938 SUPREME COURT REPORTS ANNOTATED

City of Baguio vs. De Leon

No. L24756. October 31, 1968.

CITY OF BAGUIO, plaintiffappellee, vs. FORTUNATO

DE LEON, defendantappellant.

Statutory construction Ordinance passed pursuant to

Republic Act 329 conferring upon the City of Baguio the power to
tax is valid.On July 15, 1948, Republic Act No. 329 was enacted
amending the city charter of Baguio and adding to its power to
license the power to tax and regulate all business, trades and
occupations therein. The ordinance under consideration,
therefore, cannot be considered ultra vires.
Courts Jurisdiction of city courts When city court has
jurisdiction to decide on the constitutionality of an ordinance.
Where the principal issue is collection for a sum of money and
the city court has already acquired jurisdiction over the suit, the
mere fact that the issue of constitutionality is raised does not
suffice to oust the City Court of its jurisdiction. Since the City
Court is possessed of judicial power and it is likewise axiomatic
that the judicial power embraces the ascertainment of the facts
and the application of the law, the Constitution as the highest law
superseding any statute or ordinance in conflict therewith, it
cannot be said that a City Court is bereft of competence to proceed
on the matter.
Taxation Double taxation When not violative of due process.
The argument against double taxation may not be invoked
where one tax is imposed by the state and the other is imposed by
the city, it being widely recognized that there is nothing
inherently obnoxious in the requirement that license fees or taxes
be exacted with respect to the same occupation, calling or activity
by both the state and the political subdivisions thereof. Where
Congress has clearly expressed its intention, the statute must be
sustained even though double taxation results.
Same Rule on equality and uniformity in taxation.Equality
and uniformity in taxation means that all taxable articles or kind
or property of the same class shall be taxed at the same
 939

VOL. 25, OCTOBER 31, 1968 939

City of Baguio vs. De Leon

rate. A tax is considered uniform when it operates with the same

force and effect in every place where the subject may be found.
Where the statute or ordinance in question applies equally to all
persons, firms and corporations placed in similar situation there
is no infringement of the rule on equality. Inequalities which
result from a singling out of one particular class for taxation or
exemption inf ringe no constitutional limitation.
Public officers The act of the City Treasurer is the act of the
mayor unless repudiated.In much the same way that an act of a
department head of the national government, performed within
the limits of his authority, is presumptively the act of the
President unless reprobated or disapproved, similarly the act of
the City Treasurer may be assumed to carry the seal of approval
of the City Mayor unless repudiated or set aside.

APPEAL from a decision of the City Court of Baguio.

The facts are stated in the opinion of the Court.

The City Attorney for plaintiffappellee.
Fortunato de Leon for and in his own behalf as
defendantappellant.

FERNANDO, J.:

In this appeal, a1 lower court decision upholding the validity

of an ordinance of the City of Baguio imposing a license fee
on any person, firm, entity or corporation doing business in
the City of Baguio is assailed by defendantappellant
Fortunato de Leon. He was held liable as a real estate
dealer with a property therein worth more than P10,000,
but not in excess of P50,000, and therefore obligated to pay
under such ordinance the P50 annual f ee. That is the
principal question. In addition, there has been a firm and
unyielding insistence by defendantappellant of the lack of
jurisdiction of the City Court of Baguio, where the suit
originated, a complaint having been filed against him by
the City Attorney of Baguio for his failure to pay the
amount of P300 as license fee covering the period from the
first quarter of 1958 to the fourth quarter of 1962,
allegedly, inspite of repeated demands. Nor was
defendantappellant agreeable to such a suit being
instituted by the City Treasurer without the consent of the
Mayor, which for

______________

1 Ordinance No. 218.

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940 SUPREME COURT REPORTS ANNOTATED

