digest in admin and loc gov't

8/9/2019 Digest in Admin and Loc Gov't

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G.R. No. 187972 June 29, 2010

PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR), represented by ATTY.

CARLOS R. BAUTISTA, JR.,Petitioner,

vs.

FONTANA DEVELOPMENT CORPORATION,Respondent.

DOCTRINE:

In PAGCOR v. Viola, we ruled thatPAGCOR, in the exercise of its licensing and

regulatory powers, has no quasi-judicial functions, as Secs. 8 and 9 of PD 1869 do not

grant quasi-judicial powers to PAGCOR. As such, direct resort to this Court is not

allowed. Having settled that PAGCORs revocation of MONDRAGONs authority to operate a

casino was not an exercise of quasi-judicial powers then it follows that the case was properly

filed before the Regional Trial Court. Hence,as the Regional Trial Court had jurisdiction to

take cognizance of the case, petitioners contention that the temporary restraining

order and the preliminary injunction by the trial court are void must fail.

This Court has to point out thatthe issuance of the 10-year SAO by PAGCOR in lieu

of the MOA with FDC is a breach of the MOA. The MOA in question was validly entered

into by PAGCOR and FDC on December 23, 1999.It embodied the license and authority to

operate a casino, the nature and extent of PAGCORs regulatory powers over the casino, and

the rights and obligations of FDC. Thus, theMOA is a valid contract with all the essential

elements required under the Civil Code. The parties are then bound by the stipulations

of the MOA subject to the regulatory powers of PAGCOR. Well-settled is the rule that a

contract voluntarily entered into by the parties is the law between them and all issues

or controversies shall be resolved mainly by the provisions thereof.

As parties to the MOA,FDC and PAGCOR bound themselves to all its provisions.

After all, the terms of a contract have the force of law between the parties, and courts

have no choice but to enforce such contract so long as they are not contrary to law,morals, good customs, or public policy.A stipulation for the term or period for the

effectivity of the MOA to be co-terminus with term of the franchise of PAGCOR including

any extension is NOT contrary to law, morals, good customs, or public policy.

FACTS:

Petitioner Philippine Amusement and Gaming Corporation (PAGCOR) is a government

owned and controlled corporation created under Presidential Decree (PD) No. 1869 to enable

the Government to regulate and centralize all games of chance authorized by existing franchise

or permitted by law. Section 10 thereof conferred on PAGCOR a franchise of twenty-five (25)

years or until July 11, 2008, renewable for another twenty-five (25) years. Under Section 9thereof, it was given regulatory powers over persons and/or entities with contract or franchise

with it, viz:

SECTION 9. Regulatory Power.The Corporation shall maintain a Registry of the affiliated entities, and

shall exercise all the powers, authority and the responsibilities vested in the Securities and Exchange

Commission over such affiliated entities mentioned under the preceding section, including but not

limited to amendments of Articles of Incorporation and By-Laws, changes in corporate term, structure,

capitalization and other matters concerning the operation of the affiliating entities, the provisions of the

Corporation Code of the Philippines to the contrary notwithstanding, except only with respect to original

incorporation.


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On June 20, 2007, RA No. 9487 was enacted, extending PAGCORs franchise up to July

10, 2033 renewable for another twenty-five (25) years. On July 18, 2008, PAGCOR informed

FDC that it was extending the MOA on a month-to-month basis until the finalization of the

renewal of the contract. FDC protested, claiming that the extension of PAGCORs franchise had

automatically extended the MOA.

FDC filed before the RTC of Manila the instant complaint for Injunction againstPAGCOR, contending that it could not be covered by a month-to-month extension nor by the

standard Authority to Operate since the MOA was automatically renewed and extended up to

2033; that the MOA clearly provided that the same was co-terminus with PAGCORs franchise

including any extension thereof; that it had faithfully complied with the conditions under the

MOA. PAGCOR on the other hand argues that its decision to replace the MOA with the

Authority to Operate was pursuant to its regulatory powers under Sections 8 and 9 of PD No.

1869; that under the said provisions, it was given all the powers, authority and responsibilities

of the Securities and Exchange Commission (SEC) over corporations engaged in gambling; that

consequently, being the SEC of said corporations, the appeal or review of its decision should

have been made directly to the SC under PD No. 1869 in relation to the last paragraph of

Section 6, PD No. 902-A; PAGCOR argued that administrative agencies are co-equal with RTCs

ISSUE:

WON the Manila RTC or this Court has jurisdiction over FDCs complaint for injunction

and specific performance; and

WON PAGCOR issued the license (MOA) under PD 1869 or under Executive Order No.

