G.R. No. 114231. May 18, 2001.
MANILA ELECTRIC COMPANY, petitioner, vs. NELIA A. BARLIS, in her capacity as Officer-in-Charge/Acting Municipal Treasurer of Muntinlupa, substituting EDUARDO A. ALON, former Municipal Treasurer of Muntinlupa, Metro Manila, respondent.

FACTS

Manila Electric Company (MERALCO) owned and operated power plants in Sucat, Muntinlupa, from 1968 to 1978, paying real property taxes based on its filed tax declarations. In 1978, MERALCO sold the plants to the National Power Corporation. In 1985, the Municipal Assessor of Muntinlupa discovered that MERALCO had allegedly misdeclared or failed to declare for taxation several machineries and equipment within the plants for the period 1976 to 1978. New tax declarations were issued, and after MERALCO failed to pay the assessed deficiency taxes despite collection notices and a Bureau of Local Government Finance endorsement confirming its liability, the Municipal Treasurer issued warrants of garnishment against MERALCO’s bank deposits in October 1990.
MERALCO filed a Petition for Prohibition with the Regional Trial Court (RTC) of Makati, seeking to enjoin the enforcement of the warrants, without having paid the assessed tax under protest or appealing the assessment to the Local Board of Assessment Appeals. The Municipal Treasurer moved to dismiss the petition for lack of jurisdiction and failure to exhaust administrative remedies. The RTC denied the motion to dismiss, prompting the Treasurer to file a petition for certiorari with the Court of Appeals.

ISSUE

Whether the Regional Trial Court had jurisdiction over MERALCO’s petition for prohibition to set aside the warrants of garnishment for real property taxes, despite MERALCO not having paid the tax under protest and not having exhausted administrative remedies.

RULING

The Court of Appeals correctly ruled that the RTC had no jurisdiction. The Supreme Court affirmed this decision. The governing law was the Real Property Tax Code (P.D. No. 464), which established a specific procedure for contesting tax assessments. Section 64 of the Code explicitly prohibited any court from entertaining any suit assailing the validity of a tax assessment until the taxpayer had paid the tax under protest. This condition precedent was jurisdictional. MERALCO did not comply with this requirement. Furthermore, MERALCO failed to exhaust available administrative remedies. Under the Code, a taxpayer dissatisfied with an assessment must first appeal to the Local Board of Assessment Appeals within sixty days. MERALCO did not avail itself of this remedy. The issuance of the warrants of garnishment was a legitimate enforcement action following a final assessment. A direct judicial action via prohibition was improper to circumvent the mandated protest and appeal process. The RTC’s assumption of jurisdiction was therefore void. The Court emphasized that tax collection cannot be enjoined without adhering to the statutory conditions, which are designed to ensure the uninterrupted flow of public funds.