The Supreme Court has affirmed that the Court of Tax Appeals (CTA) holds exclusive jurisdiction over special civil actions for certiorari challenging interlocutory orders issued by Regional Trial Courts (RTC) in local tax cases. This means that if a taxpayer seeks to question a decision made by an RTC during a local tax dispute, they must bring their case before the CTA, not the Court of Appeals. This ruling streamlines the process for resolving tax disputes and ensures that cases are handled by a specialized court with expertise in tax law, thereby promoting efficiency and consistency in tax litigation.

Property Tax Tug-of-War: Who Decides When Collection is Unfair?

In the case of CE Casecnan Water and Energy Company, Inc. vs. The Province of Nueva Ecija, the central issue revolved around which court, the Court of Appeals (CA) or the Court of Tax Appeals (CTA), had jurisdiction over a petition for certiorari. CE Casecnan sought to challenge an interlocutory order issued by the Regional Trial Court (RTC) regarding real property tax (RPT) assessments. This order pertained to the denial of a preliminary injunction that CE Casecnan had requested to prevent the Province of Nueva Ecija from collecting the assessed RPT. The critical question was whether the nature of the case, involving a challenge to a local tax assessment, fell under the specialized jurisdiction of the CTA, or whether it was simply an action for injunction, which would typically fall under the CA’s purview.

The factual background of the case begins with the Amended and Restated Casecnan Project Agreement, a build-operate-transfer (BOT) contract between CE Casecnan and the National Irrigation Administration (NIA). This agreement concerned the Casecnan Multi-Purpose Irrigation and Power Project. Subsequently, a dispute arose over the payment of real property taxes. CE Casecnan received a Notice of Assessment of Real Property from the Office of the Provincial Assessor of Nueva Ecija, demanding payment of a substantial amount. CE Casecnan contested this assessment, leading to a series of appeals and legal actions, culminating in the petition for certiorari that reached the Court of Appeals.

The Court of Appeals determined that because the core issue involved the validity of a real property tax assessment, the CTA held jurisdiction. CE Casecnan argued that its petition related to an ordinary civil action for injunction, not a local tax case, and therefore, the CA had jurisdiction. However, the Supreme Court disagreed, emphasizing that the power to rule on a Petition for Certiorari assailing an interlocutory order of the RTC relating to a local tax case belongs to the CTA.

Jurisdiction over the subject matter is a fundamental requirement for a court to act on any controversy. It is conferred by law, not by the consent or waiver of the parties. The Supreme Court has consistently held that if a court lacks jurisdiction over an action, it cannot decide the case on the merits and must dismiss it. Republic Act No. 9282 expanded the jurisdiction of the CTA and elevated its rank to that of a collegiate court with special jurisdiction. This expansion includes exclusive appellate jurisdiction to review decisions, orders, or resolutions of the RTC in local tax cases originally decided or resolved by the RTC in the exercise of its original or appellate jurisdiction.

The Supreme Court relied on the case of City of Manila v. Grecia-Cuerdo, which affirmed the CTA’s jurisdiction to issue writs of certiorari and to determine grave abuse of discretion on the part of the RTC in interlocutory orders within the CTA’s exclusive appellate jurisdiction. The court emphasized that allowing both the CA and the CTA to exercise jurisdiction over the same subject matter would lead to a split-jurisdiction situation, which is detrimental to the orderly administration of justice. The Court also quoted J. M. Tuason & Co., Inc. v. Jaramillo, De Jesus v. Court of Appeals, Galang, Jr. v. Hon. Judge Geronimo and Bulilis v. Nuez, reiterating that a court may issue a writ of certiorari in aid of its appellate jurisdiction if it has jurisdiction to review the final orders or decisions of the lower court.

The petitioner contended that the injunction case filed with the RTC was not a local tax case but an ordinary civil action, seeking only to enjoin the respondents from collecting RPT. However, the Supreme Court clarified that in praying to restrain the collection of RPT, the petitioner implicitly questioned the propriety of the RPT assessment. Deciding whether to restrain collection necessitates ruling on the assessment’s validity, effectively challenging the assessment itself. As the CA aptly stated, the subject matter and the issues, not the name or designation of the remedy, should control. The Supreme Court has already held that local tax cases include RPT in National Power Corporation v. Municipal Government of Navotas and City of Lapu-Lapu v. Philippine Economic Zone Authority.

In light of these considerations, the Supreme Court found no merit in CE Casecnan’s petition. The Court held that the injunction case before the RTC was indeed a local tax case, and a certiorari petition questioning an interlocutory order issued in such a case falls under the exclusive jurisdiction of the CTA. The CA was therefore correct in dismissing the petition for lack of jurisdiction. The Supreme Court, in affirming the CA’s decision, reinforces the principle that specialized courts like the CTA are best equipped to handle tax-related disputes, ensuring a more efficient and consistent application of tax laws.

FAQs

What was the key issue in this case?	The key issue was determining whether the Court of Appeals (CA) or the Court of Tax Appeals (CTA) had jurisdiction over a petition for certiorari challenging an interlocutory order issued by the Regional Trial Court (RTC) in a local tax case.
What is a writ of certiorari?	A writ of certiorari is a legal remedy sought to correct errors of jurisdiction committed by a lower court or tribunal. It essentially asks a higher court to review the proceedings of the lower court.
What is the significance of R.A. 9282 regarding the CTA?	Republic Act No. 9282 expanded the jurisdiction of the CTA, elevating it to a collegiate court with special jurisdiction over tax-related matters. This law solidified the CTA’s role in resolving tax disputes efficiently.
What did the Court decide about the RTC injunction case?	The Court determined that the RTC injunction case was a local tax case because it implicitly questioned the validity of the real property tax assessment. Therefore, jurisdiction rested with the CTA.
Why is it important for the CTA to have jurisdiction over these types of cases?	Granting the CTA jurisdiction ensures that tax disputes are handled by a specialized court with expertise in tax law, promoting consistency and efficiency in tax litigation. It avoids a split-jurisdiction scenario.
What happens if a court hears a case it doesn’t have jurisdiction over?	If a court hears a case without proper jurisdiction, its decision is considered null and void. Jurisdiction cannot be waived and must be determined by law.
How did the Supreme Court apply the City of Manila v. Grecia-Cuerdo ruling?	The Supreme Court applied the City of Manila v. Grecia-Cuerdo ruling to support the CTA’s authority to issue writs of certiorari in cases where the RTC may have committed grave abuse of discretion in issuing interlocutory orders related to tax matters.
What was CE Casecnan’s main argument, and why did it fail?	CE Casecnan argued that the case was an ordinary civil action for injunction, not a local tax case. This argument failed because the Court determined that the injunction sought was directly related to the RPT assessment’s validity.

This case clarifies the jurisdictional boundaries between the Court of Appeals and the Court of Tax Appeals in local tax disputes, affirming the CTA’s specialized role. Taxpayers and local government units must now be aware that challenges to interlocutory orders in local tax cases should be brought before the CTA. Understanding these jurisdictional rules is critical for navigating the Philippine legal system and ensuring that cases are heard in the appropriate forum.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CE Casecnan Water and Energy Company, Inc. vs. The Province of Nueva Ecija, G.R. No. 196278, June 17, 2015