The Shell Company of P.l., Ltd., Plaintiff-Appelant, vs. E. E . Vano, as Municipal Treasurer of the Municipality of Cordova, Province of Cebu, Defendant-Appellee, G. R. No. L-6093, February 24, 1954 [Supreme Court Decisions]

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Title: The Shell Company of P.l., Ltd., Plaintiff-Appelant, vs. E. E . Vano, as Municipal Treasurer of the Municipality of Cordova, Province of Cebu, Defendant-Appellee, G. R. No. L-6093, February 24, 1954 [Supreme Court Decisions]
Language: English
Source: The Lawyers Journal Volume XIX (Issue No.6) June 30, 1954
Year: 1954
Subject: Taxation -- Philippines; Municipal revenue -- Philippines
Rights
Abstract: [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.]
Fulltext: from that of the agency agreement of 7 November and accepted on 22 November 194G by the ddendant, because in a letter dated 2 January 1947 2.<idressed to the plaintiff, refening to the transaction 'lf 1,000 metric tons of coconut oil emulsion, the defendant saysx x x I am doing cvel'ything possible to fulfill these 1,000 tons of emulsion, and until such time that we completed this order I do not feel it very sensible on my part to accept more orders. I want to prove to Forlrade, yourself and other 1>eople that we delive1 · our goods. Regarding your commission, it is understood to be 2-1/ 2% of all prices quoted by me plus 50-50 c ;n o\•er price. (Schedule B.) In another letter dated I G January 1947 to the plaintiff, speakinir of t he same transaction, the defendant. saysAs pel' our understanding when I was in the States tlui overprice is subject to any increase in the cost of production. I am not t rying to make things difficult for you and I ·shall give your 2-1/2% commission plus our overprice provided you can give me substantial order in ordel" for me to amortize my loss on this_ first deal. Unless such could be :1nanged I shall remit to you for the present your commission upon collection from the bank. (Schedule C.) · In a telegram sent by the defendant to the plaintiff the> former saysx x x YOUR MONEY PENDING STOP UNDERSTAND YOU AUTHORIZED SOME LOCAL ATTORNEYS AND MY RELATIVES TO INTEHVENF. YOUR BEHALF. (~chedule D.l The defendant's claim that th~ agreement for the sale of 1,000 metric tons of coconut oil emulsion w::.s agreed upon in a document, referring to the letter of 16 Octuber 1946, is again <lisprovcd by his letter dated 2 December 194G to Ft'rhade Corpor1tion where he says: The purpose of this letter is to confirm in final form the oral agreement which we have heretofore reached, as between ourselves, during the course of various conven;ntions between us and our respective representatives up•.n the subject matter of this lettn. It is understood that I nm to sell to you, and you · are to purchase from me, one thousand 0,000) tons of cor.f'nut oil S02.p emulsion at a price of four hunclr<:d dollars ($400.) per metric ton, i.e., 2,204.G pounds, F . 0. B. shipboard, 1\tanila, P.1. (Exhibit S, Special. Pndel'scoring sup11lied.) 'rhe contention that as the ccntract was executed in New York, the Court of First Instance of Manila has no jurisdiction over this case, i:::z without merit, because a non-resident may sue a resident in the courts of this c<>untry (I) where the defendant may be summoned and his property lcviable upon execution in case of a favorable, final and cxecutory judgment. It is a JlCrsonal action for the collection of a sum of money which the courts of first instance h>lve jurisdiction to t.ry a nd decide. There is no conflict of laws involved in the case, because it is only a question of enforcing an obligation created by or arising from contract; and unless the enforcement of the contract be against public policy of the forum, it must be enforced. The plaintiff is entitled to collect M,589.88 for commission and P50,000 for one. half of the overprice, or a total of