Basco vs. PAGCOR (G.R. No. 91649) - Digest
Facts:
Petitioner is seeking to annul the Philippine Amusement and Gaming
Corporation (PAGCOR) Charter -- PD 1869, because it is allegedly
contrary to morals, public policy and order, and because it constitutes
a waiver of a right prejudicial to a third person with a right recognized
by law. It waived the Manila Cit governments right to impose taxes and
license fees, which is recognized by law. For the same reason, the law
has intruded into the local governments right to impose local taxes and
license fees. This is in contravention of the constitutionally enshrined
principle of local autonomy.
Issue:
Whether or not Presidential Decree No. 1869 is valid.
Ruling:
1. The City of Manila, being a mere Municipal corporation has no
inherent right to impose taxes. Their charter or statute must plainly
show an intent to confer that power, otherwise 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 Charter of Manila is subject to control by Congress. It should be
stressed that municipal corporations are mere creatures of Congress,
which has the power to create and abolish municipal corporations
due to its general legislative powers. Congress, therefore, has the
power of control over the Local governments. 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. The City of Manilas power to impose license fees on gambling, has
long been revoked by P.D. No. 771 and vested exclusively on the
National Government. Therefore, only the National Government has
the power to issue license or permits for the operation of gambling.
3. Local governments have no power to tax instrumentalities of the
National Government. PAGCOR is government owned or controlled
corporation with an original charter, P.D. No. 1869. All of its shares of
stocks are owned by 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 an instrumentality of the
Government, PAGCOR should be and actually is exempt from local
taxes. Otherwise, its operation might be burdened, impeded or
subjected to control by a mere Local Government.
4. Petitioners also argue that the Local Autonomy Clause of the
Constitution will be violated by P.D. No. 1869.
Article 10, Section 5 of the 1987 Constitution:
Each local government unit shall have the power to create its own
source of revenue and to levy taxes, fees, and other charges subject to
such guidelines and limitation as the congress may provide,
consistent with the basic policy on local autonomy. Such taxes, fees
and charges shall accrue exclusively to the local government.
SC said this is a pointless argument. The power of the local
government to impose taxes and fees is always subject to
limitations which Congress may provide by law. Besides, the principle
of local autonomy under the 1987 Constitution simply means
decentralization. It does not make local governments sovereign within
the state.
Wherefore, the petition is DISMISSED.
FACTS:
In 1977, the Philippine Amusements and Gaming Corporation
(PAGCOR) was created by Presidential Decree 1067-A. PD 1067-B
meanwhile granted PAGCOR the power to establish, operate and
maintain gambling casinos on land or water within the territorial
jurisdiction of the Philippines. PAGCORs operation was a success
hence in 1978, PD 1399 was passed which expanded PAGCORs
power. In 1983, PAGCORs charter was updated through PD 1869.
PAGCORs charter provides that PAGCOR shall regulate and
centralize all games of chance authorized by existing franchise or
permitted by law. Section 1 of PD 1869 provides:
Section 1. Declaration of Policy. It is hereby declared to be the
policy of the State to centralize and integrate all games of chance not
heretofore authorized by existing franchises or permitted by law.
Atty. Humberto Basco and several other lawyers assailed the validity of
the law creating PAGCOR. They claim that PD 1869 is unconstitutional
because a) it violates the equal protection clause and b) it violates the
local autonomy clause of the constitution.
Basco et al argued that PD 1869 violates the equal protection clause
because it legalizes PAGCOR-conducted gambling, while most other
forms of gambling are outlawed, together with prostitution, drug
trafficking and other vices.
Anent the issue of local autonomy, Basco et al contend that P.D. 1869
forced cities like Manila to waive its right to impose taxes and legal
fees as far as PAGCOR is concerned; that Section 13 par. (2) of P.D.
1869 which 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 is
violative of the local autonomy principle.
ISSUE:
1. Whether or not PD 1869 violates the equal protection clause.
2. Whether or not PD 1869 violates the local autonomy clause.
HELD:
1. No. Just how PD 1869 in legalizing gambling conducted by
PAGCOR is violative of the equal protection is not clearly explained in
Bascos petition. The mere fact that some gambling activities like
cockfighting (PD 449) horse racing (RA 306 as amended by RA 983),
sweepstakes, lotteries and races (RA 1169 as amended by BP 42) are
legalized under certain conditions, while others are prohibited, does
not render the applicable laws, PD. 1869 for one, unconstitutional.
Bascos posture ignores the well-accepted meaning of the clause
equal protection of the laws. 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, Sec 1 of the Constitution. The
equal protection clause does not prohibit the Legislature from
establishing classes of individuals or objects upon which different rules
shall operate. The Constitution does not require situations which are
different in fact or opinion to be treated in law as though they were the
same.
2. No. Section 5, Article 10 of the 1987 Constitution provides:
Each local government unit shall have the power to create its own
source of revenue and to levy taxes, fees, and other charges subject to