City of Baguio vs. De Leon

him was indispensable. The lower court was of a different

mind.
In its decision of December 19, 1964, it declared the
above ordinance as amended, valid and subsisting, and
held def endantappellant liable for the fees therein
prescribed as a real estate dealer. Hence, this appeal.
Assume the validity of such ordinance, and there would be
no question about the liability of defendantappellant for
the above license fee, it being shown in the partial
stipulation of facts, that he was "engaged in the rental of
his property in Baguio" deriving income therefrom during
the period covered by the first quarter of 1958 to the fourth
quarter of 1962.
The source of authority f or the challenged ordinance is
supplied by Republic
2
Act No. 329, amending the city
charter of Baguio empowering it to fix the license f ee and
regulate "businesses, trades and occupations as may be
established or practiced in the City."
Unless it can be shown then that such a grant of
authority is not broad enough to justify the enactment of
the ordinance now assailed, the decision appealed from
must be affirmed. The task confronting defendant
appellant, therefore, was far from easy. Why he failed is
understandable, considering that even a cursory reading of
the above amendment readily discloses that the enactment
of the ordinance in question finds support in the power
thus conferred.
Nor is the question raised by him as to the validity 3
thereof novel in character. In Medina v. City of Baguio, the
effect of the amendatory section insofar as it would expand
the previous power vested by the city charter was clarified
in these terms: "Appellants apparently have in mind
section 2553, paragraph (c) of the Revised Administrative
Code, which empowers the City of Baguio merely to impose
a license fee for the purpose of regulating the business that
may be established in the city. The power as thus conferred
is indeed limited, as it does not include the power to levy a
tax. But on July 15, 1948, Republic Act No. 329 was
enacted amending the charter of said city and adding to its
power to license the power to tax and to regulate. And it is
precisely having in view this amend

________________

2 Section 2553, paragraph (c), Revised Administrative Code.

3 91 Phil. 854, 856857 (1952).

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VOL. 25, OCTOBER 31, 1968 941

City of Baguio vs. De Leon

ment that Ordinance No. 99 was approved in order to

increase the revenues of the city. In our opinion, the
amendment above adverted to empowers the city council
not only to impose a license fee but also to levy a tax for
purposes of revenue, more so when in amending section
2553 (b), the phrase 'as provided by law' has been removed
by section 2 of Republic Act No. 329. The city council of
Baguio, therefore, has now the power to tax, to license and
to regulate provided that the subjects affected be one of
those included in the charter. In this sense, the ordinance
under consideration cannot be considered ultra vires
whether its purpose be to levy a tax or impose a license fee.
The terminology used is of no consequence,"
It would be an undue and unwarranted emasculation of
the above power thus granted if defendantappellant were
to be sustained in his contention that no such statutory
authority for the enactment of the challenged ordinance
could be discerned f rom the language used in the
amendatory act. That is about all that needs to be said in
upholding the lower court, considering that the City of
Baguio was not devoid of authority in enacting this
particular ordinance. As mentioned at the outset, however,
defendant appellant likewise alleged procedural missteps
and asserted that the challenged ordinance suffered from
certain constitutional infirmities. To such points raised by
him, we shall now turn.

1. Defendantappellant makes much of the alleged

lack of jurisdiction of the City Court of Baguio in
the suit for the collection of the real estate dealer's
fee from him in the amount of P300. He contended
 before the lower court, and it is his contention now,
that while the amount of P300 sought was within
the jurisdiction of the City Court of Baguio where
this action originated, since the principal issue was
the legality and constitutionality of the challenged
ordinance, it is not such City Court but the Court of
First Instance that has original jurisdiction.

There is here a misapprehension of the Judiciary Act. The

City Court has jurisdiction. Only recently, on September 7,
1968 to be exact, we rejected a4 contention similar in
character in Nemenzo v. Sabillano. The plaintiff in

_______________

4 L20977.

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942 SUPREME COURT REPORTS ANNOTATED

City of Baguio vs. De Leon

that case filed a claim for the payment of his salary before
the Justice of the Peace Court of Pagadian, Zamboanga del
Sur. The question of jurisdiction was raised the defendant
Mayor asserted that what was in issue was the
enforcement of the decision of the Commission of Civil
Service the Justice of the Peace Court was thus without
jurisdiction to try the case. The above plea was curtly
dismissed by us, as what was involved was "an ordinary
money claim" and therefore "within the original
jurisdiction of the Justice of the Peace Court where it was
filed, considering the amount involved." Such is likewise
the situation here. 5
Moreover, in City of Manila v. Bugsuk Lumber Co., a
suit to collect from a defendant this license fee
corresponding to the years 1951 and 1952 was filed with
the Municipal Court of Manila, in view of the amount
involved. The thought that the municipal court lacked
jurisdiction apparently was not even in the minds of the
parties and did not receive any consideration by this Court.
Evidently, the fear is entertained by defendant
appellant that whenever a constitutional question is raised,
it is the Court of First Instance that should have original
jurisdiction on the matter. It does not admit of doubt,
however, that what confers jurisdiction is the amount set
forth in the complaint. Here, the sum sought to be
recovered was clearly within the jurisdiction of the City
Court of Baguio.
Nor could it be plausibly maintained that the validity of
such ordinance being open to question as a def ense against
its enforcement from one adversely affected, the matter
should be elevated to the Court of First Instance. For the
City Court could6 rely on the presumption of the validity of
such ordinance, and the mere fact, however, that in the
answer to such a complaint a constitutional question was
raised did not suffice to oust the City Court of its
jurisdiction. The suit remains one for collection, the lack of
validity being only a defense to such an attempt at
recovery. Since the City Court is possessed of judicial
power and it is likewise axiomatic that the judicial power
em

