Basco v PAGCOR

FACTS:Petitioners seek to annul the

PAGCOR charter PD 1869 for being
allegedly contrary to morals, public
policy and order, monopolistic & tends
toward crony economy, waiving the
Manila City governments right to impose
taxes & license fees, and violating the
equal protection clause, local autonomy
and other state policies in the
Constitution.
ISSUES:Whether PD 1869 is valid.
HELD:Every law has in its favor the
presumption of constitutionality. For
a law to be nullified, it must be shown
that there is a clear & unequivocal
breach of the Constitution. The grounds
for nullity must be clear and beyond
reasonable doubt. The question of
whether PD 1869 is a wise legislation is
up for Congress to determine.
The power of LGUs to regulate
gambling through the grant of
franchises, licenses or permits was
withdrawn by PD 771, and is now
vested exclusively on the National
Government. Necessarily, the power to
demand/collect license fees is no longer
vested in the City of Manila.
LGUs have no power to tax
Government instrumentalities.
PAGCOR, being a GOCC, is therefore
exempt from local taxes. The National
Government is supreme over local
governments. As such, mere creatures
of the State cannot defeat national
policies using the power to tax as a tool
for regulation. The power to tax
cannot be allowed to defeat an
instrumentality of the very entity
which has the inherent power to

wield it. The power of LGUs to impose

taxes & fees is always subject to
limitation provided by Congress.
The principle of local autonomy does
not make LGUs sovereign within a
state, it simply means
decentralization.
A law doesnt have to operate in equal
force on all persons/things. The equal
protection clause doesnt preclude
classification of individuals who may be
accorded different treatment under the
law as long as the classification is not
unreasonable/arbitrary. The mere fact
that some gambling activities are
legalized under certain conditions, while
others are prohibited, does not render
the applicable laws unconstitutional.

Basco 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 GamingCorporation
(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
local autonomy.

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. Note: other issues were
raised in the case, such as if whether
the petitioners have standing.

Lino v Pano

FACTS:On December 29, 1995,

respondent Tony Calvento was appointed
agent by the Philippine Charity
Sweepstakes Office (PCSO) to install
Terminal OM 20 for the operation of
lotto. He asked Mayor Calixto Cataquiz,
Mayor of San Pedro, Laguna, for a
mayors permit to open the lotto outlet.
This was denied by Mayor Cataquiz in a
letter dated February 19, 1996. The
ground for said denial was an ordinance
passed by the Sangguniang
Panlalawigan of Laguna entitled
Kapasiyahan Blg. 508, T. 1995which was
issued on September 18, 1995.As a
result of this resolution of denial,
respondent Calvento filed a complaint
for declaratory relief with prayer for
preliminary injunction and temporary
restraining order. In the said complaint,
respondent Calvento asked the Regional
Trial Court of San Pedro Laguna, Branch
93, for the following reliefs: (1) a
preliminary injunction or temporary
restraining order, ordering the
defendants to refrain from implementing
or enforcing Kapasiyahan Blg. 508, T.
1995; (2) an order requiring Hon.
Municipal Mayor Calixto R. Cataquiz to
issue a business permit for the operation
of a lotto outlet; and (3) an order
annulling or declaring as invalid

Kapasiyahan Blg. 508, T. 1995.On

February 10, 1997, the respondent
judge, Francisco Dizon Pao,
promulgated his decision enjoining the
petitioners from implementing or
enforcing resolution or Kapasiyahan Blg.
508, T. 1995.

ISSUE: WON Kapasiyahan Blg. 508, T.

1995 is valid

HELD: As a policy statement expressing

the local governments objection to the
lotto, such resolution is valid. This is
part of the local governments autonomy
to air its views which may be contrary to
that of the national governments.
However, this freedom to exercise
contrary views does not mean that local
governments may actually enact
ordinances that go against laws duly
enacted by Congress. Given this
premise, the assailed resolution in this
case could not and should not be
interpreted as a measure or ordinance
prohibiting the operation of lotto.n our
system of government, the power of
local government units to legislate and
enact ordinances and resolutions is
merely a delegated power coming from
Congress. As held in Tatel vs. Virac,
ordinances should not contravene an
existing statute enacted by Congress.
The reasons for this is obvious, as
elucidated in Magtajas v. Pryce
Properties Corp.

