Philippine Long Distance Telephone Company (PLDT) filed a complaint for
theft under Article 308 of the Revised Penal Code against Baynet Co., Ltd.
Property 1 (DIGEST)
US V. TAMBUNTING
FACTS:
The Manila Gas Company installed equipment for the transmission of gas
in a house at Evangelista. After the original subscriber left, the apparatus
was sealed and the services discontinued.
Later Mr Tambunting moved in. He was a cheapskate and spliced the
tubing to leech free gas for household use. Alas, the crime was discovered
by the gas company. The prosecutor filed charges and hailed Mr.
Tambunting to court
ISSUE:
Whether or not gas can be the subject of larceny.
HELD:
Yes. Gas is a substance which lends itself to felonious appropriation. It is a
valuable merchandise that can be bought and sold like other personal
property, susceptible of being siphoned from a larger mass and
transported from place to place. Articles 517 and 518 sets parameters for
the theft of gas and it is a valid ordinance.
Laurel v. Abrogar, G.R. No. 155076 (January 13, 2009) Case Digest
Personal Property
Facts:
(Baynet) for stealing its business. PLDT alleged that Baynet offered phone
cards to people in Japan to call their friends and relatives in the
Philippines using PLDT's facilities and equipment.
Issue:
Whether or not the PLDT's business of providing telecommunication
services is a personal property under Article 308 of the Revised Penal
Code.
Held:
No, PLDT's business of providing telecommunication services is not a
personal property under Article 308 of the Revised Penal Code.
Personal property under the Revised Penal Code covers both tangible and
intangible properties but must be considered with the word "take" in the
law. There is "taking" of personal property, and theft is consummated
when the offender unlawfully acquires possession of personal property
even if for a short time; or if such property is under the dominion and
control of the thief. The statutory definition of "taking" clearly indicates
that not all personal properties may be the proper subjects of theft. The
general rule is that only movable properties, which have physical or
material existence and susceptible of occupation by another are proper
subjects of theft. Movable properties under Article 308 of the Revised
Penal Code should be distinguished from the rights or interest to which
they relate to. While the rights or interests are properties, they are not
considered personal properties under Article 308 of the Revised Penal
Code.

PLDT's business is intangible and cannot be taken by another and not the
proper subjects of theft because they are without form or substance.
Berkenkotter v. Cu Unjieng 61 phil 663
Facts: On 26 April 1926, the Mabalacat Sugar Company obtained from Cu
Unjieng e Hijos, a loan secured by a first mortgage constituted on 2
parcels of land "with all its buildings, improvements,sugarcane mill, steel
railway, telephone line, apparatus, utensils and whatever forms part or is
a necessary complement of said sugar-cane mill, steel railway, telephone
line, now existing or that may in the future exist in said lots.”On 5
October 1926, the Mabalacat Sugar Company decided to increase the
capacity of its sugar central by buying additional machinery and
equipment, so that instead of milling 150 tons daily, it could produce 250.
Green proposed to the Berkenkotter, to advance the necessary amount
for the purchase of said machinery and equipment, promising to
reimburse him as soon as he could obtain an additional loan from the
mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to
obtain an additional loan from Cu Unjieng e Hijos, said machinery and
equipment would become security therefore, said Green binding himself
not to mortgage nor encumber them to anybody until Berkenkotter be
fully reimbursed for the corporation's indebtedness to him.
Having agreed to said proposition made in a letter dated 5 October 1926,
Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green,
the total amount supplied by him to Green having been P25,750.
Furthermore, Berkenkotter had a credit of P22,000 against said
corporationfor unpaid salary. With the loan of P25,750 and said credit of
P22,000, the Mabalacat Sugar Co., Inc., purchased the additional
machinery and equipment.On 10 June 1927, Green applied to Cu Unjieng
e Hijos for an additional loan of P75,000 offeringas security the additional
machinery and equipment acquired by said Green and installed in the
sugar central after the execution of the original mortgage deed, on 27
April 1927, together with whatever additional equipment acquired with
said loan. Green failed to obtain said loan. Hence, above mentioned
mortgage was in effect.
Issue: Are the additional machines also considered mortgaged?
