G.R. No. 106041, Benguet Corporation v. Central Board of Assessment Appeals et al.

, 218 CRA
Repu!li" of t#e $#ilippines
%$R&'& C(%R)
'anila
&N BANC
*&C++(N
,anuar- 2., 1../
G.R. No. 106041
B&NG%&) C(R$(RA)+(N, petitioner,
vs.
C&N)RA0 B(AR* (1 A&'&N) A$$&A0, B(AR* (1 A&'&N) A$$&A0 (1
2A'BA0&, $R(3+NC+A0 A&(R (1 2A'BA0&, $R(3+NC& (1 2A'BA0&, and
'%N+C+$A0+)4 (1 AN 'ARC&0+N(, respondents.
Romulo, 'a!anta, Buenaventura, a-o" 5 *e los Angeles for petitioner.
Cru6, ,.7
)#e realt- ta8 assessment involved in t#is "ase amounts to $11,/1.,/04.00. +t #as !een imposed on t#e
petitioner9s tailings dam and t#e land t#ereunder over its protest.
)#e "ontrovers- arose in 1.8: ;#en t#e $rovin"ial Assessor of 2am!ales assessed t#e said properties
as ta8a!le improvements. )#e assessment ;as appealed to t#e Board of Assessment Appeals of t#e
$rovin"e of 2am!ales. (n August 24, 1.88, t#e appeal ;as dismissed mainl- on t#e ground of t#e
petitioner9s <failure to pa- t#e realt- ta8es t#at fell due during t#e penden"- of t#e appeal.<
)#e petitioner seasona!l- elevated t#e matter to t#e Central Board of Assessment Appeals, 1 one of t#e
#erein respondents. +n its de"ision dated 'ar"# 22, 1..0, t#e Board reversed t#e dismissal of t#e
appeal !ut, on t#e merits, agreed t#at <t#e tailings dam and t#e lands su!merged t#ereunder =;ere>
su!?e"t to realt- ta8.<
1or purposes of ta8ation t#e dam is "onsidered as real propert- as it "omes ;it#in t#e o!?e"t mentioned
in paragrap#s =a> and =!> of Arti"le 41: of t#e Ne; Civil Code. +t is a "onstru"tion ad#ered to t#e soil
;#i"# "annot !e separated or deta"#ed ;it#out !rea@ing t#e material or "ausing destru"tion on t#e land
upon ;#i"# it is atta"#ed. )#e immova!le nature of t#e dam as an improvement determines its
"#ara"ter as real propert-, #en"e ta8a!le under e"tion /8 of t#e Real $ropert- )a8 Code. =$.*. 464>.
Alt#oug# t#e dam is partl- used as an antiApollution devi"e, t#is Board "annot a""ede to t#e reBuest for
ta8 e8emption in t#e a!sen"e of a la; aut#ori6ing t#e same.
888 888 888
Ce find t#e appraisal on t#e land su!merged as a result of t#e "onstru"tion of t#e tailings dam, "overed
!- )a8 *e"laration Nos.
002A0260 and 002A0266, to !e in a""ordan"e ;it# t#e "#edule of 'ar@et 3alues for 2am!ales ;#i"#
;as revie;ed and allo;ed for use !- t#e 'inistr- =*epartment> of 1inan"e in t#e 1.81A1.82 general
revision. No serious attempt ;as made !- $etitionerAAppellant Benguet Corporation to impugn its
reasona!leness, i.e., t#at t#e $:0.00 per sBuare meter applied !- RespondentAAppellee $rovin"ial
Assessor is indeed e8"essive and un"ons"iona!le. Den"e, ;e find no "ause to distur! t#e mar@et value
applied !- Respondent Appellee $rovin"ial Assessor of 2am!ales on t#e properties of $etitionerA
Appellant Benguet Corporation "overed !- )a8 *e"laration Nos. 002A0260 and 002A0266.
)#is petition for "ertiorari no; see@s to reverse t#e a!ove ruling.
