Del Mar vs. Pagcor

11/10/2016
G.R.No.138298
TodayisThursday,November10,2016
RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.138298November29,2000
RAOULB.DELMAR,petitioner,
vs.
PHILIPPINE AMUSEMENT AND GAMING CORPORATION, BELLE JAIALAI CORPORATION, FILIPINAS
GAMINGENTERTAINMENTTOTALIZATORCORPORATION,respondents.
xx
G.R.No.138982November29,2000
FEDERICOS.SANDOVALIIandMICHAELT.DEFENSOR,petitioners,
vs.
PHILIPPINEAMUSEMENTANDGAMINGCORPORATION,respondent.
JUANMIGUELZUBIRI,intervenor.
DECISION
PUNO,J.:
ThesetwoconsolidatedpetitionsconcerntheissueofwhetherthefranchisegrantedtothePhilippineAmusement
andGamingCorporation(PAGCOR)includestherighttomanageandoperatejaialai.
First, we scour the significant facts. The Philippine Amusement and Gaming Corporation is a governmentowned
andcontrolledcorporationorganizedandexistingunderPresidentialDecreeNo.1869whichwasenactedonJuly
11,1983.PursuanttoSections1and10ofP.D.No.1869,respondentPAGCORrequestedforlegaladvicefromthe
SecretaryofJusticeastowhetherornotitisauthorizedbyitsChartertooperateandmanagejaialaifrontonsinthe
country. In its Opinion No. 67, Series of 1996 dated July 15, 1996, the Secretary of Justice opined that "the
authorityofPAGCORtooperateandmaintaingamesofchanceorgamblingextendstojaialaiwhichisaformof
sport or game played for bets and that the Charter of PAGCOR amounts to a legislative franchise for the
purpose."1 Similar favorable opinions were received by PAGCOR from the Office of the Solicitor General per its
letterdatedJune3,1996andtheOfficeoftheGovernmentCorporateCounselunderitsOpinionNo.150dated
June14,1996.2Thus,PAGCORstartedtheoperationofjaialaifrontons.
OnMay6,1999,petitionerRaoulB.delMarinitiallyfiledinG.R.No.138298aPetitionforProhibitiontoprevent
respondentPAGCORfrommanagingand/oroperatingthejaialaiorBasquepelotagames,byitselforinagreement
withBelleCorporation,onthegroundthatthecontrovertedactispatentlyillegalanddevoidofanybasiseitherfrom
theConstitutionorPAGCORsownCharter.
However, on June 17,1999,respondentPAGCORenteredintoan Agreementwith private respondents Belle Jai
Alai Corporation (BELLE) and Filipinas Gaming Entertainment Totalizator Corporation (FILGAME) wherein it was
agreedthatBELLEwillmakeavailabletoPAGCORtherequiredinfrastructurefacilitiesincludingthemainfronton,
aswellasprovidetheneededfundingforjaialaioperationswithnofinancialoutlayfromPAGCOR,whilePAGCOR
handlestheactualmanagementandoperationofjaialai.3
Thus,onAugust10,1999,petitionerDelMarfiledaSupplementalPetitionforCertiorariquestioningthevalidity
of said Agreement on the ground that PAGCOR is without jurisdiction, legislative franchise, authority or power to
enterintosuchAgreementfortheopening,establishment,operation,controlandmanagementofjaialaigames.
Alittleearlier,oronJuly1,1999,petitionersFedericoS.SandovalIIandMichaelT.DefensorfiledaPetition for
Injunction,docketedasG.R.No.138982,whichseekstoenjoinrespondentPAGCORfromoperatingorotherwise
managingthejaialaiorBasquepelotagamesbyitselforinjointventurewithBelleCorporation,forbeingpatently
illegal,havingnobasisinthelawortheConstitution,andinusurpationoftheauthoritythatproperlypertainstothe
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legislative branch of the government. In this case, a Petition in Intervention was filed by Juan Miguel Zubiri
alleging that the operation by PAGCOR of jaialai is illegal because it is not included in the scope of PAGCORs
franchisewhichcoversonlygamesofchance.
PetitionersRaoulB.delMar,FedericoS.SandovalII,MichaelT.Defensor,andintervenorJuanMiguelZubiri,are
suingastaxpayersandintheircapacityasmembersoftheHouseofRepresentativesrepresentingtheFirst
District of Cebu City, the Lone Congressional District of MalabonNavotas, the Third Congressional District of
QuezonCity,andtheThirdCongressionalDistrictofBukidnon,respectively.
Thebedrockissuesspawnedbythepetitionsatbarare:
G.R.No.138298
PetitionerDelMarraisesthefollowingissues:
I.TherespondentPAGCORhasnojurisdictionorlegislativefranchiseoractedwithgraveabuseofdiscretion,
tantamounttolackorexcessofjurisdiction,inarrogatinguntoitselftheauthorityorpowertoopen,pursue,
conduct,operate,controlandmanagejaialaigameoperationsinthecountry.
II.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxinexecutingitsagreementwithco
respondents Belle and Filgame for the conduct and management of jaialai game operations, upon undue
relianceonanopinionoftheSecretaryofJustice.
III.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxinenteringintoapartnership,joint
ventureorbusinessarrangementwithitscorespondentsBelleandFilgame,throughtheiragreementxxx.
TheAgreementwasenteredintothroughmanifestpartialityandevidentbadfaith(Sec.3(e),RA3019),thus
manifestlyandgrosslydisadvantageoustothegovernment[AntiGraftandCorruptPracticesAct,RA3019,
Sec.3(g)].
IV.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxtoawardtoitscorespondents
BelleandFilgametherighttoavailofthetaxbenefitswhich,bylaw,inuressolelyandexclusivelytoPAGCOR
itself.
V. x x x Respondent PAGCOR has equally no jurisdiction or authority x x x to cause the disbursement of
fundsfortheillegalestablishment,managementandoperationofjaialaigameoperations.
VI.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxtoawardorgrantauthorityforthe
establishment,managementandoperationofofffrontonbettingstationsorbookies.
VII.TherespondentPAGCORhasnojurisdictionorauthorityxxxinawardinguntoitscorespondentsBelle
andFilgame,withoutpublicbidding,thesubjectagreement.
Indefense,privaterespondentsBELLEandFILGAMEassert:
1.Thepetitionstatesnocauseofactionandmustbedismissedoutright
2.Thepetitionerhasnocauseofactionagainsttherespondents,henotbeingarealpartyininterest
3.Theinstantpetitioncannotbemaintainedasataxpayersuit,therebeingnoillegaldisbursementofpublic
fundsinvolved
4.TheinstantpetitionisessentiallyanactionforquowarrantoandmayonlybecommencedbytheSolicitor
General
5.TheoperationofjaialaiiswellwithinPAGCORsauthoritytooperateandmaintain.PAGCORsfranchiseis
intendedtobewideinitscoverage,theunderlyingconsiderationsbeing,that:(1)thefranchisemustbeused
to integrate all gambling operations in one corporate entity (i.e. PAGCOR) and (2) it must be used to
generatefundsforthegovernmenttosupportitssocialimpactprojects
6.Theagreementexecutedby,betweenandamongPAGCOR,BJACandFILGAMEisoutsidethecoverage
ofexistinglawsrequiringpublicbidding.
SubstantiallythesamedefenseswereraisedbyrespondentPAGCORinitsComment.
G.R.No.138982
Petitionerscontendthat:
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I.TheoperationofjaialaigamesbyPAGCORisillegalinthat:
1)thefranchiseofPAGCORdoesnotincludetheoperationofjaialaisincejaialaiisaprohibitedactivityunderthe
RevisedPenalCode,asamendedbyP.D.No.1602whichisotherwiseknownastheAntiGamblingLaw
2)jaialaiisnotagameofchanceandthereforecannotbethesubjectofaPAGCORfranchise.
II.Afranchiseisaspecialprivilegethatshouldbeconstruedstrictlyagainstthegrantee.
III. To allow PAGCOR to operate jaialai under its charter is tantamount to a license to PAGCOR to legalize and
operateanygamblingactivity.
InitsComment,respondentPAGCORaversthat:
1. An action for injunction is not among the cases or proceedings originally cognizable by the Honorable
SupremeCourt,pursuanttoSection1,Rule56ofthe1997RulesofCivilProcedure.
2.Assuming,arguendo,theHonorableSupremeCourthasjurisdictionoverthepetition,thepetitionshouldbe
dismissedforfailureofpetitionerstoobservethedoctrineonhierarchyofcourts.
3.xxxPetitionershavenolegalstandingtofileataxpayerssuitbasedontheircauseofactionnorarethey
therealpartiesininterestentitledtotheavailsofthesuit.
4.Respondentsfranchisedefinitelyincludestheoperationofjaialai.
5.Petitionershavenorightinessetobeentitledtoatemporaryrestrainingorderand/ortobeprotectedbya
writofpreliminaryinjunction.
TheSolicitor General claims that the petition, which is actually an action for quowarranto under Rule 66 of the
RulesofCourt,againstanallegedusurpationbyPAGCORofafranchisetooperatejaialai,shouldbedismissed
outrightbecauseonlytheSolicitorGeneralorpublicprosecutorcanfilethesamethatP.D.No.1869,theCharterof
PAGCOR,authorizesPAGCORtoregulateandoperategamesofchanceandskillwhichincludejaialaiandthat
P.D. No. 1602 did not outlaw jaialai but merely provided for stiffer penalties to illegal or unauthorized activities
relatedtojaialaiandotherformsofgambling.
Weshallfirstruleontheimportantproceduralissuesraisedbytherespondents.
RespondentsinG.R.No.138982contendthattheCourthasnojurisdictiontotakeoriginalcognizanceofapetition
forinjunctionbecauseitisnotoneofthoseactionsspecificallymentionedinSection1ofRule56ofthe1997Rules
ofCivilProcedure.Moreover,theyurgethatthepetitionshouldbedismissedforfailureofpetitionerstoobservethe
doctrineonhierarchyofcourts.
It is axiomatic that what determines the nature of an action and hence, the jurisdiction of the court, are the
allegationsofthepleadingandthecharacterofthereliefsought.4AcursoryperusalofthepetitionfiledinG.R.No.
138982willshowthatitisactuallyoneforProhibitionunderSection2ofRule65foritseekstopreventPAGCOR
from managing, maintaining and operating jaialai games. Even assuming, arguendo, that it is an action for
injunction,thisCourthasthediscretionarypowertotakecognizanceofthepetitionatbarifcompellingreasons,or
the nature and importance of the issues raised, warrant the immediate exercise of its jurisdiction.5 It cannot be
gainsaidthattheissuesraisedinthepresentpetitionshavegeneratedanoasisofconcern,evendaysofdisquietin
viewofthepublicinterestatstake.InTano,etal.vs.Socrates,etal.,6thisCourtdidnothesitatetotreatapetition
forcertiorariandinjunctionasaspecialcivilactionforcertiorariandprohibitiontoresolveanissueoffarreaching
impacttoourpeople.Thisisinconsonancewithourcaselawnowaccordednearreligiousreverencethatrulesof
procedurearebuttoolsdesignedtofacilitatetheattainmentofjusticesuchthatwhenitsrigidapplicationtendsto
frustrateratherthanpromotesubstantialjustice,thisCourthasthedutytosuspendtheiroperation.7
Respondentsalsoassailthelocusstandiorthestandingofpetitionerstofilethepetitionsatbarastaxpayersand
aslegislators.First,theyallegethatpetitionershavenolegalstandingtofileataxpayerssuitbecausetheoperation
ofjaialaidoesnotinvolvethedisbursementofpublicfunds.
Respondents' stance is not without oven ready legal support. A party suing as a taxpayer must specifically prove
that he has sufficient interest in preventing the illegal expenditure of money raised by taxation.8 In essence,
taxpayersareallowedtosuewherethereisaclaimofillegaldisbursementofpublicfunds,9orthatpublicmoneyis
being deflected to any improper purpose,10 or where petitioners seek to restrain respondent from wasting public
fundsthroughtheenforcementofaninvalidorunconstitutionallaw.11
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In the petitions at bar, the Agreement entered into between PAGCOR and private respondents BELLE and
FILGAME will show that all financial outlay or capital expenditure for the operation of jaialai games shall be
providedforbythelatter.Thus,theAgreementprovides,amongothers,that:PAGCORshallmanage,operateand
controlthejaialaioperationatnocostorfinancialrisktoit(Sec.1[A][1])BELLEshallprovidefunds,atnocostto
PAGCOR, for all capital expenditures (Sec. 1[B][1]) BELLE shall make available to PAGCOR, at no cost to
PAGCOR,theuseoftheintegratednationwidenetworkofonlinecomputerizedsystems(Sec.1[B][2])FILGAME
shallmakeavailableforuseofPAGCORonarentfreebasisthejaialaifrontonfacilities(Sec.1[C][1])BELLE&
FILGAMEjointlyundertaketoprovidefunds,atnocosttoPAGCOR,forpreoperatingexpensesandworkingcapital
(Sec. 1 [D][1]) and that BELLE & FILGAME will provide PAGCOR with goodwill money in the amount of P 200
million(Sec.1[D][2]).Infine,therecordisbarrenofevidencethattheoperationandmanagementofjaialaibythe
PAGCORinvolvesexpenditureofpublicmoney.
Be that as it may, in line with the liberal policy of this Court on locus standi when a case involves an issue of
overarching significance to our society,12 we find and so hold that as members of the House of Representatives,
petitionershavelegalstandingtofilethepetitionsatbar.Intheinstantcases,petitionerscomplainthattheoperation
of jaialai constitutes an infringement by PAGCOR of the legislatures exclusive power to grant franchise. To the
extentthepowersofCongressareimpaired,soisthepowerofeachmemberthereof,sincehisofficeconfersaright
toparticipateintheexerciseofthepowersofthatinstitution,sopetitionerscontend.Thecontentioncommandsour
concurrenceforitisnowsettledthatamemberoftheHouseofRepresentativeshasstandingtomaintaininviolate
theprerogatives,powersandprivilegesvestedbytheConstitutioninhisoffice.13Asprescientlystressedinthecase
ofKilosbayan,Inc.,viz:
"Wefindtheinstantpetitiontobeoftranscendentalimportancetothepublic.Theissuesitraisedareofparamount
publicinterestandofacategoryevenhigherthanthoseinvolvedinmanyoftheaforecitedcases.Theramifications
ofsuchissuesimmeasurablyaffectthesocial,economic,andmoralwellbeingofthepeopleevenintheremotest
barangays of the country and the counterproductive and retrogressive effects of the envisioned online lottery
systemareasstaggeringasthebillionsinpesositisexpectedtoraise.Thelegalstandingthenofthepetitioners
deservesrecognitionxxx."
After hurdling the threshold procedural issues, we now come to the decisive substantive issue of whether
PAGCOR's legislative franchise includes the right to manage and operate jaialai.14 The issue is of supreme
significance for its incorrect resolution can dangerously diminish the plenary legislative power of Congress, more
especiallyitsexerciseofpolicepowertoprotectthemoralityofourpeople.Afteracircumspectconsiderationofthe
clashingpositionsoftheparties,weholdthatthecharterofPAGCORdoesnotgiveitanyfranchisetooperateand
managejaialai.
FIRST. A "franchise" is a special privilege conferred upon a corporation or individual by a government duly
empoweredlegallytograntit.15Itisaprivilegeofpublicconcernwhichcannotbeexercisedatwillandpleasure,
but should be reserved for public control and administration, either by the government directly, or by public
agents, under such conditions and regulations as the government may impose on them in the interest of the
public.16Afranchisethusemanatesfromasovereignpower17andthegrantisinherentlyalegislativepower.It
may,however,bederivedindirectly from the state through an agency to which the power has been clearlyand
validlydelegated.18Insuchcases,Congressprescribestheconditionsonwhichthegrantofafranchisemaybe
made.19 Thus, the mannerof granting the franchise, to whom it may be granted, the mode of conducting the
business, the character and quality of the service to be rendered and the duty of the grantee to the public in
exercising the franchise are almost always defined in clear and unequivocal language. In the absence of these
definingterms,anyclaimtoalegislativefranchisetooperateagameplayedforbetsanddenouncedasa
menacetomoralityoughttoberejected.
SECOND. A historicalstudy of the creation, growth and development of PAGCOR will readily show that it was
nevergivenalegislativefranchisetooperatejaialai.
(2.a)BeforethecreationofPAGCOR,a25yearrighttooperatejaialaiinManilawasgivenbyPresidentMarcos
tothePhilippineJaiAlaiandAmusementCorporationthencontrolledbyhisinlaws,theRomualdezfamily.
ThefranchisewasgrantedonOctober16,1975thruP.D.No.810issuedbyPresidentMarcosintheexerciseof
hismartiallawpowers.Onthatverydate,the25yearfranchiseofthepriorgranteeexpiredandwasnotrenewed.
Afewmonthsbefore,PresidentMarcoshadissuedP.D.No.771datedAugust20,1975,revokingtheauthorityof
localgovernmentunitstoissuejaialaifranchises.Bytheseacts,theformerPresidentexercisedcompletecontrolof
thesovereignpowertograntfranchises.
