FIRST DIVISION

[G.R. No. 115044. September 1, 1994.]

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila; and THE

CITY OF MANILA , petitioners, vs. HON. FELIPE G. PACQUING, as
Judge, Regional Trial Court of Manila; and ASSOCIATED
DEVELOPMENT CORPORATION , respondents.

Office of the City Legal Officer for petitioners.

Cayanga, Zuñiga & Angel for private respondent.

DECISION

QUIASON , J : p

This is a petition for certiorari under Rule 65 of the Revised Rules of Court to set
aside the Orders dated March 28, 1994, April 11, 1994 and April 20, 1994 of Judge Felipe
G. Pacquing, presiding judge of the Regional Trial Court, Branch 40, Manila, issued in Civil
Case No. 88-45660. LexLib

The Order dated March 28, 1994 granted the motion of private respondent to
compel petitioner Mayor Alfredo S. Lim to issue a permit or license in favor of private
respondent pursuant to Ordinance No. 7065 upon compliance by private respondent with
all the requirements set thereunder.
The Order dated April 11, 1994 denied the motion for reconsideration led by
petitioners of the Order dated May 28, 1994.
The Order dated April 20, 1994 reiterated the order of March 28, 1994, directing
Mayor Lim to immediately issue to private respondent the necessary permit or license
pursuant to Ordinance No. 7065.
I
On September 7, 1971, the Municipal Board of Manila passed Ordinance No. 7065
pursuant to Section 18(jj) of the Revised Charter of Manila, granting private respondent a
franchise to operate a jai-alai in the city. The ordinance is reproduced as follows:
"AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW AND PERMIT
THE ASSOCIATED DEVELOPMENT CORPORATION TO ESTABLISH, MAINTAIN
AND OPERATE A JAI-ALAI IN THE CITY OF MANILA, UNDER CERTAIN TERMS
AND CONDITIONS AND FOR OTHER PURPOSES.

Be it ordained by the Municipal Board of the City of Manila, that:

SECTION 1. The Mayor is authorized, as he is hereby authorized to

allow and permit the Associated Development Corporation to establish, maintain
and operate a jai-alai in the City of Manila, under the following terms and
conditions and such other terms and conditions as he (the Mayor) may prescribe
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 for good reasons of general interest:

a. That the construction, establishment and maintenance of the

jai-alai shall be at a place permissible under existing zoning ordinances of
Manila;

b. That the games to be played daily shall commence not earlier

than 5:00 in the afternoon; cdphil

c. That the City of Manila will receive a share of 2 1/2% on the

annual gross receipts on all wagers or bets, 1/2% of which will accrue to
the Games and Amusement Board as now provided by law;

d. That the corporation will, in addition, pay to the city an

annual license fee of P3,000.00 and a daily permit fee of P200.00;

e. That the corporation will, to insure its faithful compliance of

all the terms and conditions under this ordinance, put up a performance
bond from a surety acceptable to the city, in the amount of at least
P30,000.00.

SECTION 2. The Mayor and the City Treasurer or their duly authorized
representatives are hereby empowered to inspect at all times during regular
business hours the books, records and accounts of the establishment, as well as
to prescribe the manner in which the books and nancial statements of the
entrepreneur shall be kept.

SECTION 3. This ordinance shall take effect upon its approval.

Enacted originally by the Municipal Board on September 7, 1971; vetoed by

the Mayor on September 27, 1971; modified and amended by the Municipal Board
at its regular session today, October 12, 1971.
Approved by His Honor, the Mayor, on 13 November 1971."

Thereafter, private respondent took steps preparatory to the establishment of the

jai-alai at Ermita, Manila. Private respondent retained the services of an architectural rm
from Hongkong to design the fronton and contracted with a local rm for the construction
of the building. LibLex

On August 20, 1975, after the declaration of Martial Law, President Ferdinand E.
Marcos promulgated Presidential Decree No. 771 revoking the powers of the local
government to grant permits or licenses and cancelling all existing franchises to operate
jai-alais.
Less than two months after P.D. No. 771 was issued, the Philippine Jai-Alai and
Amusement Corporation, an enterprise controlled by Alfredo Romualdez, a brother-in-law
of President Marcos, was granted a franchise to operate a jai-alai within the Greater Manila
Area under P.D. No. 810.
However, after the EDSA Resolution, President Corazon C. Aquino issued Executive
Order No. 169, repealing P.D. No. 810.
On May 5, 1988, private respondent sought the resumption of its business
operations under its franchise issued under Ordinance No. 7065. Mayor Gemiliano C.
Lopez denied private respondent's request, as well as its motion for reconsideration.

