Capitol, quarry firm set to settle P1.2-billion tax dispute

Local

THE Provincial Government of Cebu is moving to settle a long-running tax dispute with Apo Land and Quarry Corporation (ALQC) through a compromise deal worth P211.56 million, dramatically lower than the original P1.218-billion assessment covering liabilities from 2009 to 2025.

Provincial officials confirmed during a Capitol press briefing that the proposed settlement still needs authorization from the Sangguniang Panlalawigan (SP) before Governor Pamela Baricuatro can formally sign the agreement.

If approved, the compromise would resolve years of tax disputes between the province and the Naga City-based quarry operator over extraction activities and related regulatory fees.

The original tax assessment issued by the Provincial Treasurer reached P1,218,630,650.84 and included Tax on Extraction under Section 124 of the Cebu Provincial Revenue Code, Monitoring Fees under Section 125, Environmental Enhancement Fees under Section 220, and accumulated penalties and interest.

Governor Baricuatro said most of the P1.2 billion assessment came from extraction charges imposed on quarry materials taken from private lands.

"Actually kanang 1.2 billion nga extraction ana, it comes from the private land. APO was extracting in private land. Unya 80% anang 1.2 billion comes from extraction fee," said Baricuatro.

She explained that nearly 80 percent of the total amount resulted from extraction fees computed at 10 percent of the market value of quarried materials.

However, provincial legal counsel Atty. Restituto Arnaiz said a Supreme Court ruling prohibits local government units from collecting extraction taxes on quarry materials sourced from privately owned land.

“Dili makaimpose ug extraction fee ang LGU kung ang extraction is withing private land. And kaning sa APO, private lands mani ang pagextract. Mao na nga di ta kaimpose og extraction fee which is ang dako nga amount (sa P1.2 billion),” Arnaiz explained.

The legal review prompted the Capitol to remove the extraction tax component from the computation, effectively eliminating the largest portion of the original claim.

With the extraction tax excluded, the remaining collectible charges include monitoring fees and environmental enhancement fees under the Cebu Provincial Revenue Code.

The monitoring fees were retained but recalculated after negotiations between the provincial government and ALQC. Both parties agreed to use a fair market value of P300 per cubic meter of limestone as the basis for computation.

With a monitoring rate of 10 percent, the charge translates to P30 per cubic meter.

Arnaiz stressed that the reduced settlement amount resulted from detailed legal and financial review.

“Nganong niabot naman lang ni’g 211 million? Dili ni na come up lang dayon nga compromise agreement,” he said.

Another point of dispute involved how far back the province could collect monitoring fees.

ALQC argued that under Section 194(a) of the Local Government Code, taxes and fees must be assessed within five years from the time they became due, making assessments for 2019 and earlier years already prescribed.

The provincial government, however, cited Section 194(b), which allows up to 10 years for assessments in cases involving fraud or intent to evade taxes.

Rather than wait for a court ruling on the matter, both parties agreed to settle the issue through compromise.

Under the proposed agreement, monitoring fee assessments from 2009 to 2019 will remain included but surcharges, penalties, and interest for those years will receive an 80 percent discount.

No penalty discount will apply to liabilities from 2020 to 2024, while only a one-month interest of two percent will be imposed for 2025.

The Environmental Enhancement Fee under Section 220 remains fully enforceable and was included in the settlement without changes.

After removing extraction taxes, recomputing monitoring charges, adjusting penalties, and retaining environmental fees, both parties arrived at a final compromise amount of P211,560,530.35.

“Mao nang nigamay nalang na kay ang gi-charge nato nila kay Environmental fee og monitoring fee plus naa’y penalties and surcharges kay dugay man na nabayran kay since 2009 pa man ang computation ani,” Arnaiz said.

Under the proposed terms, ALQC must pay the full amount in a single lump sum within seven days after the agreement is signed.

The compromise settlement is embodied in Proposed Resolution No. 29, Series of 2026, which seeks to authorize Baricuatro to enter into and sign the agreement on behalf of the provincial government.

Arnaiz clarified that the governor cannot finalize the deal without legislative approval.

“Dili man ang office of the governor ang mo-approve ani, dili man ka pirma si governor unless mohatag og authorization ang Sangguniang Panlalawigan,” he explained.(MyTVCebu)