(2.b) Almost one year and a half after granting the Philippine JaiAlai and Amusement Corporation a 25year
franchisetooperatejaialaiinManila,PresidentMarcoscreatedPAGCORonJanuary1,1977byissuingP.D.No.
1067A.Thedecreeisentitled"CreatingthePhilippineAmusementsandGamingCorporation,DefiningItsPowers
andFunctions,ProvidingFundsthereforandforOtherPurposes."ItsDeclarationofPolicy20trumpetedtheintent
thatPAGCORwascreatedtoimplement"thepolicyoftheStatetocentralizeandintegrateallgamesofchance
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notheretoforeauthorizedbyexistingfranchisesorpermittedbylawxxx."Oneofitswhereasclausesreferred
totheneedtoprevent"theproliferationofillegalcasinosorclubsconductinggamesofchancexxx."21Toachieve
this objective, PAGCOR was empowered "to establish and maintain clubs, casinos, branches, agencies or
subsidiaries,orotherunitsanywhereinthePhilippinesxxx."22
(2.c)OnthesamedayaftercreatingPAGCOR,PresidentMarcosissuedP.D.No.1067BgrantingPAGCOR"xxx
a Franchise to Establish, Operate, and Maintain Gambling Casinos on Land or Water Within the Territorial
Jurisdiction of the Republic of the Philippines." Obviously, P.D. No. 1067A which created the PAGCOR is not a
grant of franchise to operate the game of jaialai. On the other hand, Section 1 of P.D. No. 1067B provides the
natureandtermofPAGCORSfranchisetomaintaingamblingcasinos(notafranchisetooperatejaialai),viz:
"SECTION 1. NATURE AND TERM OF FRANCHISE. Subject to the terms and conditions established in this
Decree, the Philippine Amusements and Gaming Corporation is hereby granted for a period of twentyfive (25)
years,renewableforanother25years,theright,privilege,andauthoritytooperateandmaintaingamblingcasinos,
clubs and other recreation or amusement places, sports, gaming pools, i.e., basketball, football, etc., whether on
landorsea,withintheterritorialjurisdictionoftheRepublicofthePhilippines."
Section2ofthesamedecreespellsoutthescopeofthePAGCORfranchisetomaintaingamblingcasinos(not
afranchisetooperatejaialai),viz:
"SEC.2.SCOPEOFFRANCHISE.InadditiontotherightandprivilegesgranteditunderSec.1,thisFranchise
shallentitlethefranchiseholdertodoandundertakethefollowing:
(1) Enter into operators and/or management contracts with duly registered and accredited company
possessingtheknowledge,skill,expertiseandfacilitiestoinsuretheefficientoperationofgamblingcasinos
Provided, That the service fees of such management and/or operator companies whose services may be
retainedbythefranchiseholderofthisFranchiseshallnotintheaggregateexceedten(10%)percentofthe
grossincome.
(2) Purchase foreign exchange that may be required for the importation of equipment, facilities and other
gambling paraphernalia indispensably needed or useful to insure the successful operation of gambling
casinos.
(3)Acquiretherightofway,accesstoorthrupubliclands,publicwatersorharbors,includingtheManilaBay
Area such right to include, but not limited to, the right to lease and/or purchase public lands, government
reclaimedlands,aswellaslandofprivateownershiporthoseleasedfromthegovernment.Thisrightshall
carrywithittheprivilegeofthefranchiseholdertoutilizepiers,quays,boatlandings,andsuchotherpertinent
andrelatedfacilitieswithinthesespecifiedareasforuseaslanding,anchoring,orberthingsitesinconnection
withitsauthorizedcasinooperations.
(4) Build or construct structures, buildings, coastways, piers, docks, as well as any other form of land and
berthingfacilitiesforitsfloatingcasinos.
(5)Todoandperformsuchotheractsdirectlyrelatedtotheefficientandsuccessfuloperationandconductof
gamesofchanceinaccordancewithexistinglawsanddecrees."
(2.d)StillonthedayaftercreatingPAGCOR,PresidentMarcosissuedP.D.No.1067CamendingP.D.
Nos. 1067A and B. The amendment provides that PAGCORs franchise to maintain gambling
casinos "x x x shall become exclusive in character, subject only to the exception of existing
franchises and games of chance heretofore permitted by law, upon the generation by the franchise
holderofgrossrevenuesamountingtoP1.2billionanditscontributiontherefromoftheamountofP720
millionasthegovernmentsshare."
(2.e)OnJune2,1978,PresidentMarcosissuedP.D.No.1399amendingP.D.Nos.1067Aand1067
B.TheamendmentsdidnotchangethenatureandscopeofthePAGCORfranchisetomaintain
gambling casinos. Rather, they referred to the Composition of the Board of Directors,23 Special
ConditionofFranchise,24Exemptions,25andOtherConditions.26
(2.f)OnAugust13,1979,PresidentMarcosissuedP.D.No.1632.Again,theamendmentsdidnot
change a comma on the nature and scope of PAGCORs franchise to maintain gambling
casinos.Theyrelatedtotheallocationofthe60%shareofthegovernmentwherethehostareaisa
city or municipality other than Metro Manila,27 and the manner of payment of franchise tax of
PAGCOR.28
(2.g)OnJuly11,1983,PresidentMarcosissuedP.D.No.1869entitled"ConsolidatingandAmending
P.D. Nos. 1067A, 1067B, 1067C, 1399 and 1632 Relative to the Franchise and Power of the
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PAGCOR."As a consolidated decree, it reiterated the nature and scope of PAGCORs existing
franchisetomaintaingamblingcasinos(notafranchisetooperatejaialai),thus:
"SEC. 10. Nature and term of franchise. Subject to the terms and conditions established in this Decree, the
Corporationisherebygrantedforaperiodoftwentyfive(25)years,renewableforanothertwentyfive(25)years,
the rights, privilege and authority to operate and maintain gambling casinos, clubs, and other recreation or
amusementplaces,sports,gamingpools,i.e.basketball,football,lotteries,etc.,whetheronlandorsea,withinthe
territorialjurisdictionoftheRepublicofthePhilippines.
SEC.11.ScopeofFranchise.InadditiontotherightsandprivilegesgranteditundertheprecedingSection,this
Franchiseshallentitlethecorporationtodoandundertakethefollowing:
(1) Enter into operating and/or management contracts with any registered and accredited company
possessingtheknowledge,skill,expertiseandfacilitiestoinsuretheefficientoperationofgamblingcasinos
provided, that the service fees of such management and/or operator companies whose services may be
retainedbytheCorporationshallnotintheaggregateexceedten(10%)percentofthegrossincome
(2) Purchase foreign exchange that may be required for the importation of equipment, facilities and other
gambling paraphernalia indispensably needed or useful to insure the successful operation of gambling
casinos
(3)Acquiretherightofwayoraccesstoorthrupublicland,publicwatersorharbors,includingtheManilaBay
Area such right shall include, but not be limited to, the right to lease and/or purchase public lands,
government reclaimed lands, as well as lands of private ownership or those leased from the Government.
This right shall carry with it the privilege of the Corporation to utilize piers, quays, boat landings, and such
other pertinent and related facilities within these specified areas for use as landing, anchoring or berthing
sitesinconnectionwithitsauthorizedcasinooperations
(4)Buildorconstructstructures,buildings,castways,piers,decks,aswellasanyotherformoflandingand
boardingfacilitiesforitsfloatingcasinosand
(5)Todoandperformsuchotheractsdirectlyrelatedtotheefficientandsuccessfuloperationandconductof
gamesofchanceinaccordancewithexistinglawsanddecrees."
(2.h) Then came the 1986 EDSA revolution and the end of the Marcos regime. On May 8, 1987, President
CorazonAquino issued Executive Order No. 169 repealing P.D. Nos. 810, 1124 and 1966 thus revoking the
franchiseofthePhilippineJaiAlaiandAmusementCorporationcontrolledbytheRomualdezestooperate
jaialaiinManila.PAGCORsfranchisetooperategamblingcasinoswasnotrevoked.Neitherwasitgivena
franchisetooperatejaialai.
THIRD. In light of its legal history, we hold that PAGCOR cannot maintain that section 10 of P.D. No. 1869
grantsitafranchisetooperatejaialai.Section10provides:
"SEC. 10 Nature and term of franchise. Subject to the terms and conditions established in this Decree, the
the rights, privilege and authority to operate and maintain gambling casinos, clubs, and other recreation or
amusementplaces,sports,gamingpools,i.e.,basketball,football,lotteries,etc.,whetheronlandorsea,withinthe
territorialjurisdictionoftheRepublicofthePhilippines."
(3.a) P.D. No. 1869 is a mere consolidation of previous decrees dealing with PAGCOR. PAGCOR cannot seek
comfortinsection10asitisnotanewprovisioninP.D.No.1869and,fromthebeginningofitshistory,wasnever
meant to confer it with a franchise to operate jaialai. It is a reiteration of section 1 of P.D. No. 1067B which
provides:
"SECTION1.NatureandTermofFranchise.SubjecttothetermsandconditionsestablishedinthisDecree,the
PhilippineAmusementsandGamingCorporationisherebygrantedforaperiodoftwentyfive(25)years,renewable
foranother25years,theright,privilege,andauthoritytooperateandmaintaingamblingcasinos,clubsandother
recreationoramusementplaces,sportsgamingpools,i.e.,basketball,football,etc.,whetheronlandorsea,within
theterritorialjurisdictionoftheRepublicofthePhilippines."
(3.b) Plainly, section 1 of P.D. No. 1067B which was reenacted as section 10 of P.D. No. 1869 is not a grant of
legislativefranchisetooperatejaialai.P.D.No.1067Bisafranchisetomaintaingamblingcasinosalone.Thetwo
franchisesareasdifferentasdayandnightandnoalchemyoflogicwilleffacetheirdifference.
(3.c) PAGCOR's stance becomes more sterile when we consider the law's intent. It cannot be the intent of
President Marcos to grant PAGCOR a franchise to operate jaialai because a year and a half before it was
chartered,heissuedP.D.No.810grantingPhilippineJaiAlaiandAmusementCorporationa25yearfranchiseto
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operate jaialai in Manila. This corporation is controlled by his inlaws, the Romualdezes.29 To assure that this
Romualdez corporation would have no competition, President Marcos earlier revoked the power of local
governmentstograntjaialaifranchises.Thus,PAGCORsstancethatP.D.No.1067Bisitsfranchisetooperate
jaialai,whichwouldhavecompetedwiththeRomualdezesfranchise,extendscredulitytothelimit.Indeed,
P.D.No.1067AwhichcreatedPAGCORmadeitcrystalclearthatitwastoimplement"thepolicyoftheStateto
centralizeandintegrateallgamesofchancenotheretoforeauthorizedbyexistingfranchisesorpermittedby
law,"whichincludedthePhilippineJaiAlaiandAmusementCorporation.
(3.d)TherecanbenosliverofdoubtthatunderP.D.No.1869,PAGCORsfranchiseisonlyto operate gambling
casinosandnotjaialai.Thisconclusioniscompelledbyaplainreadingofitsvariousprovisions,viz:
"SECTION1.DeclarationofPolicy.ItisherebydeclaredtobethepolicyoftheStatetocentralizeandintegrateall
gamesofchancenotheretoforeauthorizedbyexistingfranchisesorpermittedbylawinordertoattainthefollowing
objectives:
xxxxxx
(b)Toestablishandoperateclubsandcasinos,foramusementandrecreation,includingsports,gamingpools
(basketball,football,lotteries,etc.)andsuchotherformsofamusementandrecreationincludinggamesofchance,
whichmaybeallowedbylawwithintheterritorialjurisdictionofthePhilippinesandwhichwill:xxx(3)minimize,if
nottotallyeradicate,theevils,malpracticesandcorruptionsthatarenormallyprevalentintheconductand
operationofgamblingclubsandcasinoswithoutdirectgovernmentinvolvement.
xxxxxx
TITLEIVGRANTOFFRANCHISE
SEC. 10. Nature and term of franchise. Subject to the terms and conditions established in this Decree, the
therights,privilegesandauthoritytooperateandmaintaingamblingcasinos,clubs,andotherrecreationor
amusementplaces,sports,gamingpools,i.e.basketball,football,lotteries,etc.whetheronlandorsea,withinthe
territorialjurisdictionoftheRepublicofthePhilippines.
SEC.11.ScopeofFranchise.InadditiontotherightsandprivilegesgranteditundertheprecedingSection,this
FranchiseshallentitletheCorporationtodoandundertakethefollowing:
(1)Enterintooperatingand/ormanagementcontractswithanyregisteredandaccreditedcompanypossessingthe
knowledge,skill,expertiseandfacilitiestoinsuretheefficientoperationofgamblingcasinosprovided,thatthe
servicefeesofsuchmanagementand/oroperatorcompanieswhoseservicesmayberetainedbytheCorporation
shallnotintheaggregateexceedten(10%)percentofthegrossincome
(2)Purchaseforeignexchangethatmayberequiredfortheimportationofequipment,facilitiesandothergambling
paraphernaliaindispensablyneededorusefultoinsurethesuccessfuloperationofgamblingcasinos
(3)Acquiretherightofwayoraccesstoorthrupublicland,publicwatersorharborsxxx.Thisrightshallcarrywith
it the privilege of the Corporation to utilize x x x such other pertinent and related facilities within these specified
areasxxxinconnectionwithitsauthorizedcasinooperations
(4)Buildorconstructstructures,buildingcastways,piers,decks,aswellasanyotherformoflandingandboarding
facilitiesforitsfloatingcasinos
xxxxxx
SEC.13.Exemptions.
(1)Customsduties,taxesandotherimpostsonimportations.Allimportationsofequipment,vehicles,automobiles,
boats,ships,barges,aircraftandsuchothergamblingparaphernalia,includingaccessoriesorrelatedfacilities,for
thesoleandexclusiveuseofthecasinos,theproperandefficientmanagementandadministrationthereof,and
suchotherclubs.RecreationoramusementplacestobeestablishedunderandbyvirtueofthisFranchiseshallbe
exemptfromthepaymentofallkindsofcustomsduties,taxesandotherimposts,includingallkindsoffees,levies,
orchargesofanykindornature,whetherNationalorLocal.
Vessels and/or accessory ferry boats imported or to be imported by any corporation having existing contractual
arrangementswiththeCorporation,forthesoleandexclusiveuseofthecasinoortobeusedtoservicethe
operations and requirements of the casino, shall likewise be totally exempt from the payment of all customs
duties,xxx.
(2)Incomeandothertaxes.(a)xxx
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(b)Others:Theexemptionhereingrantedforearningsderivedfromtheoperationsconductedunderthefranchisex
xxshallinuretothebenefitofandextendtocorporation(s)xxxwithwhomtheCorporationoroperatorhas any
contractual relationship in connection with the operations of the casino(s) authorized to be conducted
underthisFranchisexxx.
(3) Dividend Income. x x x The dividend income shall not in such case be considered as part of beneficiaries
taxableincomeprovided,however,thatsuchdividendincomeshallbetotallyexemptedfromincomeorotherforms
oftaxesifinvestedwithinsix(6)monthsfromdatethedividendincomeisreceived,inthefollowing:
(a)operationofthecasino(s)orinvestmentsinanyaffiliateactivitythatwillultimatelyredoundtothebenefitofthe
Corporation or any other corporation with whom the Corporation has any existing arrangements in connection
withorrelatedtotheoperationsofthecasino(s)
xxxxxx
(4)UtilizationofForeignCurrencies.TheCorporationshallhavetherightandauthority,solelyandexclusivelyin
connectionwiththeoperationsofthecasino(s),topurchase,receive,exchangeanddisburseforeignexchange,
subjecttothefollowingtermsandconditions:
(a) A specific area in the casino(s) or gaming pit shall be put up solely and exclusively for players and patrons
utilizingforeigncurrencies
(b)TheCorporationshallappointanddesignateadulyaccreditedcommercialbankagentoftheCentralBank,to
handle,administerandmanagetheuseofforeigncurrenciesinthecasino(s)
(c) The Corporation shall provide an office at casino(s) for the employees of the designated bank, agent of the
CentralBank,wheretheCorporationwillmaintainadollaraccountwhichwillbeutilizedexclusivelyfortheabove
purposeandthecasinodollartreasuryemployees
xxxxxx
(f) The disbursement, administration, management and recording of foreign exchange currencies used in the
casino(s)shallbecarriedoutinaccordancewithexistingforeignexchangeregulationsxxx.
SEC.14.OtherConditions.
(1)Place.TheCorporationshallconductthegamblingactivitiesorgamesofchanceonlandorwaterwithinthe
territorial jurisdiction of the Republic of the Philippines. When conducted on water, the Corporation shall have the
righttodockthefloatingcasino(s)inanypartofthePhilippineswherevessels/boatsareauthorizedtodockunder
theCustomsandMaritimeLaws.
(2)Time.Gamblingactivitiesmaybeheldandconductedatanytimeofthedayornightprovided,however,thatin
places where curfewhoursareobserved, all players and personnel of gambling casinos shall remain within
thepremisesofthecasinos.
(3)Personsallowedtoplay.xxx
(4)Personsnotallowedtoplay.
xxxxxx
Fromtheseareexceptedthepersonnelemployedbythecasinos,specialguests,orthosewhoatthediscretion
oftheManagementmaybeallowedtostayinthepremises.
