Can a City Ban the Operation of Lotto and Casinos in its Territory?

Can City Prohibit Lotto Casino Image Article Nicolas de Vega Law

This article talks about the police power of a local government unit such as city, including the limitations thereof. When lotto and casinos are allowed by the state, a city, through an ordinance, cannot ban the operations thereof in its territory.

The Police Power of the City

Police power is the power of the state to promote public welfare by restraining and regulating the use of liberty and property. This is primarily lodged with the national legislature but by virtue of valid delegation, it may also be exercised by the President, administrative boards, lawmaking bodies and local governments under the general welfare clause.

Section 16 of Republic Act No. 7160, otherwise known as the Local Government Code (“LGC”), is the general welfare clause which grants power to the LGUs to exercise police power to protect the general welfare through the enactment of ordinances. However, this power is not absolute.

In order for an ordinance to be valid, it must not only be within the corporate powers of the concerned LGU to enact but must also be passed in accordance with the procedure prescribed by law. Moreover, substantively, the ordinance:

(i) must not contravene the Constitution or any statute;

(ii) must not be unfair or oppressive;

(iii) must not be partial or discriminatory;

(iv) must not prohibit, but may regulate trade;

(v) must be general and consistent with public policy; and

(vi) must not be unreasonable [Social Justice Society vs. Atienza, G.R. No. 156052, 13 February 2008].

In view thereof, although LGUs possess police power to advance general welfare, it cannot unduly exercise such power when it contravenes the law or encroaches on the power of the national government.  Consequently, in Municipality of Tupi vs. Faustino [G.R. No. 231896, 20 August 2019], an ordinance prescribing speed limit was declared invalid since it contravened the existing law and held that “municipal ordinances are inferior in status and subordinate to the laws of the State. Thus, in case of conflict between an ordinance and a statute, the ordinance must be set aside.”

A city, through an ordinance, cannot ban the operations of lotto in its territory.

Can a city ban the operations of lotto in its territory? The answer is a resounding NO. In Lina vs. Pano [G.R. No. 129093, 30 August 2001], the Supreme Court struck down the ordinance by the sangguniang panlalawigan of  Laguna prohibiting the operation of lotto in its jurisdiction. The High Court reasoned that lotto is allowed by law and regulated by the PCSO. Thus, the LGU cannot disallow an act which is allowed by law, to wit:

“The game of lotto is a game of chance duly authorized by the national government through an Act of Congress. Republic Act 1169, as amended by Batas Pambansa Blg. 42, is the law which grants a franchise to the PCSO and allows it to operate the lotteries. X x x

This statute remains valid today. While lotto is clearly a game of chance, the national government deems it wise and proper to permit it. Hence, the Sangguniang Panlalawigan of Laguna, a local government unit, cannot issue a resolution or an ordinance that would seek to prohibit permits. Stated otherwise, what the national legislature expressly allows by law, such as lotto, a provincial board may not disallow by ordinance or resolution.

In our system of government, the power of local government units to legislate and enact ordinances and resolutions is merely a delegated power coming from Congress. As held in Tatel vs. Virac,13 ordinances should not contravene an existing statute enacted by Congress.” [ Emphasis and underscoring supplied]

Clearly, when lotto is allowed by existing laws, a city cannot forbid the same. Local government units are not sovereign units within the state.  In fact, the legislature exercises the power of control over LGUs while the President exercises supervision over them.

A city, through an ordinance, cannot ban the operations of casino in its territory.

Can a city ban the operations of casinos in its territory? The answer is again a resonant NO. In Basco vs. PAGCOR [G.R. No. 91649, 14 May 1991], the Supreme Court upheld the supremacy of the national government over LGUs and enunciated that decentralization does not make local governments sovereign within the state or imperium in imperio.

 More importantly, the Supreme Court has already ruled on this issue in Magtajas vs. Pryce Properties Corporation, Inc. [G.R. No. 111097, 20 July 1994]. In the aforementioned case, the Supreme Court denounced as unconstitutional an ordinance by Cagayan de Oro City disallowing the operation of casinos in its city, to wit:

“In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the petitioners that the ordinances in question are valid. On the contrary, we find that 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.

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. 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.

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 may destroy, it may abridge and control. Unless there is some constitutional limitation on the right, the legislature might, by a single act, and if we can suppose it capable of so great a folly and so great a wrong, 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 local government units has not been enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we here confirm that Congress retains control of the local government units although in significantly reduced degree now than under our previous Constitutions. The power to create still includes the power to destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable innovations in the Constitution, like the direct conferment on the local government units of the power to tax,  which cannot now be withdrawn by mere statute. By and large, however, the national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it.

X x x

We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on land and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not been modified by the Local Government Code, which empowers the local government units to prevent or suppress only those forms of gambling prohibited by law.

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.” [Emphasis and underscoring supplied]

Indeed, since a city is an agent of the national government, it cannot enact an ordinance that violates the law and undermines the regulatory powers of PAGCOR. As the old adage goes, the spring cannot rise higher than its source.

About Nicolas and De Vega Law Offices

If you need assistance in administrative, civil and criminal litigation, or dealing with local government units, we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website