G.R. No. 241302 - Province of Nueva Vizcaya vs. CE Casec Water and Energy Co., Inc.

On November 13, 1994, CE Casecnan Water and Energy Company, Inc. (CE Casecnan), an independent power producer (IPP), and the National Irrigation Administration (NIA) entered into a Build-Operate-Transfer (BOT) contract whereby CE Casecnan agreed to deliver all water diverted from the Casecnan Watershed and net electrical energy generated to the Pantabangan Reservoir.
The parties executed an Amended and Restated Casecnan Project Agreement on June 26, 1995, which made CE Casecnan responsible for financing, designing, constructing, testing, commissioning, and operating the project. The project involves transporting water from Casecnan Watershed to Pantabangan Reservoir and generating electric power, which NIA accepts in exchange for fees.
The Project is a combined irrigation and hydroelectric power generation facility intended to enhance the Pantabangan Dam in Nueva Ecija and supplement the Luzon grid's energy supply.

On December 2, 2002, the Provincial Assessor of Nueva Vizcaya requested from CE Casecnan detailed estimates of the infrastructure cost for the Casecnan dams, trans-basin tunnel, and related facilities situated in Alfonso Castaneda, Nueva Vizcaya, to determine RPT dues. CE Casecnan provided the requested documents.
On September 28, 2003, the Provincial Assessor informed CE Casecnan of the initial appraisal and assessment of the properties.
On February 27, 2004, the Office of the Municipal Assessor and Treasurer requested CE Casecnan to settle RPT dues for 2003 and 2004. CE Casecnan referred the matter to NIA, pursuant to their agreement, but NIA instead filed a Protest with the Local Board of Assessment Appeals (LBAA).
The LBAA denied NIA’s protest on December 1, 2004.
On February 1, 2005, the Provincial Treasurer issued a Final Demand to CE Casecnan for RPT amounting to Php 229,680,604.27 for 2003-2004, followed by another demand on May 5, 2005 for a total of Php 238,368,919.33 covering 2003-2005.
Despite no instructions from NIA, CE Casecnan paid these amounts totaling Php 250,734,306.98 under protest and demanded reimbursement from NIA.

CE Casecnan filed a Protest with the Provincial Treasurer on August 23, 2005, requesting review of the assessment and refund of the amount paid.
The Provincial Treasurer dismissed the Protest on October 15, 2005, prompting CE Casecnan to appeal to the LBAA.
On October 20, 2006, the LBAA denied CE Casecnan’s appeal, holding:

The assessments carry the presumption of regularity, which CE Casecnan and NIA failed to overthrow.
Section 234(c) of the Local Government Code (LGC), providing exemption from RPT of machinery and equipment directly and exclusively used by local water districts (LWD) and government-owned/controlled corporations (GOCCs), does not apply because CE Casecnan is neither an LWD nor a GOCC, and it is the registered owner.

CE Casecnan and NIA separately appealed to the Central Board of Assessment Appeals (CBAA).
The CBAA consolidated these appeals and, in its December 5, 2013 Decision, dismissed both, affirming non-exemption of CE Casecnan's properties and the finality of the assessments.
Upon motions for reconsideration, the CBAA issued a Resolution on August 21, 2015, modifying its decision by declaring the assessments illegal and null and void due to the Province’s failure to enact a tax ordinance for 2003 and 2004. It likewise nullified the collection efforts based on said assessments.

Exemption from RPT under Section 234(c) of the LGC.
No valid tax ordinance existed for years 2003-2005.
Entitlement to refund of taxes paid under protest.
Applicability of Executive Order (EO) No. 173 which condones/reduces real property taxes on power generation facilities of IPPs under BOT contracts with GOCCs.

On November 17, 2017, the CTA rendered a Decision remanding the case to the CBAA for computing the refund amount pursuant to EO No. 173, agreeing with the non-exemption ruling but holding that the assessments lacked a valid tax ordinance basis.
On reconsideration, the CTA modified its decision to clarify EO No. 173’s application regarding the RPT liability of CE Casecnan.

The Province of Nueva Vizcaya filed a Petition for Review on Certiorari before the Supreme Court, challenging:

The CTA’s application of EO No. 173 to CE Casecnan despite payment of the taxes.
The claim that the tax assessments were invalid for lack of tax ordinance, asserting Tax Ordinance No. 2000-003 covers 2003 to 2005.
The constitutionality of EO No. 173 (raised for the first time before the Court).

CE Casecnan, NIA, and the Department of Finance filed comments supporting the CTA’s rulings.

Whether the tax assessments issued by the Provincial Assessor of Nueva Vizcaya against CE Casecnan for the years 2003 to 2005 are valid despite the alleged absence of a valid tax ordinance.
Whether Section 234(c) of the Local Government Code exempts CE Casecnan’s machinery and equipment from real property tax.
Whether Executive Order No. 173 applies to CE Casecnan’s RPT liabilities, including amounts already paid under protest, and whether it mandates refund/condonation.
Whether EO No. 173 is constitutional and consistent with local autonomy under the 1987 Constitution.
Whether the CTA En Banc correctly remanded the case to the CBAA for computation of refund pursuant to EO No. 173.