Lina v. Pao
Facts:
Private respondent Tony Calvento, was
appointed agent by PCSO to install a
terminalfor the operation of lotto,
applied for a mayors permit to operate

a lotto outlet in San Pedro,Laguna. It

was denied on the ground that an
ordinance entitled Kapasiyahan Blg. 508,
Taon1995 of the Sangguniang
Panlalawigan of Laguna prohibited
gambling in the province,including the
operation of lotto. With the denial of his
application, private respondent filedan
action for declaratory relief with prayer
for preliminary injunction and temporary
restraining order. The trial court
rendered judgment in favor of private
respondent enjoinin gpetitioners from
implementing or enforcing the subject
resolution.
Issue:
whether Kapasiyahan Blg. 508, T. 1995
of the Sangguniang Panlalawigan of
Laguna and the denial of a mayors
permit based thereon are valid
Held:
No. The questioned ordinance merely
states the objection of the council to
the said game. It is but a mere policy
statement on the part of the local
council, which is not self-executing. Nor
could it serve as a valid ground to
prohibit the operation of the lotto
system in the province of Laguna. As a
policy statement expressing the local
governments objection to the lotto,
such resolution is valid. This is part of
the local governmentsautonomy to air
its views which may be contrary to that
of the national government. However,
this freedom to exercise contrary views
does not mean that local governments
may actually enact ordinances that go
against laws duly enacted by Congress.
Given thispremise, the assailed
resolution in this case could not and
should not be interpreted as ameasure
or ordinance prohibiting the operation of
lotto. Moreover, ordinances should not
contravene statutes as municipal
governments are merely agents of the

national government. The local councils

exercise only delegated legislative
powers which have been conferred on
them by Congress. The delegate cannot
be superior to the principal or exercise
powers higher than those of the latter.
This being thecase, these councils, as
delegates, cannot be superior to the
principal or exercise powers higher than
those of the latter. The question of
whether gambling should be permitted is
for Congress to determine, taking into
account national and local interests.
Since Congress has allowed the PCSO to
operate lotteries which PCSO seeks to
conduct in Laguna, pursuant toits
legislative grant of authority, the
province's Sangguniang Panlalawigan
cannot nullify the exercise of said
authority by preventing something
already allowed by Congress.
Limbona vs Mangelin
G.R. No. 80391, February 28, 1989
Sarmiento, J.
Facts:
Sultan Alimbusar Limbona was
appointed as a member of the
Sangguniang
Pampook,
Regional
Autonomous Government, Region XII,
representing Lanao del Sur. He was then
elected
speaker
of
the
regional
legislative assembly of central Mindanao,
composed of 18 members. Later,
Congressman Datu Guimid Matalam,
Chairman of the Committee on Muslim
Affairs of the House of Representatives,
invited Mr. Xavier Razul, Pampook
Speaker of Region XI, Zamboanga City
and the petitioner in his capacity as
Speaker of the Assembly, Region XII, in
a conference. Petitioner then ordered
Acting Secretary Alimbuyao to inform
the assemblymen that there will be no
session on said date as petitioner and
Razul
are
attending
the
house
committee hearing.

The Assembly held session in

defiance of petitioner's advice. After
declaring the presence of a quorum, the
Speaker Pro-Tempore was authorized to
preside in the session. On Motion to
declare the seat of the Speaker vacant,
all Assemblymen in attendance voted in
the affirmative, hence, the chair
declared said seat of the Speaker
vacant.
The petitioner then went to court
praying that judgment be rendered
declaring the proceedings held by
respondents during the session as null
and void and holding the election of
petitioner as Speaker of said Legislative
Assembly or Batasan Pampook, Region
XII held on March 12, 1987 valid and
subsisting, and(e) Making the injunction
permanent.
Issue:
WON
the
expulsion
of
the
petitioner (pending litigation) has made
the case moot and academic.
Held:
The case has not been rendered
moot and academic by reason simply of
the expulsion resolution so issued. For, if
the petitioner's expulsion was done
purposely to make this petition moot
and academic, and to preempt the
Court, it will not make it academic.
On the ground of the immutable
principle of due process alone, we hold
that the expulsion in question is of no
force and effect. In the first place, there
is no showing that the Sanggunian had
conducted an investigation, and whether
or not the petitioner had been heard in
his defense, assuming that there was an
investigation, or otherwise given the
opportunity to do so. What appears in
the records is an admission by the
Assembly that "since November, 1987

up to this writing, the petitioner has not

set foot at the Sangguniang Pampook."
To be sure, respondents aver that "[t]he
Assemblymen, in a conciliatory gesture,
wanted him to come to Cotabato City,"
but that was "so that their differences
could be threshed out and settled."
Certainly, that avowed wanting or desire
to thresh out and settle, no matter how
conciliatory it may be cannot be a
substitute for the notice and hearing
contemplated by law.
In the second place, the resolution
appears strongly to be a bare act of
vendetta by the other Assemblymen
against the petitioner arising from what
the former perceive to be abduracy on
the part of the latter. Indeed, it (the
resolution) speaks of "a case [having
been filed] [by the petitioner] before the
Supreme Court . . . on question which
should have been resolved within the
confines of the Assembly ---- an act
which
some
members
claimed
unnecessarily and unduly assails their
integrity and character as representative
of the people," an act that cannot
possibly justify expulsion. Access to
judicial remedies is guaranteed by the
Constitution, and, unless the recourse
amounts to malicious prosecution, no
one may be punished for seeking
redress in the courts.
We therefore order reinstatement,
with the caution that should the past
acts of the petitioner indeed warrant his
removal, the Assembly is enjoined,
should it still be so minded, to
commence proper proceedings therefor
in line with the most elementary
requirements of due process. And while
it is within the discretion of the
members of the Sanggunian to punish
their erring colleagues, their acts are
nonetheless subject to the moderating
hand of this Court in the event that such
discretion is exercised with grave abuse.

