Memorandum of Law TITLE: In Re Prohibition of the Quezon City Mayor of Small Town Lotto REQUESTED BY: Atty.

Myrna Feliciano DATE SUBMITTED: September 12, 2008 QUESTION PRESENTED Can the Mayor of Quezon City prohibit small town lotto? BRIEF ANSWER NO. By virtue of the Local Government Code, the power to suppress gambling is vested in the City Council and not on the Mayor. STATEMENT OF FACTS The Small Town Lottery (STL) project by the Philippine Charity Sweepstakes Office (PCSO) had been proposed since the Aquino presidency. In Raro vs. Sandiganbayan, the government during 1987 had given some officials some funds to facilitate the evaluation of the operation of STL1. In 2005, President Gloria Macapagal-Arroyo tasked the PCSO to help in the campaign to eradicate jueteng and other forms of illegal gambling by introducing STL2. The Board of Directors passed a Resolution providing for a test-run of a number of provinces3. The agency executed contracts with private companies for the said test run. The funding scheme of the STL are as follows4:

1

city or municipality, 10 percent; provincial government, 5 percent; congressional district, 2.5 percent; PNP, 5 percent; and PCSO, the remaining 7.5 percent

Raro vs. Sandiganbayan [Supreme Court] G.R. No. 108431. July 14, 2000 (Unreported, en banc) < http://www.supremecourt.gov.ph/jurisprudence/2000/july2000/108431.htm> September 10, 2008 [2]. 2 Walang Kupas: The PCSO History Philippine Charity Sweepstakes Office, (no date) Available http://www.pcso.gov.ph/press_site/features/features.aspx. September 10, 2008 [STL]. 3 Ibid 4 Ibid

The PCSO in early 2006 briefed the Committee on Games and Amusements regarding the Small Town Lottery project5. It was said to bring 7.2 billion worth of revenues to the government during the first year of its implementation6. Besides its benefits in the form of increased government revenue, the goals of the STL project as said in the brief are7:
[1] to discover additional sources of charity funds; [2] to generate, at the provincial and municipal level, funds for local charitable undertakings, economic development, and social amelioration activities; [3] to combat jueteng and other illegal numbers games; and [4] to provide alternative sources of income for those who might be economically dislocated by the eradication of jueteng and illegal numbers games.

The project was supported by the Malacaang and vowed the full transparency of the operations of the project8. Executive officials also assured the public that it took into consideration specific safeguards to protect the youth and to ensure that STLs will not be a front of illegal gambling operations9. However, the Congress held the issue and never passed the project into a law10. Local governments had various reactions to the project. Some cities like Iloilo openly accepted STL operations, believing that it would provide employment for the people who lost their jobs because of the government efforts to abolish jueteng11. Meanwhile, the governor of the province of Albay wants the PCSO to close STL establishments because it is being used as cover for jueteng12.
5

Committee on Games and Amusements, Committee News Vol. 13 No. 103, 13th Cong. (March 22, 2006). 6 Ibid 7 Ibid 8 Government of the Republic of the Philippines. Malacaang vows full transparency of Small Town Lottery operations The Official Site of the Government of the Republic of the Philippines (2006), Available http://www.gov.ph/news/default.asp?i=14721. September 10, 2008 [1]. 9 Supra at [5-9]. 10 Maila Ager, House seeks small town lottery suspension but PCSO opposes Inquirer.net (March 29, 2006), Available http://newsinfo.inquirer.net/breakingnews/nation/view_article.php?article_id=586. September 10, 2008.

