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Municipal CorporationLocal Autonomyimperium in imperio

On July 11, 1983, PAGCOR was created under PD 1869 to enable the Government to regulateand centralize all games of chance authorized by existing franchise or permitted by law. Basco

and four others (all lawyers) assailed the validity of the law creating PAGCOR on constitutional

grounds among others particularly citing that the PAGCORs charter is against the constitutionalprovision on local autonomy.

Basco et al contend that P.D. 1869 constitutes a waiver of the right of the City of Manila toimpose taxes and legal fees; 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 localautonomy principle.

ISSUE: Whether or not PAGCORs charter is violative of the principle of local autonomy.

HELD: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 chargessubject to such guidelines and limitation as the congress may

provide, consistent with the basic policy on local autonomy. Such taxes, fees and charges shallaccrue 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 imposetaxes. 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 andabolish 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 controlled corporation with an originalcharter, 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.


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` ` ` TAN vs. COMELECG.R. No. 73155 July 11, 1986

Governing law: Art XI Sec. 3 of Constitution in relation to Sec. 197 of Local Government Code

Facts:This case was prompted by the enactment of Batas Pambansa Blg. 885, An Act Creating a New

Province in the Island of Negros to be known as the Province of Negros del Norte, effective Dec.

3, 1985. (Cities of Silay, Cadiz and San Carlos and the municipalities of Calatrava, Taboso,Escalante, Sagay, Manapla, Victorias, E.R. Magalona, and Salvador Benedicto proposed to

belong to the new province).

Pursuant to and in implementation of this law, the COMELEC scheduled a plebiscite for January

3, 1986. Petitioners opposed, filing a case for Prohibition and contending that the B.P. 885 is

unconstitutional and not in complete accord with the Local Government Code because: The voters of the parent province of Negros Occidental, other than those living within the

territory of the new province of Negros del Norte, were not included in the plebiscite. The area which would comprise the new province of Negros del Norte would only be about

2,856.56 sq. km., which is lesser than the minimum area prescribed by the governing statute,Sec. 197 of LGC.

Issue:WON the plebiscite was legal and complied with the constitutional requisites of the

Consititution, which states thatSec. 3. No province, city, municipality or barrio may be

created, divided, merged, abolished, or its boundary substantially altered except in accordancewith the criteria established in the Local Government Code, and subject to the approval by a

majority ofthe votes in a plebiscite in the unit or units affected? NO.

Held:

Whenever a province is created, divided or merged and there is substantial alteration of the

boundaries, the approval of a majority of votes in the plebiscite in the unit or units affectedmust first be obtained. The creation of the proposed new province of Negros del Norte will

necessarily result in the division and alteration of the existing boundaries of Negros Occidental

(parent province).

Plain and simple logic will demonstrate that two political units would be affected. The first

would be the parent province of Negros Occidental because its boundaries would be substantially

altered. The other affected entity would be composed of those in the area subtracted from themother province to constitute the proposed province of Negros del Norte.

Paredes vs. Executive (G.R. No. 55628) should not be taken as a doctrinal or compellingprecedent. Rather, the dissenting view of Justice Abad Santos is applicable, to wit:

when the Constitution speaks of the unit or units affected it means all of the people of the

municipality if the municipality is to be divided such as in the case at bar or of the people of two

or more municipalities if there be a merger.


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The remaining portion of the parent province is as much an area affected. The substantial

alteration of the boundaries of the parent province, not to mention the adverse economic effects it

might suffer, eloquently argue the points raised by the petitioners.

SC pronounced that the plebscite has no legal effect for being a patent nullity

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