Ericsson Telecommunications Inc. v. City Of20210505-12-12f6os4
Ericsson Telecommunications Inc. v. City Of20210505-12-12f6os4
Ericsson Telecommunications Inc. v. City Of20210505-12-12f6os4
DECISION
AUSTRIA-MARTINEZ, J : p
SO ORDERED. 3
SO ORDERED. 5
The CA sustained respondent's claim that the petition filed with the
RTC should have been dismissed due to petitioner's failure to show that Atty.
Maria Theresa B. Ramos (Atty. Ramos), petitioner's 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.
Its motion for reconsideration having been denied in a Resolution 6
dated February 9, 2007, petitioner now comes before the Court via a Petition
for Review on Certiorari under Rule 45 of the Rules of Court, on the following
grounds:
(1) THE COURT OF APPEALS ERRED IN DISMISSING THE CASE FOR
LACK OF SHOWING THAT THE SIGNATORY OF THE
VERIFICATION/CERTIFICATION IS NOT SPECIFICALLY AUTHORIZED
FOR AND IN BEHALF OF PETITIONER.
Section 2 (c), Rule 41 of the Rules of Court provides that in all cases
where questions of law are raised or involved, the appeal shall be to this
Court by petition for review on certiorari under Rule 45.
Thus, as correctly pointed out by petitioner, the appeal before the CA
should have been dismissed, pursuant to Section 5 (f), Rule 56 of the Rules
of Court, which provides:
Sec. 5. Grounds for dismissal of appeal. — The appeal may be
dismissed motu proprio or on motion of the respondent on the
following grounds:
Third, the dismissal of the appeal, in effect, would have sustained the
RTC Decision ordering respondent to cancel the Assessment Notices issued
by respondent, and therefore, would have rendered moot and academic the
issue of whether the local business tax on contractors should be based on
gross receipts or gross revenues.
However, the higher interest of substantial justice dictates that this
Court should resolve the same, to evade further repetition of erroneous
interpretation of the law, 16 for the guidance of the bench and bar. AHaDSI
As earlier stated, the substantive issue in this case is whether the local
business tax on contractors should be based on gross receipts or gross
revenue.
Respondent assessed deficiency local business taxes on petitioner
based on the latter's gross revenue as reported in its financial statements,
arguing that gross receipts is synonymous with gross earnings/revenue,
which, in turn, includes uncollected earnings. Petitioner, however, contends
that only the portion of the revenues which were actually and constructively
received should be considered in determining its tax base.
Respondent is authorized to levy business taxes under Section 143 in
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relation to Section 151 of the Local Government Code.
Insofar as petitioner is concerned, the applicable provision is
subsection (e), Section 143 of the same Code covering contractors and other
independent contractors, to wit:
SEC. 143. Tax on Business . — The municipality may impose
taxes on the following businesses:
xxx xxx xxx
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.
I n Commissioner of Internal Revenue v. Bank of Commerce, 17 the
Court interpreted gross receipts as including those which were actually or
constructively received, viz.:
Actual receipt of interest income is not limited to physical
receipt. Actual receipt may either be physical receipt or
constructive receipt. When the depository bank withholds the final
tax to pay the tax liability of the lending bank, there is prior to the
withholding a constructive receipt by the lending bank of the amount
withheld. From the amount constructively received by the lending
bank, the depository bank deducts the final withholding tax and remits
it to the government for the account of the lending bank. Thus, the
interest income actually received by the lending bank, both physically
and constructively, is the net interest plus the amount withheld as final
tax . AEHCDa
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, exchanged or leased, the payment of which is yet to
be received. This is in consonance with the International Financial
Reporting Standards, 21 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), 22 which is measured at the
fair value of the consideration received or receivable. 23
As aptly stated by the RTC:
"[R]evenue from services rendered is recognized when services
have been performed and are billable." It is "recorded at the amount
received or expected to be received." (Section E [17] of the
Statements of Financial Accounting Standards No. 1). 24
Footnotes
* Only Pasig City is named as respondent in the body of herein Petition for
Review, pp. 1-2; rollo, pp. 17-18.
1. Entitled "Ericsson Telecommunications, Inc., Plaintiff, v. Pasig City thru its
Mayor, Hon. Soledad Eusebio and the City Treasurer, Hon. Crispino Salvador,
Defendants."
2. Rollo , pp. 60-67.
3. Rollo , p. 67.
4. Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices
Rosalinda Asuncion-Vicente and Ramon M. Bato, Jr., concurring; id. at 6-13.
5. Id. at 12-13.
6. Id. at 14.
7. Rollo , pp. 24-25.
8. Estribillo v. Department of Agrarian Reform, G.R. No. 159674, June 30, 2006,
494 SCRA 218, 232; General Milling Corporation v. National Labor Relations
Commission , 442 Phil. 425, 427 (2002); Shipside Incorporated v. Court of
Appeals, 404 Phil. 981, 995 (2001).
9. Supra note 8.
10. Supra note 8, at 995.
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11. Id. at 996.
12. De Guia v. De Guia, 408 Phil. 399, 408 (2001); Damasco v. National Labor
Relations Commission, 400 Phil. 568, 581 (2000).
13. Rollo , p. 68.
14. Pajuyo v. Court of Appeals, G.R. No. 146364, June 3, 2004, 430 SCRA 492,
506.
15. Velayo-Fong v. Velayo, G.R. No. 155488, December 6, 2006, 510 SCRA 320,
329-330.
16. See Velayo-Fong v. Velayo, supra note 15; Province of Batangas v. Romulo,
G.R. No. 152774, May 27, 2004, 429 SCRA 736, 757.
17. G.R. No. 149636, June 8, 2005, 459 SCRA 638, 653.
18. G.R. No. 147375, June 26, 2006, 492 SCRA 551.