11

Maricar M. Calubiran. City Council opens city doors to STL The News Today Online Edition (July 21, 2006), Available http://www.thenewstoday.info/2006/07/21/city.council.opens.city.doors.to.stl.html . September 10, 2008 [1 & 6]. 12 Ephraim Aguilar. Albay gov wants small town lotto stopped Inquirer.net, (August 20, 2006), Available http://newsinfo.inquirer.net/breakingnews/regions/view/20080820-

In the case of Quezon City, the implementation of STL faced opposition in 2006. Mayor Feliciano Belmonte refused the orders of Malacaang to make Quezon City one of the local government units where STLs will have its experimental run, and thus issued an order to stop the operation of STL in the city13. The enterprise which owns the STL franchise in the Quezon City, Benchmark Acquisition International, questioned the said order because the said agent was backed by a resolution from the Quezon City Council. Mayor Belmonte, meanwhile, said that the operation of was illegal because the establishment lacked business permit. At present, STL is considered as a national project of the PCSO but its operation is still questioned by local government officials and other sectors of the society14. DISCUSSION Introduction Lotteries in the Philippines Lottery is defined as [a] method of raising revenues, especially stategovernment revenues, by selling tickets and giving prizes (usually large cash prizes) to those who hold tickets with winning numbers that are drawn at random. Also termed as lotto. (Blacks Law Dictionary, 8th edition). Since 1833, lotteries have been in existence in the Philippines to generate revenues for the Spanish government15. It was stopped at the outbreak of the Philippine Revolution but revived again in the 1930s16. Despite its long existence, however, it can be shown from the statement of facts that the operation of STL had been widely disputed since the introduction of the project.

155817/Albay-gov-wants-small-town-lotto-stopped. September 10, 2008 [10] 13 QUEZON CITY MAYOR TOLD NOT TO BACK DOWN IN OPPOSING STL The Official Website of Senator Aquilino Nene Pimentel, Jr., (March 30, 2006), Available http://www.nenepimentel.org/news/20060330_STL.asp. September 10, 2008. 14 Supra at [14]. 15 PCSO History Philippine Charity Sweepstakes Office, (no date) Available http://www.pcso.gov.ph/aboutpcso_site/pcso_history.aspx. September 10, 2008 [1]. 16 E. Aguilar, Supra at [2].

In the case at hand, the question is whether or not the Mayor of Quezon City can prohibit small town lotto (STL). The Powers of the City Mayor There is no question about the power of the Quezon City Mayor to issue business permits. Republic Act No. 537, also called as An Act to Revise the Charter of Quezon City, in Section 10 paragraph (n) gives the City Mayor the power to grant or refuse municipal licenses as stated:
To grant or refuse municipal license or permit of all classes and to revoke the same for violation of the conditions upon which they are granted, or if acts prohibited by law or municipal ordinance are being committed under the protection of such license or permit or in the premises in which the business for which the same have been granted is carried on, or for any other good reason of general and public interest.

The Local Government Code (Republic Act No. 7160) in Section 16 grants the local government units with powers those which are essential to the promotion of the general welfare17. This is also known as the General Welfare Clause18. It can be said, however, that the power to prevent, suppress, and impose appropriate penalties for gambling is not vested in the City Mayor but to the Sangguniang Panglungsod or the City Council. As expressly stated in the Code:

SEC. 458. - Powers, Duties, Functions and Compensation. - (a) The sangguniang panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: (1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this connection, shall: xxx (v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and maintenance of houses of ill repute, gambling and other prohibited games of chance, fraudulent
17 18

Rep. Act No. 7160 (1991), sec. 16. Magtajas vs. Pryce Properties Corp., Inc, 234 SCRA 255

(1994)

devices and ways to obtain money or property, drug addiction, maintenance of drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of obscene or pornographic materials or publications, and such other activities inimical to the welfare and morals of the inhabitants of the city;

Furthermore, R.A. 537 in Section 11 paragraph (bb) expressly vests the power to suppress gambling houses, houses of ill fame and other disorderly houses to the City Council. Thus, the Mayor of Quezon City cannot prohibit STL without securing first the approval of the City Council. Having the question answered, it also seems necessary to discuss whether the local government has the power to prohibit small town lotto, in order to clarify more regarding the matter.

