CE CASECNAN WATER AND ENERGY COMPANY, INC., PETITIONER, VS. THE PROVINCE OF NUEVA ECIJA, THE OFFICE OF THE PROVINCIAL ASSESSOR OF NUEVA ECIJA, AND THE OFFICE OF THE PROVINCIAL T…

Casecnan Water and Energy Company versus the Province of Nueva Ecija

The Case

This is a petition for review on certiorari brought by CE Casecnan Water and Energy Company, Incorporated against the Province of Nueva Ecija, its Provincial Assessor, and its Provincial Treasurer. The petitioner asks the Supreme Court to reverse the Court of Appeals, which had dismissed its special civil action for certiorari for lack of jurisdiction. The question at the heart of the case is simple but consequential: when a party assails, by certiorari, an interlocutory order of the Regional Trial Court in a local tax case, does that petition belong to the Court of Appeals or to the Court of Tax Appeals? The case matters because it fixes the dividing line between the ordinary appellate court and the specialized tax court in local taxation controversies.

Procedural History

The petitioner filed with the Regional Trial Court of San Jose City, Nueva Ecija a complaint for injunction and damages, with applications for a temporary restraining order and a writ of preliminary injunction, to restrain the collection of real property taxes. The trial court denied the application for a seventy-two hour temporary restraining order, later issued a twenty day temporary restraining order, but ultimately denied the application for a writ of preliminary injunction. It likewise denied the petitioner's motion for reconsideration.

The petitioner then went up to the Court of Appeals on a petition for certiorari under Rule 65 of the Rules of Court, seeking to annul the trial court's orders denying the injunction. The Court of Appeals dismissed the petition for lack of jurisdiction, holding that the controversy was a local tax case falling within the jurisdiction of the Court of Tax Appeals. It denied reconsideration. The petitioner then elevated the matter to the Supreme Court by petition for review on certiorari.

Facts

In June 1995, the petitioner and the National Irrigation Administration entered into a build operate transfer contract, the Casecnan Contract, for the construction and development of the Casecnan Multi Purpose Irrigation and Power Project in Pantabangan, Nueva Ecija and Alfonso Castaneda, Nueva Vizcaya. The project is a combined irrigation and hydroelectric power generation facility using the Pantabangan Dam. A supplemental agreement later provided that the National Irrigation Administration must reimburse the petitioner for real property taxes, provided the same was paid upon its directive and with the concurrence of the Department of Finance.

In September 2005, the petitioner received a notice of assessment showing real property tax due for the years 2002 to 2005 in the amount of 248,676,349.60 pesos. It questioned the assessment before the Nueva Ecija Local Board of Assessment Appeals, which dismissed it, and then appealed to the Nueva Ecija Central Board of Assessment Appeals. While that was pending, the respondents collected real property taxes, including those for 2006 up to the second quarter of 2008, totalling 363,703,606.88 pesos, which the petitioner paid under protest.

The petitioner later received letters from the Provincial Treasurer stating that it had arrears amounting to 1,277,474,342.10 pesos, later clarified to 1,279,997,722.70 pesos, and still later a demand covering the third quarter of 2008 in the amount of 53,346,755.18 pesos. The petitioner filed a complaint for injunction with the trial court to restrain collection, insisting that it was not the party that should pay the taxes but the National Irrigation Administration. When the trial court refused the writ of preliminary injunction, the petitioner sought relief by certiorari before the Court of Appeals.

Issues

• Whether or not the Court of Tax Appeals has exclusive jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the Regional Trial Court in a local tax case.
• Whether or not the injunction case filed by the petitioner with the Regional Trial Court is a local tax case, such that the certiorari petition against the interlocutory order therein falls within the jurisdiction of the Court of Tax Appeals.

Applicable Provisions

Section 7, paragraph 3 of Republic Act No. 9282, which expanded the jurisdiction of the Court of Tax Appeals, provides:

The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided, decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction.

This provision is the source of the tax court's exclusive appellate jurisdiction over local tax cases, from which its authority to issue certiorari in aid of that jurisdiction is derived.

Section 1, Article VIII of the 1987 Constitution, relied upon by the Court, provides:

Judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

This constitutional grant is the basis for holding that the Court of Tax Appeals may determine whether the Regional Trial Court committed grave abuse of discretion in issuing an interlocutory order in a case within its exclusive appellate jurisdiction.

Section 6, Rule 135 of the Rules of Court provides:

When by law, jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer.

This provision supports the rule that the grant of appellate jurisdiction carries with it the auxiliary power to issue writs necessary to make that jurisdiction effective.

Ruling

On the first issue, the Court held that it is the Court of Tax Appeals which has exclusive jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the Regional Trial Court in a local tax case. The Court reasoned that Republic Act No. 9282 expanded the jurisdiction of the Court of Tax Appeals and elevated it to a collegiate court with special jurisdiction, including exclusive appellate jurisdiction to review decisions, orders, or resolutions of the Regional Trial Court in local tax cases. Following its earlier ruling in City of Manila versus Grecia-Cuerdo, the Court held that the tax court's power includes determining whether there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Regional Trial Court in issuing an interlocutory order in cases falling within its exclusive appellate jurisdiction. The Court anchored this on the principle that if a case may be appealed to a particular court, that court has jurisdiction to issue the extraordinary writ of certiorari in aid of its appellate jurisdiction. It warned that to rule otherwise would create a split jurisdiction, where one court decides the appeal in the main case while another rules on an incident in the very same case.

On the second issue, the Court held that the injunction case before the Regional Trial Court is a local tax case. It reasoned that in praying to restrain the collection of real property taxes, the petitioner also implicitly questioned the propriety of the assessment, because in ruling on whether to restrain collection the trial court must first necessarily rule on the propriety of the assessment. The Court held that the subject matter and the issues, not the name or designation of the remedy, should control. It noted that local tax cases include real property tax cases. Since the certiorari petition questioned an interlocutory order issued in a local tax case, the Court of Appeals correctly dismissed it for lack of jurisdiction.

Doctrine

The Court of Tax Appeals has exclusive jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the Regional Trial Court in a local tax case. This flows from its exclusive appellate jurisdiction under Section 7, paragraph 3 of Republic Act No. 9282, and from the rule that a court which may review a case by appeal may issue the writ of certiorari in aid of that appellate jurisdiction. The power to determine grave abuse of discretion on the part of the Regional Trial Court in such cases is grounded on Section 1, Article VIII of the 1987 Constitution, and the auxiliary writs are supported by Section 6, Rule 135 of the Rules of Court. Finally, whether an action is a local tax case is determined by its subject matter and the issues raised, not by the name or designation of the remedy; an action to restrain the collection of real property taxes is a local tax case.

Disposition

The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals dismissing the certiorari petition for lack of jurisdiction.

Remember This

Memorize this line: it is the Court of Tax Appeals, not the Court of Appeals, that has exclusive jurisdiction over a special civil action for certiorari assailing an interlocutory order of the Regional Trial Court in a local tax case. Examiners use this case to test jurisdiction over local tax controversies and the rule that the subject matter and issues, not the label of the remedy, determine whether a case is a local tax case.