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 On August 2, 1988, private respondent led a petition for mandamus and speci c
performance with the Regional Trial Court, Branch 40, Manila, docketed as Civil Case No.
88-45660.
In a decision dated September 9, 1989, Judge Augusto E. Villarin of Branch 40 held
that Ordinance No. 7065 created a binding contract between the City of Manila and private
respondent and that the City Mayor had no discretion but "to grant the necessary permit or
license allowing it to operate and maintain a jai-alai in the City of Manila pursuant to
Ordinance No. 7065."
The trial court noted:
"A careful reading, however, of Ordinance No. 7065 will readily show that
the discretion, if any, allowed respondent Mayor, under the Ordinance, will be
exercisable only after the permit, which he is mandated to issue, has been issued
and the jai-alai fronton is already operational. The Ordinance stipulates that the
Mayor is authorized 'to allow and permit petitioner to establish, maintain and
operate a jai-alai in the City of Manila,' under the ve conditions enumerated in
subparagraphs 'a' to 'e' of Section 1 of the Ordinance. But a simple reading the
these 'terms and conditions' patently shows that subparagraphs 'b' to 'e' are
clearly conditions that will only come into play after the jai-alai fronton has been
put up or established; while the condition under sub-paragraph 'a' appears to have
been complied with satisfactorily by the petitioner, since no objection at all has
been made by respondents to the proposed site for the jai-alai fronton, that is, the
25,000 sq. m. land area behind the present Harrison Plaza Complex located at
Ermita, Manila.

It is therefore, quit evident to this Court that no discretion is left to the

respondent Mayor to allow or not petitioner 'to establish, maintain and operate a
jai-alai in the City of Manila.' The Court is satis ed that the requirements of Sec.
3, Rule 65, have been met. llcd

Moreover, it is well-settled that the grant of a franchise, when accepted and

acted upon by the grantee, creates a contract. And, going by contract law, under
the undisputed circumstances in this case, respondent Mayor, in behalf of the
City, is obliged to comply with what is required of him under the Ordinance. At the
very least, the enactment and approval of Ordinance No. 7065 on November 13,
1971, created a bilateral contract between petitioner and respondents. Petitioner
has commenced the performance of its obligation under the contract, but was
prevented by events over which it has no control from completely ful lling what
was called for on its part to establish, operate and maintain a jai-alai in the City of
Manila" (Rollo, pp. 39-40).

The trial court disposed as follows:

"WHEREFORE, the petitioner is GRANTED and respondent City of Manila, is
ordered to immediately issue to petitioner, the permit/license required under
Ordinance No. 7065" (Rollo, p. 40).

Mayor Lopez appealed said decision to the Court of Appeals (CA G.R. No. 16477
SP) but on February 9, 1989, he filed a Notice of Withdrawal of Appeal.
On May 5, 1989, the Court of Appeals promulgated a resolution, the dispositive part
of which reads as follows:
"For the reasons stated in the NOTICE OF WITHDRAWAL OF APPEAL which
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 was led on February 9, 1989 by respondents appellants thru counsel let their
appeal from the Decision dated September 9, 1989 and Order dated August 25,
1988, of the Regional Trial Court of Manila in Civil Case No. 88-45660 be as it is
hereby considered WITHDRAWN" (Rollo, p. 126).