)#e prin"ipal "ontention of t#e petitioner is t#at t#e tailings dam is not su!?e"t to realt- ta8 !e"ause it is
not an <improvement< upon t#e land ;it#in t#e meaning of t#e Real $ropert- )a8 Code. 'ore
parti"ularl-, it is "laimed A
=1> as regards t#e tailings dam as an <improvement<7
=a> t#at t#e tailings dam #as no value separate from and independent of t#e mineE #en"e, !- itself it
"annot !e "onsidered an improvement separatel- assessa!leE
=!> t#at it is an integral part of t#e mineE
="> t#at at t#e end of t#e mining operation of t#e petitioner "orporation in t#e area, t#e tailings dam ;ill
!enefit t#e lo"al "ommunit- !- serving as an irrigation fa"ilit-E
=d> t#at t#e !uilding of t#e dam #as stripped t#e propert- of an- "ommer"ial value as t#e propert- is
su!merged under ;ater ;astes from t#e mineE
=e> t#at t#e tailings dam is an environmental pollution "ontrol devi"e for ;#i"# petitioner must !e
"ommended rat#er t#an penali6ed ;it# a realt- ta8 assessmentE
=f> t#at t#e installation and utili6ation of t#e tailings dam as a pollution "ontrol devi"e is a reBuirement
imposed !- la;E
=2> as regards t#e valuation of t#e tailings dam and t#e su!merged lands7
=a> t#at t#e su!?e"t properties #ave no mar@et value as t#e- "annot !e sold independentl- of t#e mineE
=!> t#at t#e valuation of t#e tailings dam s#ould !e !ased on its in"idental use !- petitioner as a ;ater
reservoir and not on t#e alleged "ost of "onstru"tion of t#e dam and t#e annual !uildAup e8penseE
="> t#at t#e <residual value formula< used !- t#e $rovin"ial Assessor and adopted !- respondent CBAA
is ar!itrar- and erroneousE and
=/> as regards t#e petitioner9s lia!ilit- for penalties for
nonAde"laration of t#e tailings dam and t#e su!merged lands for realt- ta8 purposes7
=a> t#at ;#ere a ta8 is not paid in an #onest !elief t#at it is not due, no penalt- s#all !e "olle"ted in
addition to t#e !asi" ta8E
=!> t#at no ot#er mining "ompanies in t#e $#ilippines operating a tailings dam #ave !een made to
de"lare t#e dam for realt- ta8 purposes.
)#e petitioner does not dispute t#at t#e tailings dam ma- !e "onsidered realt- ;it#in t#e meaning of
Arti"le 41:. +t insists, #o;ever, t#at t#e dam "annot !e su!?e"ted to realt- ta8 as a separate and
independent propert- !e"ause it does not "onstitute an <assessa!le improvement< on t#e mine alt#oug#
a "onsidera!le sum ma- #ave !een spent in "onstru"ting and maintaining it.
)o support its t#eor-, t#e petitioner "ites t#e follo;ing "ases7
1. 'uni"ipalit- of Cota!ato v. antos =10: $#il. .6/>, ;#ere t#is Court "onsidered t#e di@es and gates
"onstru"ted !- t#e ta8pa-er in "onne"tion ;it# a fis#pond operation as integral parts of t#e fis#pond.
