G.R. No. L-24756 October 31, 1968
CITY OF BAGUIO, plaintiff-appellee, vs. FORTUNATO DE LEON, defendant-appellant.

FACTS

The City of Baguio filed a complaint in the City Court of Baguio against Fortunato de Leon for his failure to pay a real estate dealer’s license fee totaling P300 for the period from the first quarter of 1958 to the fourth quarter of 1962, despite repeated demands. The fee was imposed under City Ordinance No. 218, as amended, which required an annual license fee from persons doing business in the city, with real estate dealers paying based on the value of their property. De Leon, engaged in renting out his property in Baguio, was classified as a real estate dealer with property worth over P10,000 but not exceeding P50,000, liable for a P50 annual fee. De Leon contested the suit, arguing the City Court lacked jurisdiction because the case involved the constitutionality of the ordinance, which should be heard by the Court of First Instance. He also challenged the ordinance as ultra vires, unconstitutional for imposing double taxation and violating uniformity, and argued the suit was improperly instituted by the City Treasurer without the Mayor’s consent. The lower court upheld the ordinance’s validity and found de Leon liable, prompting this appeal.

ISSUE

1. Whether the City Court of Baguio had jurisdiction over the collection suit.
2. Whether City Ordinance No. 218, as amended, is valid, being within the city’s legislative power and not constitutionally infirm.
3. Whether the suit was properly instituted by the City Treasurer without the Mayor’s consent.

RULING

1. Jurisdiction of the City Court: The City Court of Baguio had jurisdiction. The suit was for collection of a sum (P300) within its jurisdictional limit. The raising of a constitutional question as a defense does not oust the City Court of jurisdiction; it retains the power to apply the law, including the Constitution, though it should exercise this power with caution due to the presumption of ordinance validity and its position in the judicial hierarchy. This is supported by precedents like Nemenzo v. Sabillano and City of Manila v. Bugsuk Lumber Co.
2. Validity of the Ordinance:
– Statutory Authority: The ordinance is valid and within the city’s power under Republic Act No. 329 , which amended the Baguio City charter to empower it to fix license fees and regulate businesses. This expanded power includes the authority to levy a tax for revenue, as clarified in Medina v. City of Baguio.
– Double Taxation: The ordinance does not violate due process on grounds of double taxation. Double taxation is not inherently unconstitutional unless it amounts to confiscation. The Supreme Court has held that license fees may be exacted by both the state and its political subdivisions for the same activity.
– Uniformity: The ordinance does not violate the constitutional requirement of uniformity. It classifies real estate dealers based on property value (P50,000 or above: P100; P10,000 to P50,000: P50; less than P10,000: P24), which is a reasonable and natural classification based on substantial distinctions. Uniformity means taxing all properties of the same class at the same rate, as established in Eastern Theatrical Co. v. Alfonso and Commissioner of Internal Revenue v. Lednicky.
3. Proper Institution of the Suit: The suit was properly instituted by the City Treasurer. The act of the City Treasurer, performed within his authority to collect revenues, is presumptively approved by the City Mayor unless repudiated. This prevents favoritism and ensures efficient tax collection, analogous to the principle that acts of national department heads are presumptively the President’s.
The lower court decision is affirmed, with costs against defendant-appellant.