TITLEVIEXEMPTIONFROMCIVILSERVICELAW
SEC.16.Exemption.AllpositionintheCorporation,whethertechnical,administrative,professionalormanagerial
areexemptfromtheprovisionsoftheCivilServiceLaw,rulesandregulations,andshallbegovernedonlybythe
personnelmanagementpoliciessetbytheBoardofDirectors.Allemployeesofthecasinosandrelatedservices
shallbeclassifiedas"Confidential"appointees.
TITLEVIITRANSITORYPROVISIONS
SEC.17.TransitoryProvisions.xxx
SEC.18.ExemptionfromLaborLaws.Nounionoranyformofassociationshallbeformedbyallthoseworkingas
employeesofthecasinoorrelatedserviceswhetherdirectlyorindirectly.Forsuchpurpose,allemployeesofthe
casinosorrelatedservicesshallbeclassifiedas"confidential"appointeesandtheiremploymentthereof,whether
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bythefranchiseholder,ortheoperators,orthemanagers,shallbeexemptfromtheprovisionsoftheLaborCodeor
anyimplementingrulesandregulationsthereof."
Fromitscreationin1977anduntil1999,PAGCORneverallegedthatithasafranchisetooperatejaialai.
Twentytwoyearsisalongstretchofsilence.Itisinexplicablewhyitneverclaimeditsallegedfranchisefor
solongatimewhichcouldhaveallowedittoearnbillionsofpesosasadditionalincome.
(3.e)Tobesure,weneednotresorttointellectualjujitsutodeterminewhetherPAGCORhasafranchisetooperate
jaialai.Itiseasytotellwhetherthereisalegislativegrantornot.Knownasthegameofathousandthrills,jaialai
isadifferentgame,hence,thetermsandconditionsimposedonafranchiseearespelledoutinstandard
form.A review of some laws and executive orders granting a franchise to operate jaialai will demonstrate these
standardtermsandconditions,viz:
(3.e.1)CommonwealthActNo.485(AnActtoPermitBetsintheGameofBasquePelota)June18,1939
"BeitenactedbytheNationalAssemblyofthePhilippines:
SECTION 1. Any provision of existing law to the contrary notwithstanding, it shall be permissible in the game of
Basque pelota, a game of skill (including the games of pala, raqueta, cestapunta, remonte and mano), in which
professional players participate, to make either direct bets or bets by means of a totalizer Provided, That no
operatorormaintainerofaBasquepelotacourtshallcollectascommissionafeeinexcessoftwelvepercentumon
suchbets,ortwelvepercentumofthereceiptsofthetotalizer,andofsuchpercentumthreeshallbepaidtothe
GovernmentofthePhilippines,fordistributioninequalsharesbetweentheGeneralHospitalandthePhilippineAnti
tuberculosisSociety.
SEC. 2. Any person, company or corporation, that shall build a court for Basque pelota games with bets within
eighteen months from the date of the approval of this Act, shall thereunder have the privilege to maintain and
operatethesaidcourtforatermoftwentyfiveyearsfromthedateinwhichthefirstgamewithbetsshallhavetaken
place.Attheexpirationofthesaidtermoftwentyfiveyears,thebuildingsandthelandonwhichthecourtandthe
stadiumshallbeestablished,shallbecomethepropertyoftheGovernmentofthePhilippines,withoutpayment.
SEC.3.ThelocationanddesignofthebuildingsthatshallbeusedforthesamegamesofBasquepelota,shallhave
priorapprovaloftheBureauofPublicWorksandtheoperatorshallpayalicensefeeoffivehundredpesosayearto
thecityormunicipalityinwhichtheestablishmentshallbesituated,inadditiontotherealestatetaxdueonsuch
realproperty.
SEC.4.ThisActshalltakeeffectuponitsapproval.
ENACTED,withoutExecutiveapproval,June18,1939."
(3.e.2) Executive Order No. 135 (Regulating the Establishment, Maintenance and Operation of Frontons and
BasquePelotaGames[JaiAlai])May4,1948
"ByvirtueofthepowersvestedinmebyCommonwealthActNo.601,entitledAnActtoregulatetheestablishment,
maintenanceandoperationofplacesofamusementsincharteredcities,municipalitiesandmunicipaldistricts,the
followingrulesandregulationsgoverningfrontonsandbasquepelotagamesareherebypromulgated:
SECTION1.Definitions.WheneverusedinthisOrderandunlessthecontextindicatesadifferentmeaning,the
followingtermsshallbearthemeaningindicatedherein:
(a) Basque pelota game shall include the pelota game with the use of pala, raqueta, cesta punta, remonte and
mano,inwhichprofessionalplayersparticipate.
(b)Frontoncomprisesthecourtwherebasquepelotagamesareplayed,inlcudingtheadjoiningstructuresusedin
connectionwithsuchgames,suchasthebettingboothsandgalleries,totalizatorequipment,andthegrandstands
wherethepublicisadmittedinconnectionwithsuchgames.
(c)Pelotariisaprofessionalplayerengagedinplayingbasquepelota.
(d)Professionalplayerisonewhoplaysforcompensation.
SEC.2.Supervisionovertheestablishmentandoperationoffrontonsandbasquepelotagames.Subjecttothe
administrative control and supervision of the Secretary of the Interior, city or municipal mayors shall exercise
supervision over the establishment, maintenance and operation of frontons and basque pelota games within their
respectiveterritorialjurisdiction,aswellasovertheofficialsandemployeesofsuchfrontonsandshallseetoitthat
alllaws,ordersandregulationsrelatingtosuchestablishmentsaredulyenforced.Subjecttosimilarapproval,they
shallappointsuchpersonnelasmaybeneededinthedischargeoftheirdutiesandfixtheircompensationwhich
shallbepaidoutoftheallotmentofonehalfpercentum(1/2%)outofthetotalbetsorwagerfundssetasideand
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madeavailableforthepurposeinaccordancewithSection19hereof.TheSecretaryoftheInteriorshallhavethe
powertoprohibitorallowtheoperationofsuchfrontonsonanydayordays,ormodifytheirhourofoperationandto
prescribeadditionalrulesandregulationsgoverningthesame.
SEC.3.Particulardutiesofcityormunicipalmayorsregardingoperationofbasquepelotagamesandfrontons.In
connectionwiththeirdutytoenforcethelaws,orders,rulesandregulationsrelatingtofrontonsandbasquepelota
games,thecityormunicipalmayorshallrequirethatsuchfrontonsshallbeproperlyconstructedandmaintainedin
accordancewiththeprovisionsofCommonwealthActNo.485shallseethatthepropersanitaryaccommodations
areprovidedinthegrandstandsandotherstructurescomprisingsuchfrontonsandshallrequirethatsuchfrontons
beprovidedwithaproperlyequippedclinicforthetreatmentofinjuriestothepelotaris.
SEC.4.Permits.Intheabsenceofalegislativefranchise,itshallbeunlawfulforanypersonorentitytoestablish
and/or operate frontons and conduct basque pelota games without a permit issued by the corresponding city or
municipalmayor,withtheapprovaloftheprovincialgovernorinthelattercase.Anypermitissuedhereundershall
bereportedbytheprovincialgovernororcitymayor,asthecasemaybe,totheSecretaryoftheInterior.
SEC.5.Licensefees.Thefollowinglicensefeesshallbepaid:
(a) For each basque pelota fronton, five hundred pesos (P500) annually, or one hundred and twentyfive pesos
(P125)quarterly.
(b) For pelotaris, judges or referees and superintendents (intendentes) of basque pelota games, eighteen pesos
(P18)eachannually.
Theabovelicensefeesshallaccruetothefundsofthecityormunicipalitywherethefrontonisoperated.
SEC.6.Location.ExceptinthecaseofanybasquepelotafrontonlicensedasofDecember8,1941,nobasque
pelotafrontonshallbemaintainedoroperatedwithinaradiusof200linealmetersfromanycityhallormunicipal
building, provincial capitol building, national capitol building, public playa or park, public school, church, hospital,
athleticstadium,oranyinstitutionoflearningorcharity.
SEC.7.Buildings,sanitaryandparkingrequirements.Nopermitorlicensefortheconstructionoroperationofa
basque pelota fronton shall be issued without proper certificate of the provincial or city engineer and architect
certifyingtothesuitabilityandsafetyofthebuildingandofthedistrictorcityhealthofficercertifyingtothesanitary
condition of said building. The city or municipal mayor may, in his discretion and as circumstances may warrant,
requirethatthefrontonbeprovidedwithsufficientspaceforparkingsothatthepublicroadsandhighwaysbenot
usedforsuchpurposes.
SEC.8.Protestandcomplaint.Anypersonwhobelievesthatanybasquepelotafrontonislocatedorestablished
inanyplacenotauthorizedhereinorisbeingoperatedinviolationofanyprovisionofthisordermayfileaprotestor
complaint with the city or municipal mayor concerned, and after proper investigation of such complaint the city or
municipalmayormaytakesuchactionashemayconsidernecessaryinaccordancewiththeprovisionsofsection
10hereof.AnydecisionrenderedonthematterbythecityormunicipalmayorshallbeappealabletotheSecretary
oftheInterior.
SEC. 9. Persons prohibited admission. Persons under 16 years of age, persons carrying firearms or deadly
weaponsofanydescription,exceptgovernmentofficialsactuallyperformingtheirofficialdutiestherein,intoxicated
persons,andpersonsofdisorderlynatureandconductwhoareapttodisturbpeaceandorder,shallnotbeadmitted
orallowedinanybasquepelotafronton:Provided,Thatpersonsunder16yearsofagemay,whenaccompaniedby
theirparentsorguardians,beadmittedthereinbutinnocaseshallsuchminorsbeallowedtobet.
SEC. 10. Gambling prohibited. No card games or any of the prohibited games shall be permitted within the
premises of any basque pelota fronton and upon satisfactory evidence that the operator or entity conducting the
gamehastoleratedtheexistenceofanyprohibitedgamewithinitspremises,thecityormunicipalmayormaytake
thenecessaryactioninaccordancewiththeprovisionsofsection11hereof.
SEC.11.Revocationorsuspensionofpermitsandlicenses.Thecityormunicipalmayor,subjecttotheapproval
oftheSecretaryoftheInterior,maysuspendorrevokeanylicensegrantedunderthisOrdertoanybasquepelota
frontonortoanyofficialoremployeethereof,forviolationofanyoftherulesandregulationsprovidedinthisOrder
or those which said city or municipal mayor may prescribe, or for any just cause. Such suspension or revocation
shalloperatetoforfeittothecityormunicipalityconcernedallsumspaidtherefor.
SEC.12.Appeals.AnyactiontakenbythecityormunicipalmayorundertheprovisionsofthisOrdershallstand,
unlessmodifiedorrevokedbytheSecretaryoftheInterior.
SEC.13.Books,recordsandaccounts.Thecityormunicipalmayor,orhisdulyauthorizedrepresentative,shall
havethepowertoinspectatalltimesthebooks,records,andaccountsofanybasquepelotafronton.Hemay,inhis
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discretion and as the circumstances may warrant, require that the books and financial or other statements of the
personorentityoperatingthegamebekeptinsuchmannerashemayprescribe.
SEC.14.Daysandhoursofoperation.Exceptasmayotherwisebeprovidedherein,basquepelotagameswith
bettingshallbeallowedeveryday,exceptingSundays,from2oclockp.m.tonotlaterthan11oclockp.m.
SEC.15.Pelotaris,judges,referees,etc.shallbelicensed.Nopersonorentityoperatingabasquepelotafronton,
wherein games are played with betting, shall employ any pelotari, judge or referee, superintendent of games
(intendente),oranyotherofficialwhosedutiesareconnectedwiththeoperationorsupervisionofthegames,unless
suchpersonhasbeendulylicensedbythecityormunicipalmayorconcerned.Suchlicenseshallbegrantedupon
satisfactoryproofthattheapplicantisingoodhealth,knowtherulesandusagesofthegame,andisapersonof
goodmoralcharacterandofundoubtedhonesty.Inthecaseofpelotaris,suchlicenseshallbegrantedonlyupon
thefurtherconditionthattheyareabletoplaythegamewithreasonableskillandwithsafetytothemselvesandto
theiropponents.Thecityormunicipalmayormayfurtherrequireotherreasonablequalificationsforapplicantstoa
license,nototherwiseprovidedherein.Suchlicenseshallbeobtainedyearly.
SEC.16.Installationofautomaticelectrictotalizator.Anypersonorentityoperatingafrontonwhereinbettingin
anyformisallowedshallinstallinitspremiseswithintheperiodofoneyearfromthedatethisOrdertakeseffect,an
automatic electrically operated indicator system and ticket selling machine, commonly known as totalizator, which
shall clearly record each ticket purchased on every player in any game, the total number of tickets sold on each
event,aswellasthedividendsthatcorrespondtoholdersofwinningnumbers.Thisrequirementshall,however,not
applytodoubleeventsorforecastpoolsortoanybettingmadeonthebasisofacombinationorgroupingofplayers
untilatotalizatorthatcanregistersuchbetshasbeeninventedandplacedonthemarket.
SEC. 17. Supervision over sale of betting tickets and payment of dividends. For the purpose of verifying the
accuracy of reports in connection with the sale of betting tickets and the computation of dividends awarded to
winners on each event,aswellasotherstatementswithreferencetothebetting in the games played, the city or
municipalmayorshallassignsuchnumberofauditingofficersandcheckersasmaybenecessaryforthepurpose.
Theseauditingofficersandcheckersshallbeplacedintheticketsellingbooths,dividendcomputationboothsand
suchotherpartsofthefronton,wherebettingticketsaresoldanddividendscomputed.Itshallbetheirdutytocheck
upandcorrectanyirregularityoranyerroneousreportorcomputationthatmaybemadebyofficialsofthefronton,
inconnectionwiththesaleofticketsandthepaymentofdividends.
SEC. 18. Wager tickets and dividends. The face value of the wager tickets for any event shall not exceed P5
whetherfor"win"or"place",orforanycombinationorgroupingofwinningnumbers.Thefacevalueofsaidtickets,
asthecasemaybe,shallbethebasisforthecomputationofthedividendsandsuchdividendsshallbepaidafter
eliminatingfractionsoftencentavos(P0.10)forexample:iftheresultingdividendisP10.43,thedividendthatshall
bepaidwillbeonlyP10.40.
SEC.19.Distributionofwagerfunds.Thetotalwagerfundsorgrossreceiptsfromthesaleofthebettingtickets
shallbeapportionedasfollows:acommissionnotexceedingtenandonehalfpercentum(10%)onthetotalbets
oneachgameoreventshallbesetasideforthepersonorentityoperatingthefrontonandfourandonehalfper
centum(4%)ofsuchbetsshallbecoveredintotheNationalTreasuryfordispositionasmaybeauthorizedbylaw
orexecutiveorderandthebalanceoreightyfivepercentum(85%)ofthetotalbetsshallbedistributedintheform
of dividends among holders of "win" or "place" numbers or holders of the winning combination or grouping of
numbers,asthecasemaybe:Provided,however,Thatofthetenandonehalfpercentum(10%)representing
thecommissionofthepersonorentityoperatingthefronton,anamountequivalenttoonehalfpercentum(1/2%)of
thetotalbetsorwagerfundsshallbesetasideandmadeavailabletocovertheexpensesofthepersonnelassigned
tosupervisetheoperationofbasquepelotagamesandfrontons,includingpaymentofsalariesofsuchpersonnel,
purchaseofnecessaryequipmentandothersundryexpensesasmaybeauthorizedbycompetentauthority.
SEC. 20. Supervision over the conduct of games enforcement of rules and regulations. The city or municipal
mayorisauthorizedtoplacewithinthepremisesofthefrontonsuchnumberofinspectorsandagentsasmaybe
deemednecessarytosupervisetheconductofthegamestoseethattherulesofthegamesarestrictlyenforced,
andtocarryouttheprovisionsofthisOrderaswellassuchotherregulationsasmayhereafterbeprescribed.
SEC. 21. Rules governing the games and personnel of the fronton. The rules and regulations that have been
adopted by any fronton to govern the operation of its games and the behavior, duties and performance of the
officials and personnel connected therewith, such as pelotaris, judges, referees or superintendents of games
(intendentes)andothers,shallbetherecognizedrulesandregulationsofsuchfrontonuntilthesamearealteredor
repealed by the Secretary of the Interior and any fronton may introduce any type or form of games or events,
provided they are not contrary to the provisions of this Order or any rule or regulation hereafter issued by the
SecretaryoftheInterior.
SEC.22.Regulationsgoverningpelotaris.Anyruleorregulationadoptedbyanyestablishedfrontongoverningthe
conductorperformanceofpelotaristothecontrarynotwithstanding,thefollowingregulationsshallbeobserved:
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(a)Thepelotariswhoareparticipatinginthegamesshallnotbeallowedtocommunicate,talkormakesignswith
any one in the public or with any official or employee of the fronton during the games, except with the judges or
refereesorthesuperintendent(intendente)inchargeofthegames
(b)Theprogramofgamesorevents,aswellasthelineupororderofplayingofthepelotarisineacheventshallbe
determinedbythesuperintendentofthegames(intendente),subjecttotheapprovalofthecityormunicipalmayor,
orhisauthorizedrepresentatives
(c)Pelotarisshallbeingoodphysicalconditionbeforeparticipatinginanygameandshallbelaidofffromplayingat
least two days in a week. Every pelotari shall once a month secure a medical certificate from a government
physiciantobedesignatedbythecityormunicipalmayorconcernedcertifyingtohisphysicalfitnesstoengagein
thegamesand
(d)Theamountofdividendscomputedforanyeventshallnotbepostedwithintheviewofthepelotarisparticipating
intheeventuntilaftertheterminationofsaidevent."
