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., one of the herein private respondents, renovated 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 existing business permit to any establishment for the using and allowing to be used its premises or portion thereof for the operation of casino.
Nor was this all. 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.
Cagayan de Oro City went to SC seeking to reverse the decision of CA, hence this case.
Whether the Ordinance of the Sanggunian of Cagayan De Oro contravene P.D. 1869 and prohibiting the operation of Casino in their City is a valid exercise of Police Power?
No, 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.
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.