_______________

5 101 Phil. 859 (1957).

6 U.S. v. Salaveria, 39 Phil. 102 (1918) and ErmitaMalate Hotel
Association v. Mayor of Manila, L24693, July 31, 1967.

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VOL. 25, OCTOBER 31, 1968 943

City of Baguio vs. De Leon

braces the ascertainment of facts and the application of the

law, the Constitution as the highest law superseding any
statute or ordinance in conflict therewith, it cannot be said
that a City Court is bereft of competence to proceed on the
matter. In the exercise of such delicate power, however, the
admonition of Cooley on inferior tribunals is well worth
remembering. Thus: "It must be evident to any one that the
power to declare a legislative enactment void is one which
the judge, conscious of the fallibility of the human
judgment, will shrink from exercising in any case where he
can conscientiously and with due regard7
to duty and official
oath decline the responsibility." While it remains
undoubted that such a power to pass on the validity of an
ordinance alleged to infringe certain constitutional rights of
a litigant exists, still it should be exercised with due care
and circumspection, considering not only the presumption
of validity but also the relatively modest rank of a city
court in the judicial hierarchy.

2. To repeat the challenged ordinance cannot be

considered ultra vires as there is more than ample
 statutory authority for the enactment thereof.
Nonetheless, its validity on constitutional grounds
is challenged because of the allegation that it
imposed double taxation, which is repugnant to the
due process clause, and that it violated the
requirement of uniformity. We do not view the
matter thus.

As 'to why double taxation is not violative of due process,

Justice Holmes made clear in this language: "The objection
to the taxation as double may be laid down on one side. x x
x The 14th Amendment [the due process clause] no more
forbids double taxation than it does doubling the amount of
a tax, short of confiscation or proceedings unconstitutional
on other grounds."8 With that decision rendered at a time
when American sovereignty in the Philippines was
recognized, it possesses more than just a persuasive effect.
To some, it delivered the coup de grace to the bogey of
double taxation as a constitutional bar to the

________________

7 Cooley on Constitutional Limitations, Vol. I, 8th ed. 332 (1927) 27).

8 Fort Smith Lumber Co. v. Arkansas, 251 US 523, 533 8 F (1920)

944

944 SUPREME COURT REPORTS ANNOTATED

City of Baguio vs. De Leon

exercise of the taxing power. It would seem though that in

the United States, as with us, its ghost, as noted by an
eminent critic, still
9
stalks the juridical stage. In a 1947
decision, however, we quoted with approval
10
this excerpt
from a leading American decision: "Where, as here,
Congress has clearly expressed its Intention, the statute
must be sustained even though double taxation results."
At any rate, it has been expressly affirmed by us that
such an "argument against double taxation may not be
invoked where one tax is imposed by the state and the
other is imposed by the city x x x, it being widely
recognized that there is nothing inherently obnoxious in
the requirement that license fees or taxes be exacted with
respect to the same occupation, calling or activity
11
by both
the state and the political subdivisions thereof."
The above would clearly indicate how lacking in merit is
this argument based on double taxation.
 Now, as to the claim that there was a violation of the
rule of uniformity established by the constitution.
According to the challenged ordinance, a real estate dealer
who leases property worth P50 000 or above must pay an
annual fee of P100. If the property is worth P10,000 but not
over P50,000, then he pays P50 and P24 if the value is less
than P10,000. On its face, therefore, the above ordinance
cannot be assailed as violative of the constitutional
requirement of uniformity In Philippine Trust Company v.
Yatco,12 Justice Laurel, speaking for the Court, stated: "A
tax is considered uniform when it operates with the same
force and effect in every place where the subject may be
found."
There was no occasion in that case to consider the
possible effect on such a constitutional requirement where
there is a classification. The
13
opportunity came in Eastern
Theatrical Co. v. Alfonso. Thus: "Equality and uniformity
in taxation means that all taxable articles or kinds

_______________

9 Wise & Co. v. Meer, 78 Phil. 655.

10 Helmich v. Hellman, 276 US 233 (1928).
11 Punsalan v. Municipal Board of Manila, 95 Phil. 46, 43 (1954).
12 69 Phil. 420 (1940).
13 83 Phil. 862, 862 (1949).

