G.R. No. L-6093, February 24, 1954
THE SHELL CO. OF P.I., LTD., plaintiff-appellant, vs. E. E. VAÑO, as Municipal Treasurer of the Municipality of Cordova, Province of Cebu, defendant-appellee.

FACTS

The Municipal Council of Cordova, Cebu, enacted three ordinances imposing annual taxes: Ordinance No. 10, series of 1946, imposed a P150 tax on “installation managers”; Ordinance No. 9, series of 1947, imposed a P40 tax for “minor local deposit in drums of combustible and inflammable materials” and a P200 tax for “tin can factories”; and Ordinance No. 11, series of 1948, imposed a P150 tax on tin can factories with a maximum annual output capacity of 30,000 tin cans. The Shell Co. of P.I., Ltd., a foreign corporation, paid these taxes under protest (except for the P40 payment under Ordinance No. 9) and filed a suit for refund, arguing that the ordinances were ultra vires (beyond the municipal council’s legal authority). The case was submitted for judgment based on a stipulation of facts agreed upon by both parties.

ISSUE

Whether the municipal ordinances in question are valid exercises of the municipal council’s taxing authority under Commonwealth Act No. 472 .

RULING

The Supreme Court affirmed the lower court’s judgment, upholding the validity of the ordinances and dismissing the complaint.
1. Ordinance No. 9 (Series of 1947): The Court held that the taxes imposed (P40 for deposit of combustible materials and P200 for tin can factories) were authorized under Commonwealth Act No. 472 , which allows municipal councils to impose license taxes on persons engaged in any occupation, business, or privilege. The Court distinguished this from the regulative authority under Section 2244 of the Revised Administrative Code, which limits permit fees to P10 annually. Here, the taxes were levied under the taxing authority of Commonwealth Act No. 472 , not as mere permit fees.
2. Ordinance No. 10 (Series of 1946): The Court rejected the appellant’s argument that an “installation manager” is not a taxable “calling” under the National Internal Revenue Code. It ruled that even if the installation manager is a salaried employee, it constitutes an occupation subject to municipal tax under Commonwealth Act No. 472 . The Court cited Section 179 of the National Internal Revenue Code, which allows municipalities to impose local taxes on the same occupation. The Court also noted that the appellant’s failure to raise the issue of lack of approval by the Department of Finance (required for taxes exceeding P50 annually under Commonwealth Act No. 472 ) in the lower court precluded it from being raised on appeal, and the stipulation of facts justified a presumption of lawful approval.
3. Ordinance No. 11 (Series of 1948): The Court held the ordinance valid, as it was approved by both the Provincial Board of Cebu and the Department of Finance. The tax was neither a “percentage tax” nor a “tax on specified articles” (the only exceptions under Section 1 of Commonwealth Act No. 472 ), nor did it fall under any prohibitions in Section 3 of the same Act. The tax was based on the business of manufacturing tin cans with a specific output capacity, not on the proceeds of sales or on the articles themselves.
4. Additional Points: The Court dismissed the claim that Ordinance No. 10 was discriminatory merely because no other person in the locality held the same designation, stating it would apply to anyone exercising that occupation. The Court also noted that in a refund action against a municipal treasurer, the real party in interest is the municipality itself, which can sue and be sued.