Held: Article 1877 of the Civil Code provides that mortgage includes all
natural accessions, improvements, growing fruits, and rents not collected
when the obligation falls due, and the amount of any indemnities paid or
due the owner by the insurers of the mortgaged property or byvirtue of
the exercise of the power of eminent domain, with the declarations,
amplifications, and limitations established by law, whether the state
continues in the possession of the person who mortgaged it or whether it
passes into the hands of a third person. It is a rule, that in a mortgage of
real estate, the improvements on the same are included; therefore, all
objects permanently attached to a mortgaged building or land, although
they may have been placed there after the mortgage was constituted, are
also included. (Yes. The installation of a machinery and equipment in a
mortgaged sugar central, in lieu of another of less capacity, for the
purpose of carrying out the industrial functions of the latter and
increasing production, constitutes a permanent improvement on said
sugar central and subjects said machinery and equipment to the
mortgage constituted thereon.)
Philippine Refining Co., Inc. v. Aboitiz & Co., G.R. No. L-41506 (March 25,
1935) Case Digest
Facts:
Philippine Refining Co., Inc., and Francisco Jarque executed three chattel
mortgages on the motor vessels Pandan and Zaragoza, which were
recorded in the record of transfers and incumbrances of vessels for the
port of Cebu. The mortgages had no appended affidavit of good faith
except for the 3rd mortgage, which was not registered in the customs
house within the period of 30 days prior to the start of the insolvency
proceedings against Francisco Jarque.
A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz
on the motorship Zaragoza and was entered in the chattel mortgage
registry of the register of deeds.
Francisco Jarque was then declared to be an insolvent debtor that
resulted to an assignment of all his properties in favor of Jose Corominas.
Judge Jose M. Hontiveros declined the foreclosure of the mortgages and
sustained the special defenses of fatal defectiveness of the mortgages.
Issue:
Whether or not the mortgages are defective.
Held:
Vessels are considered personal property under the civil law. (Code of
Commerce, article 585.) Similarly under the common law, vessels are
personal property although occasionally referred to as a peculiar kind of
personal property.
Since the term "personal property" includes vessels, they are subject to
mortgage agreeably to the provisions of the Chattel Mortgage Law. (Act
No. 1508, section 2.)
The only difference between a chattel mortgage of a vessel and a chattel
mortgage of other personalty is that it is not now necessary for a chattel
mortgage of a vessel to be noted n the registry of the register of deeds,
but it is essential that a record of documents affecting the title to a vessel
be entered in the record of the Collector of Customs at the port of entry.
Otherwise a mortgage on a vessel is generally like other chattel
mortgages as to its requisites and validity.
A good chattel mortgage according to Section 5 of The Chattell Mortgage
Law, includes the requirement of an affidavit of good faith appended to
the mortgage and recorded therewith. The absence of the affidavit
vitiates a mortgage as against creditors and subsequent encumbrancers.
As a consequence a chattel mortgage of a vessel wherein the affidavit of
good faith required by the Chattel Mortgage Law is lacking, is
unenforceable against third persons.
MINDANAO BUS COMPANY v. THE CITY ASSESSOR & TREASURER and the
BOARD OF TAX APPEALS of Cagayan de Oro City
G.R. No. L-17870 September 29, 1962
FACTS:
Petitioner is a public utility solely engaged in transporting passengers and
cargoes by motor trucks. It owns a land where it maintains and operates a
garage for its TPU motor trucks; a repair shop; blacksmith and carpentry
shops, and with machineries placed therein, its TPU trucks are made;
body constructed; and same are repaired in a condition to be serviceable
in the TPU land transportation business it operates.
The machineries have never been or were never used as industrial
equipment to produce finished products for sale, nor to repair
machineries, parts and the like offered to the general public
indiscriminately for business or commercial purposes.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400
petitioner’s above-mentioned equipment. Petitioner appealed the
assessment to the respondent Board of Tax Appeals on the ground that
the same are not realty. The Board of Tax Appeals of the City sustained
the city assessor, so petitioner herein filed with the Court of Tax Appeals
a petition for the review of the assessment.
The CTA held the petitioner liable to the payment of the realty tax on its
maintenance and repair equipment mentioned above. Hence, this
petition.
ISSUE:
Should the tools and equipment in the petitioner company’s repair shop
be considered immovable taxable real properties?
DOCTRINE:
NO. Movable equipment to be immobilized in contemplation of the law
must first be “essential and principal elements” of an industry or works
without which such industry or works would be “unable to function or
carry on the industrial purpose for which it was established.” The tools
and equipment are not essential and principle municipal elements of
petitioner’s business of transporting passengers and cargoes by motor
trucks. They are merely incidentals — acquired as movables and used
only for expediency to facilitate and/or improve its service. The
transportation business could be carried on without the repair or service
shop if its rolling equipment is repaired or serviced in another shop
belonging to another.