80, Section 5.

RULING:

Yes, the Manila RTC has jurisdiction over FDCs complaint for injunction. A perusal of

FDCs complaint in Civil Case No. 08-120338 easily reveals that it is an action for injunction

based on an alleged violation of contractthe MOA between the partieswhich granted FDC

the right to operate a casino inside the Clark Special Economic Zone (CSEZ). As such, the

Manila RTC has jurisdiction over FDCs complaint anchored on Sec. 19, Chapter II of BP

129, which grants the RTCs original exclusive jurisdiction over "all civil actions in

which the subject of the litigation is incapable of pecuniary estimation." Evidently, a

complaint for injunction or breach of contract is incapable of pecuniary estimation.

Moreover, the RTCs shall exercise original jurisdiction "in the issuance of writs of

certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction which

may be enforced in any part of their respective regions" under Sec. 21 of BP 129.

In PAGCOR v. Viola, we ruled thatPAGCOR, in the exercise of its licensing and

regulatory powers, has no quasi-judicial functions, as Secs. 8 and 9 of PD 1869 do not

grant quasi-judicial powers to PAGCOR. As such, direct resort to this Court is not

allowed. Having settled that PAGCORs revocation of MONDRAGONs authority to operate acasino was not an exercise of quasi-judicial powers then it follows that the case was properly

filed before the Regional Trial Court. Hence,as the Regional Trial Court had jurisdiction to

take cognizance of the case, petitioners contention that the temporary restraining

order and the preliminary injunction by the trial court are void must fail.

Considering the nature of issues involved in the case at bar we will resolve FDCs

complaint on the merits, instead of remanding it to the trial court for further proceedings.

Moreover, the dispute between the parties involves a purely question of lawwhether the


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license or MOA was issued pursuant to PD 1869 or Sec. 5, EO 80, in relation to RA 7227,

which does not necessitate a full blown trial. Demands of substantial justice and equity require

the relaxation of procedural rules.

As to the second issue, we resolve that the source of PAGCORs authority lies in its

basic charter, PD 1869, as amended, and neither in RA 7227 nor its extension, EO 80, for thelatter merely recognizes PAGCORs power to license casinos. Indeed, PD 1869 empowers

PAGCOR to regulate and control all games of chance within the Philippines, and clearly, RA

7227 or EO 80 cannot be the source of its powers, but its basic charter, PD 1869.

Section 8. Registration.All persons primarily engaged in gambling, together with their allied business,

with contract or franchise from the Corporation, shall register and affiliate their businesses with the

Corporation. The Corporation shall issue the corresponding certificates of affiliation upon compliance by

the registering entity with the promulgated rules and regulations.

Section 9. Regulatory Power.The Corporation shall maintain a Registry of the affiliated entities, and

shall exercise all the powers, authority and the responsibilities vested in the Securities and Exchange

Commission over such affiliated entities mentioned under the preceding section, including but not

limited to amendments of Articles of Incorporation and By-Laws, changes in corporate term, structure,

capitalization and other matters concerning the operation of the affiliating entities, the provisions of the

Corporation Code of the Philippines to the contrary notwithstanding, except only with respect to originalincorporation.

It is unequivocal thatPAGCOR draws its authority and power to operate and

regulate casinos from PD 1869,and neither from Sec. 5 of EO 80 nor from RA 7227. Hence,

sincePD 1869 remains unaffected by the unconstitutionality of Sec. 5 of EO 80, then

PAGCOR has no legal basis for nullifying or recalling the MOA with FDC and replacing

it with its new Standard Authority to Operate (SAO). There is no infirmity in the MOA,

as it was validly entered by PAGCOR under PD 1869 and remains valid until legally

terminated in accordance with the MOA.

This Court has to point out thatthe issuance of the 10-year SAO by PAGCOR in lieu

of the MOA with FDC is a breach of the MOA. The MOA in question was validly enteredinto by PAGCOR and FDC on December 23, 1999.It embodied the license and authority to

operate a casino, the nature and extent of PAGCORs regulatory powers over the casino, and

the rights and obligations of FDC. Thus, theMOA is a valid contract with all the essential

elements required under the Civil Code. The parties are then bound by the stipulations

of the MOA subject to the regulatory powers of PAGCOR. Well-settled is the rule that a

contract voluntarily entered into by the parties is the law between them and all issues

or controversies shall be resolved mainly by the provisions thereof.

