MAGTAJAS & THE CITY OF CAGAYAN DE ORO vs. PRYCE PROPERTIES CORPORATION, INC.
&
PHILIPPINE AMUSEMENT AND GAMING CORPORATION
Facts:
PAGCOR decided to expand its operations to Cagayan de Oro City. To this end, it leased a portion of a building
belonging to Pryce Properties Corporation, Inc, renovated and equipped the same, and prepared to inaugurate its
casino there during the Christmas season. Civic organizations angrily denounced the project. The religious
elements echoed the objection and so did the women's groups and the youth. Demonstrations were led by the
mayor and the city legislators. The media trumpeted the protest, describing the casino as an affront to the welfare
of the city.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December 7, 1992,
it enacted Ordinance No. 3353 An Ordinance Prohibiting The Issuance Of Business Permit and Cancelling Existing
Business Permit to Any Establishment for the Using and Allowing to be Used its Premises or Portion Thereof for the
Operation of Casino. On January 4, 1993, it adopted a sterner ordinance No. 3375-93 An Ordinance Prohibiting the
Operation of Casino and Providing Penalty for Violation Therefor.
The City Council asserted that as the Legislative Body it shall enact measure to suppress any activity inimical to
public morals and general welfare of the people and/or regulate or prohibit such activity pertaining to amusement
or entertainment in order to protect social and moral welfare of the community.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and
supplemental petitioner.
Issue:
Whether or not the ordinance enacted is valid and constitutional?
Ruling:
The ordinances violate P.D. 1869, which has the character and force of a statute, as well as the public policy
expressed in the decree allowing the playing of certain games of chance despite the prohibition of gambling in
general. Under the Local Government Code, local government units must prevent and suppress all kinds of
gambling within their territories except only those allowed by statutes like P.D. 1869. The exception reserved in
such laws must be read into the Code, to make both the Code and such laws equally effective and mutually
complementary.
PAGCOR is mentioned as the source of funding in two later enactments of Congress, to wit, R.A. 7309, creating a
Board of Claims under the Department of Justice for the benefit of victims of unjust punishment or detention or of
violent crimes, and R.A. 7648, providing for measures for the solution of the power crisis. PAGCOR revenues are
tapped by these two statutes. This would show that the PAGCOR charter has not been repealed by the Local
Government Code but has in fact been improved as it were to make the entity more responsive to the fiscal
problems of the government.
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 the local
government units 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.
The tests of a valid ordinance are well established. A long line of decisions has held that 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.
Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or
nullified by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro
City to enact Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No.
3375-93 prohibiting the operation of casinos. For all their praiseworthy motives, these ordinances are contrary to
P.D. 1869 and the public policy announced therein and are therefore ultra vires and void.