SERG’S PRODUCTS AND GOQUIOLAY V. PCI LEASING AND FINANCE (338
SCRA 499)
FACTS: PCI filed a case for collection of a sum of money as well as a writ
of replevin for the seizure of machi eries, subject of a chattel mortgag e
executed by petitioner in favor of PCI. Machineries of petitioner were
seized and petitioner filed a motion for special protective order. It asserts
that the machineries were real property and could not be subject of a
chattel mortgage.
HELD: The machineries in question have b ecome immobilized by
destination because they are essential and principal elements in the
industry, and thus have become immovable in nature. Nonetheless, they
are still proper subjects for a chattel mortgage. Contracting parties may
validly stipulate that a real property be considered as personal. After
agreement, they are consequently estopped from claiming otherwise.
Serg’s Products, Inc. Vs. PCI Leasing and Finance, Inc. GR No. 137705.
August 22, 2000
Facts:
Respondent PCI Leasing and Finance, Inc, filed with the RTC-QC a
complaint for a sum of money with an application for a writ of replevin.
Respondent Judge issued a writ of replevin directing its sheriff to seize
and deliver the machineries and equipment to PCI after 5 days and upon
the payment of the necessary expenses.
In the implementation of the said writ, the sheriff proceeded to
petitioner’s factory, seized one machinery with word that he would
return for the other.
Petitioners filed a motion for special protective order, invoking the power
of the court to control the conduct of its officers and amend and control
its processes, praying for a directive for the sheriff to defer enforcement
of the writ of replevin.
The motion was opposed by PCI Leasing, on the ground that the
properties were still personal and therefore still subject to seizure and a
writ of replevin.
The sheriff again sought to enforce the writ of seizure and take
possession of the remaining properties. He was able to take two more,
but was prevented by the workers from taking the rest.
Issue:
1. Whether or not the machineries purchased and imported by Serg’s
became real property by virtue of immobilization.
2. Whether or not the contract between the parties is valid.
Ruling:
The petition is not meritorious.
1. No.
The machines that were subjects of the Writ of seizure were placed by
petitioners in the factory built on their own land. Indisputably, they were
essential and principal elements of their chocolate-making industry.
Hence, although each of them was movable or personal property on its
own, all of them have become immobilized by destination because they
are essential and principal elements in the industry. In that sense
petitioners are correct in arguing that the said machines are real property
pursuant to Article 415 (5) of the Civil Code.
But the Court disagrees with the submission of the petitioners that the
said machines are not proper subject of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a
real property be considered as personal. After agreeing to such
stipulation, they are consequently stopped from claiming otherwise.
Under the principle of estoppels, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein.
Clearly then, petitioners are stopped from denying the characterization of
the subject machines as personal property. Under circumstances, they
are proper subjects of the Writ of Seizure.
It should be stressed, however, that the Court’s holding-that the
machines should be deemed personal property pursuant to the Lease
Agreement-is good only insofar as the contracting parties are concerned.
Hence, while the parties are bound by the Agreement, third persons
acting in good faith are not affected by its stipulation characterizing the
subject machinery as personal. In any event, there is no showing that any
specific third party would be adversely affected.
2. Yes.
It should be pointed out that the Court may rely on the Lease Agreement,
for nothing on the record shows that it has been nullified or annulled. In
fact, petitioners assailed it first only in the RTC proceedings, which had
ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties.
Petition denied. Judgment affirmed.
Note:
Article 415. The following are immovable property:
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried on
in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works.
Serg's v. PCI Leasing
Serg’s Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000
FACTS:
 PCI Leasing and Finance filed a complaint for sum of money, with
an application for a writ of replevin.
 Judge issued a writ of replevin directing its sheriff to seize and
deliver the machineries and equipment to PCI Leasing after 5
days and upon the payment of the necessary expenses.
 The sheriff proceeded to petitioner's factory, seized one
machinery, with word that he would return for other
machineries.
 Petitioner (Serg’s Products) filed a motion for special protective
order to defer enforcement of the writ of replevin.
 PCI Leasing opposed the motion on the ground that the
properties were still personal and therefore can still be subjected
to seizure and writ of replevin.
 Petitioner asserted that properties sought to be seized were
immovable as defined in Article 415 of the Civil Code.
 Sheriff was still able to take possession of two more machineries
In its decision on the original action for certiorari filed by the Petitioner,
the appellate court, Citing the Agreement of the parties, held that the
subject machines were personal property, and that they had only been
leased, not owned, by petitioners; and ruled that the "words of the
contract are clear and leave no doubt upon the true intention of the
contracting parties."
