Basco v.

Pagcor
G.R. No. 91649
May 14, 1991
Equal Protection Clause
FACTS:
The Philippine Amusement and Gaming Corporation was created to establish, operate,
and maintain gambling casinos on land or water within the territorial jurisdiction of the
Philippines. It proved to be one of the largest sources of revenue to fund infrastructure and socioeconomic projects of the government. Eventually, PD 1869 was enacted to enable PAGCOR to
regulate and centralize all games of chance, authorized by existing franchise or permitted by law.
The petitioners seek to annul the PAGCOR Charter, PD 1869 on the ground that allegedly
it is contrary to morals, public policy and order. Being exempt from any form of tax, petitioners
argue that it waived the Manila City Governments right to impose taxes and license fees,
violating the principle of local autonomy. They also invoke that it violates the equal protection
clause that it legalizes PAGCOR conducted gambling, while other forms of gambling were
illegalized and other types of vices like prostitution and drug trafficking.
ISSUES:
1. Whether or not PD 1869 violates the principle of local autonomy.
2. Whether or not PD 1869 violates the equal protection clause.
HELD:
1. No.
The police power of the state is the authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare. The creation of PAGCOR,
being allowed to regulate and centralize all games of change was beneficial not only to the
government but also to the society. It allows a continuous flow of funds and the elimination of
corrupt management of gambling institutions, for now they are subjected to the control of the
government. Exempting PAGCOR from taxes whether local or national does not violate the
principle of local autonomy. The City of Manila has no inherent right to impose taxes for it must
always yield to a legislative act. It is true that the Constitution grants LGUs the power to levy
taxes, fees and other charges but it is always subject to limitations as the Congress may enact.
Being a creature of the Congress, it is subject to the control of the latter and the Congress can
provide for tax exemptions which the city must yield to. Local Governments do not have the
power to tax government instrumentalities, which PAGCOR is through its regulatory powers.
Local Governments cannot impede or burden government instrumentalities in the performance of
their duties. On the issue of license fees, the power to issue licenses and therefore to impose
license fees is vested exclusively on the National Government and not on the City.
2. No.
Prepared by: Jo-Anne D. Coloquio

Petitioners argue that PD 1869 violates the equal protection clause of the Constitution for it
legalized PAGCOR while other forms of gambling were outlawed, including other vices like
prostitution and drug trafficking. The court finds this argument untenable for 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. It has long been held that a law, in
order to abide by the Bill of Rights, does not need to operate in equal force on all persons or
things. The clause does not prohibit establishing classes upon which different rules shall apply
to. The mere fact that other forms of gambling are prohibited does not render PD 1869
unconstitutional.

Prepared by: Jo-Anne D. Coloquio