BASCO v. PAGCOR, G.R. No.

91649

G.R. No. 91649 May 14, 1991

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES

MARANAN AND LORENZO SANCHEZ,petitioners, v. PHILIPPINE AMUSEMENTS
AND GAMING CORPORATION (PAGCOR), respondent.

Re: Principle of Local Autonomy

FACTS:
The PH Amusement and Gaming Corp. was created by PD 1067-A and granted a
franchise under PD 1067-B. Subsequently, under PD 1869, the Government enabled it to
regulate and centralize all games of chance authorized by existing franchise or permitted
by law, under declared policy. 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 of the following
issues:

ISSUES:
(1) WON it waived the Manila City gov't's right to impose taxes and license fees, which
is recognized by law.

(2) WON it has intruded into the LGUs' right to impose local taxes and license fees, and
thus contrary to the principle of local autonomy enshrined in the Constitution.

(3) WON it violates the equal protection clause as it allows some gambling acts but also
prohibits other gaming acts.

(4) WON it violates the Cory gov't's policy of being away from monopolistic and crony
economy, and toward free enterprise and privatization.

HELD:
(1) No. The fact that PAGCOR, under its charter, is exempt from paying tax of any kind
is not violative of the principle of local autonomy. LGUs' have no inherent right to
impose taxes. LGUs' power to tax must always yield to a legislative act which is superior
having been passed by the state itself which has the inherent power to tax. The charter of
LGUs is subject to control by Congress as they are mere creatures of Congress. Congress,
therefore, has the power of control over LGUs. And if Congress can grant the City of
Manila the power to tax certain matters, it can also provide for exemptions or even take
back the power.

(2) No. LGUs' right to impose license fees on "gambling", has long been revoked.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"franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested
exclusively on the National Government. Furthermore, LGUs' have no power to tax
instrumentalities of the gov't such as PAGCOR which exercises governmental functions
of regulating gambling activities.

(3) No. The clause does not preclude classification of individuals who may be accorded
different treatment under the law as long as the classification is not unreasonable or
arbitrary. A law does not have to operate in equal force on all persons or things to be
conformable to Article III, Section 1 of the Constitution. The Constitution does not
require situations which are different in fact or opinion to be treated in law as though they
were the same.

(4) No. The judiciary does not settle policy issues. The Court can only declare what the
law is and not what the law should be. Under our system of government, policy issues are
within the domain of the political branches of government and of the people themselves
as the repository of all state power. On the issue of monopoly, the same is not necessarily
prohibited by the Constitution. The state must still decide whether public interest
demands that monopolies be "regulated" or prohibited. Again, this is a matter of policy
for the Legislature to decide. The judiciary can only intervene when there are violations
of the statutes passed by Congress regulating or prohibiting monopolies.