BASCO VS PHILIPPINE AMUSEMENTS AND GAMING CORPORATION

197 SCRA 52 [GR NO. 91649 MAY 14, 1991]

FACTS:
A TV ad proudly announces: “The New PAGCOR – Responding Through
Responsible Gaming.” But the petitioners think otherwise, that is why, they filed
the instant petition seeking to annul the PAGCOR charter – PD 1869, because it
is allegedly contrary to morals, public policy and order, and because –
a) It constitutes a waiver of a right prejudicial to a third person with a right
recognized by law. It waived the Manila city government’s right to impose
taxes and license fees, which is recognized by law;
b) For the same reason stated in the immediately preceeding paragraph, the
law has intruded into the local government’s right to impose local taxes
and license fees. This, in contravention of the constitutionally enshrined
principle of local autonomy;
c) It violates the equal protection clause of the constitution in that it legalizes
PAGCOR – conducted gambling, while most other forms of gambling are
outlawed, together with prostitution, drug trafficking and other vices;
d) It violates the avowed trend of the Cory government away from the
monopolistic and crony economy, and toward free enterprise and
privatization.
ISSUE:
Whether or not the city of Manila may levy taxes on PAGCOR.
HELD:
No. The city of Manila, being a mere municipal corporation has no inherent right
to impose taxes. Thus, the charter or statute must plainly show an intent to
confer that power or the municipality cannot assume it. Its power to tax therefore
must always yield to a legislative act which is superior having been passed upon
by the state itself which has the inherent power to tax.
The city of Manila’s power to impose license fees on gambling has long been
revoked. As early as 1975, the power of local governments to regulate gambling
thru the grant of “franchise, licenses or permits” was withdrawn by PD no. 771
and was vested exclusively on the national government.
Therefore, only the national government has the power to issue “license or
permits” for the operation of gambling. Necessarily the power to demand or
collect license fees which is a consequence of the issuance of “licenses or
permits” is no longer vested in the City of Manila.
Local governments has no power to tax instrumentalities of the National
Government. PAGCOR is a government owned or controlled corporation with an
original charter, PD 1869. All of its shares of stocks are owned by the national
government.
The power of the local government to “impose taxes and fees” is always subject
to “limitations” which congress may provide by law. Since PD 1869 remains an
operative law until amended, repealed or revoked, its exemption clause remains
as an exception to the exercise of the power of local governments to impose taxes
and fees. It cannot therefore be violative but rather is consistent with the
principle of local autonomy.
Besides, the principle of local autonomy under the 1987 constitution simply
means “decentralization.” It does not make local governments sovereign within
the state or an “imperium in imperio.”
What is settled is that the matter of regulating; taxing or otherwise dealing with
gambling in a state concern and hence, it is the sole prerogative of the state to
retain it or delegate it to local governments.
Nestle Philippines, Inc. v. CA
GR No. 134114, 6 July 2001

FACTS:
Petitioner Nestle Philippines, Inc. transacted sixteen separate importations of
milk and milk products from different countries between the period of July and
November 1984. It paid the corresponding customs duties and advance sales
taxes to the Collector of Customs of Manila for each transaction based on the
published Home Consumption Value (HCV) as indicated in the Bureau of
Customs Revision Orders, but it seasonably filed the corresponding protests
before the said Collector of Customs. In the said protests, petitioner claimed for
the refund of the alleged overpaid import duties and advance sales taxes. With
regards to the advance sales taxes, the Court of Tax Appeals eventually ruled in
favor of the petitioner. However, the Collector of Customs failed to render a
decision on the sixteen protest cases for almost six years for the alleged overpaid
customs duties. In order to prevent the claims from becoming stale on the ground
of prescription, petitioner immediately filed a petition for review with the Court
of Tax Appeals (CTA). The CTA dismissed the said petition for want of
jurisdiction. The issue was raised to the Court of Appeals by way of petition for
review, but it was also dismissed for failure to exhaust administrative remedies.
ISSUES:

Whether or not the petitioner’s claims are governed by the rule on quasi-
contracts or solutio indebiti which prescribes in six (6) years under Article 1145
of the New Civil Code.

RULING W/ DOCTRINE:

The Supreme Court ruled that the rule on quasi-contracts or solution indebiti is
not applicable in this case. In order for the rule on solution indebiti to apply, it
is an essential condition that petitioner must first show that its payment of the
customs duties was in excess of what was required by the law at the time when
the subject sixteen importations of milk and milk products were made. Unless
shown otherwise, the disputable presumption of regularity of performance of
duty lies in favor of the Collector of Customs.

In the present case, there is no factual showing that the collection of the alleged
overpaid customs duties was more than what is required of the petitioner when
it made the aforesaid separate importations. There is no factual finding yet by
the government agency concerned that petitioner is indeed entitled to its claim
of overpayment and, if true, for how much it is entitled. It bears stress that in
determining whether or not petitioner is entitled to refund of alleged overpayment
of customs duties, it is necessary to determine exactly how much the
Government is entitled to collect as customs duties on the importations. Thus,
it would only be just and fair that the petitioner-taxpayer and the Government
alike be given equal opportunities to avail of the remedies under the law to
contest or defeat each other's claim and to determine all matters of dispute
between them in one single case. If the State expects its taxpayers to observe
fairness and honesty in paying their taxes, so must it apply the same standard
against itself in refunding excess payments, if truly proven, of such taxes.
Indeed, the State must lead by its own example of honor, dignity and
uprightness.

Thus, the remand of this case to the CTA is warranted for the proper verification
and determination of the factual basis and merits of the petition and in order
that the ends of substantial justice and fair play may be subserved. In the light
of Sections 2308 and 2309 of the Tariff and Customs Code, it appeared that in
all cases subject to protest, the claim for refund of customs duties may be
foreclosed only when the interested party claiming refund fails to file a written
protest before the Collector of Customs. Accordingly, once a written protest is
seasonably filed with the Collector of Customs the failure or inaction of the latter
to promptly perform his mandated duty under the Tariff and Customs Code
should not be allowed to prejudice the right of the party adversely affected
thereby. Technicalities and legalisms, however exalted, should not be misused
by the government to keep money not belonging to it, if any is proven, and
thereby enrich itself at the expense of the taxpayers.