As parties to the MOA,FDC and PAGCOR bound themselves to all its provisions.

After all, the terms of a contract have the force of law between the parties, and courts

have no choice but to enforce such contract so long as they are not contrary to law,

morals, good customs, or public policy.A stipulation for the term or period for the

effectivity of the MOA to be co-terminus with term of the franchise of PAGCOR including

any extension is not contrary to law, morals, good customs, or public policy.


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G.R. No. 171873 July 9, 2010

MUNICIPALITY OF TIWI, represented by Hon. Mayor JAIME C. VILLANUEVA and the

SANGGUNIANG BAYAN of TIWI,Petitioners,

vs.

ANTONIO B. BETITO,Respondent.

DOCTRINE:

Pursuant to Section 444(b)(1)(vi) of the LGC, the municipal mayor is required to

secure the prior authorization of the Sangguniang Bayan before entering into a contract on

behalf of the municipality.In the instant case, the Sangguniang Bayan of Tiwi

unanimously passed Resolution No. 15-92 authorizing Mayor Corral to hire a lawyer of

her choice to represent the interest of Tiwi in the execution of this Courts Decision in

National Power Corporation v. Province of Albay RESOLUTION AUTHORIZING THE

MUNICIPAL MAYOR OF TIWI TO HIRE THE SERVICES OF A LAWYER TO REPRESENT THE

MUNICIPALITY OF TIWI AND THE SIX GEOTHERMAL BARANGAYS IN THE EXECUTION OF

G.R. NO. 87479 AND DIVESTING THE LAWYER HIRED BY THE PROVINCIAL GOVERNOR AND

THE PROVINCE OF ALBAY OF ITS AUTHORITY TO REPRESENT THE MUNICIPALITY OF TIWIAND THE SIX BARANGAYS

Theabove-quoted Resolution authority necessarily carried with it the power to

negotiate, execute and sign on behalf of Tiwi the Contract of Legal Services.

The wording of Resolution No. 15-92 is clear.Its title and whereas clauses,

previously quoted above, indicate that the hiring of a lawyer was for the sole purpose of

executing the judgment in National Power Corporation v. Province of Albay, that is, to

allow Tiwi to recover its rightful share in the unpaid realty taxes of NPC.

Allegations and admissions in the pleadings are sufficient to rule thatMayor Corral

was duly authorized to enter into the Contract of Legal Services. However, the legal

services contemplated therein, which are properly compensable, are limited to suchservices which reasonably contributed to the recovery of Tiwis rightful share in the

unpaid realty taxes of NPC.Paragraph 4 of the Contract of Legal Services, insofar as it

covers legal services outside of this purpose, is therefore unenforceable.

FACTS:

On June 4, 1990, this Court issued a Decision in the case of National Power

Corporation v. Province of Albay finding, among others, the National Power Corporation (NPC)

liable for unpaid real estate taxes from June 11, 1984 to March 10, 1987 on its properties

located in the Province of Albay (Albay). NPC, through its then President Pablo Malixi (President

Malixi), and Albay, represented by then Governor Romeo R. Salalima (Governor Salalima),

entered into a Memorandum of Agreement (MOA) where the former agreed to settle its tax

liabilities estimated at P214,845,104.76. Subsequently, Mayor Naomi C. Corral (Mayor Corral)

of Tiwi formally requested Governor Salalima to remit the rightful tax shares of Tiwi and its

barangays where the NPCs properties were located relative to the payments already made by

NPC to Albay.

On August 30, 1992, the Sangguniang Bayan of Tiwi passed Resolution No. 15-92

authorizing Mayor Corral to hire a lawyer to represent Tiwi and its barangays in the recovery of

their rightful share in the aforesaid realty taxes. Thereafter, Mayor Corral sought the services of


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respondent Atty. Antonio B. Betito (respondent) and Atty. Alberto Lawenko (Atty. Lawenko). As a

result, on January 25, 1993, Mayor Corral, representing Tiwi, and respondent and Atty.

Lawenko entered into a Contract of Legal Services (subject contract). The subject contract

provided, among others, that respondent and Atty. Lawenko would receive a 10% contingent fee

on whatever amount of realty taxes that would be recovered by Tiwi through their efforts.