ISSUE: Whether or not the machineries became real property by virtue of
immobilization.
Ruling:
Petitioners contend that the subject machines used in their factory were
not proper subjects of the Writ issued by the RTC, because they were in
fact real property.
Writ of Replevin: Rule 60 of the Rules of Court provides that writs of
replevin are issued for the recovery of personal property only.
Article 415 (5) of the Civil Code provides that machinery, receptacles,
instruments or implements intended by the owner of the tenement for
an industry or works which may be carried on in a building or on a piece
of land, and which tend directly to meet the needs of the said industry or
works
In the present case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on their own
land.They were essential and principal elements of their chocolate-
making industry.Hence, although each of them was movable or personal
property on its own, all of them have become “immobilized by
destination because they are essential and principal elements in the
industry.”
 improvements and buildings introduced and erected by the party of the
However, contracting parties may validly stipulate that a real property be second part shall pass to the exclusive ownership of the lessor without
considered as personal. After agreeing to such stipulation, they are any obligation on its part to pay any amount for said improvements and
consequently estopped from claiming otherwise.Under the principle of buildings; which do not include the machineries and accessories in the
estoppel, a party to a contract is ordinarily precluded from denying the improvements.
truth of any material fact found therein.
In another action wherein the Davao Light & Power Co., Inc., was the
Section 12.1 of the Agreement between the parties provides “The plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment
PROPERTY is, and shall at all times be and remain, personal property was rendered in favor of the plaintiff in that action against the defendant;
notwithstanding that the PROPERTY or any part thereof may now be, or a writ of execution issued thereon, and the properties now in question
hereafter become, in any manner affixed or attached to or embedded in, were levied upon as personalty by the sheriff. No third party claim was
or permanently resting upon, real property or any building thereon, or filed for such properties at the time of the sales thereof as is borne out by
attached in any manner to what is permanent.” the record made by the plaintiff herein

The machines are personal property and they are proper subjects of the It must be noted also that on number of occasion, Davao Sawmill treated
Writ of Replevin the machinery as personal property by executing chattel mortgages in
favor of third persons. One of such is the appellee by assignment from
Davao Sawmill v. Castillo the original mortgages.

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT &
The lower court rendered decision in favor of the defendants herein.
POWER CO., INC. G.R. No. L-40411 August 7, 1935
Hence, this instant appeal.

Facts:
Issue:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
Government of the Philippine Islands. However, the land upon which the whether or not the machineries and equipments were personal in
business was conducted belonged to another person. On the land the nature.
sawmill company erected a building which housed the machinery used by
it. Some of the implements thus used were clearly personal property, the Ruling/ Rationale:
conflict concerning machines which were placed and mounted on Yes. The Supreme Court affirmed the decision of the lower court.
foundations of cement. In the contract of lease between the sawmill
company and the owner of the land there appeared the following Machinery which is movable in its nature only becomes immobilized
provision: That on the expiration of the period agreed upon, all the
when placed in a plant by the owner of the property or plant, but not
when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner.
DAVAO VS CASTILLO 61 PHIL 709
FACTS: Davao Sawmill Co., operated a sawmill. The land upon which the
business was conducted was leased from another person. On the land,
Davao Sawmill erected a building which housed the machinery it used.
Some of the machines were mounted and placed on foundations of
cement. In the contract of lease, Davo Sawmill agreed to turn over free of
charge all improvements and buildings erected by it on the premises with
the exception of machineries, which shall remain with the Davao Sawmill.
In an action brought by the Davao Light and Power Co., judgment was
rendered against Davao Sawmill. A writ of execution was issued and the
machineries placed on the sawmill were levied upon as personalty by the
sheriff. Davao Light and Power Co., proceeded to purchase the machinery
and other properties auctioned by the sheriff.
ISSUE : Are the machineries real or personal property?
HELD : (Art.415) Appellant should have registered its protest before or at
the time of the sale of the property. While not conclusive, the appellant's
characterization of the property as chattels is indicative of intention and
impresses upon the property the character determined by the parties.
Machinery is naturally movable. However, machinery may be immobilized
by destination or purpose under the following conditions: General Rule:
The machinery only becomes immobilized if placed in a plant by the
owner of the property or plant. ▪ Immobilization cannot be made by a
tenant, a usufructuary, or any person having only a temporary right.
