G.R. No. 106041, January 29, 1993
Benguet Corporation, petitioner, vs. Central Board of Assessment Appeals, Board of Assessment Appeals of Zambales, Provincial Assessor of Zambales, Province of Zambales, and Municipality of San Marcelino, respondents.

FACTS

In 1985, the Provincial Assessor of Zambales assessed petitioner Benguet Corporation’s tailings dam and the land submerged thereunder for realty tax, amounting to P11,319,304.00. The petitioner protested, arguing the dam was not a taxable improvement. The Provincial Board of Assessment Appeals dismissed the appeal on August 24, 1988, due to the petitioner’s failure to pay realty taxes during the appeal’s pendency. On appeal, the Central Board of Assessment Appeals (CBAA) reversed the dismissal but upheld the taxability of the tailings dam and submerged land on March 22, 1990. The CBAA ruled the dam was real property under Article 415 of the Civil Code and an “improvement” under the Real Property Tax Code (P.D. 464), with no legal exemption despite its anti-pollution function. It also sustained the Provincial Assessor’s valuation based on the Schedule of Market Values for Zambales. The petitioner then filed this certiorari petition, contesting the assessment on multiple grounds.

ISSUE

1. Whether the tailings dam and the submerged land are subject to real property tax as assessable improvements.
2. Whether the valuation of the properties by the Provincial Assessor was proper.
3. Whether the petitioner is liable for penalties for non-declaration of the properties for tax purposes.

RULING

1. Yes, the tailings dam and submerged land are subject to real property tax. The Supreme Court held that the tailings dam is real property under Article 415 of the Civil Code, as it is a construction adhered to the soil. It qualifies as an “improvement” under Section 3(k) of the Real Property Tax Code, being a valuable addition intended to enhance utility or adapt property for further purposes. The Court rejected the petitioner’s arguments that the dam was an integral, non-separable part of the mine or a mere pollution control device, citing jurisprudence (e.g., Caltex [Phil.] Inc. v. CBAA, MERALCO v. CBAA) that structures permanently attached to land and enhancing its utility are taxable. The Court distinguished the cases cited by the petitioner (e.g., Municipality of Cotabato v. Santos, Bislig Bay Lumber Co. v. Provincial Government of Surigao) as inapplicable, noting they involved different circumstances, such as government rights to use the properties.
2. Yes, the valuation was proper. The Court upheld the CBAA’s deference to the Provincial Assessor’s valuation based on the Schedule of Market Values for Zambales, as the petitioner failed to substantiate claims that the P50.00 per square meter rate was excessive or unconscionable. The Court emphasized its policy of respecting the expertise of quasi-judicial agencies like the CBAA, absent grave abuse of discretion, which was not shown here.
3. No, the petitioner is not liable for penalties. The Court set aside the CBAA’s ruling that the penalty issue must first be raised with local authorities. It held that the petitioner acted in good faith in questioning the assessment, not to evade tax, and thus should not be penalized for non-declaration.
DISPOSITION: The petition was dismissed for lack of grave abuse of discretion by the CBAA, except the imposition of penalties, which was set aside. Costs were imposed on the petitioner.