G.R. No.
111097 July 20, 1994 In addition, Section 458 of the said Code specifically declares that the Sangguniang
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND
GAMING CORPORATION, respondents.
Facts:
There was instant opposition when PAGCOR announced the opening of a casino in
Cagayan de Oro City. Civic organizations angrily denounced the project. The religious
elements echoed the objection and so did the women's groups and the youth. Demon-
strations were led by the mayor and the city legislators.
The trouble arose when in 1992, flush with its tremendous success in several cities,
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., reno-
vated and equipped the same, and prepared to inaugurate its casino there during the
Christmas season.
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 EXIST-
ING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOW-
ING 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.)
Pryce assailed the ordinances before the Court of Appeals, where it was joined by
PAGCOR as intervenor and supplemental petitioner. Their challenge succeeded. On
March 31, 1993, the Court of Appeals declared the ordinances invalid and issued the
writ prayed for to prohibit their enforcement. MR denied.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate
all games of chance, including casinos on land and sea within the territorial jurisdiction
of the Philippines. Cagayan de Oro City, like other local political subdivisions, is em-
powered to enact ordinances for the purposes indicated in the Local Government
Code. It is expressly vested with the police power under what is known as the General
Welfare Clause1
1 Sec. 16. — General Welfare. — Every local government unit shall exercise the pow-
ers expressly granted, those necessarily implied therefrom, as well as powers neces-
sary, appropriate, or incidental for its efficient and effective governance, and those
which are essential to the promotion of the general welfare. Within their respective ter-
ritorial jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and safety, en-
Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolu-
tions and appropriate funds for the general welfare of the city and its inhabitants.
The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod
may prohibit the operation of casinos because they involve games of chance, which
are detrimental to the people. Gambling is not allowed by general law and even by the
Constitution itself. The legislative power conferred upon local government units may be
exercised over all kinds of gambling and not only over "illegal gambling" as the respon-
dents erroneously argue. The petitioners also stress that when the Code expressly au-
thorized the local government units to prevent and suppress gambling and other pro-
hibited games of chance, like craps, baccarat, blackjack and roulette, it meant all forms
of gambling without distinction.
The adoption of the Local Government Code, it is pointed out, had the effect of modify-
ing the charter of the PAGCOR. The Code is not only a later enactment than P.D.
1869 and so is deemed to prevail in case of inconsistencies between them. More than
this, the powers of the PAGCOR under the decree are expressly discontinued by the
Code insofar as they do not conform to its philosophy and provisions.
Issue: Whether or not Ordinance No. 3353 and Ordinance No. 3375-93 are valid?
Held: NO.
The tests of a valid ordinance are well established. A long line of decisions 9 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.
We begin by observing that under Sec. 458 of the Local Government Code, local gov-
ernment units are authorized to prevent or suppress, among others, "gambling and
other prohibited games of chance." Obviously, this provision excludes games of
chance which are not prohibited but are in fact permitted by law. The petitioners are
less than accurate in claiming that the Code could have excluded such games of
chance but did not. In fact it does. The language of the section is clear and unmistak-
able. Under the rule of noscitur a sociis, a word or phrase should be interpreted in rela-
hance the right of the people to a balanced ecology, encourage and support the devel-
opment of appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full employ-
ment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
tion to, or given the same meaning of, words with which it is associated. Accordingly,
we conclude that since the word "gambling" is associated with "and other prohibited The rationale of the requirement that the ordinances should not contravene a statute is
games of chance," the word should be read as referring to only illegal gambling which, obvious. Municipal governments are only agents of the national government. Local
like the other prohibited games of chance, must be prevented or suppressed. 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 exer-
The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and cise powers higher than those of the latter.
the public policy embodied therein insofar as they prevent PAGCOR from exercising
the power conferred on it to operate a casino in Cagayan de Oro City. We hold that the power of PAGCOR to centralize and regulate all games of chance, in-
cluding casinos on land and sea within the territorial jurisdiction of the Philippines, re-
The petitioners have an ingenious answer to this misgiving. They deny that it is the or- mains unimpaired. P.D. 1869 has not been modified by the Local Government Code,
dinances that have changed P.D. 1869 for an ordinance admittedly cannot prevail which empowers the local government units to prevent or suppress only those forms of
against a statute. Their theory is that the change has been made by the Local Govern- gambling prohibited by law.
ment Code itself, which was also enacted by the national lawmaking authority. In their
view, the decree has been, not really repealed by the Code, but merely "modified pro Casino gambling is authorized by P.D. 1869. This decree has the status of a statute
tanto" in the sense that PAGCOR cannot now operate a casino over the objection of that cannot be amended or nullified by a mere ordinance. Hence, it was not competent
the local government unit concerned. 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-
There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as 93 prohibiting the operation of casinos.
the private respondent points out, 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.

On the assumption of a conflict between P.D. 1869 and the Code, the proper action is
not to uphold one and annul the other but to give effect to both by harmonizing them if
possible. This is possible in the case before us. The proper resolution of the problem
at hand is to hold that under the Local Government Code, local government units may
(and indeed 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 effec-
tive and mutually complementary.

This approach would also affirm that there are indeed two kinds of gambling, to wit, the
illegal and those authorized by law. Legalized gambling is not a modern concept; it is
probably as old as illegal gambling, if not indeed more so. The petitioners' suggestion
that the Code authorizes them to prohibit all kinds of gambling would erase the distinc-
tion between these two forms of gambling without a clear indication that this is the will
of the legislature.

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.