(3.e.3) Presidential Decree No. 810 (An Act Granting the Philippine JaiAlai and Amusement Corporation a
FranchisetoOperate,ConstructandMaintainaFrontonforBasquePelotaandSimilarGamesofSkillintheGreater
ManilaArea)October16,1975
"WHEREAS,byvirtueoftheprovisionsofCommonwealthActNumbered485thefranchisetooperateandmaintain
a fronton for the Basque pelota and similar games of skill in the City of Manila, shall expire on October, 1975
whereupontheownershipoftheland,buildingsandimprovementsusedinthesaidgamewillbetransferredwithout
paymenttothegovernmentbyoperationoflaw
WHEREAS,thereisapressingneednotonlytofurtherdevelopthegameasasportandamusementforthegeneral
publicbutalsotoexploititsfullpotentialinsupportofthegovernmentsobjectivesanddevelopmentprograms
WHEREAS,Basquepelotaisagameofinternationalrenown,themaintenanceandpromotionofwhichwillsurely
assistthetourismindustryofthecountry
WHEREAS,thetourismappealofthegamewillbeenhancedonlywiththegovernmentssupportandinducementin
developingthesporttoalevelatparwithinternationalstandards
WHEREAS, once such tourism appeal is developed, the same will serve as a stable and expanding base for
revenuegenerationforthegovernmentsdevelopmentprojects.
NOW,THEREFORE,I,FERDINANDE.MARCOS,PresidentofthePhilippines,byvirtueofthepowersvestedin
mebytheConstitution,herebydecreeasfollows:
SECTION1.Anyprovisionoflawtothecontrarynotwithstanding,thereisherebygrantedtothePhilippineJaiAlai
and Amusement Corporation, a corporation duly organized and registered under the laws of the Philippines,
hereinafter called the grantee or its successors, for a period of twentyfive years from the approval of this Act,
extendableforanothertwentyfiveyearswithoutthenecessityofanotherfranchise,theright,privilegeandauthority
to construct, operate and maintain a court for Basque Pelota (including the games of pala, raqueta, cestapunta,
remonte and mano) within the Greater Manila Area, establish branches thereof for booking purposes and hold or
conduct Basque pelota games therein with bettings either directly or by means of electric and/or computerized
totalizator.
ThegamestobeconductedbythegranteeshallbeunderthesupervisionoftheGamesandAmusementsBoard,
hereinafterreferredtoastheBoard,whichshallenforcethelaws,rulesandregulationsgoverningBasquepelotaas
provided in Commonwealth Act numbered four hundred and eightyfive, as amended, and all the officials of the
gameandpelotaristhereinshallbedulylicensedassuchbytheBoard.
SEC. 2. The grantee or its duly authorized agent may offer, take or arrange bets within or outside the place,
enclosureorcourtwheretheBasquepelotagamesareheld:Provided,Thatbetsoffered,takenorarrangedoutside
the place, enclosure or court where the games are held, shall be offered, taken or arranged only in places duly
licensedbythecorporationProvided,however,ThatthesameshallbesubjecttothesupervisionoftheBoard.No
person other than the grantee or its duly authorized agents shall take or arrange bets on any pelotari or on the
game,ormaintainoruseatotalizatororotherdevice,methodorsystemtobetonanypelotarioronthegamewithin
orwithouttheplace,enclosureorcourtwherethegamesareheldbythegrantee.Anyviolationofthissectionshall
bepunishedbyafineofnotmorethantwothousandpesosorbyimprisonmentofnotmorethansixmonths,orboth
inthediscretionoftheCourt.Iftheoffenderisapartnership,corporation,orassociation,thecriminalliabilityshall
devolveuponitspresident,directorsoranyotherofficialsresponsiblefortheviolation.
SEC. 3. The grantee shall provide mechanical and/or computerized devices, namely: a) electric totalizator b)
machinedirectlyconnectedtoacomputerinadisplayboard,forthesaleoftickets,including,thosesoldfromthe
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offcourt stations c) modern sound system and loud speakers d) facilities that bring safety, security, comfort and
convenience to the public e) modern intercommunication devices and f) such other facilities, devices and
instrumentsforclean,honestandorderlyBasquepelotagames,withinthreeyearsfromtheapprovalofthisAct.
The Board shall assign its auditors and/or inspectors to supervise and regulate the placing of bets, proper
computationofdividendsandthedistributionofwagerfunds.
SEC.4.Thetotalwagerfundorgrossreceiptsfromthesaleofbettingticketswillbeapportionedasfollows:eighty
fivepercentum(85%)shallbedistributedintheformofdividendsamongtheholdersof"win"or"place"numbersor
holdersofthewinningcombinationorgroupingofnumbersasthecasemaybe.Theremainingbalanceoffifteen
percentum(15%)shallbedistributedasfollows:elevenandonehalfpercentum(11%)shallbesetasideasthe
commissionfeeofthegrantee,andthreeandonehalfpercentum(3%)thereofshallbesetasideandallotedto
anyspecialhealth,educational,civic,cultural,charitable,socialwelfare,sports,andothersimilarprojectsasmaybe
directedbythePresident.Thereceiptsfrombettingcorrespondingtothefractionoftencentavoseliminatedfrom
the dividends paid to the winning tickets, commonly known as breakage, shall also be set aside for the above
namedspecialprojects.
SEC.5.Theprovisionofanyexistinglawtothecontrarynotwithstanding,thegranteeisherebyauthorizedtohold
Basque pelota games (including the games of pala, raqueta, cestapunta, remonte and mano) on all days of the
weekexceptSundaysandofficialholidays.
SEC. 6. The provisions of Commonwealth Act numbered four hundred and eightyfive as amended, shall be
deemed incorporated herein, provided that the provisions of this Act shall take precedence over the provisions
thereofandallotherlaws,executiveordersandregulationswhichareinconsistentherewith.
SEC.7.Thegranteeshallnotlease,transfer,granttheusufructof,sellorassignthisfranchisepermit,ortherights
orprivilegesacquiredthereundertoanyperson,firm,company,corporationorothercommercialorlegalentity,nor
merge with any other person, company or corporation organized for the same purpose, without the previous
approvalofthePresidentofthePhilippines.
SEC.8.Forpurposesofthisfranchise,thegranteeishereinauthorizedtomakeuseoftheexistingfronton,stadium
andfacilitieslocatedalongTaftAvenue,CityofManila,belongingtothegovernmentbyvirtueoftheprovisionsof
CommonwealthActnumberedfourhundredandeightyfive."
Itisabundantlyclearfromtheaforequotedlaws,executiveordersanddecreesthatthelegislativepractice
isthatafranchisetooperatejaialaiisgrantedsolelyforthatpurposeandthetermsandconditionsofthe
grantareunequivocablydefinedbythegrantor.Suchexpressgrantanditsconditionalitiesprotectiveofthe
publicinterestareevidentlywantinginP.D.No.1869,thepresentCharterofPAGCOR.Thus,whileE.O.135
and P.D. No. 810 provided for the apportionment of the wager funds or gross receipts from the sale of betting
tickets,aswellasthedistributionofdividendsamongholdersof"win"or"place"numbersorholdersofthewinning
combination or grouping of numbers, no such provisions can be found in P.D. No. 1869. Likewise, while P.D. No.
810describeswhereandhowthegamesaretobeconductedandbettingstobemade,andimposesapenaltyin
caseofaviolationthereof,suchprovisionsareabsentinP.D.No.1869.
Infine,P.D.No.1869doesnothavethestandardmarksofalawgrantingafranchisetooperatejaialaias
thosefoundunderP.D.No.810orE.O.135.WecannotblinkawayfromthestubbornrealitythatP.D.No.1869
dealswithdetailspertinentalonetotheoperationofgamblingcasinos.Itprescribestherulesandregulations
concerningtheoperationofgamblingcasinossuchastheplace,time,personswhoareandarenotentitledtoplay,
tax exemptions, use of foreign exchange, and the exemption of casino employees from the coverage of the Civil
ServiceLawandtheLaborCode.TheshortpointisthatP.D.No.1869doesnothavetheusualprovisionswith
regards to jaialai. The logical inference is that PAGCOR was not given a franchise to operate jaialai frontons.
Thereisnoreasontoresistthebeguilingrulethatactsofincorporation,andstatutesgrantingotherfranchisesor
specialbenefitsorprivilegestocorporations,aretobeconstruedstrictlyagainstthecorporationsandwhateveris
notgiveninunequivocaltermsisunderstoodtobewithheld.30
FOURTH.Thetaxtreatmentbetweenjaialaioperationsandgamblingcasinosaredistinctfromeachother.Letters
ofInstructionNo.1439issuedonNovember2,1984directedthesuspensionoftheimpositionoftheincreasedtax
onwinningsinhorseracesandjaialaiundertheoldrevenuecode,towit:
"WHEREAS,theincreasedtaxonwinningsonhorseracesandjaialaiunderPresidentialDecree1959hasalready
affected the holding of horse races and jaialai games, resulting in government revenue loss and affecting the
livelihoodofthosedependentthereon
WHEREAS,themanneroftaxationapplicabletheretoisuniqueanditseffectsandincidenceareinnowaysimilarto
thetaxesoncasinooperationortoanyshiftabletax
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NOW,THEREFORE,I,FERDINANDE.MARCOS,PresidentofthePhilippines,byvirtueofthepowersvestedin
me by the Constitution, do hereby order and instruct the Minister of Finance, the Commissioner of the Bureau of
Internal Revenue, and the Chairman, Games & Amusements Board, to suspend the implementation of the
increasedrateoftaxwinningsinhorseracesandjaialaigamesandcollectinsteadtherateapplicablepriortothe
effectivityofPD1959."
Similarly, under Republic Act No. 8424, or the Tax Reform Act of 1997, there is an amusement tax imposed on
operators of jaialai (Section 125) and a stamp tax on jaialai tickets (Section 190). There is no corresponding
impositionongamblingcasinos.Welltonote,section13ofP.D.No.1869grantstothefranchiseholderandcasino
operatorstaxexemptionsfromthepaymentofcustomsdutiesandincometax,exceptafranchisetaxoffive(5%)
percentwhichshallbeinlieuofallkindsoftaxes,levies,feesorassessmentsofanykind,natureordescription,
levied,establishedorcollectedbyanymunicipal,provincial,ornationalgovernmentauthority.Nosimilarexemptions
havebeenextendedtooperatorsofjaialaifrontons.
FIFTH.P.D.No.1869,thepresentCharterofPAGCOR,isaconsolidationofP.D.Nos.1067A,1067Band1067
CallissuedonJanuary1,1977.P.D.No.1067AcreatedthePAGCORanddefineditspowersandfunctionsP.D.
No.1067BgrantedtoPAGCORafranchisetoestablish,operate,andmaintaingamblingcasinoson land or
waterwithintheterritorialjurisdictionoftheRepublicofthePhilippinesandP.D.No.1067CgrantedPAGCORthe
exclusiveright,privilegeandauthoritytooperateandmaintaingamblingcasinos,subjectonlytotheexceptionof
existingfranchisesandgamesofchancepermittedbylaw.
Beyond debate, P.D. No. 1869 adopted substantially the provisions of said prior decrees, with some
additions which, however, have no bearing on the franchise granted to PAGCOR to operate gambling
casinosalone,suchastheAffiliationProvisionsunderTitleIIIandtheTransitoryProvisionsunderTitleVII.Italso
addedtheterm"lotteries"underSection1(b)onDeclarationofPolicyandSection10ontheNatureandTermof
Franchise.ItoughttofollowthatP.D.No.1869carrieswithitthesamelegislativeintentthatinfusedP.D.Nos.1067
A, 1067B and 1067C. To be sure, both P.D. No. 1067A and P.D. No. 1869 seek to enforce the same avowed
policy of the State to "minimize, if not totally eradicate, the evils, malpractices and corruptions that normally are
found prevalent in the conduct and operation of gambling clubs and casinos without direct government
involvement." It did not address the moral malevolence of jaialai games and the need to contain it thru
PAGCOR. We cannot deface this legislative intent by holding that the grant to PAGCOR under P.D. Nos. 1067A
and1067Btoestablish,operate,andmaintaingamblingcasinos,hasbeenenlarged,broadenedorexpandedby
P.D.No.1869soastoincludeagranttooperatejaialaifrontons.Thenandnow,theintentionwasmerelytogrant
PAGCORafranchisetooperategamblingcasinos,nomore,noless.
SIXTH.Lesttheideagetslostintheshoalsofoursubconsciousness,letusnotforgetthatPAGCORisengagedin
businessaffectedwithpublicinterest.Thephrase"affectedwithpublicinterest"meansthatanindustryissubjectto
control for the public good31 it has been considered as the equivalent of "subject to the exercise of the police
power."32Perforce, a legislative franchise to operate jaialai is imbued with public interest and involves an
exerciseofpolicepower.Thefamiliarruleisthatlawswhichgranttherighttoexerciseapartofthepolice
power of the state are to be construed strictly and any doubt must be resolved against the grant.33 The
legislature is regarded as the guardian of society, and therefore is not presumed to disable itself or
abandon the discharge of its duty. Thus, courts do not assume that the legislature intended to part away
with its power to regulate public morals.34 The presumption is influenced by constitutional considerations.
Constitutionsarewidelyunderstoodtowithholdfromlegislaturesanyauthoritytobargainawaytheirpolicepower35
forthepowertoprotectthepublicinterestisbeyondabnegation.
It is stressed that the case at bar does not involve a franchise to operate a public utility (such as water,
transportation, communication or electricity) the operation of which undoubtedly redounds to the benefit of the
generalpublic.Whatisclaimedisanallegedlegislativegrantofagamblingfranchiseafranchisetooperatejai
alai. A statute which legalizes a gambling activity or business should be strictly construed and every reasonable
doubtmustberesolvedtolimitthepowersandrightsclaimedunderitsauthority.36
ThedissentwouldliketomakecapitalofthefactthatthecasesofStonevs.MississippiandAicardivs.Alabama
are not on all fours to the cases at bar and, hence, the rulings therein do not apply. The perceived incongruity is
moreapparentthanreal.
Stone37involvesacontractenteredintobytheStateofMississippiwiththeplaintiffswhichallowedthelattertosell
anddisposeofcertificatesofsubscriptionwhichwouldentitletheholdersthereoftosuchprizesasmaybeawarded
tothem,bythecastingoflotsorbylot,chanceorotherwise.Thecontractwasenteredintobyplaintiffspursuantto
theircharterentitled"AnActIncorporatingtheMississippiAgricultural,EducationalandManufacturingAidSociety"
which purportedly granted them the franchise to issue and sell lottery tickets. However, the state constitution
expresslyprohibitsthelegislaturefromauthorizinganylotteryorallowingthesaleoflotterytickets.Mississippilaw
makesitunlawfultoconductalottery.
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ThequestionraisedinStoneconcernedtheauthorityoftheplaintiffstoexercisethefranchiseorprivilegeofissuing
and selling lottery tickets. This is essentially the issue involved in the cases at bar, that is, whether PAGCORs
charterincludesthefranchisetooperatejaialaifrontons.Moreover,evenassumingarguendothatthefactsinthe
casesatbararenotidentical,theprinciplesoflawlaiddowninStoneareilluminating.Forone,itwasheldinStone
that:
"Experiencehasshownthatthecommonformsofgamblingarecomparativelyinnocuouswhenplacedincontrast
with the widespread pestilence of lotteries. The former are confined to a few persons and places, but the latter
infeststhewholecommunityitenterseverydwellingitreacheseveryclassitpreysuponthehardearningsofthe
pooranditplunderstheignorantandsimple.xxx"38
The verity that all species of gambling are pernicious prompted the Mississippi Court to rule that the legislature
cannotbargainawaypublichealthorpublicmorals.Wecantakejudicialnoticeofthefactthatjaialaifrontonshave
mushroomedineverynookandcornerofthecountry.Theyareaccessibletoeveryoneandtheyspeciallymangle
themoralsofthemarginalizedsectorofsociety.Itcannotbegainsaidthatthereisbutaminisculeofadifference
betweenjaialaiandlotterywithrespecttotheevilssoughttobeprevented.
InthecaseofAicardivs.Alabama,Moses&Co.wasgrantedalegislativefranchisetocarryongamingintheform
specifiedtherein,anditsagent,AntonioAicardi,wasindictedforkeepingagamingtable.Inascertainingwhether
thescopeofthecompanysfranchiseincludedtherighttokeepagamingtable,theCourtthereheldthat"suchan
Act should be construed strictly. Every reasonable doubt should be so resolved as to limit the powers and rights
claimedunderitsauthority.Implicationsandintendmentsshouldhavenoplaceexceptastheyareinevitablefrom
thelanguageorthecontext."
