197 SCRA 52

G.R. No. 91649 - May 14, 1991

Basco v. PAGCOR
Facts:

Atty. Humberto Basco, Edilberto Balce, Socrates Maranan, and Lorenzo Sanchez filed a petition
to annul the Philippine Amusement and Gaming Corporation (PAGCOR) Charter PD 1869 in
the belief that it is contrary to morals, public policy, public order, and it constitutes a waiver
of a right prejudicial to a third person with a right recognized by law. They also claimed that
it is unconstitutional because it is contrary to the declared national policy of the "new restored
democracy" and the people's will as expressed in the 1987 Constitution.

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;
Against public policy.
For the same reason stated in the immediately preceding 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;
Against morals.
It violates the equal protection clause of the constitution in that it legalizes PAGCORconducted gambling, while most other forms of gambling are outlawed, together with
prostitution, drug trafficking and other vices;
Against public order.
It violates the avowed trend of the Cory government away from monopolistic and crony
economy, and toward free enterprise and privatization.

Issues:

Whether or not Presidential Decree 1869 is unconstitutional.

Held:
No. The purpose of PD 1869 was to "regulate and centralize thru an appropriate institution all games of
chance authorized by existing franchise or permitted by law", and that it was a good source of revenue for
the Government that could support its plans and projects for the development and welfare of the country
and its citizens. It subjected gambling to be allowable but must be within the control and monitor of the
Government, and it minimizes, although not eradicates, the corruptions in gambling thus putting public
welfare into consideration. With that in mind, PD 1869 is therefore constitutional.
As for being exempted from taxes, that is because PAGCOR is a GOCC (Government Owned and
Controlled Corporation). The power of the City of Manila, a local government unit, was withdrawn by PD
771 and such power had been given to the National Government. Also, local government units do not
have power to tax GOCCs.
The principle of local autonomy doesnt mean that the City of Manila has authority or sovereignty over
Manila. The National Government still has power over it and the LGUs are merely given powers to
represent (but not to control) the city they are assigned to.