Case Digest - Local Government Tax

Basco et al vs. PAGCOR
G.R. No. 91649 May 14, 1991
FACTS:
PD 1869 is the charter which created the Philippine Amusement and Gaming Corporation. PAGCOR was created to enable the government to regulate and centralize all games of chance authorized by existing franchise or permitted by law. Section 13 par 2 of the decree exempts PAGCOR, franchise holder from paying any “tax of any kind or form, income or otherwise… whether national or local”. According to the petitioners, this waived the Manila City government’s right to impose taxes and license fees which is recognized by law.
ISSUE:
Whether or not the exemption clause of PD 1869 is violative of the principle of local autonomy?
RULING:
The city of Manila, being a municipal corporation has no inherent right to impose taxes. Its power to tax must always yield to a legislative act which is superior having been passed upon by the state which has the inherent power of the state to tax.
The court added that since one of the roles of PAGCOR is to regulate gambling casinos, this “places it in the category of an agency or instrumentality of the government…” PAGCOR should be and actually is exempted from local taxes, otherwise, its operation might be burdened, impeded, or subjected to control by a mere local government.
The matter of regulating, taxing or otherwise dealing with gambling is a state concern and hence, it is the sole prerogative of the state to retain it or delegate it to local government.