such guidelines and limitation as the congress may provide, consistent
with the basic policy on local autonomy. Such taxes, fees and charges
shall accrue exclusively to the local government.
A close reading of the above provision does not violate local autonomy
(particularly on taxing powers) as it was clearly stated that the taxing
power of LGUs are subject to such guidelines and limitation as
Congress may provide.
Further, the City of Manila, being a mere Municipal corporation has no
inherent right to impose taxes. The Charter of the City of Manila is
subject to control by Congress. It should be stressed that municipal
corporations are mere creatures of Congress which has the power to
create and abolish municipal corporations due to its general
legislative powers. Congress, therefore, has the power of control over
Local governments. 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.
Further still, local governments have no power to tax instrumentalities
of the National Government. PAGCOR is a government owned or
1
controlled corporation with an original charter, PD 1869. All of its
shares of stocks are owned by the National Government. Otherwise,
its operation might be burdened, impeded or subjected to control by a
mere Local government.
This doctrine emanates from the supremacy of the National
Government over local governments.
HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF
LAGUNA, and HON.CALIXTO CATAQUIZ,
petitioners, vs
. HON. FRANCISCO DIZON PAO and TONYCALVENTO,
respondents.
G.R. No. 129093
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
Villegas vs Hiu Chiong Tsai Pao Ho (1978)
February 15, 2013 markerwins Tax Law
Facts: The Municipal Board of Manila enacted Ordinance 6537
requiring aliens (except those employed in the diplomatic and consular
missions of foreign countries, in technical assistance programs of the
government and another country, and members of religious orders or
congregations) to procure the requisite mayors permit so as to be
employed or engage in trade in the City of Manila. The permit fee is
P50, and the penalty for the violation of the ordinance is 3 to 6 months
imprisonment or a fine of P100 to P200, or both.
Issue: Whether the ordinance imposes a regulatory fee or a tax.
Held: The ordinances purpose is clearly to raise money under the
guise of regulation by exacting P50 from aliens who have been cleared
for employment. The amount is unreasonable and excessive because
it fails to consider difference in situation among aliens required to pay
it, i.e. being casual, permanent, part-time, rank-and-file or executive.
[ The Ordinance was declared invalid as it is arbitrary, oppressive and
unreasonable, being applied only to aliens who are thus deprived of
their rights to life, liberty and property and therefore violates the due
process and equal protection clauses of the Constitution. Further, the
ordinance does not lay down any criterion or standard to guide the
Mayor in the exercise of his discretion, thus conferring upon the mayor
arbitrary and unrestricted powers. ]
Lonzanida vs COMELEC [311 SCRA 602]
Posted by Pius Morados on November 6, 2011
(Local Government, Disqualification: Exception to the 3 term limit rule)
Facts: Petitioner Lonzanida was duly elected and served two
consecutive terms as municipal mayor of San Antonio, Zambales prior
to the May 1995 elections. In the May 1995 elections Lonzanida ran for
mayor of San Antonio, Zambales and was again proclaimed winner.
He assumed office and discharged the duties thereof. His proclamation
in 1995 was contested by his opponent who filed an election protest.
The court rendered a judgment declaring the results of the said
election last May 8, 1995, as null and void on the ground that there
was a failure of election.
In the May 11, 1998 elections Lonzanida again filed his certificate of
candidacy for mayor of San Antonio and was proclaimed winner. Prior
proclamation, His opponent timely filed a petition to disqualify him from
running on the ground that he had served three consecutive terms in
the same post.
The COMELEC found that Lonzanidas assumption of office by virtue
of his proclamation in May 1995, although he was later unseated
before the expiration of the term, should be counted as service for one
full term in computing the three term limit under the Constitution and
the Local Government Code. Hence, COMELEC issued a resolution
granting the petition for disqualification
Petitioner Lonzanida challenges the validity of the COMELEC
resolutions maintaining that he was duly elected mayor for only two
consecutive terms and that his assumption of office in 1995 cannot be
counted as service of a term for the purpose of applying the three term
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limit for local government officials, because he was not the duly elected
mayor of San Antonio in the May 1995 elections.
The private respondent maintains that the petitioners assumption of
office in 1995 should be considered as service of one full term because
he discharged the duties of mayor for almost three years until March 1,
1998 or barely a few months before the next mayoral elections.
Ramon Talaga, Jr. served as mayor of Lucena City during terms 1992-
1995 and 1995-1998. During the 1998 elections, Talaga lost to
Bernard G. Tagarao. However, before Tagaraos 1998-2001 term
ended, a recall election was conducted in May 2000 wherein Talaga
won and served the unexpired term of Tagarao until June 2001. When
Talaga ran for mayor in 2001, his candidacy was challenged on the
ground that he had already served as mayor for three consecutive
terms in violation of the three term-limit rule. Comelec found Talaga
disqualified to run for mayor. Talaga filed a motion for reconsideration
which Comelec granted. Talaga was then elected Mayor.

