Basco v.

PAGCOR
GR No. 91649, 14 May 1991
FACTS:
On July 11, 1983, PAGCOR was created under Presidential Decree 1869, pursuant
to the policy of the government, to regulate and centralize through an appropriate
institution all games of chance authorized by existing franchise or permitted by
law. This was subsequently proven to be beneficial not just to the government but
also to the society in general. It is a reliable source of much needed revenue for the
cash-strapped Government.
Petitioners filed an instant petition seeking to annul the PAGCOR because it
is allegedly contrary to morals, public policy and public order, among others.

ISSUE:
Whether or not PD 1869 is unconstitutional because it constitutes a waiver
of the right of the City of Manila to improve taxes and legal fees; and that the
exemption clause in PD 1869 is violative of constitutional principle of Local
Autonomy.

(Note: There are other issues raised in this case. I only emphasized what is to be
discussed in our class local autonomy.)
RULING:
No. The City of Manila, being a mere Municipal Corporation has no
inherent right to impose taxes. Its charter was created by Congress, therefore
subject to its control. Also, local governments have no power to tax
instrumentalities of the National Government.

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.

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an "operative" law until "amended, repealed or revoked" (Sec. 3, Art.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.