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VOL. 25, OCTOBER 31, 1968 945

City of Baguio vs. De Leon

of property of the same class shall be taxed at the same

rate. The taxing power has the authority to make
reasonable and natural classifications for purposes of
taxation x x x." About two years later, Justice Tuason,
speaking for this Court14
in Manila Race Horses Trainers
Assn. v. De la Fuente incorporated the above excerpt in
his opinion and continued: "Taking everything into
account, the differentiation against which the plaintiffs
complain conforms to the practical dictates of justice and
equity and is not discriminatory within the meaning of the
Constitution."
To satisfy this requirement then, all that 15is needed as
held in another case decided two years later, is that the
statute or ordinance in question "applies equally to all
persons, firms and corporations placed in similar
situation." This Court is on
16
record as accepting the view in
a leading American case that "inequalities which result
 16
a leading American case that "inequalities which result
from a singling out of one particular class for 17 taxation or
exemption infringe no constitutional limitation."
It is thus apparent from the above that in much the
same way that the plea of double taxation is unavailing,
the allegation that there was a violation of the principle of
uniformity is inherently lacking in persuasiveness. There is
no need to pass upon the other allegations to assail the
validity of the above ordinance, it being maintained that
the license fees therein imposed "is excessive, unreasonable
and oppressive" and that there is a failure to observe the
mandate of equal protection. A reading of the ordinance
will readily disclose their inherent lack of plausibility.

3. That would dispose of all the errors assigned,

except the last two, which would predicate a
grievance on the complaint having been started by
the City Treasurer rather than the City Mayor of
Baguio. These alleged errors, as was the case with
the others assigned, lack merit.

In much the same way that an act of a department head of

the national government, performed within the limits

_______________

14 88 Phil. 60, 65 (1951).

15 Uy Matias v. City of Cebu, 93 Phil. 300 (1953).
16 Carmichael v. Southern Coal and Coke Co., 301 US 495 (1937).
17 Lutz v. Araneta, 98 Phil. 148, 153 (1955).

946

946 SUPREME COURT REPORTS ANNOTATED

City of Baguio vs. De Leon

of his authority, is presumptively18the act of the President

unless reprobated or disapproved, similarly the act of the
City Treasurer, whose position is roughly analogous, may
be assumed to carry the seal of approval of the City Mayor
unless repudiated or set aside. This should be the case
considering that such city official is called upon to see to it
that revenues due the City are collected. When
administrative steps are futile and unavailing, given the
stubbornness and obduracy of a taxpayer, convinced in
good faith that no tax was due, judicial remedy may be
resorted to by him, It would be a reflection on the state of
 the law if such fidelity to duty would be met by
condemnation rather than commendation.
So much for the analytical approach. The conclusion
thus reached has a reinforcement that comes to it from the
functional and pragmatic test. If a city treasurer has to
await the nod from the city mayor before a municipal
ordinance is enforced, then opportunity exists for
favoritism and undue discrimination to come into play.
Whatever valid reason may exist as to why one taxpayer is
to be accorded a treatment denied another, the suspicion is
unavoidable that such a manifestation of official favor
could have been induced by unnamed but not unknown
consideration. It would not be going too far to assert that
even defendantappellant would find no satisfaction in such
a sad state of affairs. The more desirable legal doctrine
therefore, on the assumption that a choice exists, is one
that would do away with such temptation on the part of
both taxpayer and public official alike.
WHEREFORE, the lower court decision of December 19,
1964, is hereby affirmed. Costs against defendant
appellant.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,

Sanchez, Castro, Angeles and Capistrano, JJ., concur.
Zaldivar, J., is on official leave.

Decision affirmed.

o0o

______________

18 Villena v. Sec, of the Interior, 67 Phil. 451 ( 1939 ).

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