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Province of Nueva Ecija vs. Imperial Mining Co. Inc

The case involved a mining company that leased land from the government for mining purposes. While the original lease agreement and mining law exempted leased mineral lands from property tax, a new property tax code changed the basis of taxation to actual use regardless of ownership. The court thus held that the mining company was liable for property tax on the leased land starting from the effective date of the new tax code.

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95 views2 pages

Province of Nueva Ecija vs. Imperial Mining Co. Inc

The case involved a mining company that leased land from the government for mining purposes. While the original lease agreement and mining law exempted leased mineral lands from property tax, a new property tax code changed the basis of taxation to actual use regardless of ownership. The court thus held that the mining company was liable for property tax on the leased land starting from the effective date of the new tax code.

Uploaded by

Hinata Shoyo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Province of Nueva Ecija vs. Imperial Mining Co.

Inc, 118 SCRA 632 (1982)

– where it was held that the policy of taxing real property is on the basis of actual use even if the user is
not the owner. Hence, gov’t property leased to a private person becomes taxable.

FACTS:

The case involves the Province of Nueva Ecija as the plaintiff-appellant and Imperial Mining Company,
Inc. (IMC) as the defendant-appellee. The case was certified to the Court by the Court of Appeals as it
involves a purely legal question.

In 1968, IMC entered into a lease agreement with the government, specifically the Department of
Agriculture and Natural Resources, for placer mining claims in Carranglan, Nueva Ecija. The lease
agreement granted IMC the right to explore, develop, mine, extract, and dispose of mineral products on
the leased land, which covered an area of 192 hectares.

The lease contract included a provision stating that "the Lessee shall pay real estate tax on all buildings
and other improvements built on the land leased." However, the contract was silent on the issue of
whether the lessee was also liable for real property tax on the mineral land itself, separate from the
improvements.

In 1974, the Provincial Assessor of Nueva Ecija declared the leased property in the name of IMC, and
subsequently, IMC was assessed for real property tax by the Province.

In September 1976, the Province of Nueva Ecija filed a lawsuit against IMC, seeking the collection of real
property tax on the mineral land for the years 1970 to 1976. The total amount claimed was P38,836.22.

IMC resisted the lawsuit, arguing that the mineral land, being part of the public domain, was owned by
the government and therefore exempt from real estate tax. IMC relied on the terms of the lease
contract and Section 87 of the old Mining Act (Commonwealth Act 137), which did not subject leased
mineral lands to the payment of real estate tax.

After a trial, the Court of First Instance of Nueva Ecija dismissed the complaint. The court based its
decision on the terms of the lease contract and the provisions of the old Mining Act, which exempted
leased mineral lands from real estate tax. The court also noted that the Real Property Tax Code of 1974
(Presidential Decree 464), which took effect on June 1, 1974, did not change this rule.

The Province of Nueva Ecija appealed the decision to the higher court, arguing that IMC was liable for
real property tax on the mineral land leased by it.

ISSUE:
Whether IMC, as the lessee of the mineral land, is liable for real property tax on the land, even
though it is part of the public domain.

RULING:
The Court of First Instance initially dismissed the complaint, relying on the terms of the lease
contract and Section 87 of the old Mining Act (Commonwealth Act 137), which was in force
when IMC obtained the lease in 1968. This provision exempted leased mineral lands from the
payment of real estate tax.
However, on appeal, the decision was modified.
The court considered the provisions of Presidential Decree 464, the new Real Property Tax Code
that came into effect in 1974. This decree changed the basis of real property taxation to actual
use, regardless of ownership. The court noted that the policy of taxing real property on the basis
of actual use was reflected in various provisions of the new law.
The court highlighted that Presidential Decree 464 provided exemptions from real property tax,
including exemptions for lands acquired by grant, purchase, or lease from the public domain.
The fact that specific exemptions were included in the law indicated that leased lands of the
public domain would otherwise be subject to real property tax. The decree also classified real
property for assessment purposes, including mineral land.

The court held that IMC is subject to the payment of real property tax on the mineral land leased by it, in
accordance with Presidential Decree 464. The court emphasized that the liability for real property tax on
the leased mineral land should start on January 1, 1975, pursuant to the provision in the decree
regarding the date of effectivity of assessment or reassessment.

The case was remanded to the trial court to determine the amount of real property tax due from IMC.

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