2. Bislig Ba- 0um!er Co. v. $rovin"ial Government of urigao =100 $#il. /0/>, involving a road
"onstru"ted !- t#e tim!er "on"essionaire in t#e area, ;#ere t#is Court did not impose a realt- ta8 on t#e
road primaril- for t;o reasons7
+n t#e first pla"e, it "annot !e disputed t#at t#e o;ners#ip of t#e road t#at ;as "onstru"ted !- appellee
!elongs to t#e government !- rig#t of a""ession not onl- !e"ause it is in#erentl- in"orporated or
atta"#ed to t#e tim!er land . . . !ut also !e"ause upon t#e e8piration of t#e "on"ession said road ;ould
ultimatel- pass to t#e national government. . . . +n t#e se"ond pla"e, ;#ile t#e road ;as "onstru"ted !-
appellee primaril- for its use and !enefit, t#e privilege is not e8"lusive, for . . . appellee "annot prevent
t#e use of portions of t#e "on"ession for #omesteading purposes. +t is also dut- !ound to allo; t#e free
use of forest produ"ts ;it#in t#e "on"ession for t#e personal use of individuals residing in or ;it#in t#e
vi"init- of t#e land. . . . +n ot#er ;ords, t#e government #as pra"ti"all- reserved t#e rig#ts to use t#e
road to promote its varied a"tivities. in"e, as a!ove s#o;n, t#e road in Buestion "annot !e "onsidered
as an improvement ;#i"# !elongs to appellee, alt#oug# in part is for its !enefit, it is "lear t#at t#e same
"annot !e t#e su!?e"t of assessment ;it#in t#e meaning of e"tion 2 of C.A.
No. 4F0.
Apparentl-, t#e realt- ta8 ;as not imposed not !e"ause t#e road ;as an integral part of t#e lum!er
"on"ession !ut !e"ause t#e government #ad t#e rig#t to use t#e road to promote its varied a"tivities.
/. Gendri"@ v. );in 0a@es Reservoir Co. =144 $a"ifi" 884>, an Ameri"an "ase, ;#ere it ;as de"lared
t#at t#e reservoir dam ;ent ;it# and formed part of t#e reservoir and t#at t#e dam ;ould !e <;ort#less
and useless e8"ept in "onne"tion ;it# t#e outlet "anal, and t#e ;ater rig#ts in t#e reservoir represent
and in"lude ;#atever utilit- or value t#ere is in t#e dam and #eadgates.<
4. (ntario ilver 'ining Co. v. Di8on =164 $a"ifi" 4.8>, also from t#e %nited tates. )#is "ase
involved drain tunnels "onstru"ted !- plaintiff ;#en it e8panded its mining operations do;n;ard,
resulting in a "onstantl- in"reasing flo; of ;ater in t#e said mine. +t ;as #eld t#at7
C#atever value t#e- #ave is "onne"ted ;it# and in fa"t is an integral part of t#e mine itself. ,ust as
mu"# so as an- s#aft ;#i"# des"ends into t#e eart# or an underground in"line, tunnel, or drift ;ould !e
;#i"# ;as used in "onne"tion ;it# t#e mine.
(n t#e ot#er #and, t#e oli"itor General argues t#at t#e dam is an assessa!le improvement !e"ause it
en#an"es t#e value and utilit- of t#e mine. )#e primar- fun"tion of t#e dam is to re"eive, retain and
#old t#e ;ater "oming from t#e operations of t#e mine, and it also ena!les t#e petitioner to impound
;ater, ;#i"# is t#en re"-"led for use in t#e plant.
)#ere is also ample ?urispruden"e to support t#is vie;, t#us7
. . . )#e said eBuipment and ma"#iner-, as appurtenan"es to t#e gas station !uilding or s#ed o;ned !-
Calte8 =as to ;#i"# it is su!?e"t to realt- ta8> and ;#i"# fi8tures are ne"essar- to t#e operation of t#e
gas station, for ;it#out t#em t#e gas station ;ould !e useless and ;#i"# #ave !een atta"#ed or affi8ed
permanentl- to t#e gas station site or em!edded t#erein, are ta8a!le improvements and ma"#iner-
;it#in t#e meaning of t#e Assessment 0a; and t#e Real $ropert- )a8 Code. =Calte8 H$#il.I +n". v.
CBAA, 114 CRA 2.6>.
Ce #old t#at ;#ile t#e t;o storage tan@s are not em!edded in t#e land, t#e- ma-, nevert#eless, !e
"onsidered as improvements on t#e land, en#an"ing its utilit- and rendering it useful to t#e oil industr-.