With the withdrawal of the appeal, the judgment in Civil Case No. 45560 became
nal and executory and was entered in the Book of Entries of Judgment of the Court of
Appeals on May 26, 1989 and in the Book of Entries of Judgment of the Regional Trial
Court on October 27, 1992.
In 1991, the City of Manila led an action to annul the franchise of private
respondent with the Regional Trial Court, Branch 23, Manila, docketed as Civil Case No. 91-
58913. llcd

In said complaint, the City of Manila claimed that private respondent had abandoned
its franchise granted under Ordinance No. 7065 and that said ordinance had been repealed
by P.D. Nos. 771 and 810.
Judge William Bayhon of Branch 23 noted that the issue of abandonment was
squarely raised and resolved in Civil Case No. 88-45660 while the issue of the repeal of
Ordinance No. 7065 could have been pleaded but was not by the City of Manila as a
defense in Civil Case No. 88-45660. According to him, the city had waived such a defense.
To make matters worse, the city was in estoppel to raise said issue since it had been
issuing permits pursuant to the decision in Civil Case No. 88-45660 and collecting the
corresponding fees.
Civil Case No. 91-58913, questioning the effectivity of the franchise granted private
respondent under Ordinance No. 7065, was therefore dismissed on December 21, 1991.
No appeal was taken from said dismissal of the case.
The City of Manila led with this Court another case for declaratory judgment to
nullify the franchise to operate a jai-alai under Ordinance No. 7065 (G.R. No. 101768). The
petition was dismissed in a resolution dated October 3, 1991 "for lack of jurisdiction."
It may be of interest to note that three Manila councilors also led an action to
compel Mayor Lopez to cancel the permit and license he issued in favor of private
petitioner pursuant to Ordinance No. 7065 (Maceda v. Lopez, Civil Case No. 91-58930,
Regional Trial Court, Branch 37, Manila). In his answer to said petition, Mayor Lopez
pointed out that in issuing the permit and license, he was just acting in obedience to the
final judgment in Civil Case No. 88-45660. LexLib

Judge Enrico A. Laxamana, presiding judge of Branch 37, made the following
observations:
"The license was issued by Mayor Lopez in obedience to a nal order of a
court of justice. For him to refuse to issue the license would place him in danger
of being cited in contempt of court. And for him now to revoke or cancel such
license or permit de nitely would place a greater risk and danger of being cited in
contempt of court" (Rollo, p. 184).

II
As a preliminary issue, private respondent urged the dismissal of the petition on the
grounds that it was in violation of Circular No. 28-91, prohibiting forum shopping, and
Revised Circular No. 1-88, requiring the inclusion in the petition of a veri ed statement of
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 the dates when notice of the judgment, order or resolution subject thereof, was received,
when a motion for reconsideration, if any, was led, and when the notice of the denial
thereof was received.
Private respondent averred that the certi cation submitted by petitioners did not
disclose (1) that the trial court had rendered a decision in Civil Case No. 88-45660 on
September 9, 1988 holding that Ordinance No. 7065 was in full force and effect; (2) that
said decision had become nal and executory after the petitioners withdrew their appeal
therefrom; (3) that petitioners had also led Civil Case No. 91-58913, questioning he
effectivity of Ordinance No. 7065, which was dismissed. Likewise, they alleged that the
a davit did not state the material dates necessary for the Court to determine the
timeliness of the filing of the petition (Rollo, pp. 108-110).
The certi cation submitted in compliance with Circular No. 28-91 stated that the
petitioner in said petition "has not commenced a similar action in any court or
administrative body against said respondents nor is there any pending case of the same
nature and parties in any court or administrative body." Rightly, there was no case led nor
was there any case pending wherein the question of whether the decision in Civil Case No.
88-45660 can be executed by motion is raised.
The a davit on the material dates submitted by petitioners attested to the dates
when petitioners received the three orders of respondent judge being questioned in the
petition for certiorari. These are the dates material for reckoning the timeliness of the filing
of the petition to nullify said orders. As far as the issue of the proper mode for executing
the decision is concerned, the dates given in the a davit are su cient for the Court to
determine whether the petition was filed within a reasonable time contemplated in Rule 65.
There is, therefore, no violation of Circular No. 28-91 and Revised Circular No. 1-88
to speak of.
On their part, petitioners alleged that the decision in Civil Case No. 88-45660, which
is being implemented by the three orders in question, is null and void for want of
jurisdiction of the trial court that rendered it. They posited their claim on the theory that
Ordinance No. 7065 had been cancelled by P.D. No. 771 in 1975 and that the trial court had
traduced the law when it made it appear in its decision that Ordinance No. 7065 was still in
full force and effect (Rollo, pp. 10-13).
LibLex