Whether or not the local government of Quezon City can prohibit small town lotto The Mayor, being a member of the City Council, also has the power to recommend such measures as he shall deem advantageous to the city19. Thus, by recommendation he can make the City Council suppress the establishment of gambling houses, specifically buildings which house small town lotto. However, it might be necessary to deal upon the legality of such form of gambling. The Philippine Charity Sweepstakes Office was created by Act No. 4130 during the Commonwealth Period to raise the revenues of the government20 through the conduct of charity sweepstakes races, lotteries, and similar activities subject to such rules and regulations as shall be promulgated by the Board of Directors21. Also, under B.P. 22 Section 9 paragraph (D), the Board of Directors has the power
To promulgate rules and regulations for the operation of the office and to do such act or acts as may be necessary for the attainment of its purposes and ojectives.

In adopting its Resolution in 2005, the Board of Directors can invoke this power of rule-making vested in it. However, as what can be construed from the
19 20 21

Rep. Act No. 537, sec. 10 par. (c). PSCO History supra Batas Blg. 42

reading of the law itself, paragraph (D) can pertain to Paragraph (A) To adopt or amend such rules to implement the provisions of this Act or paragraph (B) to determine and approve the most effective organizational framework for the Office and its staffing pattern. The authority vested in the Board of Directors needs further clarification. Its Resolution was questioned by local government units and many disputes have not yet been settled as of present because the period of conducting test runs is still undergoing. One of these issues involve whether or not STL is a legal form of gambling. It was stated that in form, STL is similar to jueteng. The difference lies on the permit issued by the PCSO to conduct such kind of gambling. The Constitution does not expressly prohibit gambling, but it is discouraged in other laws such as the Family Code, wherein the loss of one spouse in a game of chance shall not be chargeable to the funds of the conjugal partnership22. As thus held in Magtahas, there are two forms of gambling: legal and illegal. In this case, PAGCOR held the power to centralize and regulate all games of chance. The said agencys establishment of a casino in Cagayan de Oro was thus held as a valid exercise of this power, and not subject to the Local Government Code. Casinos are included in such forms of legal gambling in P.D. 1869. This power is not expressly provided in the PCSO Charter, neither was STL and such establishments held as legal by B.P. 42 or any other statute. The legality of STLs or jueteng is also at present not judged by the Congress or the courts; hence there is no conclusion on the matter. Thus there is an absence of express provisions of neither statutes nor jurisprudence providing STL as a legal form of gambling, thus making the Resolution of the Board of Directors questionable in the sense that it is not clear whether it violates provisions on the Local Government Code. However, the authority vested upon the City Councils is clear. In the case of Quezon City, the local government saw STL as a cloak for jueteng, resulting in police raids of its outlets23. Jueteng is an illegal form of gambling.
22 23

Exec. Order No. 209 (1988) Art. 164 No guidelines yet on small town lottery Sun.Star Davao (March 28, 2006), Available http://www.sunstar.com.ph/static/dav/2006/03/28/news/no.guidelines.yet.on.small.town.l ottery.html. September 11, 2008.

Acting within its power, the Quezon City local government closed down the said outlets and continued to refuse orders for its inclusion as one of the test-run localities. CONCLUSION The Quezon City Mayor by himself cannot issue an order to prohibit STL in his constituency, because it is not included in his powers as provided in Section 10 of RA 537. The power to suppress gambling is expressly vested in the City Council. The primary rule in statutory construction is that when the language of the law is clear, there is no need for interpretation. The legality of small town lotteries is a political question, which might be answered by a legislation of Congress. However, no such statute legalizes STLs nor are there any cases upholding its validity. What is clear, however, is that STL is a PSCO-permitted form of jueteng which transparent operation is a subject of controversy. Furthermore, there is a clear mandate of the law for local governments to suppress gambling. Since the legality of STL is still not passed upon by the legislative, then it is up to the discretion of the local governments to see if there STL establishments had been cloaking jueteng, a form of illegal gambling, as in the case of Quezon City.

Respectfully submitted, Maria Edsie Buado