MAGTAJAS V PRYCE PROPERTIES

(G.R. No. 111097, July 20, 1994)

On the Powers and Attributes of LGUs

FACTS:
In 1992, PAGCOR decided to expand its operations to Cagayan de Oro City and leased a portion of a
building belonging to Pryce Properties.

In response to the news, the Sangguniang Panlungsod of CDO enacted an ordinance prohibiting the
issuance of business permit and cancelling existing business permit of any establishment used and
allowing the use of its promises for the operation of a casino. A later ordinance totally prohibited the
operation of casinos and penalized such.

Pryce and PAGCOR assailed the ordinances, with the CA declaring the ordinances invalid and issuing a
writ to prohibit their enforcement.

Hence, CDO and its mayor now instituted this petition.They contend that the LGU has the authority to
regulate properties and business within their territorial limits in the interest of the general welfare. They
likewise stress that the LGC expressly authorized LGUs to prevent and suppress gambling and other
prohibited games of chance.

ISSUE:
W/N the subject ordinances are valid

RULING:
NO, because the ordinances violate PD 1869 (PAGCOR’s charter)

RATIO:
The tests of a valid ordinance are well-established: a) it must not contravene the constitution or any statute;
b) it must not be unfair or oppressive; c) it must not be partial or discriminatory; d) it must not prohibit but
may regulate trade; e) it must be general and consistent with public policy; and f) it must not be
unreasonable.

The rationale of the requirement that the ordinances should not contravene a statute is obvious. 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.

Casino gambling is authorized by PD 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 Sanggunian to enact ordinances
prohibiting such. Despite the motive, the ordinances are contrary to the decree and the public policy
announced therein and are therefore ultra vires and void.