Petitioners failed to appreciate the distinction between a void and an erroneous

judgment and between jurisdiction and the exercise of jurisdiction.
Jurisdiction should be distinguished from the exercise thereof (Lamagan v. De La
Cruz, 40 SCRA 101 [1971]). The authority to decide a case at all and not the decision
rendered therein, is what makes up jurisdiction. The fact that the decision is erroneous
does not divest the court that rendered it of the jurisdiction conferred by law to try the
case (Quiason, Philippine Courts and their Jurisdictions, p. 199 [1993 ed.]).
Since jurisdiction is the power to hear and determine a particular case, or the
jurisdiction over the subject matter, it does not depend upon the regularity of the exercise
by the court of its power (Century Insurance Co. v. Fuentes, 2 SCRA 1168 [1961]).
In the case at bench, there is no question that the Regional Trial Court has the
competence to hear and decide Civil Case No. 88-45660, a special civil action for
mandamus under Rule 65 of the Revised Rules of Court. There is also no quarrel that said
court has jurisdiction over an action for speci c performance under Section 19(1) of the
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 Judiciary Reorganization Act of 1990 (Lapitan v. Scandia , 24 SCRA 479 [1968]). Assuming
arguendo that the Regional Trial Court did not have jurisdiction over the said civil case, the
principle of estoppel will operate to bar petitioners from raising the question of
jurisdiction for the first time in the instant case (Tijam v. Sibonghanoy, 23 SCRA 29 [1968]).
Having jurisdiction over the civil case, whatever error may be attributed to the trial
court, is simply one of judgment, not of jurisdiction. An error of judgment cannot be
corrected by certiorari but by appeal (Robles v. House of Representatives Electoral
Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta Motor Sales Corporation , 57 SCRA 344
[1978]; Galang v. Endencia , 73 Phil. 391 [1941]). In fact, Mayor Lopez availed of such a
remedy when he appealed the decision in Civil Case No. 88-45660 to the Court of Appeal
(CA G.R. No. 16477-SP). cdphil

The issue on the cancellation of Ordinance No. 7065 by President Marcos could
have been raised as a special defense in Civil Case No. 88-54660 but was not. The Revised
Rules of Court frown at the piecemeal presentation of issues, and jurisprudence bars from
subsequent litigation between the same parties matters that could have been raised in a
previous case (Revised Rules of Court, Rule 39, Sec. 49[b]; Gonzales v. Gonzales , 26 SCRA
72 [1968]).
The City of Manila should have pursued in the appellate courts its appeal
questioning the dismissal of Civil Case No. 91-58913, where the trial court ruled that
Mayor Lopez and the city could no longer claim that Ordinance No. 7065 had been
cancelled by President Marcos because they failed to raise this issue in Civil Case NO. 88-
54660.
At any rate, the unilateral cancellation of the franchise, which has the status of a
contract, without notice, hearing and justi able cause is intolerable in any system where
the Rule of Law prevails (Poses v. Toledo Transportation Co. , 62 Phil. 297 [1935]; Manila
Electric Co., v. Public Utility Commissioners, 30 Phil. 387 [1915]).
As a fall-back, petitioners claimed that assuming arguendo that the judgment in Civil
Case No. 88-45660 dated September 9, 1986 is valid, its execution by mere motion on
March 11, 1994 is irregular. Citing Section 6 of Rule 39 of the Revised Rules of Court, they
contended that the decision must be enforced by action, not motion (Rollo, pp. 13-14). llcd

Petitioners erroneously counted the ve-year period under Section 6 of Rule 39 from
the date of the decision. Said Rule provides:
"Execution by Motion or by Independent Action. A judgment may be
executed on motion within ve (5) years from the date of its entry or from the
date it becomes nal and executory. After the lapse of such time and before it is
barred by the statute of limitations, a judgment may be enforced by action."