+t is undenia!le t#at t#e t;o tan@s #ave !een installed ;it# some degree of permanen"e as re"epta"les
for t#e "onsidera!le Buantities of oil needed !- '&RA0C( for its operations. ='anila &le"tri" Co. v.
CBAA, 114 CRA 2F/>.
)#e pipeline s-stem in Buestion is indu!ita!l- a "onstru"tion ad#ering to t#e soil. +t is atta"#ed to t#e
land in su"# a ;a- t#at it "annot !e separated t#erefrom ;it#out dismantling t#e steel pipes ;#i"# ;ere
;elded to form t#e pipeline. ='&RA0C( e"urities +ndustrial Corp. v. CBAA, 114 CRA 261>.
)#e ta8 upon t#e dam ;as properl- assessed to t#e plaintiff as a ta8 upon real estate. =1la8A$ond Cater
Co. v. Cit- of 0-nn, 16 N.&. F42>.
)#e oil tan@s are stru"tures ;it#in t#e statute, t#at t#e- are designed and used !- t#e o;ner as
permanent improvement of t#e free #old, and t#at for su"# reasons t#e- ;ere properl- assessed !- t#e
respondent ta8ing distri"t as improvements. =tandard (il Co. of Ne; ,erse- v. Atlanti" Cit-, 1: A 2d.
2F1>
)#e Real $ropert- )a8 Code does not "arr- a definition of <real propert-< and simpl- sa-s t#at t#e
realt- ta8 is imposed on <real propert-, su"# as lands, !uildings, ma"#iner- and ot#er improvements
affi8ed or atta"#ed to real propert-.< +n t#e a!sen"e of su"# a definition, ;e appl- Arti"le 41: of t#e
Civil Code, t#e pertinent portions of ;#i"# state7
Art. 41:. )#e follo;ing are immova!le propert-.
=1> 0ands, !uildings and "onstru"tions of all @inds ad#ered to t#e soilE
888 888 888
=/> &ver-t#ing atta"#ed to an immova!le in a fi8ed manner, in su"# a ;a- t#at it "annot !e separated
t#erefrom ;it#out !rea@ing t#e material or deterioration of t#e o!?e"t.
e"tion 2 of C.A. No. 4F0, ot#er;ise @no;n as t#e Assessment 0a;, provides t#at t#e realt- ta8 is due
<on t#e real propert-, in"luding land, !uildings, ma"#iner- and ot#er improvements< not spe"ifi"all-
e8empted in e"tion / t#ereof. A reading of t#at se"tion s#o;s t#at t#e tailings dam of t#e petitioner
does not fall under an- of t#e "lasses of e8empt real properties t#erein enumerated.
+s t#e tailings dam an improvement on t#e mineJ e"tion /=@> of t#e Real $ropert- )a8 Code defines
improvement as follo;s7
=@> +mprovements A is a valua!le addition made to propert- or an amelioration in its "ondition,
amounting to more t#an mere repairs or repla"ement of ;aste, "osting la!or or "apital and intended to
en#an"e its value, !eaut- or utilit- or to adopt it for ne; or furt#er purposes.
)#e term #as also !een interpreted as <artifi"ial alterations of t#e p#-si"al "ondition of t#e ground t#at
are reasona!l- permanent in "#ara"ter.< 2
)#e Court notes t#at in t#e (ntario "ase t#e plaintiff admitted t#at t#e mine involved t#erein "ould not
!e operated ;it#out t#e aid of t#e drain tunnels, ;#i"# ;ere indispensa!le to t#e su""essful
development and e8tra"tion of t#e minerals t#erein. )#is is not true in t#e present "ase.
