University of the Philippines College of Law | LocGov | D2021

Topic Local government, decentralization, autonomy

Case Name Magtajas vs. Pryce Properties Corporation
Case No. & Date G.R. No. 111097 (1994)
Ponente Cruz
Petitioners Mayor Pablo P. Magtajas & The City of Cagayan de Oro
Respondents Pryce Properties Corporation, Inc. & Philippine Amusement and Gaming Corporation

Summary (recit- When PAGCOR decided to expand its operations to CDO, several oppositions came from its residents.
friendly) Subsequently, the Sangguniang Panlungsod of CDO enacted 2 ordinances prohibiting the operation of casinos
in their territory. Pryce, PAGCOR’s lessee, together with PAGCOR as intervenor, assailed the ordinances
before the CA. The CA held that the ordinances are invalid. Thus, this petition before the SC. SC also held that
the ordinances were ultra vires and void. Under LGC Sec. 458 (invoked by petitioners as source of the power
of the LGU to prohibit casinos), LGUs are authorized to prevent or suppress “gambling and OTHER prohibited
games of chance.” Obviously, this excludes games of chance which are not prohibited by and are in fact
permitted by law. In this case, the casino is allowed by P.D. No. 1869 (charter of PAGCOR), and thus cannot be
prohibited by CDO. SC also held that P.D. No. 1869 is not repealed by the LGC, expressly or impliedly, and as
the ordinances contravene such decree, they are invalid. SC, in explaining that ordinances should not
contravene a statute, stated that municipal governments are only agents of the national government. Local
councils exercise only delegated legislative powers conferred on them by Congress as the national lawmaking
body. The delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is
a heresy to suggest that LGUs can undo the acts of Congress, from which they have derived their power in the
first place, and negate by mere ordinance the mandate of the statute.
Doctrine/s  Municipal governments are only agents of the national government. Local councils exercise only
delegated legislative powers conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a
heresy to suggest that LGUs can undo the acts of Congress, from which they have derived their power in
the first place, and negate by mere ordinance the mandate of the statute.
 Test of a valid ordinance - To be valid, an ordinance must conform to the following substantive
requirements:
1) It must not contravene the constitution or any statute;
2) It must not be unfair or oppressive;
3) It must not be partial or discriminatory;
4) It must not prohibit but may regulate trade;
5) It must be general and consistent with public policy;
6) It must not be unreasonable.

RELEVANT FACTS

Facts:
1. In 1992, PAGCOR decided to expand its operations to Cagayan de Oro City (CDO). To this end, it leased a portion of a
building belonging to Pryce Properties Corporation, Inc., one of the herein private respondents.
2. Civic organizations, religious elements, women’s groups and the youth all denounced the project. Demonstrations were led
by the mayor and the city legislators. Media described the casino as “an affront to the welfare of the city”.

Ordinances by the Sangguinang Panlungsod:

3. The reaction of the Sangguniang Panlungsod of CDO was swift and hostile. On December 7, 1992, it enacted Ordinance No.
3353 which prohibits the issuance of business permit and cancelling existing business permit to any establishment using and
allowing to be used its premises or portion thereof for the operation of casinos.
4. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 (sterner ordinance) which prohibits the operation of casino
and provides penalty for violation therefore.

Action before the Court of Appeals:

5. Pryce assailed the ordinances before the CA, where it was joined by PAGCOR as intervenor and supplemental petitioner.
The CA declared the ordinances invalid.

Petitioners’ arguments in this petition for review;

 University of the Philippines College of Law | LocGov | D2021

 By virtue of Sec. 16, Local Government Code (LGC) 1 (General Welfare Clause) and Sec. 4582, the Sangguniang Panlungsod
may prohibit the operation of casinos because they involve games of chance, which are detrimental to the people.
 When the Code expressly authorized the LGUs to prevent and suppress gambling and other prohibit games of
chance (i.e. craps, baccarat, blackjack, and roulette), it meant ALL forms of gambling, without distinction.
 Gambling is intrinsically harmful (invoked Constitution, court decisions, State policies on family and proper
upbringing of the youth and U.S. v. Salaveria, which sustained a municipal ordinance prohibiting the playing of
panguingue).
 LGC recognizes the competence of the communities to determine and adopt the measures best expected to
promote the general welfare of their inhabitants in line with State policies. This is consonant with the policy of
local autonomy as mandated in Art.II, Sec.25, and Art. X, Constitution.
 Under Sec. 16, LGUs may also regulate properties and businesses w/in their territorial limits
 Gambling is not allowed by general law and even by the Constitution itself.
 CDO is empowered to enact ordinances for purposes indicated in the LGC and is vested with police power.
 The adoption of the LGC had the effect of modifying the charter of the PAGCOR, P.D. No. 1869 (1. Later enactment than the
charter and is deemed to prevail in case of inconsistencies between them; 2. Powers of PAGCOR are expressly discontinued
by the Code as they do not conform to its philosophy and its provisions, pursuant to par.(f) of its repealing clause3)
 Doubt must be resolved in favor of petitioners, in accordance with the direction of the LGC calling for its liberal
interpretation in favor of LGUs.
 Petitioners also impugn the wisdom of P.D. No. 1869 in creating PAGCOR and authorizing it to operate casinos.