P57,589.88, lawful interests thereon from the date of the filing of the complaint, and costs in both instances. As thus modified the judgment appealed from is affirmed, with costs aga..ins the appellant. (l) Manha1J.Wel11 Co. v1. Henry W. El~r & Co •• ~6 Phil. 10; Weatern Equip. ment and Supply Co. v1. R"JU, 51 Phil. l U. Paras, Pablo, Beng:::on, Montmnayor, Reyes, Jugo, BautisM A t19elo, and Concepcio11, JJ., concur. IV T he SJu:ll Comv<rn·u of P.l., Ltd., Plai11liff-Ap11rllant, vs. E. E . V(u1o, as Municipal Treasurer oi the Municip(!Jity of Cordova, Provine.: of Cebu, 1Jefct1tlnnt. A1i11ellee, G. R. No. L~6093, Fcbruaty 24, 1954, Padilfo J. PLEADING AND PRACTICE; ACTION FOR HEFUND OF MUNICIPAL TAXES; REAL PAHTY IN INTEREST. - In an action for refund of municipal taxes claimed to have been paid ,and collected under an illegal ordinance, the real party in interest iii not the municipal treasurer but the municipality concerned that is empowered to sue and be sued. C. D. Jolmston and A. P. Dean for appellant. Provincial Fiseut Jose C. Borromeo and Assista.nt ProvinciQl F isrn.I An.mi11.~ V. i111friabao for UJ.lpcllee. DECI S ION PADILLA, J.: The Municipal Council of Cordova, province of Cebu, a.tlopte<l the following ordinances: No. IO, $Hies of 194G, which imposes an annual tax of !"150 on occupation or the exercise of the priYilege of installation manage!'; No, 9, sel"ies of 1947, which imposes an annual tax of P40 for local deposits in drums of combustible and inflammable materials and an annual tax of !"200 for tin can factories; and No. 11, sel'ies of 1948, which imposes an annual tax of !"150 on tin can facto1 ies having a maximum annual output capacity of 30,000 tin cans. The Shell Company of P.I. Ltd., a foreign corporntion, filed suit for the refund of the taxes paid by it, on the ground that the ordinances impnsing such taxes are 11/tra vircs. 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 Cy their undersigned attorneys and hereby agi·ee to the following· stipulation of facts: 1. That the parties admit the allegations contained in Paragraph l of the Amended Complaint referring to residence, personality, :rnd capacity of the pa11ies except the fact that E. E. Vai10 is now replaced by F. 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-:m~V742, A-3'7h0852, and A. 21030388 are herein marked as Exhibits A, ll, C, and D, 1 ·espectiwly, for the plaintiff; 3. That the parties admit that payments made> under Eichibits ll, C, and D were all 101der protest and plaintiff admits that Exhibit A was ?Jot. paid under protest; 4. That the parties admit that Official Receipt No. A-1280606 for !"40.00 and Official Receipt No. A-3760742 for P200.00 were collected by the defendant by virtue of Ordinance No. 9, <Secs. E-4 and E-6, respectively) under Resolution No. "31, Series of 1947, enacted December 15, 1!)47, 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 ihe pla..intiff, a nd as Exhibit "1" for the defendant; 274 THE LA WYERS JOURNAL June 30, 1954 5. That the parties admit that Of(icial R~ceipt No. A-3760852 for P150.00 was p:i.id for taxes imposed on Installation Managers, colleeted by the defendant by virtue of Ordinance No. 10 <Sec. 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 ~aid Ordinance No. 10, Series of 1946 is marked a~ Exhibit "F" for the plaintiff, an<I a~ Exhibit "2" for the defendant; 6. That t.he parties admit t!l8t Official Receipt No. A210~0388 for P5,450.00 was paid by plaintiff and that said amount was collected by defendant by virtue :>f Ordinance No. 11, Series o( 1948 (under Resolution No. 46) ct:acted 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 oC Sec. 4 of Conunonwealth 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 de!t:ndant. Copy of the approval of the Honorable Secretary of Finance of the same Ordinance is herein marked as Exhibit "4" for the defet1dant, 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 reeord of evidence. Cebu City, Philippines, January 20, 1950. THE SHELL C:O. OF P.I. THE MUNICIPALITY OF LTD. CORDOVA By (Sgd.