&ven ;it#out t#e tailings dam, t#e petitioner9s mining operation "an still !e "arried out !e"ause t#e
primar- fun"tion of t#e dam is merel- to re"eive and retain t#e ;astes and ;ater "oming from t#e
mine. )#ere is no allegation t#at t#e ;ater "oming from t#e dam is t#e sole sour"e of ;ater for t#e
mining operation so as to ma@e t#e dam an integral part of t#e mine. +n fa"t, as a result of t#e
"onstru"tion of t#e dam, t#e petitioner "an no; impound and re"-"le ;ater ;it#out #aving to spend for
t#e !uilding of a ;ater reservoir. And as t#e petitioner itself points out, even if t#e petitioner9s mine is
s#ut do;n or "eases operation, t#e dam ma- still !e used for irrigation of t#e surrounding areas, again
unli@e in t#e (ntario "ase.
As "orre"tl- o!served !- t#e CBAA, t#e Gendri"@ "ase is also not appli"a!le !e"ause it involved ;ater
reservoir dams used for different purposes and for t#e !enefit of t#e surrounding areas. B- "ontrast, t#e
tailings dam in Buestion is !eing used e8"lusivel- for t#e !enefit of t#e petitioner.
Curiousl-, t#e petitioner, ;#ile vigorousl- arguing t#at t#e tailings dam #as no separate e8isten"e, ?ust
as vigorousl- "ontends t#at at t#e end of t#e mining operation t#e tailings dam ;ill serve t#e lo"al
"ommunit- as an irrigation fa"ilit-, t#ere!- impl-ing t#at it "an e8ist independentl- of t#e mine.
1rom t#e definitions and t#e "ases "ited a!ove, it ;ould appear t#at ;#et#er a stru"ture "onstitutes an
improvement so as to parta@e of t#e status of realt- ;ould depend upon t#e degree of permanen"e
intended in its "onstru"tion and use. )#e e8pression <permanent< as applied to an improvement does
not impl- t#at t#e improvement must !e used perpetuall- !ut onl- until t#e purpose to ;#i"# t#e
prin"ipal realt- is devoted #as !een a""omplis#ed. +t is suffi"ient t#at t#e improvement is intended to
remain as long as t#e land to ;#i"# it is anne8ed is still used for t#e said purpose.
)#e Court is "onvin"ed t#at t#e su!?e"t dam falls ;it#in t#e definition of an <improvement< !e"ause it
is permanent in "#ara"ter and it en#an"es !ot# t#e value and utilit- of petitioner9s mine. 'oreover, t#e
immova!le nature of t#e dam defines its "#ara"ter as real propert- under Arti"le 41: of t#e Civil Code
and t#us ma@es it ta8a!le under e"tion /8 of t#e Real $ropert- )a8 Code.
)#e Court ;ill also re?e"t t#e "ontention t#at t#e appraisal at $:0.00 per sBuare meter made !- t#e
$rovin"ial Assessor is e8"essive and t#at #is use of t#e <residual value formula< is ar!itrar- and
erroneous.
Respondent $rovin"ial Assessor e8plained t#e use of t#e <residual value formula< as follo;s7
A :0K residual value is applied in t#e "omputation !e"ause, ;#ile it is true t#at ;#en slime fills t#e
di@e, it ;ill t#en !e "overed !- anot#er di@e or stage, t#e stage "overed is still t#ere and still e8ists and
sin"e onl- one fa"e of t#e di@e is filled, :0K or t#e ot#er fa"e is unutili6ed.
+n sustaining t#is formula, t#e CBAA gave t#e follo;ing ?ustifi"ation7
Ce find t#e appraisal on t#e land su!merged as a result of t#e "onstru"tion of t#e tailings dam, "overed
!- )a8 *e"laration Nos.
