Shell Corporation v.

Vano (As Municipal Treasurer)

GR L-6093, 94 Phil 387, February 24, 1954

Facts:

The Municipal Council of Cordova, Cebu adopted Ordinance 10 which imposes an annual tax on
occupation or the exercise of the privilege of installation manager and Ordinance 11 imposing an annual
tax on tin can factories having a maximum output capacity of 30,000 tin cans. Shell, a foreign
corporation, disputed the ordinances and contended that: first, installation manager is a designation
made by the company and such designation cannot be deemed to be a calling as defined in Sec 178 of
NIRC and that the installation manager employed by Shell is a salaried employee which may not be
taxed by the municipal council under the provisions of NIRC; second, the ordinance is discriminatory and
hostile because there is no other person in the locality who exercises such designation or calling; and
third, the imposition of tax on tin can factories having a 30,000 maximum output capacity is unlawful
because it is a percentage tax and falls under the exceptions provided in the Tax Code.

Issue: W/N an installation manager, although a salaried employee, is liable for occupation tax

Ruling:

Yes. Even if the installation manager is a salaried employee of the corporation, still it is an occupation.
Further, 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. The occupation tax must be paid by
each individual engaged in a calling subject to it.

Issue 2: W/N the ordinance is unconstitutional because it is hostile and discriminatory

Ruling:

No. 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.
Issue 3: W/N the annual tax imposition on tin can factories having an annual output capacity of 30,000
is valid

Ruling:

Yes. It is not a percentage tax because the maximum annual output capacity is not a percentage. 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.

Issue 4: W/N the Municipal Treasurer should have been impleaded in this case

Ruling:

No. In an action for refund of municipal taxes claimed to have been paid and collected under an illegal
ordinance, it is not the municipal treasuer who is the real party-in-interest but the municipality
concerned that is empowered to sue and be sued.