> L. de C. Blechynden By <Sgd.> F. A. Corbo Plaintiff Defendant C. D. JOHNSTON & A. P. DEEN <SGD.> JOSE C:. BORROMEO By <Sgd.> A. P. Deen Provincial Fiscal Attys. for tht- plaintiff 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 tias appealed. It is contended that as the municipal ordinanee 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 thnt 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 reasonabl~ fee, in no case to exceed PIO Jler annum, may be charged, the annual tax of P40 and 1'200 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 ar.d pursuant to the provisions of Com. Act No. 472, which authorizes municipal councils and municipal district councils "to impose municipal license taxes upon persons engaged in any occupatiC'l;'I 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 on spl!Cified articles." Likewise, Ordinar:ce No. 10, series of 1946, which imposes an a11.nual tax of P150 on "installation manl_Lger" comes under the provisions of Corn. 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 17~ of l"hc National Internal Revenue Code (Com. Act No. 466), and that the instailation manager employed by the plaintiff is a salaried employee which may not be taxed by the municipal council under the provisions or Com. Act No. 472. This contention is without merit, because evl'n if the instailation manager is a sa... laried employee of the plaintiff, still it is an occupation "and one occupation or line of business doeS; not become exempt by being ce>nducted with some other occupation or business for which such tax has beeIJ paid" (1) and the occupation tax must be paid "by £=&ch individual engaged in a calling subject therE'to." C 2> And pmsuant to section l 79 of the National Internal Rev~nue Code, "The payment of x x x occupation tax shall not exempt any person from any tax, x x x provided by Jaw or ordinance in places where such xx x occupation is xx x regulated by municipal law, nor shall the 1iayment of any such tax be held to prohibit any municipality from placing a tax upon the same x x x: occupation, fol' 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. it was approved by the Department of Finance, as provided for and required in section 4, paragraph 2, of Com. Act No. 472, the rate of municipal tax being in excess of !'50 per annum. But as this point on the approval by the Depart.. ' ment of Finance was not raised in the court below, it cannot be raised for the first time on appeal. The issue joined by the partit:s in their pleadings and the point raised by the plaintiff is that the municipal council was not empowered to adopt the ordi. mmce and not that it was not aJlproved by the Department of Finance. The fact that it was not stated in the stipulation of facts justifies the p1·esumption that the ordinance was approved in accordance with Jaw. The contention that the ordinance is discriminatory and hostile because there is no other person in the locality who exercises such 40designation" or occupation is also without merit, because the ' fP..ct 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 duignated 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 CP.pacity of 30,000 tin cans which, a::cord.ing to the stipulation or 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, Com. Act No. 472. Neither does it fall under any of the prohibitions provided for in sl'ction 3 of the same Act. Specific taxes enurnernted in the National Internal Revenue Code are those that are imposed upon "things manufactured or produced in the Philippines for domestic safo 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, skinuned milk, manufactured oils and other fuels, coal, bunker fuel oil, Diesel fuel oil, cinematographic films, playing cards, saccharine. {l) And