Issue: WON petitioners assumption of office as mayor of San Antonio Issue:

Zambales from May 1995 to 1998 may be considered as service of
Whether Talaga was disqualified to run as mayor given that he had
one full term for the purpose of applying the three-term limit for elective
already served two full terms and he won in the 2000 recall elections.
local government officials.
Held: No. Section 8, Art. X of the Constitution provides that, the term Held:

of office of elective local officials, except barangay officials, which shall

be determined by law shall be three years and no such officials shall
serve for more than three consecutive terms. Voluntary renunciation of
the office for any length of time shall not be considered as an
interruption in the continuity of his service for the full term for which he
was elected.
Section 43 of the Local Government Code (R.A. No. 7160) restates the
same rule, that: No local elective official shall serve for more than
three consecutive terms in the same position. Voluntary renunciation of
the office for any length of time shall not be considered as an
interruption in the continuity of service for the full term for which the
elective official concerned was elected.
The petitioner cannot be deemed to have served the May 1995 to 1998
term because he was ordered to vacate his post before the expiration
of the term.
The term limit for elective local officials must be taken to refer to the
right to be elected as well as the right to serve in the same elective
position. Consequently, it is not enough that an individual has served
three consecutive terms in an elective local office, he must also have
been elected to the same position for the same number of times before
the disqualification can apply.
For nearly two years Talaga was a private citizen. The continuity of his
mayorship wasdisrupted by his defeat in the 1998 elections. The time
between his second term and the recall election is sufficient
interruption. Thus, there was no three consecutive terms as
contemplated in the disqualifications in the LGC.
Talaga only served two consecutive full terms. There was a disruption
when he was defeated in the 1998 elections. His election during the
2000 recall election is not a continuation of his two previous terms
which could constitute his third term thereby barring him for running for
a fourth term. Victory in the 2000 recall election is not the voluntary
renunciation contemplated by the law. (Adormeo vs Comelec, G.R.
No. 147927, February 4, 2002)

Pursuant to the constitutional provision above, voluntary renunciation

of a term does not cancel the renounced term in the computation of the
three term limit; conversely, involuntary severance from office for any
length of time short of the full term provided by law amounts to an
interruption of continuity of service. The petitioner vacated his post a
few months before the next mayoral elections, not by voluntary
renunciation but in compliance with the legal process of writ of
execution issued by the COMELEC to that effect. Such involuntary
severance from office is an interruption of continuity of service and
thus, the petitioner did not fully serve the 1995-1998 mayoral term.

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Adormeo vs Comelec Case Digest

Recall, Term of Office, Three-Term Limit, Voluntary Renunciation

Facts: