"The LGUs have the power of local autonomy to exercise within their jurisdiction where they play a big role in approving and establishing STL stations," Press Secretary and presidential spokesmen Ignacio Bunye said, as he noted the LGUs’ autonomy enshrined under the 1991 Local Government Code of the Philippines, following the closure of STL stations in Quezon City due to the absence of a business license to operate.

The Arroyo administration revived STL to raise revenues to fund its socioeconomic programs and projects and curb jueteng.

STL, which is played like jueteng, is run and managed by the Philippine Charity Sweepstakes Office (PCSO), an attached agency under the Office of the President.

However, it was suspended due to questions on its implementation raised by the Department of Interior and Local Government (DILG), the Philippine National Police (PNP), and religious and anti-gambling groups.

"We will leave the PCSO to sort that out with the local government units concerned," said Bunye.

Meanwhile, officials of the Philippine Charity Sweepstakes Office (PCSO) yesterday cautioned government against forcing the state-owned lottery firm into abandoning its corporate obligations with operators of the controversial STL, saying that doing so would expose PCSO to various legal problems.

The PCSO made the appeal as it turned down a request by the Department of Interior and Local Government (DILG) to temporarily suspend its operation of STL in certain areas of the country.

The PCSO’s decision was apparently the reason why Quezon City Mayor Feliciano Belmonte Jr. ordered the arrest of STL operators and employees operating in the city.

Belmonte issued the directive despite the fact that the STL operations being undertaken by Benchmark Corp. have the blessing of the Quezon City Council which was made known through a resolution.

Rosario C. Uriarte, PCSO vice chairwoman and general manager, told STL agent corporations that the project will continue operating "pending the decision of the PCSO board of directors on the request of DILG Secretary Ronaldo V. Puno."

Earlier, Puno asked the PCSO to temporarily cease from conducting the STL test run until the role of the police is clarified.

However, in a meeting of the PCSO management on Friday afternoon, it was decided that, taking into consideration the legal implications of Puno’s order, only the state-owned lottery firm’s board has the authority to stop STL operations.

In a letter to Puno, Uriarte explained that the PCSO "could not immediately implement your request" to put on hold STL operations during the weekend.

"Pursuant to Republic Act No. 1169, as amended, the official action of the PCSO needs to be approved by its board of directors. Such that in our deed of authority issued to our various STL agent corporations, any revocation, termination, or suspension of the operations of the STL shall require the approval of the board of directors," Uriarte explained.

As this developed, the DILG gave the go signal to the PCSO to proceed with the operation of STL in four pilot areas in Luzon, following a meeting in Malacañang over the weekend where they resolved the issue over implementing guidelines.

According to well-placed DILG sources, PCSO Chairman Sergio Valencia and Uriarte met with Interior and Local Government Secretary Ronaldo Puno to iron out the differences over the implementation and operations of STL.

Puno has reportedly agreed on the "one-year test run" of the STL provided that they be given a clear cut implementing guidelines on its operations so that the government’s campaign against jueteng will not be derailed.

Malacañang had approved the PCSO’s one-year experimental period for the STL.

Sources said Puno, Uriarte, and Valencia focused on the issue of identifying those involved in legitimate STL operations supervised by the PCSO against those involved in jueteng.

Senior Supt. Samuel Pagdilao, spokesman of the Philippine National Police (PNP), said that the PNP has yet to receive a copy of the STL implementing rules and guildelines.

Sources said that Puno is expected to issue a memorandum on STL operations for police early this week.