it is not a percentage tax because it is tax or. business and U.e maximum annual output capacity is not a percentage, because it is not a share or a tax based on the amount ot the proceeds realized out of the sale of the tin cans rnanufacturt> therein but on the business of manufacturing tin cans having a maximum annual output capacity of 30,000 tin cans. In an action for r~fund of municipal taxes claimed to have Ill ~tlon 118, National Internal Revenue Code <Com.. Aet No. 466.l (2) Supra. (31 Section• U3 to U S. Nation•\ Jntarnal Re .. enue Code (Com. Act No. June 30, 1954 THE LA WYERS JOURNAL 275 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. (4) The judgi"nent appealed from is affirmed, with costs ai'ai11st the appellant. Paras, Pablo, Bengzon, Montemayor, Reyes, Ju.go, Bautista A11oelo, f,cbmdor, Cunr<;Jeion, and Diok110, J.J.; concur. ~t l:i Fuenlu d al .. G. R. No. L-3925, 15 December 1961. v Claro Rivera, Riznlina S. R;i·era, Lope K. ~MreC1l JI A.Hociatcd Insurance & Surety Co., !no., Recu"entes, con.tTfli El Hon.. Felid simo Ocnmvo, Cathay Ceramics, Inc. Y. Jes1U L. Uy, R ecu1'1"ido1. G. R. No. L-5968, A11,gust, 1953, Pablo. M. l. CIVIi. PROCEDURE; INTERPLEADER; MONEY WHICH IS THE SURJECT-MATTER OF INTERPLEADER DEPOSITED WITH CLERK OF COURT CANNOT BE WITHDRAWN BY SUBSTITUTING IT WITH A SURETY BOND.-Aikins. Kroll and Co. deposited the sum of !"21,792.49 with the Clerk of Court and asked the court to dec.ide who an-ong the Cathay Ccrnmics Co., Inc., Lope Sarreal, the Associated In1mra.ncc and Surety Co., Rizalina Rivera, Chuo Rivc!'a and Jesus . Ur. had a right to the said sum. Cathay Ceramics Co. Inc., presented n motion asking the cou1t to withdraw t.'he eum of 1"21.792.49 and to substitute it with a surety. This was op.. posed by Ri:r.alina Rivera a.nd the Associated lnauran!!P. and Sul'rA'y, Co. The Court, hnwever, authorized the Clerk of Court to deliver out of the sum of P21,782.49 deposited, the sum of Pl9,800 t<, J esus L. Uy and the balance of Pl,992.49 to the defendant Cathay Ceramics Inc. ttpnn the filing of the Cathay Ceramic~ Jnr.. of a surety in the amount of P25,000.00, "Oliff of the conditions of which shall be that the surety shall Pa.) to the claimants herein upon the adjudication of their several claims by th1!! Court immediat\>ly and without the necessity ot any further suit in court to enforce collection upon such bond" HELD: There is a great diffe:-cm.•e between lhe amounl' of P21,792.49 de:posited with the Clerk of Court, disposable al: any moment by said clerk upon orders of the court, a.nd a surety of P25,000 borrowed to insure a case. The value of the surety is not the amount which can be distributled by the Clerk of Court at any momcr.t that the court orders, because it is not in his possession. In order that the clerk of courl: may deliver or dia.. tribute it, the court has to order first the guaraotor to deposit t he snm of money wit'h the clerk nf court. 1f the surety CC'mpany on acc0unt of technicality or because theM is no fund dis.. posablc or on account of otht:r motives does not comply im. mediately with th~ orrler of the c<:u1·t, the claimants are left: to wait for the goodwill 'lf the guarantor. How many cases have been brought: to the court bccau~e the sureties did nnt comply with the t erms of the contract. 2. CI\'lL CODE; DEPOSIT; OBLIGATION OF DEPOSITARY.-· The depositary, according to the Civil Code m:iy not use the thing Jeposited without t'hc permission of the depositor C1766 Spani&h Civil Code and Art. 1977, Civil Code of the Philippines>. As a. corollary, the depositary may not dispose of the tbina dl'posited so that others may use it, MR. JUSTICE TUASON, diss~nting, CJ) The law does not provide that the subject-matter of intcrpleader be deposited with i'he clerk of court. By Section 2 of Rule 14 the bringing of the money or property into court is left to the sound judgment of the judge handling the case. In other jurisdicl'ions it is held that it ls not necessary to ot. fer to bring money into court, but only to bring in before other proceedings are taken. <33 C.J. 455>. It has also been held that the stake-holder may ho made the bailee of the fund pend. ing Che litigation. <33 C.J. 451; Wagoner v. Buckley, IS N.Y.S. 599L <2> The sole ground of obJcction to the questioned order by two of the defrndants, to wit ; "the surety bond can not be !