ERICSSON TELECOMMUNICATIONS, INC. v.

CITY OF PASIG
G.R. No. 176667, 22 November 2007
The imposition of local business tax based on the taxpayers gross revenue will
inevitably result in the constitutionally proscribed double taxation taxing of the same
person twice by the same jurisdiction for the same thing inasmuch as the taxpayers
revenue or income for a taxable year will definitely include its gross receipts already
reported during the previous year and for which local business tax has already been
paid.
Ericsson Telecommunications, Inc (Ericsson) was assessed by the City of
Pasig with a business tax deficiency based on its gross revenues. Ericsson
protested the assessment on the ground that it should be based on gross
receipts and not on gross revenues. The City of Pasig denied the protest
which prompted Ericsson to file a petition for review for the annulment and
cancellation of its deficiency local business taxes.
The Regional Trial Court (RTC) declared the City of Pasig in default
due to its failure to include a notice of hearing in its motion to dismiss.
Ericsson was allowed to present evidence ex parte which became the basis
of the RTC to cancel and set aside the assessments. On appeal, the Court of
Appeals (CA), dismissed Ericssons c o m p l a i n t without prejudice. The CA
sustained the City of Pasigs claim that the petition filed with the RTC should
have been dismissed due to Ericssons failure to show that their Manager for
Tax and Legal Affairs and the person who signed the Verification and
Certification of Non- Forum Shopping, was duly authorized by the Board of
Directors. The motion for reconsideration was also denied and the case now
comes before the Court via a Petition for Review on Certiorari.
ISSUE:
Whether or not the local business tax, as imposed by the Pasig City
Revenue Code and the Local Government Code of 1991, should be based on
gross receipts or gross revenues
HELD:
Petition GRANTED.
The law is clear. Gross receipts include money or its equivalent actually
or constructively received in consideration of services rendered or articles
sold, exchanged or leased, whether actual or constructive. There is,
therefore, constructive receipt, when the consideration for the articles sold,
exchanged or leased, or the services rendered has already been placed under
the control of the person who sold the goods or rendered the services
without any restriction by the payor.
In contrast, gross revenue covers money or its equivalent actually or
constructively received, including the value of services rendered or articles
sold, e x c h a n g e d o r leased, the payment of which is yet to be received.
This is in consonance with the International Financial Reporting Standards,
which defines revenue as the gross inflow of

economic benefits (cash, receivables, and other assets) arising from the ordinary
operating activities of an enterprise (such as sales of goods, sales of services,
interest, royalties, and dividends), which is measured at the fair value of the
consideration received or receivable.
In Ericssons case, its audited financial statements reflect income or revenue
which accrued to it during the taxable period although not yet actually or
constructively received or paid. This is because Ericsson uses the accrual method
of accounting, where income is reportable when all the events have occurred
that fix the taxpayers right to receive the income, and the amount can be
determined with reasonable accuracy; the right to receive income, and not the
actual receipt, determines when to include the amount in gross income.
The imposition of local business tax based on petitioners gross revenue will
inevitably result in the constitutionally proscribed double taxation taxing of
the same person twice by the same jurisdiction for the same thing inasmuch as
petitioners revenue or income for a taxable year will definitely include its gross
receipts already reported during the previous year and for which local business tax
has already been paid.
Thus, the City of Pasig committed a palpable error when it assessed
petitioners local business tax based on its gross revenue as reported in its audited
financial statements, as Section 143 of the Local Government Code and Section
22(e) of the Pasig Revenue Code clearly provide that the tax should be computed
based on gross receipts.

Talento vs. Escalada

[G.R. No. 180884; June 27, 2008]
An exception to the rule that appeal shall not suspend the collection of realty taxes
is where the taxpayer has shown a clear and unmistakable right to refuse or to hold
in abeyance the payment of taxes.
FACTS:
Private respondent Petron Corporation operates several machineries and
equipment in Lamao, Limay, Bataan. On June of 2007 the Provincial Assessors
Office of Bataan delivered a notice of revised assessment over the corporations
machineries and equipment totaling to a tax liability of Php 1, 731, 025, 403 for the
period from 1994 to 2006. Petron sought an appeal with the Local Board of
Assessment Appeals on August 17, 2007 averring that the revised assessment
included items already declared and that the period covered by the assessment
exceeded 10 years, which is prohibited by the Local Government Code (LGC).
Together with the said petition, Petron sought approval of a surety bond amounting
to some Php 1.2 billion. However on August 22, 2008, Petron received from the
Provincial Treasurers Office a letter of final notice of delinquent real property tax
with a warning that should Petron be unable to settle its tax liabilities, its properties
shall be levied and sold at public auction. Thus Petron sent a letter to the Provincial
Treasurer stating that any levy on their property pending the LBAA would be
premature, but the treasurer replied by citing Sections 231 and 252 of the LGC
whereby on a payment under protest by Petron will bar the levy and sale of its
property.
On September 2008, a warrant for levy was issued prompting Petron to seek its
lifting with the LBAA and posted the surety bond of Php 1.2 billion but the treasurer
subsequently issued a notice of sale of Petrons properties prompting Petron to seek
for a TRO with the RTC. The RTC granted a TRO provided Petron add some Php 500
million to the bond to be equivalent to its outstanding tax liability. Treasure sought
the TRO dissolution but was denied, hence petitioner treasurer sought recourse
before the Supreme Court through Rule 65 of the Rules of Court questioning the
issuance of the TRO.
ISSUE:
Whether or not Provincial Treasurer acted accordingly in not suspending the
collection of the tax liability of Petron and whether the TRO was properly issued?
HELD:
As to the issuance of the TRO, the Supreme Court found it to be an
appropriate relief for Petron. As established by law, a TRO may be issued if and
when the conditions for its issuance are met as required under Rule 58 Section 3 of
the Rules of Court enumerating the grounds and also when the following requisites
are met: (1) the existence of a clear and unmistakable right that must be protected;
and (2) an urgent and paramount necessity for the writ to prevent serious damage.
From the facts shown, clearly the entire operation of Petron in Bataan hinges on the
actions of the provincial Treasurer since the value of the property sought to be
levied amounted to Php 1.7 billion, a significant amount that could undoubtedly
hamper Petrons existence in the area.