Theviewexpressedinthedissentthattheaforequotedrulingwastakenoutofcontextisperchedonthepremise
that PAGCORs franchise is couched in a language that is broad enough to cover the operations of jaialai. This
viewbegsthequestionforasshowninourdisquisition,PAGCOR'sfranchiseisrestrictedonlytotheoperationof
gamblingcasinos.Aicardisupportsthethesisthatagamblingfranchiseshouldbestrictlyconstruedduetoitsill
effectsonpublicorderandmorals.
SEVENTH.Thedissentalsoinsiststhatthelegislativeintentmustbesoughtfirstofallinthelanguageofthestatute
itself.InapplyingaliteralinterpretationoftheprovisionunderSection11ofP.D.1869that"xxxtheCorporationis
herebygrantedxxxtherights,privileges,andauthoritytooperateandmaintaingamblingcasinos,clubs,andother
recreationoramusementplaces,sports,gamingpools,i.e.,basketball,football,lotteries,etc.xxx,"itcontendsthat
theextentandnatureofPAGCORsfranchiseissobroadthatliterallyallkindsofsportsandgamingpools,including
jaialai,arecoveredtherein.ItconcludedthatsinceunderSection11ofP.D.No.1869,gamesofskilllikebasketball
and football have been lumped together with the word "lotteries" just before the word "etc." and after the words
"gamingpools,"itmaybededucedfromthewordingofthelawthatwhenbetsorstakesaremadeinconnection
withthegamesofskill,theymaybeclassifiedasgamesofchanceunderthecoverageofPAGCORsfranchise.
Werejectthissimplisticreadingofthelawconsideringthesocial,moralandpublicpolicyimplicationsembeddedin
thecasesatbar.Theplainmeaningruleusedinthedissentrestsontheassumptionthatthereisnoambiguityor
obscurityinthelanguageofthelaw.Thefact,however,thatthestatuteadmitsofdifferentinterpretationsisthebest
evidencethatthestatuteisvagueandambiguous.39Itiswidelyacknowledgedthatastatuteisambiguouswhenit
iscapableofbeingunderstoodbyreasonablywellinformedpersonsineitheroftwoormoresenses.40Inthecases
atbar,itisdifficulttoseehowaliteralreadingofthestatutorytextwouldunerringlyrevealthelegislativeintent.To
besure,theterm"jaialai"wasneverusedandisnowheretobefoundinthelaw.Theconclusionthatitisincluded
in the franchise granted to PAGCOR cannot be based on a mere cursory perusal of and a blind reliance on the
ordinaryandplainmeaningofthestatutorytermsusedsuchas"gamingpools"and"lotteries."Sutherlandtellsus
thatastatuteis"ambiguous",andsoopentoexplanationbyextrinsicaids,notonlywhenitsabstractmeaningorthe
connotation of its terms is uncertain, but also when it is uncertain in its application to, or effect upon, the fact
situationofthecaseatbar.41
Similarly,thecontentioninthedissentthat:
"xxxEveniftheCourtisfullypersuadedthatthelegislaturereallymeantandintendedsomethingdifferentfrom
whatitenacted,andthatthefailuretoconveytherealmeaningwasduetoinadvertenceormistakeintheuseofthe
language, yet, if the words chosen by the legislature are not obscure or ambiguous, but convey a precise and
sensible meaning (excluding the case of obvious clerical errors or elliptical forms of expression), then the Court
musttakethelawasitfindsit,andgiveititsliteralinterpretation,withoutbeinginfluencedbytheprobablelegislative
meaninglyingatthebackofthewords.Inthatevent,thepresumptionthatthelegislaturemeantwhatitsaid,though
itbecontrarytothefact,isconclusive."
cannotapplyinthecasesatbarconsideringthatithasnotbeenshownthatthefailuretoconveythetrueintention
ofthelegislatureisattributabletoinadvertenceoramistakeinthelanguageused.
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EIGHTH.Finally,thereisanotherreasonwhyPAGCOR'sclaimtoalegislativegrantofafranchisetooperatejaialai
should be subjected to stricter scrutiny. The socalled legislative grant to PAGCOR did not come from a real
Congress.ItcamefromPresidentMarcoswhoassumedlegislativepowersundermartiallaw.Thegrantisnotthe
resultofdeliberationsofthedulyelectedrepresentativesofourpeople.
ThisisnottoassailPresidentMarcoslegislativepowersgrantedbyAmendmentNo.6ofthe1973Constitution,as
the dissent would put it. It is given that in the exercise of his legislative power, President Marcos legally granted
PAGCOR'sfranchisetooperategamblingcasinos.Thevalidityofthisfranchisetooperategamblingcasinosisnot,
however,theissueinthecasesatbar.Theissueiswhetherthisfranchisetooperategamblingcasinosincludesthe
privilegetooperatejaialai.PAGCORsaysitdoes.Weholdthatitdoesnot.PAGCOR'soverarchingclaimshouldbe
giventhestrictestscrutinybecauseitwasgrantedbyonemanwhogovernedwhenthecountrywasundermartial
lawandwhosegovernancewasrepudiatedbyourpeopleinEDSA1986.Thereasonforthissubmissionisrootedin
thetruththatPAGCOR'sfranchisewasnotgrantedbyarealCongresswherethepassageofalawrequiresamore
rigorousprocessintermsoffloordeliberationsandvotingbymembersofboththeHouseandtheSenate.Itisself
evidentthatthereisaneedtobeextracautiousintreatingthisallegedgrantofafranchiseasagrantbythe
legislature,asagrantbytherepresentativesofourpeople,forplainlyitisnot.WenowhavearealCongress
anditisbesttoletCongressresolvethisissueconsideringitspolicyramificationsonpublicorderandmorals.
1wphi1
Inviewofthisruling,weneednotresolvetheotherissuesraisedbypetitioners.
WHEREFORE, the petitions are GRANTED. Respondents PAGCOR, Belle Jai Alai Corporation and Filipinas
Gaming Entertainment Totalizator Corporation are ENJOINED from managing, maintaining and operating jaialai
games,andfromenforcingtheagreemententeredintobythemforthatpurpose.
SOORDERED.
Melo,Panganiban,Pardo,Buena,GonzagaReyes,andYnaresSantiagoJJ.,concur.
Davide,Jr.,C.J.,VitugandDeLeonJr.,JJ.,seeseparateopinion.
Bellosillo,Kapunan,andQuisumbing,JJ.,jointheopinionofJ.DeLeon.
Mendoza,J.,joinintheseparateopinionofVitug,J.
Footnotes
1AnnexD,Petition,G.R.No.138298Rollo,171174.
2AnnexA,id.Ibid.,23.
3AnnexA,SupplementalPetition,G.R.No.138298Ibid.,162168.
4TimesBroadcastingNetworkvs.CA,etal.,274SCRA366(1997)EstateofthelateMercedesJacobvs.
CA,etal.,283SCRA474(1997).
5Fortich,etal.vs.Corona,etal.,289SCRA624(1998).
6278SCRA154(1997).
7Ramosvs.CA,etal.,269SCRA34(1997).
8BugnayConstruction&Dev.Corp.vs.Laron,176SCRA240(1989).
9 Pascual vs. Sec. of Public Works, 110 Phil 331 (1960) Sanidad vs. Comelec, 73 SCRA 333 (1976)
Kilosbayan,Inc.,etal.vs.Morato,etal.,250SCRA130(1995).
10Dumlaovs.Comelec,95SCRA392(1980).
11Philconsavs.Mathay,18SCRA300(1966).
12Philconsavs.Gimenez,15SCRA479(1965)CivilLibertiesUnionvs.ExecutiveSecretary,194SCRA317
(1991)Guingonavs.Carague,196SCRA221(1991)Osmeavs.Comelec,199SCRA750(1991)Basco
vs.PAGCOR,197SCRA52(1991)Carpiovs.ExecutiveSecretary,206SCRA290(1992).
13Philconsavs.Mathay,supra.
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14ThegamewasintroducedtothecountryduringtheSpanishcolonialperiod.Thefirstgameswereplayed
atafrontoninNumanciaStreet,Binondo,Manila.In1917,thegamesweremovedtoalargerfrontonatthe
corner of Taft Avenue and San Luis Street in Ermita where it gained popularity. From a plain sport, jaialai
became a form of gambling when the Philippine Legislature issued a franchise legalizing betting in June
1939. The fronton wasthenoperatedbytheMadrigals,afamilyclosetoCommonwealth President Manuel
Quezon.DevastatedbyWorldWarII,thefrontonwasrebuiltin1948.DuringthetermofPresidentMarcos,
the jaialai franchise was granted to the Romualdez family. After the EDSA revolution, the Aquino
administration closed down jaialai. Then, in 1994, during the term of President Ramos, the Associated
Development Corporation (ADC) revived the games at a new location in Harrison Plaza, Manila. However,
after only a few months of operation, this Court ruled that a congressional franchise was required for the
games.
15CityofOaklandvs.Hogan,106P.2d987,994,41Cal.App.2d333.
16CentralPac.R.Co.vs.PeopleofStateofCalifornia,16S.Ct.766,778,162U.S.91,40LEd.903Hamill
vs.Hawks,C.C.A.Okl.,58F.2d41,44.
17Peopleexrel.Foleyvs.Begole,56P.2d931,933,98Colo.354.
18CityofHelenavs.HelenaLightandR.Co.,207O.337,63Mont.108.
19Beekmanvs.ThirdAve.R.Co.,47N.E.277,153N.Y.144.
20Section1ofP.D.No.1067A.
21Seethirdwhereasclause.
22Seesection3(2)ofP.D.No.1067A.
23Seesection5ofP.D.No.1067A.
24Seesection3ofP.D.No.1067C.
25Seesection4ofP.D.No.1067B.
26Seesection5,par.1ofP.D.No.1067B.
27Seesection1ofP.D.No.1632.
28Seesection2ofP.D.No.1632.
29SeeDissentingOpinioninLimv.Pacquing,etal.,240SCRA649(1995),pp.720and729.
30BlackonInterpretationofLaws,2nded.,pp.504506.
31NebbiavNewYork,291U.S.502.
32Bernas,The1987ConstitutionoftheRepublicofthePhilippines,ACommentary,1996ed.,p.1053.
33PeoplevChicago,103N.E.609SlaughtervOBerry,35S.E.241,48L.R.A.442.
34StonevMississippi,101U.S.814.
35SutherlandStatutoryConstruction,Vol.3,5thed.,p.244.
36AicardivAlabama,22L.Ed.215WestIndies,Inc.vFirstNationalBank,214P.2d144.
37101U.S.1079.
38Ibid.atp.1080.
39MarathonLeTourneauCo.,MarineDivisionv.NationalLaborRelationsBoard,414F.Supp1074(1976).
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40 Wisconsin Dept. of Revenue v. NagleHart, Inc., 234 NW2d 350 (1975) Allen v. Juneau County Forest
Withdrawal Appeal Review Committee, 295 NW2d 218 (1980) KimberlyClark Corp. v. Public Service
Commission,320NW2d5(1982).
41SutherlandStatutoryConstruction,Vol.2A,5thed.,1992Revision,p.713.
TheLawphilProjectArellanoLawFoundation
SEPARATEOPINION
DAVIDE,JR.,C.J.:
InmySeparateOpinioninG.R.No.115044(AlfredoLimvs.Hon.FelipePacquing)andG.R.No.117263(Teofisto
Guingona vs. Hon. Vetino Reyes), 240 SCRA 649, 685, I reiterated my prior view in a supplemental concurring
opinionIsubmittedintheearliercase,G.R.No.115044thatjaialaiisnotagameofchance,butasportbasedon
skill.BettingontheresultsthereofcanonlybeallowedbyCongress,andIamnotawareofanynewlawauthorizing
suchbetting.
Isaidtherein,thus:
It follows then that the Mayors Permit ordered by the trial court to be issued to the private respondent is not a
licenseorauthoritytoallowbettingorwageringontheresultsofthejaialaigames.Jaialaiisasportbasedonskill.
UnderArticle197oftheRevisedPenalCode,beforeitwasamendedbyP.D.No.1602,bettingupontheresultof
any boxing or other sports contests was penalized with arrestomenor or a fine not exceeding P200.00, or both.
Article2019oftheCivilCodeprovidesthat"[b]ettingontheresultsofsports,athleticcompetitions,orgamesofskill
maybeprohibitedbylocalordinances."
P.D.No.483,enactedon13June1974,penalizesbetting,gamefixingorpointshavingandmachinationsinsports
contests,includingjaialai.Section2thereofexpresslyprovides:
SECTION 2. Betting, game fixing, point shaving or game machinations unlawful. Game fixing, point shaving,
machination, as defined in the preceding Section, in connection with the games of basketball, volleyball, softball,
baseball, chess, boxing bouts, "jaialai," "sipa," "pelota" and all other sports contests, games or races as well as
bettingthereinexceptasmaybeauthorizedbylaw,isherebydeclaredunlawful.
ThesucceedingSection3providesforthepenalties.
On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15, 3270), Prescribing Stiffer Penalties on Illegal Gambling, was
enacted to increase the penalties provided in various "Philippine Gambling Laws such as Articles 195199 of the
RevisedPenalCode(FormsofGamblingandBetting),R.A.No.3063(HorseRacingBookies),P.D.No.449(Cock
fighting), P.D. No. 483 (Game Fixing), P.D. No. 510 (Slot Machines) in relation to Opinion Nos. 33 and 97 of the
MinistryofJustice,P.D.No.1306(JaialaiBookies),andotherCityandMunicipalOrdinancesongamblingallover
thecountry,"Section1thereofreads:
xxx
BothP.D.No.483andP.D.No.1602werepromulgatedintheexerciseofthepolicepoweroftheState.
PursuanttoSection2ofP.D.No.483,whichwasnotrepealedbyP.D.No.1602sincetheformerisnotinconsistent
withthelatterinthatrespect,bettinginjaialaiisillegalunlessallowedbylaw.Therewassuchalaw,P.D.No.810,
whichauthorizedthePhilippineJaiAlaiandAmusementCorporationasfollows:
SECTION2.Thegranteeoritsdulyauthorizedagentmayoffer,takeorarrangebetswithinoroutsidetheplace,
enclosureorcourtwheretheBasquepelotagamesareheld:Provided,Thatbetsoffered,takenorarrangedoutside
the place, enclosure or court where the games are held, shall be offered, taken or arranged only in places duly
licensedbythecorporation.Provided,however,ThatthesameshallbesubjecttothesupervisionoftheBoard.No
person other than the grantee or its duly authorized agents shall take or arrange bets on any pelotari or on the
game,ormaintainoruseatotalizatororotherdevice,methodorsystemtobetonanypelotarioronthegamewithin
orwithouttheplace,enclosureorcourtwherethegamesareheldbythegrantee.Anyviolationofthissectionshall
bepunishedbyafineornotmorethantwothousandpesosorbyimprisonmentofnotmorethansixmonths,orboth
inthediscretionoftheCourt.Iftheoffenderisapartnership,corporationorassociation,thecriminalliabilityshall
devolveuponitspresident,directorsoranyofficialsresponsiblefortheviolation.
However,asstatedintheponencia,P.D.No.810wasrepealedbyE.O.No.169issuedbythenPresidentCorazon
C.Aquino,Iamnotawareofanyotherlawwhichauthorizesbettinginjaialai.Itfollowsthenthatwhiletheprivate
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respondent may operate the jaialai fronton and conduct jaialai games, it can do so solely as a sports contest.
Betting on the results thereof, whether within or offfronton, is illegal and the City of Manila cannot, under the
present state of the law, license such betting. The dismissal of the petition in this case sustaining the challenged
orders of the trial court does not legalize betting, for this Court is not the legislature under our systems of
government.
MyreadingofthecharterofthePAGCORfailstodiscloseagrantofacongressionalauthoritytoallowbettingonthe
resultsofjaialai.
Accordingly,allthatthePAGCORmaydoisoperateandconductthejaialai,butinnocasecanitallowbettingon
theresultsthereofwithoutobtainingastatutoryauthorityforthepurpose.
SEPARATEOPINION
VITUG,J.:
Gambling, universally regarded to be a threat to the moral fiber of any society, is aptly a prohibited activity in the
Philippines.TheRevisedPenalCode,aswellassucceedingamendatorylaws,makes"betting,gamefixing,point
shavingorgamemachination"ongamesofchanceorskillunlawful.1TheCivilCodeadditionallystatesthat"betting
ontheresultofsports,athleticcompetitions,orgamesofskillmaybeprohibitedbylocalordinances."2
AnexceptiontotherulewasintroducedbytheformerPresidentFerdinandE.Marcoswhenhe,intheexerciseof
hislegislativepowersunderthe1973Constitution,createdthePhilippineAmusementGamesCorp.("PAGCOR")3
and granted it franchise to "operate and maintain gambling casinos, clubs, and other recreation or amusement
places,sports,gamingpools,xxx."4PAGCORwasauthorizedtoimplement,amongotherthings,anobjective"to
establishandoperateclubsandcasinosforamusementandrecreation,includinggamesofchance,which(might)
beallowedbylawwithintheterritorialjurisdictionofthePhilippines."5
TheponenciaviewsthelawtobebroadenoughtoauthorizePAGCORtooperateallkindsofsportsandgaming
pools,inclusiveofjaialai,inthecountry.Suchdoesappeartobethecase,andastatutewhichissufficientlyclear
andfreefromseriousambiguitycanonlybegivenitsliteralmeaningandsimplybeapplied.Quiteadifferentmatter,
however,submitsitselfwithregardtoPAGCORspowertoenterintojointventureagreementsintheoperationand
managementofsuchgames.