Exception: The tenant, usufructuary, or temporary possessor acted as
agent of the owner of the premises; or he intended to permanently give
away the property in favor of the owner. As a rule, therefore, the
machinery should be considered as Personal Property, since it was not
placed on the land by the owner of the said land. DOCTRINE: (Movables
must be placed by the owner (It must be pointed out that Davao Sawmill
should have registered its protest before or at the time of the sale of this
property. It must further be pointed out that while not conclusive, the
characterization of the property as chattels by Davao Sawmill is indicative
of intention and impresses upon the property the character determined
by the parties. In this connection the decision of the court in the case of
Standard Oil vs. Jaramillo, whether obiter dicta or not, furnishes the key
to such a situation. Immobilization of machinery; when placed in plant by
owner Machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or
plant, but not when so placed by a tenant, a usufructuary, or any person
having only a temporary right, unless such person acted as the agent of
the owner. The distinction rests upon the fact that one only having a
temporary right to the possession or enjoyment of property is not
presumed by the law to have applied movable property belonging to him
so as to deprive him of it by causing it by an act of immobilization to
become the property of another.) -APPLICATION OF THE PRINCIPLE OF
ESTOPPEL
PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of
First Instance of Zambales and Olongapo City; FERNANDO MAGCALE &
TEODULA BALUYUT-MAGCALE, respondents.
G.R. No. L-50008 August 31, 1987
Facts:
Spouses Magcale secured a loan from Prudential Bank. As security,
respondent’s spouses executed a real estate mortgage, their residential
building as security. Since the respondents was not able to fulfil their
obligation, the security was extrajudiciaily foreclosed and was eventually
sold in a public auction. Hence this case, to assail the validity of the
mortgage and to recover the foreclosed land.
Issue:
Whether or not a real estate mortgage can be instituted on the building
of a land belonging to another
Held:
While it is true that a mortgage of land necessarily includes in the
absence of stipulation of the improvements thereon, buildings, still a
building in itself may be mortgaged by itself apart from the land on which
it is built. Such a mortgage would still be considered as a REM for the
building would still be considered as immovable property even if dealt
with separately and apart from the land. The original mortgage on the
building and right to occupancy of the land was executed before the
issuance of the sales patent and before the government was
divested of title to the land. Under the foregoing, it is evident that
the mortgage executed by private respondent on his own building
was a valid mortgage.
Prudential Bank v. Panis, G.R. No. 5008 (August 31, 1988) Case Digest
Article 415 of the Civil Code: Real Property
Facts:
The spouses Magcale obtained a Php 70, 000 loan from Prudential Bank
secured by a Deed of Real Estate Mortgage over a 2-storey, semi-
concrete residential building including the right of occupancy on the land.
When the spouses Magcale executed this mortgage, the land still
belonged to the government as the Sales Patent over the lot applied for
by the spouses Magcale was not yet issued.
Issue:
Whether or not a real estate mortgage over a building erected on the
land belonging to another is valid.
Held:
Yes, a real estate mortgage over a building erected on the land belonging
to another is valid.
Article 415 of the Civil Code provides the inclusion of "building" separate
and distinct from the land, which can only mean that a building is by itself
an immovable property.
A mortgage of land necessarily includes buildings unless otherwise
stipulated. A building by itself, however, may be mortgaged apart from
the land on which it has been built. Such a mortgage would still be a real
estate mortgage for the building alone would still be considered an
immovable property.
Caltex Philippines, Inc. v. Board of Assessment Appeals, G.R. No. L-50466
(May 31, 1982) Case Digest
Facts:
Caltex loaned machines and equipment to gas station operators under a
lease agreement, which stipulated that upon demand, the operators shall
return to Caltex the machines and equipment. The lessor of the land
does not become the owner of the machines and equipment. Caltex
retains their ownership.

The City Assessor characterized the said machines and equipment as
taxable realty. However, the City Board of Tax Appeals ruled that they are
personalty. The Assessor appealed to the Central Board of Assessment
Appeals.
The Board held that the said machines are real property within the
meaning of Sec. 3(k) & (m) and 38 of the Real Property Tax Code, PD 464,
and that the Civil Code definitions of real and personal property in
Articles 415 and 416 are not applicable in this case.
Issue:
Whether or not the said machines and equipment are real property
subject to realty tax?
Held:
The said machines and equipment are considered real property.
Section 2 of the Assessment Law provides that the realty tax is due "on
real property, including land, buildings, machinery, and other
improvements" not specifically exempted in section 3 thereof.