\Jl adequate substituCe for money" ·- is, flimsy; and the fears expressed by this court ·regarding the delays and difficulties of enforcing a bond could ea!:.ily be overcome by the selection of a solv..:nt surety of good ~t;;\nding and adequate proviaion1 in U1e undertaking insuring prompC payment when the money was needed. If the court can allow the plaintiff to keep the fund In his posseHion during the pendency of the suit without obligat.,il)n to give any sccurit.'y, why can it not make a tespon1ible third party, with good and sufficient bond, the bailee ot t.he muney? <3> It is of interest to note that t'he remedy by interplcadcr is an equita ble one <38 C.J. 419), and tha.t even in making the final award the c~urt is not necessarily circum. scribed by the legal right's of tht: parties. Thus, "where t.he court has properly acquired jurisdiction of the cause as between defendants, it is not bound to award the fund or other thing in dispute wholly to him who has the legal t'itle, but may so ·shape its rlecree as to do t:omplete equii'y between the -parties." 133 C.J, 467>. JosP.fino 0. CorP'HS for petitioners. Benjamin Re/O'l)a, and S. Emilia.no catma for i·espondents. DECISION PABLO, M.: En la caus:l eivil No. 17111, titulada Atkins, Kroll & Co., Inc., demnnda.nte, cont'ra Cathay Ceramics, Inc., Jose Sarreal, Asao. ciated Insurance & Surety Co., Inc., Rizalina S. Rivera, Claro Rivera y Jesus L. Uy, demandados, presentada en 2!1 de Julio de . 1952. en el Juzgado de Primera Instancia de Manila, la dema.ndante f1idi6 que <:!l Juzgado decidiese quien o quiCncs, '!litre los demandados, tienen dcrecho n la suma de P21,792.49 quc dicho dcmandante dcposit6 en la escribania dcl Juzgado. Esta. suma representa el valor de la segunda rcmesa de rieles de acero vendida a la demnndante Atkins, Kroll & Co., lnc. por la Cathay Ceramics, Inc. en virt'ud de un contrato habido entre ambas en 25 de abril de 1952; y de acuerdo con dicho contrato, la primera remesa se envi6 a la demandante por la. Ceramics, Inc. en 20 de Junie de 1952, con un costo total de 1'25,789.45, y la segunda remesa que monta a "21,792.49, se envi6 en 17 de J ulio del mismo aiio. Segii.n la demanda, Jesii.s L. Uy, por medio de su abogado J ose L . Uy, reclam6 derecho prefe1·ente sobre el importe de la segunda remesa con exclusi6n de Rizalina S. Rivera y la Asso. dated Insurance & Surety Co., Inc.: que estos dos recurrentea, a su vez, _ reclamaron derecho preferente, adrnitiendo, &ln embarab, ,,. la Associated Insurance & Surety Co., Inc, quc de loa P21,792.4.9 cicbe pagarse antes la reclamaci6n de Ri:zalina S. Rivera. y que el saldo se la pague a ella. Estns reclnmaciones contrarias 11on las que dieron Juga.r a que Atkins, Kroll & Co., Inc. se viera obligada a presentar la demand& de 1 "nterpleuder y a depositar la sum a de P21, 792.49 en la. escrib11nia de! juzgado. En 30 de Julio de 1952, un dfa despuCs de presentada la demanda, la Cathay Ceramics, Inc. prcsent6 una moci6n urgente pf. dicndo que sc la pcnnitiera retira.r el dep6sito de P21,792.49 para sustifuirla con una fianza, selialando cl 31 de julio para la viab de la moci6n, a la que se opusieron Rizalina $ , Rivera y la As. socia.ted Insurance & Surety Co., Inc, La moci6n fue vista ant. el Hon. Juez Zulueta que entonces presidia tempora.lmento la Sala 7. a de! Juzgado de Primera Instancia de Manila; pero, en vez 276 THE LAWYERS JOURNAL June 30, 1954
pages: 274-276