Moreover, the recourse sought by petitioner before the Supreme Court was
improper; resort to Rule 65 is only available when all means of appeal are already
availed of or are not available, in this case, the petitioner has not sought
reconsideration before the RTC that ordered the TRO nor did the petitioner seek the
proper remedy before the Court of Appeals through Rule 45. Although litigation is
not a battle of technicalities, the SC emphasized that that procedure must be
followed for the orderly and efficient administration of justice and is a matter of
jurisdiction. In fact, petitioner was also beyond the reglamentary period to question
the order. With regards to the Provincial Treasurers continued enforcement of the
levy despite the LBAA appeal, the SC gave focus to the LBAA Rules of Procedure
whereby it is stated in Section 7, Rule V that: An appeal shall not suspend the
collection of the corresponding realty taxes on the real property subject of the
appeal as assessed by the Provincial, City or Municipal Assessor, x x x. An appeal
may be entertained but the hearing thereof shall be deferred until the
corresponding taxes due on the real property subject of the appeal shall have been
paid under protest or the petitioner shall have given a surety bond, x x x.
Corollarily, Section 11 of Republic Act No. 9282, which amended Republic Act No.
1125 (The Law Creating the Court of Tax Appeals) provides: No appeal taken to the
Court of Appeals from the Collector of Internal Revenue x x x shall suspend the
payment, levy, distraint, and/or sale of any property for the satisfaction of his tax
liability as provided by existing law. Provided, however, That when in the opinion of
the Court the collection by the aforementioned government agencies may
jeopardize the interest of the Government and/or the taxpayer the Court at any
stage of the processing may suspend the collection and require the taxpayer either
to deposit the amount claimed or to file a surety bond for not more t h a n double
the amount with the Court. Thus, although it is true that the LBAA or the courts
generally cannot suspend the payment of taxes even on appeal, however should a
bond be posted, it is proper to suspend.

SAN JUAN vs CASTRO G.R.

GR. No. 174617 December 27, 2007
Under Section 195 of the Local Government Code, a taxpayer who disagrees with a
tax assessment made by a local treasurer may file a written protest thereof, and
from the denial of the same, either appeal the assessment before the court of
competent jurisdiction or pay the tax and then seek a refund.
FACTS:
Petitioner, registered owners of real properties in Marikina City, with consent
of his wife, conveyed by deed of assignment, the properties to the Saints and
Angels Realty Corp. (SARC), by virtue of incorporations, in exchange for shares of
stock therein with a par value of P2, 000,000.0, placed in San Juans name and the
remaining par value in the name of his wife. Respondents representatives went to
the City Treasurers Office of Marikina to pay the transfer tax based on the
consideration stated in the deed of assignment. City Treasurer Castro informed him
however that the tax due is based on the fair market value of the property.
Petitioner protested the basis of the tax due. To which, the respondent replied
stating that in cases of transfer or real property not involving monetary
consideration, it is certain that the fair market value or the zonal value of the
property is the basis of the tax rate. Petitioner filed before the RTC of Marikina a
petition for mandamus and damages against respondent in his capacity as City
Treasurer, among others, praying that respondent be compelled to perform a
ministerial duty to accept payment of transfer tax based on the actual
consideration of the transfer and assignment, citing Section135 of the LGC.
ISSUE:
When can a protest of assessment be availed of?
RULING:
Under Section 195 of the Local Government Code, a taxpayer who disagrees
with a tax assessment made by a local treasurer may file a written protest thereof:
SECTION 195. Protest of Assessment .When the local treasurer or his duly
authorized representative finds that the correct taxes, fees, or charges have not
been paid, he shall issue a notice of assessment stating the nature of the tax, fee,
or charge, the amount of deficiency, the surcharges, interests and penalties. Within
sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a
written protest with the local treasurer contesting the assessment; otherwise, the
assessment shall become final and executory. The local treasurer shall decide the
protest within sixty (60) days from the time of its filing. If the local treasurer finds
the protest to be wholly or partly meritorious, he shall issue a notice cancelling
wholly or partially the assessment. However, if the local treasurer finds the
assessment to be wholly or partly correct, he shall deny the protest wholly or partly
with notice to the taxpayer. The taxpayer shall have thirty (30) days from the

receipt of the denial of the protest or from the lapse of the sixty-day (60) period
prescribed herein within which to appeal with the court of competent jurisdiction,
otherwise the assessment becomes conclusive and unappealable. That petitioner
protested in writing against the assessment of tax due and the basis thereof is on
record as in fact it was on that account that respondent sent him the above-quoted
July 15, 2005 letter which operated as a denial of petitioners written protest
.Petitioner should thus have, following the earlier above-quoted Section 195 of the
Local Government Code, either appealed the assessment before the court of
competent jurisdiction [15] or paid the tax and then sought are fund. Petitioner did
not observe any of these remedies available to him, however. He instead opted
to file a petition for mandamus to compel respondent to accept payment of transfer
tax as computed by him.