G.R. No. 91649 May 14, 1991Basco vs. PAGCOR H.B.

Basco & Associates for petitioners Valmonte Law Offices collaborating counsel for petitionersAguirre, Laborte and Capule for respondent PAGCOR Facts: The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A dated January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1, 1977"to establish, operate and maintain gambling casinos on land or water within the territorial jurisdictionof the Philippines." Petitioners filed an instant petition seeking to annul the Philippine Amusement and Gam ingCorporation (PAGCOR) Charter PD 1869, because it is allegedly contrary to morals, public policyand order Petitioners claim that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxesand legal fees; that the exemption clause in P.D. 1869 is in violation of the principle of localautonomy.

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Section 13 par. (2) of P.D. 1869 exempts PAGCOR, as the franchise holder from paying any"tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local."Issue: Does the local Government of Manila have the power to impose taxes on PAGCOR?Held No, the court rules that The City government of Manila has no power to impose taxes on PAGCOR.Reason:

The principle of Local autonomy does not make local governments sovereign within the state; the principle of local autonomy within the constitution simply means decentralization. It cannot be anImperium in imperio it can only act intra sovereign, or as an arm of the National Government. PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental,which places it in the category of an agency or instrumentality of the Government. Being aninstrumentality of the Government, PAGCOR should be and actually is exempt from local taxes. The power of local government to "impose taxes and fees" is always subject to "limitations" whichCongress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception tothe exercise of the power of local governments to impose taxes and fees. It cannot therefore beviolative but rather is consistent with the principle of local autonomy.