Issue:
What is the extent of selfgovernment
given
to
the
two
autonomous governments of Region IX
and XII?
Held:
The autonomous governments of
Mindanao were organized in Regions IX
and XII by Presidential Decree No. 1618.
Among other things, the Decree
established "internal autonomy" in the
two regions "[w]ithin the framework of
the national sovereignty and territorial
integrity of the Republic of the
Philippines and its Constitution," "with
legislative and executive machinery to
exercise
the
powers
and
responsibilities"' specified therein.
It
requires
the
autonomous
regional governments to "undertake all
internal administrative matters for the
respective regions," except to "act on
matters which are within the jurisdiction
and
competence
of
the
National
Government," "which include, but are
not limited to, the following:
(1) National defense and security;
(2) Foreign relations;
(3) Foreign trade;
(4)
Currency, monetary affairs,
foreign exchange, banking and quasibanking, and external borrowing,
(5)
Disposition, exploration,
development, exploitation or utilization
of all natural resources;
(6) Air and sea transport;
(7)
Postal matters
and
telecommunications;
(8) Customs and quarantine;
(9) Immigration and deportation;
(10) Citizenship and naturalization;
(11) National economic, social and
educational planning; and
(12) General auditing."

In
relation
to
the
central
government, it provides that "[t]he
President shall have the power of
general supervision and control over the
Autonomous Regions.
Now,
autonomy
is
either
decentralization of administration or
decentralization of power. There is
decentralization of administration when
the
central
government
delegates
administrative
powers
to
political
subdivisions in order to broaden the
base of government power and in the
process to make local governments
"more responsive and accountable," and
"ensure their fullest development as
self-reliant communities and make them
more effective partners in the pursuit of
national
development
and
social
progress." At the same time, it relieves
the central government of the burden of
managing local affairs and enables it to
concentrate on national concerns. The
President exercises "general supervision"
over them, but only to "ensure that local
affairs are administered according to
law." He has no control over their acts in
the sense that he can substitute their
judgments with his own.
Decentralization of power, on the
other hand, involves an abdication of
political power in the favor of local
governments units declared to be
autonomous.
In
that
case,
the
autonomous government is free to chart
its own destiny and shape its future with
minimum intervention from central
authorities. According to a constitutional
author,
decentralization
of
power
amounts to "self-immolation," since in
that event, the autonomous government
becomes accountable not to the central
authorities but to its constituency.
But the question of whether or not
the grant of autonomy to Muslim
Mindanao under the 1987 Constitution

involves, truly, an effort to decentralize

power rather than mere administration
is a question foreign to this petition,
since what is involved herein is a local
government unit constituted prior to the
ratification of the present Constitution.
Hence, the Court will not resolve that
controversy now, in this case, since no
controversy in fact exists. We will
resolve it at the proper time and in the
proper
case.
Under
the
1987
Constitution, local government units
enjoy autonomy in these two senses
An autonomous government that
enjoys autonomy of the latter category
is subject alone to the decree of the
organic act creating it and accepted
principles on the effects and limits of
"autonomy." On the other hand, an
autonomous government of the former
class is, as we noted, under the
supervision of the national government
acting through the President (and the
Department of Local Government). If the
Sangguniang Pampook (of Region XII),
then, is autonomous in the latter sense,
its acts are, debatably, beyond the
domain of this Court in perhaps the
same way that the internal acts, say, of
the Congress of the Philippines are
beyond our jurisdiction. But if it is
autonomous in the former category only,
it
comes
unarguably
under
our
jurisdiction.
An examination of the very
Presidential
Decree
creating
the
autonomous governments of Mindanao
persuades us that they were never
meant to exercise autonomy in the
second sense, that is, in which the
central government commits an act of
self-immolation. Presidential Decree No.
1618, in the first place, mandates that
"[t]he President shall have the power of
general supervision and control over
Autonomous Regions." 33 the second
place, the Sangguniang Pampook, their

legislative arm, is made to discharge

chiefly administrative services.
Hence, we assume jurisdiction.
And if we can make an inquiry in the
validity of the expulsion in question,
with more reason can we review the
petitioner's removal as Speaker.