The present controversy arose when respondent sought to enforce the Contract of LegalServices after rendering the aforementioned legal services which allegedly benefited Tiwi. In his

Complaint8 for sum of money against Tiwi, represented by then Mayor Patricia Gutierrez, Vice

Mayor Vicente Tomas Vera III, Sangguniang Bayan Members Rosana Parcia, Nerissa Cotara,

Raul Corral, Orlando Lew Velasco, Liberato Ulysses Pacis, Lorenzo Carlet, Bernardo Costo,

Jaime Villanueva, Benneth Templado and Municipal Treasurer Emma Cordovales (collectively

petitioners), respondent claims that he handled numerous cases which resulted to the recovery

of Tiwis share in the realty taxes.

RTC and CA ruled in favor of respondent.

ISSUE:

WON the purported "contract of legal services" exceeded the authority of the late Mayor

Corral and should have been ratified by the Sangguniang Bayan of Tiwi in order to beenforceable.

RULING:

Mayor Corral was authorized to enter into the Contract of Legal Services.

Petitioners argue that Resolution No. 15-92 did not authorize Mayor Corral to enter into the

subject contract, hence, the contract must first be ratified to become binding on Tiwi.

The argument is unpersuasive. Section 444(b)(1)(vi) of the LGC provides:

SECTION 444. The Chief Executive: Powers, Duties, Functions and Compensation. x x x

(b) For efficient, effective and economical governance the purpose of which is the general

welfare of the municipality and its inhabitants pursuant to Section 16 of this Code, the

municipal mayor shall: x x x(1) Exercise general supervision and control over all programs, projects, services, and

activities of the municipal government, and in this connection, shall: x x x

(vi)Upon authorization by the sangguniang bayan, represent the municipality in all

its business transactions and sign on its behalf all bonds, contracts, and obligations,

and such other documents made pursuant to law or ordinance;x x x

Pursuant to this provision, themunicipal mayor is required to secure the prior

authorization of the Sangguniang Bayan before entering into a contract on behalf of

the municipality.In the instant case, the Sangguniang Bayan of Tiwi unanimously

passed Resolution No. 15-92 authorizing Mayor Corral to hire a lawyer of her choice to

represent the interest of Tiwi in the execution of this Courts Decision in National Power

Corporation v. Province of AlbayRESOLUTION AUTHORIZING THE MUNICIPAL MAYOR OF

TIWI TO HIRE THE SERVICES OF A LAWYER TO REPRESENT THE MUNICIPALITY OF TIWI

AND THE SIX GEOTHERMAL BARANGAYS IN THE EXECUTION OF G.R. NO. 87479 AND

DIVESTING THE LAWYER HIRED BY THE PROVINCIAL GOVERNOR AND THE PROVINCE OF

ALBAY OF ITS AUTHORITY TO REPRESENT THE MUNICIPALITY OF TIWI AND THE SIX

BARANGAYS


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Theabove-quoted Resolution authority necessarily carried with it the power to

negotiate, execute and sign on behalf of Tiwi the Contract of Legal Services. That the

authorization did not set the terms and conditions of the compensation signifies that the

council empowered Mayor Corral to reach a mutually agreeable arrangement with the lawyer of

her choice subject, of course, to the general limitation that the contracts stipulations should

not be contrary to law, morals, good customs, public order or public policy, and, consideringthat this is a contract of legal services, to the added restriction that the agreed attorneys fees

must not be unreasonable and unconscionable. On its face, and there is no allegation to the

contrary, this prior authorization appears to have been given by the council in good faith to the

end of expeditiously safeguarding the rights of Tiwi.

The wording of Resolution No. 15-92 is clear.Its title and whereas clauses,

previously quoted above, indicate that the hiring of a lawyer was for the sole purpose of

executing the judgment in National Power Corporation v. Province of Albay, that is, to

allow Tiwi to recover its rightful share in the unpaid realty taxes of NPC.In his

Complaint,respondent admits that he was furnished and read a copy of the said

resolution before he entered into the subject contract.He cannot now feign ignorance of

the limitations of the authority of Mayor Corral to enter into the subject contract and

the purpose for which his services were employed.

In sum, the allegations and admissions in the pleadings are sufficient to rule that

Mayor Corral was duly authorized to enter into the Contract of Legal Services. However,

the legal services contemplated therein, which are properly compensable, are limited to

such services which reasonably contributed to the recovery of Tiwis rightful share in

the unpaid realty taxes of NPC.Paragraph 4 of the Contract of Legal Services, insofar

as it covers legal services outside of this purpose, is therefore unenforceable.

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