G.R. No. L-6093. February 24, 1954

The Municipal Council of Cordova, Province of Cebu, adopted the
following ordinances: No. 10, series of 1946, which imposes an annual
tax of P150 on occupation or the exercise of the privilege of
installation manager; No. 9, series of 1947, which imposes an annual
tax of P40 for local deposits in drums of combustible and inflammable
materials and an annual tax of P200 for tin can factories; and No. 11,
series of 1948, which imposes an annual tax of P150 on tin can
factories having a maximum annual output capacity of 30,000 tin cans.
The Shell Company of P. I. Ltd., a foreign corporation, filed suit for
the refund of the taxes paid by it, on the ground that the ordinances
imposing such taxes are ultra vires. The defendant denies
that they are so. The controversy was submitted for judgment upon
stipulation of facts which reads as follows:

Come now the parties in the above-entitled case by
their tinder-signed attorneys and hereby agree to the following
stipulation of facts:

1. That the parties admit the
allegations contained in Paragraph 1 of the Amended Complaint referring
to residence, personality, and capacity of the parties except the fact
that E. E. Vaño is now replaced by P. A. Corbo as Municipal Treasurer
of Cordova, Cebu;

2. That the parties admit the allegations
contained in paragraph 2 of the Amended Complaint. Official Receipts
Nos. A-1280606, A-3760742, A-3769852 and A-21030388 are herein marked
as Exhibits A, B, C, and D, respectively, for the plaintiff;

3. That the parties admit that payments made under Exhibits B, C, and D were all under protest and plaintiff admits that Exhibit A was not paid under protest;

4.
That the parties admit that Official Receipt No. A-1280606 for P40 and
Official Receipt No. A-3760742 for T200 were collected by the defendant
by virtue of Ordinance No. 9, (Sees. E-4 and E-6, respectively) under
Resolution No. 31, series of 1947, enacted December 15, 1947, approved
by the Provincial Board of Cebu in its Resolution No. 644, series of
1948. Copy of said Ordinance No. 9, series of 1947 is herein marked as
Exhibit “E” for the plaintiff, and as Exhibit “I” for the defendant;

5.
That the parties admit that Official Receipt No. A-3760852 for P150 was
paid for taxes imposed on Installation Managers, collected by the,
defendant by virtue of Ordinance No. 10 (section 3, E-12) under
Resolution No. 38, series of 1946, approved by the Provincial Board of
Cebu in its Resolution No. 1070, series of 1946. Copy of said Ordinance
No. 10, series of 1946 is marked as Exhibit “F” for the plaintiff and
as Exhibit “2” for the defendant;

6. That the parties admit
that Official Receipt No. A-21030388 for P5,450 was paid by plaintiff
and that said amount was collected by defendant by virtue of Ordinance
No. 11, series of 1948 (under Resolution No. 46) enacted August 31,
1948 and approved by the Provincial Board of Cebu in its Resolution No.
115, series of 1949, and same was approved by the Honorable Secretary
of Finance under the provisions of section 4 of Commonwealth Act No.
472. Copy of said Ordinance No. 11, series of 1948 is herein marked as
Exhibit “G” for the plaintiff, and as Exhibit “3” for the defendant
Copy of the approval of the Honorable Secretary of Finance of the same
Ordinance is herein marked as Exhibit “4” for the defendant.

Wherefore,
aside from oral evidence which may be offered by the parties and other
points not covered by this stipulation, this case is hereby submitted
upon the foregoing agreed facts and record of evidence.

Cebu City, Philippines, January 20, 1950.

THE SHELL CO. OF P. I. LTD.	C. D. JOHNSTON & A. P. DEEN
(Sgd.) L. DE C. BLECHYNDEN	(Sgd.) A. P. DEEN
Plaintiff	Attys. for the plaintiff
THE MUNICIPALITY OP CORDOVA	(Sgd.)JOSE C. BORROMEO
(Sgd.) F. A. CORBO	Provincial Fiscal
Defendant	Attorney for the defendant

(Record on Appeal, pp. 15—18.)

The parties reserved the right to introduce parole evidence but no
such evidence was submitted by either party. From the judgment holding
the ordinances valid and dismissing the complaint the plaintiff has
appealed.