ISSUE AND RATIO DECIDENDI

Issue Ratio
WON ordinances in 1. Morality of gambling is NOT a justiciable issue
question are valid?  Gambling is not illegal per se. While it is generally considered inimical to the interests of
(NO, they are ultra the people, there is nothing in the Constitution categorically proscribing or penalizing
vires and void.) gambling or, for that matter, even mentioning it at all.
 It is left to Congress to deal with the activity as it sees fit. In the exercise of its discretion,
the legislature may prohibit gambling altogether or allow it without limitation or it may
prohibit some forms of gambling and allow others for whatever reasons it may consider
sufficient.
 It is settled that questions regarding the wisdom, morality, or practicibility of statutes are
not addressed to the judiciary but may be resolved only by the legislative and executive
departments.

2. Ordinances are invalid

 To be valid, an ordinance: (1) Must not contravene the Constitution or any statute; (2)
Must not be unfair or oppressive; (3) Must not be partial or discriminatory; (4) Must not
prohibit but may regulate trade; (5) Must not be unreasonable; and (6) Must be general
and consistent with public policy.

1
SEC. 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health
and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.

2
Sec. 458. Powers, Duties, Functions and Compensation.
(a) The Sangguniang Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the
city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this
Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this connection, shall:
(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual drunkenness in public places, vagrancy, mendicancy,
prostitution, establishment and maintenance of houses of ill repute, gambling and other prohibited games of chance, fraudulent devices and ways to
obtain money or property, drug addiction, maintenance of drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of
obscene or pornographic materials or publications, and such other activities inimical to the welfare and morals of the inhabitants of the city
3
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly.
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 Under Sec. 458, LGUs are authorized to prevent or suppress “gambling and OTHER
prohibited games of chance.” Obviously, this excludes games of chance which are not
prohibited by and are in fact permitted by law.
 Petitioners are less than accurate in claiming that the Code could have excluded such
games of chance but did not. In fact, it does.
 Language of the section is clear and unmistakable. Since the word “gambling” is associated
with “and other prohibited games of chance”, the word should be read as referring to only
illegal gambling which must be prevented.

On petitioners’ theory that P.D. No. 1869 is dead, repealed and useless
 Petitioners deny that it is the ordinances that have changed P.D. No. 1869 for an ordinance
admittedly cannot prevail against a statute. Their theory is that the change has been made by
the LGC.
 In their view, the decree has been merely "modified pro tanto" in the sense that PAGCOR
cannot now operate a casino over the objection of the LGU concerned.
 What petitioners are actually arguing: P.D. No. 1869 is already dead, repealed and useless for
all intents and purposes because the Code has shorn PAGCOR of all power to centralize and
regulate casinos. Its operations may now only be prohibited by the LGU. The prohibition is not
only discretionary but mandated by Sec458 (use of word “shall”). LGUs have now no choice but
to prevent and suppress gambling, both legal and illegal (Petitioners are wrong.)

a) P.D. No. 1869 is NOT repealed by LGC (express or implied)

 Petitioners only cited par(f) of the repealing clause. But looking at the rest of the
provision4, which mentions the specific laws which are repealed (or modified) by the LGC,
P.D. No. 1869 is not one of them.
 Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the
absence of a clear and unmistakable showing of such intention.
 There is no sufficient indication of an implied repeal of P.D. No. 1869. On the contrary,
PAGCOR is mentioned as the source of funding in 2 later enactments of Congress: R.A. No.
7309 (creating a Board of Claims under the DOJ for the benefit of victims of unjust
punishment or detention of violent crimes) and R.A. No. 7648 (measures for solution of the
power crisis)—shows that PAGCOR charter has not been repealed but has been improved
as it were to make the entity more responsive to the fiscal problems of the government.
 Courts must also exert every effort to reconcile seemingly conflicting laws. The proper
actions is not to uphold one and annul the other but to give effect to both by harmonizing
them if possible. The proper resolutions of the problem at hand is to hold that under the
LGC, LGUs may (and indeed must) prevent and suppress all kinds of gambling within their
territories EXCEPT only those allowed by statutes like P.D. No. 1869.
 This approach would also affirm that there are indeed 2 kinds of gambling, the illegal and
those authorized by law. The petitioner’s suggestion that LGC authorizes them to prohibit
all kinds of gambling would erase the distinction between these 2 forms of gambling
without a clear indication that this is the will of the legislature.