PAGCORhasenteredintoajointventureagreementwithBelleJaiAlaiCorporation("BELLE")andFilipinasGaming
Entertainment Totalizator Corporation ("FILGAME") in the operation and management of jai alai games. The two
firms,undertheagreement,wouldalsofurnishthejaialaifrontonfacilities.Iseeinthejointventureagreementa
situationthatplacesBELLEandFILGAMEinactiveendeavorwithPAGCORinconductingjaialaigames.Without
a congressional franchise of its own, neither BELLE nor FILGAME can lawfully engage into the activity.
Thus, in Lim vs. Pacquing,6 this Court held that Associated Development Corporation, having had no
franchisefromCongresstooperatethejaialai,couldnotdosoevenifithadalicenseorpermitfromthe
citymayortooperatethatgameintheCityofManila.WhilePAGCORisallowedunderitschartertoenter
intoagreementsinitsauthorizedoperations,thatpower,upontheotherhand,cannotbesoconstruedasto
permitittolikewisegrantaveritablefranchisetoanyotherperson,individualorfirm.
Indeed,thegrantofafranchiseisapurelylegislativeactthatcannotbedelegatedtoPAGCORwithoutviolatingthe
Constitution.7Thethesisrestsonthemaximpotestasdelegatanondelegaripotest.Anyconstitutionallydelegated
sovereignpowerconstitutesnotonlyarightbutadutytobeperformedbythedelegate,thelegislatureinthiscase,
throughtheinstrumentalityofitsownjudgment.AfurtherdelegationofsuchpowertoPAGCORwouldconstitutea
negation of this duty in violation of the trust reposed in the delegate mandated to discharge it directly.8
Parenthetically, under the 1987 Constitution, the only instances when the legislature may validly delegate its
assignedpowersarethosethatinvolvethefixingoftariffratestothePresident9andtheinherentpowers,i.e.,police
power,eminentdomainandtaxation,thatmaybedelegatedbutsolelytolocallegislativeunits.10
The broad authority then of PAGCOR under its charter to enter into agreements could not have been meant to
empower PAGCOR to pass on or to share its own franchise to others. Had its charter intended otherwise,
PAGCOR would have been itself virtually capable of extending franchise rights and thereby be a recipient of an
unlawfuldelegationoflegislativepower.
For the foregoing considerations, I vote to grant the petitions in these cases insofar as they seek to enjoin
respondentPhilippineAmusementandGamingCorporation("PAGCOR")fromoperatingjaialaiorBasquePelota
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games through respondents Belle Jai alai Corporation ("BELLE") and/or Filipinas Gaming Entertainment
TotalizatorCorporation ("FILGAME") or through any other agency, but I vote to deny the same insofar as they
likewiseseektoprohibitPAGCORfromitselfmanagingoroperatingthegame.
Footnotes
1Sections195197,RevisedPenalCode,Pres.DecreeNo.483,Pres.Decree1602.
2Article2019,NewCivilCode.
3P.D.No.1067.
4Sec.10,P.D.No.1869.
5 Sec. 1(b), P.D. No. 1869 People vs. Quijada, 259 SCRA 191 (1996) citing Victoria vs. COMELEC, 299
SCRA269(1994)andLibananvs.Sandiganbayan,233SCRA163(1994)..
6240SCRA649,674.
7Secs.1and24,Art.VI,Constitution.
8Cruz,PhilippinePoliticalLaw,p.86(1996).
9Sec.28(2),Art.VI,Constitution.
10Art.X,Constitution.
DISSENTINGOPINION
DELEON,JR.,J.:
IrespectfullydissentfromthemajorityopinionofMr.JusticeReynatoS.Punograntingtheconsolidatedpetitionsin
thesetwocases.
Anexpositionofthesetwocaseswouldbehelpful.
Here are two consolidated cases filed against respondent Philippine Amusement and Gaming Corporation
(hereinafterreferredtoasPAGCOR)todesistfrommanagingand/oroperatingjaialaiorBasquepelotagames,by
itselforwiththe"infrastructurefacilities"ofcorespondentsBelleJaialaiCorporation(hereinaftercalledBELLE)and
FilipinasGamingEntertainmentTotalizatorCorporation(hereinaftercalledFILGAME).
InG.R.No.138298,RaoulB.delMar,inhiscapacityasmemberoftheHouseofRepresentativesrepresentingthe
FirstDistrictofCebuandasataxpayer,filedapetitionforprohibition,withprayerfortemporaryrestrainingorder,
againstPAGCORforconductingjaialaiorBasquepelotagames.InthesaidpetitionfiledwiththisCourtonMay6,
1999,delMarallegedthattheoperationofjaialaigamesbyPAGCORisillegalsinceitsfranchisedoesnotinclude
thepowertoopen,pursue,conduct,operate,controlandmanagejaialaigameoperationsinthecountry.
Under Section 10 of Presidential Decree No. 1869, PAGCORs nature and term of franchise which is therein
contained,isasfollows:
SEC. 10. Nature and term of franchise Subject to the terms and conditions established in this Decree, the
corporationisherebygrantedforaperiodoftwentyfive(25)years,renewableforanothertwentyfive(25)years,the
rights, privilege and authority to operate and maintain gambling casinos, clubs, and other recreations or
amusementplaces,sports,gamingpools,i.e.basketball,football,lotteries,etc.whetheronlandorsea,within
theterritorialjurisdictionoftheRepublicofthePhilippines.
PAGCOR,inconductingBasquepelotagamesotherwiseknownasjaialai,reliedontheOpinionoftheSecretaryof
Justice dated July 16, 1996 that "the authority of PAGCOR under its charter to operate and maintain games of
chance or gambling extends to jai alai which is a form of sport or game played for bets and that the charter of
PAGCOR(P.D.No.1869)amountstoalegislativefranchiseforthepurpose."1
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On June 17, 1999, PAGCOR entered into a joint venture agreement with BELLE and FILGAME relating to the
opening,operation,controlandmanagementofjaialaigamesoperationsinthecountry.Underthesaidagreement
which is coterminous with the franchise of PAGCOR, BELLE and FILGAME will provide technical assistance to
PAGCORwithrespecttovariousaspectsofjaialaioperationsincludingtheoperationofcomputerizednationwide
networkofonlinebettingsystems.ThejaialaifrontonfacilitieswillbeprovidedbyBELLEandFILGAME,onafree
rent basis, to PAGCOR. PAGCOR, on the other hand, shall consult BELLE and FILGAME as regards the
formulationofthetermsofappointmentoftheirpersonnel.
On July 1, 1999, Federico S. Sandoval II and Michael T. Defensor, in their capacity as members of the House of
RepresentativesrepresentingthelonedistrictofMalabonNavotasandthe3rdDistrictofQuezonCityrespectively,
andastaxpayers,filedaPetitionforInjunctiveReliefwithPrayerforIssuanceofTemporaryRestrainingOrder,with
thisCourttocompelPAGCORtorefrainfromoperatingandmanagingjaialaigames.Thepetitionwasdocketedas
G.R.No.138982.PetitionersSandovalandDefensorallegedthatthefranchiseofPAGCORdoesnotincludethe
operationofjaialai,jaialaibeingoneoftheactivitiesprohibitedundertheRevisedPenalCode,asamendedbyP.D.
No. 1602 otherwise known as the AntiGambling Law. Petitioners further averred that jai alai is not a game of
chanceandcannotbethesubjectofaPAGCORfranchise.
OnAugust17,1999,petitionerdelMarfiledamotionforleavetofileasupplementalpetitioninG.R.No.138298,
impleading BELLE and FILGAME as additional respondents. The said motion for leave was granted. In his
supplemental petition denominated as "Petition for Certiorari, Prohibition with prayer for Temporary Restraining
OrderandInjunctiveWrit"petitionerquestionedtheauthorityofPAGCORtoenterintoanagreementwithBELLE
andFILGAMEfortheopening,establishment,operation,controlandmanagementofjaialaioperations.Petitioner
allegedthatinenteringintothesaidagreementwithBELLEandFILGAME,PAGCORhasvirtuallyrelinquishedits
controlandmanagementofthejaialaioperationstothesaidcorporations.Petitionerfurtherallegedthatassuming
thatPAGCORhastherequisitefranchisetooperatejaialai,itisstillunderobligationtoconductanopenandfair
publicbiddingtodeterminethecapabilityofthepartiesconcernedwhomaybeinterestedtoprovidefundsforcapital
expenditures,includinganintegratedcomputernetworksystemforfrontonandofffrontonbettingstationsandthe
infrastructure or facilities of the fronton at Manila. Petitioner alleged that contracts that require competitive public
biddingrelatetoinfrastructureprojectsorpublicworksandtheprocurementofequipment,suppliesandmaterials.
On September 24, 1999, Juan Miguel Zubiri, as a taxpayer and member of the House of Representatives
representingtheThirdDistrictofBukidnon,filedapetitionforinterventioninG.R.No.138982.Zubiriallegedthatthe
legislativepowertograntfranchisesfortheoperationofjaialaihasnotbeendelegatedbyCongresstoanyone.By
operating jai alai without the required legislative franchise, PAGCOR has effectively usurped the authority of
CongresstograntfranchisesinviolationoftheConstitution.
Considering that BELLE and FILGAME were impleaded as additional respondents in G.R. No. 138298, the Court
requiredBELLEandFILGAMEonMarch21,2000tofiletheirrespectivecomments.
OnApril18,2000,BELLEandFILGAME,thrucounsel,filedtheircommentprayingforthedismissalofthepetition
inG.R.No.138298onthegroundthatitisessentiallyanactionforquowarrantowhichmayonlybecommencedby
theSolicitorGeneral.
On July 6, 2000, the Solicitor General filed a motion to consolidate G.R. No. 138982 with G.R. No. 138298
inasmuchastheissuesraisedareidentical.OnAugust8,2000,wegrantedthesaidmotionforconsolidation.
InbothG.R.Nos.138982and138298,notemporaryrestrainingorderwasissuedbythisCourt.
PAGCORs comments, through the Office of the Government Corporate Counsel and the Office of the Solicitor
General,totheseconsolidatedpetitionsorcasesmaybeessentiallysummarizedasfollows:
I.Petitionershavenolegalstandingtofileataxpayerssuitbasedontheirallegedcauseofactionnoraretheya
realpartyininterestentitledtotheavailsofthesuit
II.AnactionforinjunctionisnotamongthecasesorproceedingsoriginallycognizablebytheHonorableSupreme
Court
III. The franchise of PAGCOR includes its authority and power to open, pursue, conduct, operate, control and
managejaialaioperationsinthecountry
InitscommentinG.R.No.138298,PAGCORfurtherallegedthat:
IV.Peritscharter,thecorporateauthorityandpowerofPAGCORtooperateandconductjaialaigamesincludethe
expresspowertoenterintojointventureagreements
V. The joint venture Agreement dated June 17, 1999 entered into by and among PAGCOR, Belle Jai alai
Corporation(BELLE)andFilipinasGamingEntertainmentTotalizatorCorporation(FILGAME)doesnotrequireany
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publicbiddingforitsvalidity
RespondentPAGCORmaintainsthatpetitionershavenostandingtofileataxpayerssuitsincethereisnoshowing
thatthesecasesinvolveexpenditureofpublicfunds.
InKilosbayanIncorporatedvs.Morato2wehavecategoricallystatedthattaxpayers,voters,concernedcitizensand
legislators,assuch,maybringsuitonly(1)incasesinvolvingconstitutionalissuesand(2)undercertainconditions.
Taxpayersareallowedtosue,forexample,wherethereisaclaimofillegaldisbursementofpublicfundsorwherea
tax measure is assailed as unconstitutional. Concerned citizens can bring suits if the constitutional question they
raise is of transcendental importance which must be settled early. While herein petitioners and intervenor claim
illegal disbursement of public funds by PAGCOR in the resumption of the operations of jai alai games, there is
nothingonrecordtoshowinvolvementofanyexpenditureofpublicmoneyonthepartofPAGCOR.Infact,whatis
essentiallyraisedasanissueiswhetherPAGCORhastherequisitefranchisetooperatejaialaigamesandwhether
itisauthorizedunderitschartertoenterintojointventureagreementswithprivatecorporations.Morespecifically,
underthejointventureAgreementdatedJune17,19993itisprivaterespondentcorporationsBELLEandFILGAME
whichwillprovideinfrastructurefacilitiestoPAGCORonarentfreebasis.IcannotseehowtheCourtcouldtreatthe
subjectpetitionsastaxpayerssuitswhenthereisnothing,apartfrompetitionersbareallegations,toprovethatthe
operations of jai alai would involve expenditure of public funds. Neither does the pivotal issue raised relate to a
constitutionalquestioninasmuchasonlythescopeofPAGCORsfranchise,andnotitsvalidity,isassailed.
This Court is faced, however, with the issue as to the standing of the petitioners who filed their petitions, in their
capacity as taxpayers and members of the House of Representatives, alleging infringement by PAGCOR on the
legislaturessoleprerogativeinthegrantingofajaialaifranchise.RespondentsPAGCOR,BELLEandFILGAME
contend,however,thatthepivotalissueraisedbypetitionersiswhetherornotPAGCORhasviolatedanylaworhas
committed acts beyond the scope of its franchise when it entered into the said Agreement with BELLE and
FILGAME for the resumption of jai alai operations. Respondents aver that petitioners, in consequence, raised an
issuewhichmaybecommencedandprosecutedonlybytheSolicitorGeneralthroughaquowarrantoaction.
Insupportoftheirposition,respondentsciteSection2,Rule66oftheoldRulesofCivilProceduregoverningquo
warrantoproceedingsagainstlegallyincorporatedentitieswhichreads:
Sec.2.Likeactionsagainstcorporation.Alikeactionmaybebroughtagainstacorporation:
A)Whenithasoffendedagainstaprovisionofanactforitscreation.
xxx
D) When it has misused a right, privilege, or franchise conferred upon it by law, or when it has exercised a right,
privilegeorfranchise,orfranchiseincontraventionoflaw.
RespondentsmaintainthatalthoughSection2ofRule66wasnotreproducedinthe1997RulesofCivilProcedure,
anactionforquowarrantomaystillbecommencedbytheSolicitorGeneralbeforetheCourtbasedontheaforesaid
section.
Quowarrantoliterallymeans:"Bywhatauthority."ItisanextraordinarylegalremedywherebytheStatechallenges
a person or an entity to show by what authority he holds a public office or exercises a public franchise. It is
commencedbytheSolicitorGeneralinthenameoftheRepublicofthePhilippinesagainstausurperoragainsta
corporation,onthepropositionthattheStateistheaggrievedparty.TheSolicitorGeneralinstitutestheactionwhen
directedbythePresidentofthePhilippines,orwhenuponacomplaintorotherwise,hehasgoodreasontobelieve
thatanyofthecasesspecifiedunderthelawexiststowarranttheinstitutionofaquowarranto proceedings. Quo
warrantoproceedingsagainstcorporationsareinstitutedtodemandtheforfeitureoftheirfranchiseorcharter.
ItisclearthatSection2ofRule66oftheoldRulesofCourtgoverningquowarranto proceedings against legally
incorporated entities, is not reproduced in the 1997 Rules of Civil Procedure. Proceedings against legally
incorporatedentities,allegingmisuseofitsrights,privilegesandfranchisesgrantedbylaw,atthetimethesubject
petitionsbeforethisCourtwerefiledinMayandJuly1999,respectively,uptothetimethelastpleadingwasfiledon
July7,2000,weregovernedbySection5(b)ofP.D.902AwhichvestedtheSecuritiesandExchangeCommission
(SEC)withfulljurisdictionoverthesame.4However,P.D.902AwassupersededbyR.A.8799,5whichtookeffect
onAugust8,2000.
The difficulty of the issue posed by petitioners is that, in the cases at bar, the Solicitor General together with the
OfficeoftheGovernmentCorporateCounselisthecounselforrespondentPAGCOR.
Thisisnottosay,however,thatthisCourtcannottakecognizanceoftheinstantcasesbeforeus.Whilepetitioners
allegeunlawfuloperationofjaialaigamesbyPAGCOR,whatisultimatelyandmainlyatissueinthesecasesisthe
interpretationofPAGCORsfranchisewhichdefinesthescopeofPAGCORsrights,privilegesandauthority.While
theExecutivebranchofthegovernment,throughtheSecretaryofJusticeandOfficeoftheGovernmentCorporate
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CounselhaveinterpretedrespondentPAGCORsfranchisetoincludetheoperationofjaialai,thepetitioners,intheir
capacity as members of the House of Representatives, allege a different interpretation. Whether or not PAGCOR
hasinfactcommittedactsbeyondthescopeofitsfranchisehingesupontheinterpretationofPAGCORsfranchise.