It must be remembered that Mayor Lopez appealed the decision in Civil Case No.
88-45660 to the Court of Appeals, that he led the motion to withdraw the appeal on
February 9, 1989, and that the Court of Appeals approved the withdrawal of the appeal
only on May 5, 1989. The entries of judgment were made on May 26, 1989 in the Court of
Appeals, and on October 27, 1992 in the Regional Trial Court. The motion to compel the
City Mayor to issue the permit or license pursuant to Ordinance No. 7065, was led on
March 14, 1994, or well within the ve-year period whether such period is counted from
May 5, 1989, May 26, 1989 or October 27, 1992. cdphil

Petitioners hypothesized that the withdrawal of an appeal operates as if no appeal

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 was taken at all and that the ve-year period should be counted from January 24, 1989, the
fteenth day from the service of a copy of the decision on Mayor Lopez. Petitioners
anchored their theory on Section 9, Rule 40 and Section 2, Rule 50 of the Revised Rules of
Court (Rollo, pp. 15-16).
We find nothing in said Rules to support petitioners' posture.
Section 9 of Rule 40, in pertinent part, provides:
". . . If the appeal is withdrawn, or dismissed for failure to prosecute, the
judgment shall be deemed revived and shall forthwith be remanded to the justice
of the peace or municipal court for execution."

Rule 40 governed the procedure for appeals from the inferior courts to the Court of
First Instance before they became courts of record. A provision on the revival of the
judgment was necessary because at those times the decisions appealed from were
automatically vacated and trials de novo had to be conducted by the Court of First
Instance.
Section 2 of Rule 50, which governs the dismissal of an appeal by the Court of
Appeals, in pertinent part, provides:
"Upon the receipt of such certi cation [of the Clerk of Court that the appeal
has been dismissed] in the lower court the case shall stand there as though no
appeal had ever been taken, and the judgment of the said court may be enforced
with the additional costs allowed by the appellate court upon dismissing the
appeal."

The phrase "the case shall stand there as if no appeal has been taken" refers to the
manner of how the judgment may be enforced as can be gleaned from phrase following it
that "the judgment of said court may be enforced with the additional costs allowed by the
appellate court . . ." In other words, the judgment shall be executed in accordance with its
original disposition, no modi cations thereof having been ordered by the Court of Appeals.
prcd

Certainly, said Rule has nothing to do with the ve-year period for enforcing a
judgment by motion, which is governed by Section 6 of Rule 39.
Mayor Lim's vow to clean the city of vices, like gambling, is commendable. But in the
process, he should bear in mind that there are forms of gambling, and jai-alai is one them,
that Congress has deigned to allow.
The pronouncement of Justice Isagani A. Cruz in Mayor Pablo Magtales v. Pryce
Properties Corporation, G.R. No. 111097, July 20, 1994, apropos the operation of a
gambling casino in Cagayan de Oro by the Philippine Amusement and Games Inc., is
cogent to the instant case, thus:
"The morality of gambling is not a justiciable issue. Gambling is not illegal
per se. While it is generally considered inimical to the interests of the people, there
is nothing in the Constitution categorically proscribing or penalizing gambling or,
for that matter, even mentioning it at all. It is left to Congress to deal with the
activity as it sees t. In the exercise of its own discretion, the legislature may
prohibit gambling altogether or allow it without limitation or it may prohibit some
forms of gambling and allow others for whatever reasons it may consider
su cient. Thus, it has prohibited jueteng a n d mon te but permits lotteries,
cock ghting and horse-racing. In making such choices, Congress has consulted
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 its own wisdom, which this Court has no authority to review, much less reverse.
Well has it been said that courts do not sit to resolve the merits of con icting
theories. (Garcia v. Executive Secretary, 204 SCRA 516, quoting Cooley,
Constitutional Limitations, 8th ed., 379-380) That is the prerogative of the political
departments. It is settled that questions regarding the wisdom, morality, or
practicability of statutes are not addressed to the judiciary but may be resolved
only by the legislative and executive departments, to which the function belongs
in our scheme of government" (Decision, p. 8).