b) Ordinances violate P.D. No. 1869

 Municipal governments are only agents of the national government. Local councils exercise
only delegated legislative powers conferred on them by Congress as the national
lawmaking body.
 The delegate cannot be superior to the principal or exercise powers higher than those of
the latter. It is a heresy to suggest that LGUs can undo the acts of Congress, from which
they have derived their power in the first place, and negate by mere ordinance the
4
SEC.534. Repealing Clause.—(a) Batas Pambansa Blg. 337, otherwise known as the “Local Government Code,” Executive Order No. 112 (1987), and Executive Order
No. 319 (1988) are hereby repealed. (b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda and issuances related to
or concerning the barangay are hereby repealed. (c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b (2)
of Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741; Presidential
Decree No. 231 as amended; Presidential Decree No. 436 as amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752,
and 1136 are hereby repealed and rendered of no force and effect. (d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the provisions of this Code: Sections 2, 16, and 29 of Presidential
Decree No. 704; Sections 12 of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as
amended; and Section 16 of Presidential Decree No. 972, as amended, and (f) See footnote #3.
 University of the Philippines College of Law | LocGov | D2021

mandate of the statute.

 Municipal corporations owe their origin to, and derive their powers and rights wholly from
the legislature. It breathes into them the breath of life, without which they cannot exist. As
it creates, so it may destroy. As it destroy, it may abridge and control.
 Unless there is some constitutional limitation on the right, the legislature might, by a single
act, sweep from existence all of the municipal corporations in the State, and the
corporation could not prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are, so to phrase it, the mere tenants at will
of the legislature
 This basic relationship between the national legislature and the LGUs has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local
autonomy. Congress retains control of the LGUs although in significantly reduced degree
now than under our previous Constitutions
 There are certain notable innovations in the Constitution (i.e. direct conferment on the
LGUs of the power to tax), however, the national legislature is still the principal of the local
government units, which cannot defy its will or modify or violate it.

Dispositive: Petition DENIED. CA decision AFFIRMED.

SEPARATE OPINION, Padilla, J.

 Concur with the majority holding that ordinances cannot modify much less repeal PAGCOR’s general authority to establish
and maintain gambling casinos anywhere in the Philippines under P.D. No. 1869.
 However, despite the legality of the opening and operation of a casino…I wish to reiterate my view that gambling in any
form runs counter to the government’s own efforts to reestablish and resurrect the Filipino moral character which is
generally perceived to be in a state of continuing erosion
 That the PAGCOR contributes greatly to the coffers of the gov’t is not enough reason for setting up more gambling casinos
because this will not help improve, but will cause a further deterioration in the Filipino moral character
 1) What is legal is not always moral; 2) The ends do not always justify the means

National government should reexamine and reevaluate its decision of imposing the gambling casino on the residents of CDO for
it is abundantly clear that public opinion in the city is very much against it, and again the question must be seriously deliberated:
Will the prospects of revenue to be realized from the casino outweigh the further destruction of the Filipino sense of values?

SEPARATE OPINION, Davide Jr., J.

a. Procedural
 The principal cause of action is one for declaratory relief: to declare null and unconstitutional for having been enacted
without or in excess of jurisdiction, for impairing the obligation of contracts and for being inconsistent with public
policy the challenged ordinances enacted. (Pryce should not have filed a petition for prohibition) . Thus, CA does not
have jurisdiction over the nature of the action.
 Even assuming arguendo that the case is one for prohibition, then the petition should have been filed with the RTC of
CDO, following the hierarchy of courts.

b. Substantive
- Nullification by the CA of the challenged ordinances as unconstitutional primarily because it is in contravention to P.D.
No. 1869 is unwarranted. A contravention of a law is not necessarily a contravention of the constitution. The
ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be reconciled, which is not
impossible to do.

From the pleadings, it is obvious that the government and the people of CDO are, for obvious reasons, strongly against the
opening of the gambling casino in their city. Gambling, even if legalized, would be inimical to the general welfare of the
inhabitants of the city, or of any place for that matter. PAGCOR must consider the valid concerns of the people of CDO and
should not impose its will upon them in an arbitrary, if not despotic, manner.