CASE DIGEST: BENGUET CORPORATION VS. CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA). GR NO. 106041 January 29, 1993

FACTS:

A realty tax assessment has been imposed on the petitioner's tailings dam and the land thereunder by the Provincial Assessor of Zambales claiming that the said properties are taxable improvements.

 

Petitioner, on the other hand, argued that the tailings dam cannot be said and classified as an improvement upon the land within the meaning of the Real Property Tax Code and thus is not subject to realty tax. It claimed that the tailings dam has no value separate from and independent of the mine and is actually an integral part of the latter. It is submerged underwater wastes from the mine and serves only as a pollution control device which is a requirement imposed by law for mine business. It also claimed that the dam will eventually benefit the local community as an irrigation facility after its mining operation.

 

ISSUE:

Whether the tailings dam is an improvement upon the land, which is real property and is therefore subject to realty tax.

 

RULING:

Yes. The Real Property Tax Code does not carry a definition of "real property" and simply says that the realty tax is imposed on "real property, such as lands, buildings, machinery and other improvements affixed or attached to real property." In the absence of such a definition, we apply Article 415 of the Civil Code. The pertinent portions applicable in this case are found in Article 415 paragraphs (1) and (3).

 

The tailings dam in this case is an improvement upon the mine. The Real Property Tax Code defines improvement as a valuable addition made to property or amelioration in its condition, amounting to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its value, beauty, or utility or to adapt it for new or future purposes.

 

The term has also been interpreted as "artificial alterations of the physical condition of the ground that is reasonably permanent in character.

 

A structure constitutes an improvement so as to partake of the status of realty would depend upon the degree of permanence intended in its construction and use. The expression "permanent" as applied to improvement does not imply that the improvement must be used perpetually but only until the purpose to which the principal realty is devoted has been accomplished. It is sufficient that the improvement is intended to remain as long as the land to which it is annexed is still used for the said purpose.

 

xxx

Personal Note:

Real Property Tax applies to real properties. There is no provision in the Real Property Tax Code which particularly says that tailings dam is taxable because it is real property. But the Real Property Tax Code itself refers to the Civil Code provision defining what real properties are. The provisions under the Civil Code where the tailings dam belongs or classified are paragraphs (1) and (3) of Art. 415. The nature of this dam being immovable as it has adhered to the soil and attached to the mine in a fixed manner in such a way that it cannot be separated without breaking or deterioration of the mine makes it falls within the meaning of a real property that is covered by the Real Property Tax Code. Furthermore, having a permanent character makes it also falls within the meaning of an improvement which the RPT Code itself defines to be taxable.