) since the basis of
Benguet province emanates from the Revised Benguet Revenue Code itself. This notwithstanding, the provincial
revenue measure still did not distinguish between commercial and non-commercial extractions.

In addition, the Petitioner’s argument that when a company is taxed on its main business it can no longer be
taxable for engaging in an activity that is but part of, incidental to, and necessary to such main business, was
held to be inapplicable. The Court said that the cases where the above principle has been applied involved
business taxes and thus the incidental activities could not be treated as separate and distinct from the main
business. Here the tax being imposed was an excise tax levied on the privilege of extracting gravel and sand.