It was Mayor Lopez himself who assessed the bene ts that will accrue to the city
with operation of the jai-alai. Explaining his motion to withdraw the appeal from the
decision in Civil Case No. 88-45660, he said:
"The bene cient effects to the appellant City of Manila, especially during
this critical period in our national economy, are manifold and undeniable. The
franchise operation shall be a great boost toward generating much needed
revenues for the City coffers estimated at P100,000.00 a day by way of franchise
fees alone, not to mention other municipal taxes and regulatory fees. Millions of
pesos in real estate taxes on the improvements would be realizable. Employment
opportunities to little less than ve hundred people in the main building and
hundreds of others in the off track fronton shall also be created. These is also the
fact that the jai-alai building, together with all the equipment therein, with an
aggregate estimated cost of P100 million shall belong to the city upon
termination of the franchise terms" (Rollo, p. 127).

Considerations of equity and fair play militate against the petition.

The o ce of the Mayor of the City of Manila issued on January 19, 1990, January 21,
1991 and May 25, 1992 business permits in favor of private respondent to operate a jai-
alai fronton and collected the corresponding license and regulatory fees (Rollo, pp. 151-
153; 175-177; 178-198). Private respondent has spent close to P100,000,000.00 to nish
the construction of the jai-alai building and fronton. cdrep

The petition was brought under "Rule 42, Section 1 in relation to R.A. No. 5440, to
declare null and void ab initio for want of jurisdiction, the Decision and Orders dated March
28, 1994, April 11, 1994 and April 20, 1994 issued in Civil Case No. 88-45660 of the
Regional Trial Court of Manila, Branch 40" (Rollo, p. 2).
Said Rule and law refer to appeals to the Supreme Court from the decisions of the
Regional Trial Court. Clearly, they do not involve the review of orders of the Regional Trial
Court rendered after the decision of the trial court has become nal and executory. Such a
review must be taken under Rule 65, which can be given due course only when there is a
showing of lack or excess of jurisdiction or grave abuse of discretion on the part of the
trial court (Revised Rules of Court, Rule 67, Section 1; Planter's Products v. Court of
Appeals, 193 SCRA 563 [1991]). We nd no abuse of discretion, much less lack of or
excess of jurisdiction, on the part of respondent judge.
WHEREFORE, the petition for certiorari is DISMISSED.
SO ORDERED.
Bellosillo and Kapunan, JJ., concur.
Cruz, J ., is on leave.

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 Separate Opinions
DAVIDE, JR. , J.:

I concur in the result. I wish, however, to express my view on the matter of the
constitutionality of P.D. No. 771 and on the alleged waiver of the defense of repeal of the
ordinance by P.D. No. 771.
Ordinance No. 7065 of the City of Manila was enacted on 7 September 1971
pursuant to Section 18(jj) of the Revised Charter of Manila. It authorized the City Mayor "to
allow and permit the Associated Development Corporation to establish, maintain and
operate a jai alai in the City of Manila" under the terms and conditions therein provided and
"such other terms and conditions as he (the Mayor) may prescribe for good reasons of
general interest." The Ordinance was vetoed by the Mayor on 27 September 1971; it was
later modi ed and amended by the Municipal Board on 12 October 1971. The amended
ordinance was approved by the Mayor on 13 November 1971. LLjur

On 20 August 1975, then President Ferdinand E. Marcos enacted P.D. No. 771
"revoking all powers and authority of local government to grant franchise, license or permit
and regulate wagers or betting by the public on horse and dog races, jai alai or basque
pelota, and other forms of gambling." Sections 1 and 3 thereof expressly provide:
"SECTION 1. Any provision of law to the contrary notwithstanding, the
authority of chartered cities and other local governments to issue license, permit
or any form of franchise to operate, maintain and establish horse and dog race
tracks, jai alai or other forms of gambling is hereby revoked.

xxx xxx xxx

SECTION 3. All existing franchises and permits issued by local
government are hereby revoked and may be renewed only in accordance with the
Decree."