Considering that said pivotal issue involves the interpretation of the law defining the scope of PAGCORs rights,
privilegesandauthority,thisCourtmayrightfullytake,asinfactithastaken,jurisdictionoverthesubjectpetitions.It
is wellsettled that the duty and power to interpret a statute belongs to the Judiciary. While the legislative and/or
executive departments, by enacting and enforcing a law, respectively, may construe or interpret the law, it is the
SupremeCourtthathasthefinalwordastowhatthelawmeans.6
HavingruledthatthisCourtcantakecognizanceofthesubjectpetitions,Icomebacktothequestionastowhether
petitioners,intheircapacityasmembersoftheHouseofRepresentatives,havetherequisitestandingtofilethese
two related suits. Respondent PAGCOR contends that petitioners who instituted these suits in their capacity as
lawmakerscannotvalidlyclaimthattheyaresuinginbehalfofCongress.RespondentPAGCORcontendsthatthe
issue as to whether or not it has the authority to operate and manage jai alai games does not violate petitioners
rightsasmembersofCongressnorcanitbedeemedasimpermissiblyintrudingintothedomainofthelegislature.
TheissueastowhetheramemberofCongressmaybringsuitinhiscapacityasalawmaker,allegingimpairmentof
anyofthepowers,rightsandprivilegesbelongingtoCongress,isnotnovel.CitingtheAmericancasesofColeman
vs.Miller7andHoltzmanvs.Schlesinger8wedeclaredinPhilconsavs.Enriquez9that"totheextentthatthepowers
ofCongressareimpaired,soisthepowerofeachmemberthereof,sincehisofficeconfersarighttoparticipatein
theexerciseofthepowersofthatinstitution."
A more careful scrutiny is warranted, therefore, with regard to the issue as to whether the powers and rights of
petitioners, as members of Congress, are in any way impaired by respondent PAGCORs act of operating and
maintainingjaialaigames.
Thereisnodisputethatthepowertograntfranchisesrestswithinthelegislativebranchofgovernment.Inalegalor
narrowersense,theterm"franchise"ismoreoftenusedtodesignatearightorprivilegeconferredbylaw.Theview
taken in a number of cases is that to be a franchise, the right possessed must be such as cannot be exercised
withouttheexpresspermissionofasovereignpower,thatis,aprivilegeorimmunityofapublicnaturewhichcannot
belegallyexercisedwithoutlegislativegrant.10Havingtheprerogativetograntfranchises,Congressalsohasthe
power to revoke or repeal or alter franchises. Considering that whatever judgment may be rendered in the
interpretationofthelawdefiningthescopeofPAGCORsfranchisewouldhaveabearingonpetitionersprerogative,
as members of Congress, to consider whether to modify, amend, alter, or repeal, through legislation, PAGCORs
franchise,Ibelieve,thatinlimitedsense,thatpetitionershavetherequisitestandingtobringthesesuitsatbar.
Respondent PAGCOR, nevertheless, insists that an action for injunction is not among the cases or proceedings
originally cognizable by the Supreme Court. In support of its contention, PAGCOR cites the cases of Diokno vs.
Reyes11andGarciaGaviresvs.Robinson12whereitwasheldthatanapplicationforpreliminaryinjunctionwillnot
be entertained by this Court unless the same is prayed for in connection with some other remedy or in an action
actuallypendingbeforeUs.
Injunctionisajudicialwrit,processorproceedingwherebyapartyisorderedtodoorrefrainfromdoingaparticular
act.Itmaybeanactioninitselfbroughtspecificallytorestrainorcommandtheperformanceofanactoritmaybe
just a provisional remedy for and as an incident in the main action which may be for other reliefs. The action for
injunctionshouldnotbeconfusedwiththeancillaryandprovisionalremedyofpreliminaryinjunctionwhichcannot
existexceptonlyasanincidentofanindependentactionorproceeding.Inamainactionforpermanentinjunction,a
partymayaskforpreliminaryinjunctionpendingthefinaljudgment.
Section1,Rule56ofthe1997RulesofCivilProcedureprovides:
Section 1. Original cases cognizable. Only petitions for certiorari, prohibition, quo warranto, habeas corpus,
disciplinaryproceedingsagainstmembersofthejudiciaryandattorneys,andcasesaffectingambassadors,public
ministersandconsultantsmaybefiledoriginallyintheSupremeCourt.
ItisclearthatnomentionwasmadeintheabovecitedruleastothejurisdictionofthisCourttoentertainoriginal
actionsforinjunction.Inthe1917caseofMadarangvs.Santamaria13,wehaveruledthattheSupremeCourtdoes
not have original jurisdiction, in an action brought for that purpose, to grant the remedy by injunction pursuant to
Section 17 of Act No. 136 which provided that the Supreme Court shall have original jurisdiction to issue writs of
mandamus,certiorari,prohibition,habeascorpusandquowarranto.AsinSection17ofAct136,Section1ofRule
56ofthe1997RulesofCivilProcedurehaslikewisenotmadeanyprovisionforthegrantingofthewritofinjunction,
asanoriginalaction,intheSupremeCourt.Hence,therulethatthisCourtdoesnothavejurisdictionoveroriginal
actions for injunction still holds. This Court may, however, issue preliminary writs of injunction in cases on appeal
before Us or in original actions commenced therein pursuant to Section 2 of Rule 58 of the 1997 Rules of Civil
Procedure.
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Notwithstandingprocedurallapsesastotheappropriatenessoftheremediesprayedforinthepetitionsfiledbefore
Us,however,thisCourtcantakeprimaryjurisdictionoverthesaidpetitionsinviewoftheimportanceoftheissues
raised.Insomeinstances,thisCourthasevensuspendeditsownrulesandexceptedacasefromtheiroperation
wheneverthehigherinterestsofjusticesodemanded.
It is helpful, in the discussion of the merits of these consolidated cases, to review the history of the law creating
PAGCOR.
On January 1, 1977, the then President Ferdinand E. Marcos, in the exercise of his legislative powers under
Amendment No. 6 of the 1973 Constitution, issued Presidential Decree (P.D.) No. 1067A creating the Philippine
AmusementGamesCorporation(PAGCOR).PAGCORwascreatedandmandatedtoimplementthefollowingstate
policy:
Section1.DECLARATIONOFPOLICYItisherebydeclaredtobethepolicyofthestatetocentralizeandintegrate
all games of chance not heretofore authorized by existing franchise or permitted by law to obtain the following
objectives:
1. To centralize and integrate the right and authority to operate and conduct games of chance into one
corporateentitytobecontrolled,administeredandsupervisedbythegovernment
2.Toestablishandoperateclubsandcasinos,sportsgamingpools(basketball,football,etc.)andsuchother
foramusementandrecreation,includinggamesofchance,whichmaybeallowedbylawwithintheterritorial
jurisdiction of the Philippines which will (1) generate source of additional revenue infrastructure and socio
economic projects, such as flood control, Tulungan ng Bayan Centers/Nutritional Programs, Population
Control and such other essential public services (2) create recreation and integrate facilities which will
expand and improve the countrys existing tourist attractions (3) minimize, if not totally eradicate the evils,
malpractices and corruptions that normally are found prevalent in the conduct and operation of gambling
clubsandcasinoswithoutdirectgovernmentinvolvement.
On the same day, PAGCOR was granted by the then President Marcos under P.D. No. 1067B the "franchise to
establish,operateandmaintaingamblingcasinosonlandandwaterwithintheterritorialjurisdictionoftheRepublic
ofthePhilippines."PAGCORsfranchisewasfurtheramendedunderP.D.No.1067Cforthepurposeofspecifying
that "The franchise shall become exclusive in character, subject only to the exception of existing franchises and
gamesofchanceheretoforepermittedbylaw."P.D.No.1067AandP.D.No.1067BwereagainamendedbyP.D.
Nos. 1399 and 1632 relative to the provisions on Board of Directors, exemptions and allocation of fund, among
others.
OnJuly11,1983,PresidentMarcosissuedP.D.No.1869forthepurposeofconsolidatingandamendingP.D.Nos.
1067A,1067B,1067C,1399and1632,relativetothefranchiseandpowersofPAGCOR.UnderP.D.No.1869,
PAGCORismandatedtoimplementthefollowingstatepolicy
xxx
(b) to establish and operate clubs and casinos, for amusement and recreation, including sports gaming pools
(basketball,football,lotteries,etc.)andsuchotherformsofamusementandrecreationincludinggamesofchance
whichmaybeallowedbylawwithintheterritorialjurisdictionofthePhilippinesandwhichwill(1)generatesources
of additional revenue to infrastructure and sociocivic projects, such as flood control programs, beautification,
sewerage and sewage projects, Tulungan ng Bayan centers, Nutritional Programs, population control and such
other essential public services (2) create recreation and integrated facilities which will expand and improve the
countrysexistingtouristattractionsand(3)minimize,ifnottotallyeradicate,theevils,malpracticesandcorruptions
that are normally in the conduct and operation of gambling clubs and casinos without direct government
involvement."
ItisthepetitionerscontentionthatPAGCORSfranchiseislimitedtothemanagementandoperationofgamesof
chance.TheypointoutthatP.D.No.810andExecutiveOrderNo.169havecharacterizedjaialaiasagameofskill
andconsequently,theoperationandmanagementofjaialaiorBasquepelotagamescannotbesaidtohavebeen
includedinPAGCORsfranchise.JaialaiasdefinedinWebstersdictionaryisagameofBasqueoriginresembling
handballandplayed(asinSpainandLatinAmerica)onalargewalledcourtbyusuallytwoorfour(4)playerswho
usealongcurvedwickerbasketstrappedtotherightwristtocatchandhurltheballagainstthefrontwalltomakeit
reboundinsuchawaythattheopponentcannotreturnitbeforeithasbouncedmorethanonce.14
Respondent PAGCOR,ontheotherhand,citingthecasesof Limvs.Pacquingand Guingona vs. Reyes, et.al,15
claimsthatwhilejaialaiinitselfisnotagameofchance,itmaybecharacterizedasagameofchancewhenbets
areacceptedasaformofgambling.
Theobjectofallinterpretationandconstructionofstatutesistoascertainthemeaningandintentionofthe
legislature,totheendthatthesamemaybeenforced.Thismeaningandintentionmustbesoughtfirstofall
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in the language of the statute itself. For it must be presumed that the means employed by the legislature to
expressitswillareadequateforthepurposeanddoexpressthatwillcorrectly.Ifthelanguageisplainandfreefrom
obscurity,itmustbetakenasmeaningexactlywhatitsays,whatevermaybetheconsequences.16
Section11ofP.D.No.1869definingtheextentandnatureofPAGCORsfranchisereads:
xxxtheCorporationisherebygrantedxxxtherights,privilege,andauthoritytooperateandmaintaingambling
casinos,clubs,andotherrecreationoramusementplaces,sports,gamingpools,i.e.,basketball,football,lotteries,
etc.xxx[underscoringsupplied]
Contrary to the majority opinion that PAGCORs franchise is limited only to the management and operation of
casinos, a cursory reading of the abovequoted legal provision would readily show that the extent and nature of
PAGCORs franchise is so broad that literally all kinds of sports and gaming pools, including jai alai, are covered
therein.
A sport is defined as "a game or contest especially when involving individual skill or prowess on which money is
staked."17 Gaming, on the other hand, is defined as "the act or practice of playing games for stakes."18 P.D. No.
1869 has made express mention of basketball and football as example of gaming pools. Basketball and football,
however,likejaialaiaregamesofskills.InU.S.vs.Hilario19,thedistinctionbetweengamesofchanceandgames
ofskillwastreatedinthiswise:
This distinction between games of chance and games of skill, making betting upon the former illegal is quite well
treated in State vs. Gupton (30 N.C. 271) where a game of tenpins was held not to be a game of chance, but a
game depending chiefly upon the skill of players, and betting thereon consequently not prohibited by a statute
prohibitingbetsorwagersupongamesofchances.
ConsideringthatunderSection11ofP.D.No.1869,gamesofskilllikebasketballandfootballhavebeenlumped
togetherwiththeword"lotteries"justbeforetheword"etc."andafterthewords"gamingpools,"itmaybededuced
from the wording of the law that when bets or stakes are made in connection with games of skill, they may be
classifiedasgamesofchanceunderthecoverageofPAGCORsfranchise.Themeaningofthephrase"etcetera"
or its abbreviation "etc." depends largely on the context of the instrument, description and enumeration of the
mattersprecedingthetermandsubjectmattertowhichitisapplied,andwhenusedinastatute,thewordsshould
begiventheirusualandnaturalsignification.20Consequently,jaialai,otherwiseknownas"gameofBasquepelota",
whileinitselfisnotperseagameofchance,maybecategorizedasagameofchancewhenbetsareacceptedas
aformofgambling.Itisacardinalruleofstatutoryconstructionthatwhenwordsandphrasesofastatuteareclear
andunequivocal,theirmeaningmustbedeterminedfromthelanguageemployedandthestatutemustbetakento
mean exactly what it says. Even if the Court is fully persuaded that the legislature really meant and intended
somethingdifferentfromwhatitenacted,andthatthefailuretoconveytherealmeaningwasduetoinadvertenceor
mistakeintheuseoflanguage,yet,ifthewordschosenbythelegislaturearenotobscureorambiguous,butconvey
apreciseandsensiblemeaning(excludingthecaseofobviousclericalerrorsorellipticalformsofexpression),then
theCourtmusttakethelawasitfindsit,andgiveititsliteralinterpretation,withoutbeinginfluencedbytheprobable
legislativemeaninglyingatthebackofthewords.Inthatevent,thepresumptionthatthelegislaturemeantwhatit
said,thoughitbecontrarytothefact,isconclusive.21
Notably,eventheliteralapplicationoftheword"etc."doesnotruncountertothereasonfortheenactmentofthe
statuteandthepurposetobegainedbyit.P.D.No.1869,thelawamendingandconsolidatingP.D.Nos.1067A,
1067B, 1067C, 1399 and 1632, Relative to the Franchise and Powers of PAGCOR, was issued by the then
President Marcos, pursuant to the observation that PAGCORs operation has enabled the government to identify
potentialsourcesofadditionalrevenueforthegovernmentprovidedallgamesofchancearemanagedandmade
subjecttotheclosescrutiny,regulation,supervisionandcontrolbythegovernment.Theoperationandmanagement
ofjaialaicanandwillundoubtedlygeneratemorefundsforPAGCORasasourceofadditionalandmuchneeded
revenueforthegovernment.
It is alleged that there is no specific mention of jai alai among the games which PAGCOR can operate under its
franchise. Hence, pursuant to the principle that a franchise is a special privilege that should be construed strictly
againstthegrantee,PAGCORcannotclaimthatitisauthorizedtoconducttheoperationofjaialaigames.
WhilethereisnospecificmentionofjaialaiasamongthegamesofchancewhichPAGCORcanoperateunderits
franchise, the language of the law defining the scope of PAGCORs franchise is broad enough to include the
operations of jai alai as a game of chance. Where the franchise contains no words either defining or limitingthe
powers which the holder may exercise, such holder has, by implication, all such powers as are reasonably
necessarytoenableittoaccomplishthepurposesandobjectofitscreation.22Itiswellrecognizedthattheprinciple
ofstrictconstructiondoesnotprecludeafairandreasonableinterpretationofsuchcharterandfranchises,nordoes
itjustifywithholdingthatwhichsatisfactorilyappearstohavebeenintendedtobeconveyedtothegrantee.23
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ItisclaimedthatjaialaioperationsisbeyondthescopeofPAGCORsfranchiseinasmuchasjaialaiisnotallowed
bylawwithintheterritorialjurisdictionofthePhilippinesandthatatthetimeofthepassageofP.D.No.1869,the
operations of jai alai was already the subject of a grant to the Philippine Jai Alai and Amusement Corporation
(PJAC) by virtue of P.D. Nos. 810 and 1124 and that the subsequent repeal of P.D. Nos. 810 and 1124 in 1986
allegedlyrevertedbettingontheresultsofjaialaigamestothestatusofacriminalactunderP.D.No.1602.
Themeregrantingofafranchisedoesnotamounttoanimpliedcontractonthepartofthegrantorthatitwillnot
grantarivalfranchisetoacompetingcorporationorenterintoacompetitionitselfinreferencetothesubjectofthe
franchise.24 Monopoly is not an essential feature of a franchise and the strictly legal signification of the term
franchise is not always confined to exclusive rights.25 An examination of the provisions of P.D. No. 810 does not
give us any indication that the franchise granted to PJAC to operate jai alai is exclusive in character. Given the
broadlanguageofP.D.1869definingthescopeofPAGCORsfranchise,Ifindnoreasonwhytheoperationsofjai
alaicannotbedeemedasincludedinitsfranchise.Besides,thesubsequentrepealofP.D.Nos.810and1124in
1986byE.O.No.610onlymeantthatPJACwasnolongerentitledtoexerciseitsrightsunderitsformerfranchise.
E.O.No.610,otherwiseknownasRepealingPresidentialDecreeNo.810,entitled"AnActGrantingthePhilippine
JaialaiandAmusementCorporationaFranchisetoOperate,ConstructandMaintainaFrontonforBasquePelota
andSimilarGamesofSkillintheGreaterManilaArea",asamended,andAccordinglyRevokingandCancelingthe
Right, Privilege and Authority granted therein in itself did not delimit the scope of the franchise of PAGCOR
especiallysinceE.O.No.610wasspecificenoughtoidentifytherepealofthelaw(P.D.No.810)grantingacertain
franchise,i.e.PJACsfranchise.AsregardsP.D.No1602,itshouldbestressedthatitdidnotoutlawtheoperations
ofjaialai.Itmerelyprovidedforstifferpenaltiesforillegalorunauthorizedactivitiesrelatedtojaialaiandotherforms
ofgambling.
