G.R. No. 33750 ; February 18, 1931
YEO LOBY and YEO SENG, partners doing business under the firm name of “Heo Cheo Tong y Co.,” ET AL., plaintiffs-appellees, vs. THE MUNICIPALITY OF ZAMBOANGA and CARLOS DOMINGUEZ, Acting Municipal Treasurer of Zamboanga, defendants-appellants.

FACTS

The plaintiffs, two Chinese firms operating pawnshops in Zamboanga, paid the annual license tax for pawnbrokers under a municipal ordinance. A new ordinance (No. 210) effective January 1, 1928, imposed an annual tax of P1,800 on pawnbrokers exclusively making loans and a higher tax of P2,400 on those also engaged in selling jewelry or other effects. Both plaintiffs, who sold jewelry in addition to pawnbroking, paid the basic P1,800 but paid the additional P600 under protest, totaling P1,440 with surcharges. They sued to recover this amount, arguing the additional tax was invalid.

ISSUE

Whether the municipal ordinance imposing an additional license tax on pawnbrokers who also sell jewelry is valid.

RULING

No. The additional tax is invalid. While municipal councils are authorized under the Administrative Code to impose license taxes on pawnbrokers, they are not authorized to tax jewelers. The classification imposing a higher tax on pawnbrokers who sell jewelry is unreasonable and violates uniformity in taxation, as it taxes some persons selling jewelry (i.e., pawnbrokers) while others (ordinary jewelers) are not subject to such a license tax. The additional tax cannot be justified as a tax on dealers in second-hand merchandise, as the plaintiffs’ sales were not limited to second-hand jewelry, and the term “dealer in second-hand merchandise” typically refers to sellers of used clothing and household effects, not jewelry. The judgment of the trial court ordering the refund of the amount paid under protest is affirmed.

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