It is contended that as the municipal ordinance imposing an annual
tax of P40 for “minor local deposit in drums of combustible and
inflammable materials,” and of P200 “for tin factory” was adopted under
and pursuant to section 2244 of the Revised Administrative Code, which
provides that the municipal council in the exercise of regulative
authority may require any person engaged in any business or occupation,
such as “storing combustible or explosive materials” or “the conducting
of any other business of an unwholesome, obnoxious, offensive, or
dangerous character,” to obtain a permit for which a reasonable fee, in
no case to exceed P10 per annum, may be charged, the annual tax of P40
and P200 are unauthorized and illegal. The permit and the fee referred
to may be required and charged by the Municipal Council of Cordova in
the exercise of its regulative authority, whereas the ordinance which
imposes the taxes in question was adopted under and pursuant to the
provisions of Commonwealth Act No. 472, which authorizes municipal
councils and municipal district councils “to impose municipal license
taxes upon persons engaged in any occupation or business, or exercising
privileges in the municipality or municipal district, by requiring them
to secure licenses at rates fixed by the municipal council or municipal
district council,” which shall be just and uniform but not “percentage
taxes and taxes oh specified articles.” Likewise, Ordinance No. 10,
series of 1946, which imposes an annual tax of P150 on “installation
manager” comes under the provisions of Commonwealth Act No. 472. But it
is claimed that “installation manager” is a designation made by the
plaintiff and such designation cannot be deemed to be a “calling” as
defined in section 178 of the National Internal Revenue Code (Com. Act
No. 466), and that the installation manager employed by the plaintiff
is a salaried employee which may not be taxed by the municipal council
under the provisions of Commonwealth Act No. 472. This contention is
without merit, because even if the installation manager is a salaried
employee of the plaintiff, still it is an occupation “and one
occupation or line of business does not become exempt by being
conducted with some other occupation or business for which such tax has
been paid’^[1] and the occupation tax must be paid “by each individual engaged in a calling subject thereto.”^[2]
And pursuant to section 179 of the National Internal Revenue Code, “The
payment of * * * occupation tax shall not exempt any person from any
tax, * * * provided by law or ordinance in places where such * * *
occupation in * * * regulated by municipal Jaw, nor shall the payment
of any such tax be held to prohibit any municipality from placing a tax
upon the same * * * occupation, for local purposes, where the
imposition of such tax is authorized by law.” It is true that,
according to the stipulation of facts, Ordinance No. 10, series of
1946, was approved by the Provincial Board of Cebu in its Resolution
No. 1070, series of 1946, and that it does not appear that if was
approved by the Department of Finance, as provided for and required in
section 4, paragraph 2, of Commonwealth Act No. 472, the rate of
municipal tax being in excess of P50 per annum. But as this point on
the approval by the Department of Finance was not raised in the court
below, it cannot be raised for the first time on appeal. The issue
joined by the parties in their pleadings and the point raised by the
plaintiff is that the municipal council was not empowered to adopt the
ordinance and not that it was not approved by the Department of
Finance. The fact that it was not stated in the stipulation of facts
justifies the presumption that the ordinance was approved in accordance
with law.

The contention that the ordinance is discriminatory and hostile
because there is no other person in the locality who exercises such
“designation” or occupation is also without merit, because the fact
that there is no other person in the locality who exercises such a
“designation” or calling does not make the ordinance discriminatory and
hostile, inasmuch as it is and will be applicable to any person or firm
who exercises such calling or occupation named or designated as
“installation manager.”

Lastly, Ordinance No. 11, series of 1948, which imposes a municipal
tax of P150 on tin can factories having a maximum annual output
capacity of 30,000 tin cans which, according to the stipulation of
facts, was approved by the Provincial Board of Cebu and the Department
of Finance, is valid and lawful, because it is neither a percentage tax
nor one on specified articles which are the only exceptions provided
for in section 1, Commonwealth Act No. 472. Neither does it fall under
any of the prohibitions provided for in section 3 of the same Act.
Specific taxes enumerated in the National Internal Revenue Code are
those that are imposed upon “things manufactured or produced in the
Philippines for domestic sale or consumption” and upon “things imported
from the United States and foreign countries,” such as distilled
spirits, domestic denatured alcohol, fermented liquors, products of
tobacco, cigars and cigarettes, matches, mechanical lighters,
firecrackers, skimmed milk, manufactured oils and other fuels, coal,
bunker fuel oil, diesel fuel oil, cinematographic films, playing cards,
sacharine.^[1] And it is not a
percentage tax because it is tax on business and the maximum annual
output capacity is not a percentage, because it is not a share or a tax
based on the amount of the proceeds realized out of the sale of the tin
cans manufactured therein but on the business of manufacturing tin cans
having a maximum annual output capacity of 30,000 tin cans.

In an action for refund of municipal taxes claimed to have been paid
and collected under an illegal ordinance, the real party in interest is
not the municipal treasurer but the municipality concerned that is
empowered to sue and be sued.^[2]

The judgment appealed from is affirmed, with costs against the appellant.

Paras, C. J., Pablo, Bengzon, Montemayor, Reyes, Jugo, Bautista Angelo, Labrador, Concepcion, and Diokno, JJ., concur.

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^[1] Section 178, National Internal Revenue Code (Com. Act. No. 466).

^[2] Supra.

^[1] Section 178, National Internal Revenue Code (Com. Act. No. 466).

^[2] Tan vs. De la Fuente et al., 90 Phil., 519.