ThemajorityopinionmakesmuchissueofthefactthatthefranchiseofPAGCORunderP.D.No.1869camefrom
President Marcos who assumed legislative powers under martial law. He stresses that "the socalled legislative
granttoPAGCORdidnotcomefromarealCongress."Iwouldliketopointout,however,thefactthatthevalidityof
PAGCORs franchise has already been upheld in the case of Basco vs. PAGCOR.26 As earlier stated, the main
issuebeforethisCourtisthescopeoftheaforesaidfranchiseofPAGCORandnotitsvalidity.Themajorityopinion
doesnotdisputethatPAGCORunderP.D.No.1869hastherequisitefranchisetooperategamblingcasinos.Inthe
samevein,however,itisarguedthatP.D.No.1869cannotbeheldasavalidlegislativegrantoffranchiseforthe
operation of jai alai games. President Marcos had legislative power to grant PAGCOR a franchise to operate all
othergamesofchanceincludingjaialai.PresidentMarcosexerciseoflegislativepower,underAmendmentNo.6
during the martial law years, has been upheld in a number of cases by this Court, notably that of Legaspi vs.
MinisterofFinance.27Moreover,Section3,ArticleXVIIIoftheTransitoryProvisionsofthe1987Constitutionclearly
providesthat:"Allexistinglaws,decrees,executiveorders,proclamations,lettersofinstructionandotherexecutive
issuancesnotinconsistentwiththisConstitutionshallremainoperativeuntilamended,repealedorrevoked."Hence,
unless and until P.D. No. 1869 which is the charter and franchise of PAGCOR, is amended or repealed by
Congress,itremainsvalidandeffective.
If courts believe that a particular statute is unwise, a recognition of their own limited sphere forbids them from
amending or rewriting the law in the guise of strict interpretation to suit their own predilections or prejudices. The
caseofStone vs. Mississippi28cited in the majority opinion saying that courts do not assume that the legislature
intendedtopartawaywithitspowertoregulatepublicmorals,ismisplaced.Inthesaidcase,anActwaspassedby
the legislature of Mississippi on January 16, 1867 entitled, "An Act Incorporating the Mississippi Agricultural,
EducationalandManufacturingAidSociety"whichconcededtothedefendantsthefranchiseofissuingandvending
lottery tickets. From 1822 to 1867, without any constitutional requirement, lotteries were prohibited by law in
Mississippiandthosewhoconductedthemwerepunishedasakindofgamblers.In1868,thepeopleoftheStateof
Mississippi adopted a new Constitution which contained a provision stating that "the Legislature shall never
authorizeanylotterynorshallthesaleoflotteryticketsbeallowednorshallanylotteryheretoforeauthorizedbe
permittedtobedrawn,orticketsthereintobesold."Thedefendantsthereininsistedthattheyhadcompliedwithall
the conditions imposed by the charter, and were conducting business in accordance with its provisions that the
termsofthestateConstitutionandtheLegislativeAct,abovesetforth,interferedwiththeirvestedrightsandviolate
the Constitution of the United States, in attempting to impair the obligation of contracts. The question then posed
waswhetherintheviewofthefactspresented,thelegislatureofastatecan,bythecharterofalotterycompany,
defeatthewillofthepeopleauthoritativelyexpressedinrelationtothefurthercontinuanceofsuchbusinessintheir
midst.TheUnitedStatesSupremeCourtruledthatnolegislaturecanbargainawaypublichealthorpublicmorals.
Clearly,theissueinthesaidcaseismateriallydifferentfromtheissueintheconsolidatedcasesatbarwherethe
mainquestionpresentedisthescopeandnotthevalidityofrespondentPAGCORsfranchisetooperatejaialaiasa
legalized game of chance. It is not amiss to note that PAGCOR in the light of Section 1 of P.D. No. 1869 was
created,precisely,to"centralizeandintegrateallgamesofchancenotheretoforeauthorizedbyexistingfranchises
or permitted by law in order to attain the following objectives" xxx "to minimize the evils, malpractices and
corruptionsthatnormallyarefoundprevalentintheconductandoperationofgamblingclubsandcasinoswithout
directgovernmentinvolvement."PAGCORsrighttooperatejaialaigamesaslegalizedgamesofchanceunderits
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G.R.No.138298
franchise,isinfactameasurewhichflowsfromthelegislaturesexerciseofpolicepower.InBascovs.PAGCOR
thisCourthavesodeclaredthat"PublicwelfareliesatthebottomoftheenactmentofP.D.No.1869."29
Reliance in the majority opinion on the case of Aicardi vs. Alabama30 that a statute which legalizes a gambling
activityorbusinessshouldbestrictlyconstruedandeveryreasonabledoubtmustberesolvedtolimitthepowers
and rights claimed under its authority is likewise misplaced. The aforesaid statement was apparently taken out of
contextinasmuchasinthesamecase,thecourtdeclared"Everyreasonabledoubtshouldbesoresolvedastolimit
thepowersandrightsclaimedunderitsauthority.Implicationsandintendmentsshouldhavenoplaceexceptas
they are inevitable from the language or the context."31 As earlier stated, in the case at bar the scope of
PAGCORsfranchiseiscouchedinalanguagethatisbroadenoughtocovertheoperationsofjaialai.
AsregardstheissuethatitcouldnothavebeentheintentofthenPresidentMarcostograntPAGCORafranchiseto
operate jai alai considering that he had already issued to another corporation which is controlled by his inlaws a
franchise to operate jai alai, suffice it to say that in the interpretation of statutes, it is not proper or permissible to
inquireintothemotiveswhichinfluencedthelegislativebody,exceptinsofarassuchmotivesaredisclosedbythe
statute itself.32 It should be stressed that the magnitude of the consideration, political or financial, which may
operateuponthelegislativemindasaninducementforgrantsandfranchisesconferredbystatute,donotchange
the character of the legislation, or vary the rule of construction by which the rights of the grantees must be
measured.33
ConsideringthatPAGCORsfranchiseisbroadenoughtocovertheoperationandmanagementofjaialaigamesas
well as supervised betting activities in connection therewith, let us come to the question as to whether PAGCOR
mayenterintoajointventureagreementwiththeprivatecorporations,BELLEandFILGAME,tooperate,manage
andconductjaialaigamesaswellassupervisedbettingactivitiesbothatthefrontonsiteandselectedofffronton
bettingstations.
PAGCORs right to enter into management contracts is not limited to those relating to the efficient operation of
gamblingcasinosunderSection11ofP.D.No.1869whichreads:
Sec.11.ScopeofFranchise.Inadditiontotherightsandprivilegesgranteditundertheprecedingsection,this
Franchiseshallentitlethecorporationtodoandundertakethefollowing:
(1) enter into operating and/or managing contracts with any registered and accredited company possessing the
knowledge,skillandexpertiseandfacilitiestoinsuretheefficientoperationofgamblingcasinosxxx
A joint venture is an association of persons or companies jointly undertaking some commercial enterprise
generally,allcontributeassetsandsharerisks.Itrequiresacommunityofinterestsintheperformanceofthesubject
matter,aright,andgovernsthepolicyconnectedtherewith,andduty,whichmaybealteredbyagreementtoshare
inbothprofitandlosses.34Inthisjurisdiction,ajointventureisaformofpartnershipandisthusgovernedbythelaw
onpartnerships.
Section3ofP.D.No.1869enumeratesthefollowingpowersandfunctionsofPAGCOR:
xxx
h) to enter into, make, perform, and carry out contracts of every kind and for any purpose pertaining to the
business of the corporation, or in any manner incident thereto, as principal, agent or otherwise, with any
person,firm,associationorcorporation
xxx
l)todoanythingandeverythingnecessary,proper,desirable,convenientorsuitablefortheaccomplishmentofany
ofthepurposesortheattainmentofanyoftheobjectsorthefurtheranceofanyofthepowershereinstated,either
alone or in association with other corporations, firms or individuals, and to do every other act or thing incidental,
pertainingto,growingoutof,orconnectedwith,theaforesaidpurposes,objectsorpowers,oranypartthereof.
Clearly, in Section 11ofP.D.No.1869,thepowersgrantedtoPAGCORisbroad enough to include the power to
enter into a joint venture agreement with private corporations like BELLE and FILGAME relating to the operation,
managementandconductnotonlyofgamblingcasinosbutalsoofthoserelatingtojaialaiaslegalizedgambling.
Where the language of the statute is clear, it is the duty of the court to enforce it according to the plain
meaning of the word. There is no occasion to resort to other means of interpretation. It is not allowable to
interpret what has no need of interpretation, and, when the words have a definite and precise meaning, to go
elsewhereinsearchofconjectureinordertorestrictorextendthemeaning.Whenanactisexpressedinclearand
concise terms, and the sense is manifest and leads to nothing absurd, there can be no reason not to adopt the
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G.R.No.138298
sensewhichitnaturallypresents.Togoelsewhereinsearchofconjecturesinordertofindadifferentmeaningisnot
somuchtointerpretthelawastoeludeit.35
Undertherulepotestasdelegatanondelegaripotestadelegatedpowercannotbedelegated.Thisisbasedupon
the ethical principle that such delegated power constitutes not only a right but a duty to be performed by the
delegatethroughtheinstrumentalityofhisownjudgmentactingimmediatelyuponthematteroflegislationandnot
throughtheinterveningmindofanother.36However,thesaidruleisinapplicableinthecaseatbar.Thelegislative
grantoffranchisetoPAGCORhasnotaccordeduntothelatterlegislativepowersnorquasilegislativepowers.The
jointventureAgreementwasenteredbyPAGCORwithFILGAMEandBELLEpursuanttothepowersgrantedunder
P.D.No.1869toPAGCORto"enterinto,make,perform,andcarryoutcontractsofeverykindandforanypurpose
pertaining to the business of the corporation x x x with any person, firm or corporation." Under the joint venture
Agreement, BELLE and FILGAME will provide financial requirements and technical assistance to PAGCOR in
connectionwiththeuseoftheiroperationalfacilities.PAGCORhowevershallstillmanage,regulateandcontrolall
aspects of jai alai operations. The subject joint venture Agreement is in consonance with the powers granted to
PAGCOR that it may "do anything and everything necessary, proper, desirable, convenient or suitable for the
accomplishmentofanyofthepurposesorattainmentofanyoftheobjectsorthefurtheranceofanyofthepowers
hereinstated,eitheraloneorinassociationwithothercorporations,firmsorindividuals."
ItshouldbenotedthatthejointventureAgreemententeredintobyandamongPAGCOR,BELLEandFILGAME,
doesnotinvolveanyinfrastructurecontractorprojectwhichisgovernedbyP.D.No.1594.37Neitherdoesitinvolve
the sale and furnishing of supplies, materials and equipment to the government under E.O. 301. In Kilosbayan,
Incorporatedvs.Morato38,thisCourtruledthatSection1ofE.O.301denominatedas"DecentralizingActionson
Government Negotiated Contracts, Lease Contracts and Records Disposal," applies only to contracts for the
purchase of supplies, materials and equipment. In the joint venture Agreement in question, it is BELLE and
FILGAMEwhichwill,infact,providethefinancialrequirementsandtechnicalassistancetoPAGCORinconnection
with the use of their operational facilities. Hence, there is no necessity for PAGCOR to conduct a public bidding
beforeenteringintothesaidjointventureAgreementwithBELLEandFILGAMEespeciallysincethereisnothingin
theprovisionsofP.D.No.1869whichwouldrequirethatcontractsliketheJointVentureAgreementinquestionbe
submittedforpublicbidding.
Finally, while on one hand, jai alai, as a form of legalized gambling under the control and supervision of
PAGCOR,doesnotpromotegoodmorals,ontheotherhanditisexpectedtoprovideentertainmenttothe
public and much needed revenues to the government. In balancing those two apparently conflicting
interests,itmustbestressedthatcourtsarenotsupposedtopassuponanddonotpassuponquestionsof
wisdom or expediency of legislation, for it is not within their province to supervise and keep legislation
withintheboundsofpropriety.Thatisprimarilyandexclusivelyalegislativeconcern.39Anyshortcomingof
astatuteisforthelegislaturealonetocorrectbyappropriateenactment.40
Inviewofalltheforegoing,IvotetodismisstheconsolidatedpetitionsinG.R.NO.138298andG.R.NO.138982.
Footnotes
1OpinionNo.67,S.,1996,G.R.No.138298,Rollo,pp.171172.
2250SCRA130,140141[1995].
3Annex"A",SupplementalPetitioninG.R.No.138298,Rollo,pp.162170.
4Section5(b)ofP.D.902Areads:Section5.Inadditiontotheregulatoryandadjudicativefunctionsofthe
Securities and Exchange Commission over corporations, partnerships and other forms of associations
registeredwithitasexpresslygrantedunderexistinglawsanddecrees,itshallhaveoriginalandexclusive
jurisdictiontohearanddecidecasesinvolving:
xxx
(b) Controversies arising out of intracorporate or partnership relations between and among
stockholders,membersorassociatesbetweenanyorallofthemandthecorporation,partnershipor
association of which they are stockholders, members or associates, respectively and between such
corporation,partnershiporassociationandthestateinsofarasitconcernstheirindividualfranchiseor
righttoexistasentity.
5Sec.5.2ofR.A.8799,otherwiseknownas"TheSecuritiesRegulationCode"whichtookeffectonAugust8,
2000reads:TheCommissionsjurisdictionoverallcasesunderSection5ofP.D.902Aisherebytransferred
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G.R.No.138298
tothecourtsofgeneraljurisdictionortheappropriateRegionalTrialcourt:Provided,thattheSupremeCourt
intheexerciseofitsauthoritymaydesignatetheRegionaltrialcourtbranchesthatshallexercisejurisdiction
overthesecases.TheCommissionshallretainjurisdictionovercasespendingcasesinvolvingintracorporate
disputessubmittedforfinalresolutionwhichshouldberesolvedwithinone(1)yearfromtheenactmentofthis
code.TheCommissionshallretainjurisdictionoverpendingsuspensionofpayments/rehabilitationcasesfiled
asof30June2000untilfinallydisposed.
6Endenciavs.David,93Phil696,700702(1953).
7307U.S.433[1939].
8484F.2d1307[1973].
9235SCRA506,520[1994].
1036AmJur26,Franchises1.
117Phil385,387[1907].
128Phil332,333[1907].
1337Phil304[1917].
14WebstersThirdNewInternationalDictionary(Unabridged),1993Ed.
15240SCRA649,674675[1995].
16H.C.Black,HANDBOOKONTHECONSTRUCTIONANDINTERPRETATIONOFTHELAWS45(2ndEd,
1971).
17Seenote14,supra.
18Ibid.
1924Phil392,399[1913].
20Wrightvs.People,181P.2d447,450.116Colo.306.
21H.Black,op.cit,note16at53.
2236AmJur2d,Franchises26citingRussellvs.KentuckyUtilitiesCo.,231Ky820,22SW2d289,66ALR
1238SouthernIllinoisandM.BridgeCo.v.Stone,174Mo1,73SW453.
2336AmJur2d,Franchises26citingRussellvs.Sebastian,233US195,58Led912,34SCT.517.
2436AmJur2d,Franchises29.
25Ibid.
26197SCRA52[1991].
27115SCRA418,433[1982].
28101US814,25LEd.1079[1879].
29197SCRA52,62[1991]
3022L.Ed.215
31Id.at216
32H.Black,op.cit.,note16at315citingHomevs.Guy,L.R.5ChDiv.901Keyport&M.P.StreamboatCo.
v.FarmersTransp.Co.18N.J.Eq13Kountzev.Omaha,5Dill.443,Fed.Cas.No.7,928CityofRichmond
v.SupervisorsofHenricoCounty,83Va.204,2S.E.26,Peoplevs.Shepard,36N.Y.285Fletcherv.Peck,
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G.R.No.138298
6Cranch,87,3L.Ed.162Williamsv.Nashville,89Tenn.487,15S.W.364PacificCoastS.S.Co.v.United
States,33Ct.Cl.36CityofLebanonv.Creel,109Ky363,59S.W.16.
33Ibid.at116citingUnionPac.R.Co.v.UnitedStates,10Ct.Cl448.
34Kilosbayanv.Guingona,232SCRA110,144[1994].
35H.Black,op.cit.,note16at4950.
36USvs.Barrias,11Phil327,330[1908].
37Entitled"PrescribingPolicies,Guidelines,RulesandRegulationsforGovernmentInfrastructureContracts."
38Seenote2,supraat151.
39 Morfe vs. Mutuc, 22 SCRA 424, 450 [1968] Quintos vs. Lacson, 97 Phil 290, 293 [1955] People vs.
Carlos,78Phil535,548[1947]Angaravs.ElectoralCommission,63Phil139,158[1936].
40Lacsonvs.Roque,92Phil456,470[1935]Cornejov.Naval,54Phil809,814[1930].
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