002A0260 and 002A0266, to !e in a""ordan"e ;it# t#e "#edule of 'ar@et 3alues for an 'ar"elino,
2am!ales, ;#i"# is fift- =:0.00> pesos per sBuare meter for t#ird "lass industrial land =)N, page 1F,
,ul- :, 1.8.> and "#edule of 'ar@et 3alues for 2am!ales ;#i"# ;as revie;ed and allo;ed for use !-
t#e 'inistr- =*epartment> of 1inan"e in t#e 1.81A1.82 general revision. No serious attempt ;as made
!- $etitionerAAppellant Benguet Corporation to impugn its reasona!leness, i.e, t#at t#e $:0.00 per
sBuare meter applied !- RespondentAAppellee $rovin"ial Assessor is indeed e8"essive and
un"ons"iona!le. Den"e, ;e find no "ause to distur! t#e mar@et value applied !- RespondentAAppellee
$rovin"ial Assessor of 2am!ales on t#e properties of $etitionerAAppellant Benguet Corporation
"overed !- )a8 *e"laration Nos. 002A0260 and 002A0266.
+t #as !een t#e longAstanding poli"- of t#is Court to respe"t t#e "on"lusions of BuasiA?udi"ial agen"ies
li@e t#e CBAA, ;#i"#, !e"ause of t#e nature of its fun"tions and its freBuent e8er"ise t#ereof, #as
developed e8pertise in t#e resolution of assessment pro!lems. )#e onl- e8"eption to t#is rule is ;#ere
it is "learl- s#o;n t#at t#e administrative !od- #as "ommitted grave a!use of dis"retion "alling for t#e
intervention of t#is Court in t#e e8er"ise of its o;n po;ers of revie;. )#ere is no su"# s#o;ing in t#e
"ase at !ar.
Ce disagree, #o;ever, ;it# t#e ruling of respondent CBAA t#at it "annot ta@e "ogni6an"e of t#e issue
of t#e propriet- of t#e penalties imposed upon it, ;#i"# ;as raised !- t#e petitioner for t#e first time
onl- on appeal. )#e CBAA #eld t#at t#is <is an entirel- ne; matter t#at petitioner "an ta@e up ;it# t#e
$rovin"ial Assessor =and> "an !e t#e su!?e"t of anot#er protest !efore t#e 0o"al Board or a negotiation
;it# t#e lo"al sanggunian . . ., and in "ase of an adverse de"ision !- eit#er t#e 0o"al Board or t#e lo"al
sanggunian, =it "an> elevate t#e same to t#is Board for appropriate a"tion.<
)#ere is no need for t#is timeA;asting pro"edure. )#e Court ma- resolve t#e issue in t#is petition
instead of referring it !a"@ to t#e lo"al aut#orities. Ce #ave studied t#e fa"ts and "ir"umstan"es of t#is
"ase as a!ove dis"ussed and find t#at t#e petitioner #as a"ted in good fait# in Buestioning t#e
assessment on t#e tailings dam and t#e land su!merged t#ereunder. +t is "lear t#at it #as not done so for
t#e purpose of evading or dela-ing t#e pa-ment of t#e Buestioned ta8. Den"e, ;e #old t#at t#e
petitioner is not su!?e"t to penalt- for its
nonAde"laration of t#e tailings dam and t#e su!merged lands for realt- ta8 purposes.
CD&R&1(R&, t#e petition is *+'+&* for failure to s#o; t#at t#e Buestioned de"ision of
respondent Central Board of Assessment Appeals is tainted ;it# grave a!use of dis"retion e8"ept as to
t#e imposition of penalties upon t#e petitioner ;#i"# is #ere!- &) A+*&. Costs against t#e
petitioner. +t is so ordered.
Narvasa, C.,., Gutierre6, ,r., $adilla, Bidin, GriJoAABuino, Regalado, *avide, ,r., Romero, No"on,
Bellosillo, 'elo and Campos, ,r., ,,., "on"ur.
1eli"iano, ,., too@ no part.
L 1ootnotes
1 e"retar- of 1inan"e ,esus &stanislao as "#airman ;it# e"retar- of ,usti"e 1ran@lin '. *rilon and
e"retar- of 0o"al Government 0uis ). antos as mem!ers.
2 1ran"is"o, $#ilippine 'ining 0a;, 3ol. 1, 2nd &d., p. 2F4.


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