On 5 May 1988, the Associated Development Corporation, herein private

respondent, sought to enforce its rights under Ordinance No. 7065, but then Mayor
Gemeliano C. Lopez denied its request. Having failed in its motion to reconsider the denial,
the private respondent led with the Regional Trial Court (RTC) of Manila a petition for
mandamus and speci c performance, which was docketed as Civil Case No. 88-45660
and assigned to Branch 40 thereof. Cdpr

In its decision rendered on 9 September 1989 in the aforesaid civil case, the trial
court held that Ordinance No. 7065 created a binding contract between the City of Manila
and the private respondent and that the City Mayor has no discretion but "to grant the
necessary permit or license allowing it to operate and maintain a jai-alai in the City of
Manila pursuant to Ordinance No. 7065." It then ordered the City of Manila to immediately
issue to the private respondent the permit/license required under Ordinance No. 7065.
The appeal from the aforesaid decision to the Court of Appeals (CA-G.R. No. 16477
SP) having been withdrawn, the Court of Appeals issued its Resolution of 5 May 1989
considering the appeal as withdrawn.
In 1991, the City of Manila instituted Civil Case No. 91-58913 in the RTC of Manila to
annul the franchise granted to the private respondent on the grounds that the latter had
abandoned its franchise under Ordinance No. 7065 and that P.D. Nos. 771 and 810 had
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 repealed said Ordinance No. 7065. The court (per Judge William Bayhon, Branch 23)
dismissed the case because the issue of abandonment was squarely raised and resolved
in Civil Case No. 88-45660, while the issue of repeal was not raised or pleaded therein as a
defense, hence the City was in estoppel to raise it considering further that it has been
issuing permits pursuant to the decision in said Civil Case No. 88-44660 and collecting the
corresponding fees. The City of Manila did not appeal from the dismissal order. Cdpr

On 28 March 1994, the RTC issued an order in Civil Case No. 88-45660 granting the
private respondent's motion to compel petitioner Mayor Lim to issue a permit or license
pursuant to Ordinance No. 7065 upon compliance by the private respondent with all the
requirements prescribed therein. A motion to reconsider the order was denied in the Order
of 11 April 1994. On 20 April 1994, the court reiterated the Order of 28 March 1994 and
directed Mayor Lim to immediately issue to the private respondent the necessary permit
or license to Ordinance No. 7065. cdlex

Hence this petition.

I. There can be no question that, as written, Sections 1 and 3 of P.D. No. 771
revoked the authority of chartered cities and other local governments to issue a license,
permit, or any other form of franchise to operate, establish and maintain jai alai, etc., as
well as all existing franchises and permits issued by local governments. Indisputably, the
decree affected the Charter of the City of Manila (R.A. No. 409, as amended). It repealed,
more speci cally, paragraph (jj) of Section 18 of the said Charter on the authority of the
City of Manila to grant exclusive rights to establish, inter alia, jai alai, which is the source
and authority of Ordinance No. 7065. This decree was published in the 15 September 1975
issue of the Official Gazette (71 O.G. No. 37, p. 5946). I agree that insofar as Ordinance No.
7065 and the franchise granted therein are concerned, P.D. No. 771 cannot validly revoke
them; otherwise, and to that extent, the decree would be unconstitutional under the non-
impairment of contract clause (Section 10, Article III, 1987 Constitution). The franchise is a
contract solemnly entered into between the City of Manila and the private respondent. In
all other respects, however, the said decree is valid and binding. LLphil

II. The failure of the City of Manila to plead as a defense the repeal of the
ordinance by P.D. No. 771 is not fatal. In the rst place, the trial court should have taken
judicial notice of P.D. No. 771. Under Section 1, Rule 129 of the Rules of Court, courts are
mandatorily required to take judicial notice of, among other things, "the o cial acts of the
legislative, executive and judicial departments of the Philippines." Besides, even granting
for the sake of argument that P.D. No. 771 validly repealed Ordinance No. 7065, such
repeal could have only meant lack of cause of action on the part of the private respondent
in the action for mandamus to enforce the ordinance. Failure to set up the defense of lack
of cause of action in a motion to dismiss or in the answer is not a waiver thereof. Section
2, Rule 9 of the Rules of Court provides that:
"Defenses and objections not pleaded either in a motion to dismiss or in
the answer are deemed waived; except the failure to state a cause of action which
may be alleged in a later pleading, if one is permitted, or by a motion for judgment
on the pleadings, or at the trial on the merits; but in the last instance, the motion
shall be disposed of as provided in Section 5 of Rule 10 in the light of any
evidence which may have been received. Whenever it appears that the court has
no jurisdiction over the subject matter, it shall dismiss the action." (emphasis
supplied)

In any event, as earlier stated, P.D. No. 771 cannot validly revoke Ordinance No. 7065
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