BASCO vs.

PAGCOR
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 government’s right to impose taxes
and license fees, which is recognized by law. For the same reason, the law has intruded
into the local government’s 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 The City of Manila’s power to impose license fees on gambling, has long been revoked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.

OPOSA VS. FACTORAN

Facts:
The principal petitioners, all minors duly represented and joined by their respective parents. Impleaded as an
additional plaintiff is the Philippine Ecological Network, Inc. (PENI), a domestic, non-stock and non-profit
corporation organized for the purpose of, inter alia, engaging in concerted action geared for the protection of
our environment and natural resources. The petitioners alleged the respondent, Honorable Fulgencio S.
Factoran, Jr., then Secretary of the Department of Environment and Natural Resources (DENR), continued
approval of the Timber License Agreements (TLAs) to numerous commercial logging companies to cut and
deforest the remaining forests of the country. Petitioners request the defendant, his agents, representatives and
other persons acting in his behalf to:

 Cancel all existing timber license agreements in the country;

 Cease and desist from receiving, accepting, processing, renewing or approving new timber license
agreements.

Plaintiffs further assert that the adverse and detrimental consequences of continued and deforestation are so
capable of unquestionable demonstration that the same may be submitted as a matter of judicial notice. This
act of defendant constitutes a misappropriation and/or impairment of the natural resource property he holds in
trust for the benefit of plaintiff minors and succeeding generations. Plaintiff have exhausted all administrative
remedies with the defendant’s office. On March 2, 1990, plaintiffs served upon defendant a final demand to
cancel all logging permits in the country. Defendant, however, fails and refuses to cancel the existing TLA’s to
the continuing serious damage and extreme prejudice of plaintiffs.

Issues:

 Whether or not the petitioners have the right to bring action to the judicial power of the Court.
 Whether or not the petitioners failed to allege in their complaint a specific legal right violated by the
respondent Secretary for which any relief is provided by law.
 Whether or not petitioners’ proposition to have all the TLAs indiscriminately cancelled without the
requisite hearing violates the requirements of due process.
Rulings:
In the resolution of the case, the Court held that:

 The petitioners have the right to bring action to the judicial power of the Court.
1. The case at bar is subject to judicial review by the Court. Justice Davide, Jr. precisely identified in his
opinion the requisites for a case to be subjected for the judicial review by the Court. According to
him, the subject matter of the complaint is of common interest, making this civil case a class suit and
proving the existence of an actual controversy. He strengthens this conclusion by citing in the
decision Section 1, Article 7 of the 1987 Constitution.
2. The petitioners can file a class suit because they represent their generation as well as generations yet
unborn. Their personality to sue in behalf of the succeeding generations can only be based on the
concept of intergenerational responsibility insofar as the right to a balanced and healthful ecology is
concerned. Such a right, as hereinafter expounded, considers the “rhythm and harmony of nature.”
Nature means the created world in its entirety. Such rhythm and harmony indispensably include, inter
alia, the judicious disposition, utilization, management, renewal and conservation of the country’s
forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources to the end
that their exploration, development and utilization be equitably accessible to the present as well as
future generations.
3. Every generation has a responsibility to the next to preserve that rhythm and harmony for the full
enjoyment of a balanced and healthful ecology. Put a little differently, the minors’ assertion of their
right to a sound environment constitutes, at the same time, the performance of their obligation to
ensure the protection of that right for the generations to come.
 The Court does not agree with the trial court’s conclusions that the plaintiffs failed to allege with
sufficient definiteness a specific legal right involved or a specific legal wrong committed, and that the
complaint is replete with vague assumptions and conclusions based on unverified data.
1. The complaint focuses on one specific fundamental legal right — the right to a balanced and healthful
ecology which, for the first time in our nation’s constitutional history, is solemnly incorporated in the
fundamental law. Section 16, Article II of the 1987 Constitution explicitly provides:

Sec. 16. The State shall protect and advance the right of the people to a balanced and healthful ecology in
accord with the rhythm and harmony of nature.

1. This right unites with the right to health which is provided for in the preceding section of the same article:

Sec. 15. The State shall protect and promote the right to health of the people and instill health consciousness
among them.
1. While the right to a balanced and healthful ecology is to be found under the Declaration of Principles and
State Policies and not under the Bill of Rights, it does not follow that it is less important than any of the
civil and political rights enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and self-perpetuation — aptly and fittingly
stressed by the petitioners — the advancement of which may even be said to predate all governments and
constitutions. As a matter of fact, these basic rights need not even be written in the Constitution for they
are assumed to exist from the inception of humankind.

 The Court are not persuaded by the trial court’s pronouncement.

1. The respondent Secretary did not invoke in his motion to dismiss the non-impairment clause. If he
had done so, Justice Feliciano would have acted with utmost infidelity to the Government by
providing undue and unwarranted benefits and advantages to the timber license holders because he
would have forever bound the Government to strictly respect the said licenses according to their terms
and conditions regardless of changes in policy and the demands of public interest and welfare. He was
aware that as correctly pointed out by the petitioners, into every timber license must be read Section
20 of the Forestry Reform Code (P.D. No. 705) which provides that when the national interest so
requires, the President may amend, modify, replace or rescind any contract, concession, permit,
licenses or any other form of privilege granted herein .
2. All licenses may thus be revoked or rescinded by executive action. It is not a contract, property or a
property right protested by the due process clause of the Constitution.

Hence, the instant Petition is hereby GRANTED, and the challenged Order of respondent Judge of 18 July
1991 dismissing Civil Case No. 90-777 was set aside. The petitioners amend their complaint to implead as
defendants the holders or grantees of the questioned timber license agreements.