This provision is reproduced with some modification in the Real Property
Tax Code which provides:
SEC. 38. Incidence of Real Property Tax.— There shall be levied, assessed
and collected in all provinces, cities and municipalities an annual ad
valorem tax on real property, such as land, buildings, machinery and
other improvements affixed or attached to real property not hereinafter
specifically exempted.
The Code contains the following definitions in its section 3:
k) Improvements — is a valuable addition made to property or an
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 further purposes.
m) Machinery — shall embrace machines, mechanical contrivances,
instruments, appliances and apparatus attached to the real estate. It
includes the physical facilities available for production, as well as the
installations and appurtenant service facilities, together with all other
equipment designed for or essential to its manufacturing, industrial or
agricultural purposes (See sec. 3[f], Assessment Law).
The machines and equipment are necessary to the operation of the gas
station, for without them the gas station would be useless, and which
have been attached or affixed permanently to the gas station site or
embedded therein, are taxable improvements and machinery within the
meaning of the Assessment Law and the Real Property Tax Code.
Therefore, the machines and equipment are real property subject to
realty tax.
CALTEX PHILS. V. CENTRAL BOARD OF ASSESSMENT APPEALS (114 SCRA
296)
FACTS: The City Assessor characterized the items in gas stations of
petitioner as taxable realty. These items includ ed underground tanks,
elevated ta nk, elevated water tanks, water tanks, gasoline pumps,
computing pumps, etc. These items are not owned b y the lessor of the
land wherein t he equipment are installed. Upon ex piration of the lease
agreement, t he equipment should be returned in good condition.
HELD: The equipment and machinery as appurtenances to the gas station
building or shed owned by Caltex and which fixtures are necessary to the
operation of the gas station, for without them the gas station would be
useless, and which have been attached and fixed permanently to the gas
station site or embedded therein, are taxable im provements and
machinery within the meaning of the Assessment Law and the Real
Property Tax Code.
FACTS:
On 1985, Provincial Assessor of Zambales assessed the said properties in
issue as taxable
improvements. The assessment was appealed to the Board of Assessment
Appeals of theProvince of Zambales. However, the appeal was dismissed
mainly on the ground of the petitioner's failure to pay the realty taxes
that fell due during the pendency of the appeal. The petitioner
elevated the matter to the Central Board of Assessment Appeals, one
of the herein respondents. In its decision dated March 22, 1990, the
Board reversed the dismissal of the appeal but, agreed that the tailings
dam and the lands submerged there under shall be subject to realty tax.
For purposes of taxation the dam is considered as real property as it
comes within the object mentioned in Article 415 of the New Civil Code, It
is a construction adhered to the soil which cannot be separated
or detached without breaking the material or causing destruction on the
land upon which it is attached. The immovable nature of the dam as an
improvement which determines its character as real property, hence
taxable under Section 38 of the Real Property Tax Code
Issue:
Whether or not the tailings dam is subject to realty tax?
Whether or not it be considered as immovable property?
Held:
Yes, it is subject to realty tax and it is considered an immovable
property.The petitioner does not dispute that the tailings dam may be
considered realty within themeaning of Article 415. It insists, however,
that the dam cannot be subjected to realty tax as aseparate and
independent property because it does not constitute an "assessable
improvement" onthe mine although a considerable sum may have been
spent in constructing and maintaining it.The Real Property Tax Code does
not carry a definition of "real property" and simplysays that the realty tax
is imposed on "real property, such as lands, buildings, machinery an. Even
without the tailings dam, the petitioner's mining operation can still be
carried out because the primary function of the dam is merely to receive
and retain the wastes and water coming from the mine. There is no
allegation that the water coming from the dam is the sole source of water
for the mining operation so as to make the dam an integral part of the
mine. In fact, as a result of the construction of the dam, the petitioner
can now impound and recycle water without having to spend for the
building of a water reservoir. And as the petitioner itself points out, even
if the petitioner's mine is shut down or ceases operation, the dam may
still be used for irrigation of the surrounding areas, again unlike in the
Ontario case.
By contrast, the tailings dam in question is being used exclusively for the
benefit of the petitioner.
The Court is convinced that the subject dam falls within the definition of
an "improvement" because it is permanent in character and it enhances
both the value and utility of petitioner's mine. Moreover, the immovable
nature of the dam defines its character as real property under Article 415
of the Civil Code and thus makes it taxable under Section 38 of the Real
Property Tax Code.

WHEREFORE, the petition is DISMISSED for failure to show that the

questioned decision of respondent Central Board of Assessment
Appeals is tainted with grave abuse of discretion except as to the
imposition of penalties upon the petitioner which is hereby SET ASIDE