gonzales v. pagcor

11/20/2015 G.R.No.144891

http://www.lawphil.net/judjuris/juri2004/may2004/gr_144891_2004.html 1/7

TodayisFriday,November20,2015

RepublicofthePhilippinesSUPREMECOURT

Manila

THIRDDIVISION

G.R.No.144891May27,2004

RAMONA.GONZALES,petitioner,vs.PHILIPPINEAMUSEMENTANDGAMINGCORPORATION,SPORTSANDGAMESENTERTAINMENTCORPORATION,BESTWORLDGAMINGANDENTERTAINMENTCORPORATION,BELLEJAIALAICORPORATION,andFILIPINASGAMINGENTERTAINMENTTOTALIZATORCORPORATION,respondents.

DECISION

CARPIOMORALES,J.:

At bar is a special civil action for prohibition assailing the constitutionality of the creation of the PhilippineAmusementandGamingCorporation (PAGCOR)aswellas the "grantof franchises"byPAGCOR to1)Sportsand Games Entertainment Corporation (SAGE) to engage in internet gambling, 2) Best World Gaming andEntertainment Corporation (BEST WORLD) to engage in computerized bingo gaming, and 3) Belle JaialaiCorporation(BELLE)andFilipinasGamingEntertainmentTotalizatorCorporation(FILGAME)toengageinjaialaioperations.

RamonA.Gonzales,asacitizen, taxpayerandmemberof thePhilippineBar, filedonSeptember28,2000theinstantPetition1asaclasssuitunderSection12,Rule3oftheRulesofCourt2seekingtorestrainPAGCORfromcontinuingitsoperationsandprohibititanditscorespondentsfromenforcing:(1)the"GrantofanAuthorityandAgreementfortheOperationofSportsBettingandInternetGambling"3executedbetweenPAGCORandSAGE(2)the"GrantofAuthoritytoOperateComputerizedBingoGames"4betweenPAGCORandBESTWORLDand(3)the"Agreement"5amongPAGCOR,BELLEandFILGAMEtoconductjaialaioperations.

IncompliancewiththisCourtsResolutionofOctober18,2000,respondentsfiledtheirrespectivecommentsonthepetition,towhichpetitionerfiledcorrespondingreplies.

InDelMarv.Phil.AmusementandGamingCorp.,etal.,6thisCourt,byDecisionofNovember29,2000,enjoinedPAGCOR,BELLE,andFILGAMEfrommanaging,maintainingandoperating jaialaigames,and fromenforcingtheagreemententeredintobythemforthatpurpose.7

Their motions for reconsideration of said decision in Del Mar having been denied,8 PAGCOR, BELLE andFILGAMEfiledmotionsforclarificationwhichthisCourt,byResolutionofAugust24,2001,resolvedinthiswise:

WHEREFORE, . . . theCourt resolves(a) topartiallyGRANTthemotions forclarification insofaras it isprayedthatPhilippineAmusementandGamingCorporation(PAGCOR)hasavalidfranchiseto,butonlybyitself(i.e.,notinassociationwithanyotherpersonorentity)operate,maintainand/ormanagethegameofjaialai, and (b) to DENY the motions insofar as respondents would also seek a reconsideration of theCourts decision of 29 November 2000 that has, since then, (i) enjoined the continued operation,maintenance,and/ormanagementof jaialaigamesbyPAGCORinassociationwith itscorespondentsBelleJaiAlaiCorporationand/orFilipinasGamingEntertainmentTotalizatorCorporationand(ii)heldtobewithoutforceandeffecttheagreementof17June1999amongsaidrespondents.

SOORDERED.9(Emphasissupplied)

RespondentsBELLEandFILGAMEthusfiledonDecember6,2001aManifestationstatingthat:

1. Respondents [BELLE] and FILGAME were impleaded in the instant petition by reason of the"Agreement", dated 17 June 1999, which they executed with Philippine Amusement and GamingCorporation("PAGCOR").

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2. However, the said "Agreement" was already declared invalid by the SupremeCourt (en banc) in theconsolidatedcasesofDelMar vs.PAGCOR,etal. [G.R.No.138298]andSandoval vs.PAGCOR,etal.[G.R. No. 138982] through its "Resolution" dated 16 August 2001, which has already become final andexecutory.

[3]. Considering that there is no more privity of contract between PAGCOR, [BELLE] and FILGAME, it isrespectfullysubmittedthattheparticipationofrespondents[BELLE]andFILGAMEisnolongerwarranted.Thus,there isnomorenecessityforrespondents[BELLE]andFILGAMEtofileamemoranduminthe instantcase.10(Emphasissupplied)

InitsCommentonthepetitionatbarfiledonMarch29,2001,BESTWORLDstatedthatithad"beenunabletooperateitsbingoterminalsandbingogamessinceitsclosureandshutdownbyPAGCORandDILG"pursuanttoaMemorandum dated October 19, 2000 issued by then President Joseph Ejercito Estrada.11 A copy of saidMemorandumaddressedtotheChairmanofPAGCOR,whichwasattachedtoBESTWORLDsComment,reads:

MEMORANDUMFROMTHEPRESIDENT

TO: TheChairmanPhilippineAmusementsandGamingCorporation(PAGCOR)

SUBJECT: CLOSUREOFCERTAINPAGCORFACILITIESANDOUTLETS

DATE: 19October2000

YouareherebydirectedtotakeimmediatestepstoclosedownallPAGCORfacilitiesandoutletsinJaialai,onlinebingoandinternetcasinogaming.

For thispurpose,youareauthorized tosecure thesupportof thePhilippineNationalPoliceandallconcernedlocalgovernmentunits.

I expect an initial report on the implementation of this directive, through the Executive Secretary,within48hoursfromreceipthereof.

Fordirectandimmediatecompliance.

(SGD.JosephE.Estrada)12(Emphasissupplied)

ThisCourt,byResolutionofAugust13,2001,grantedthemotionofAttys.JoseSalvadorM.Rivera,E.HansS.SantosandAgnesH.MarananofRiveraSantosandMaranantowithdrawascounselforBESTWORLD"forthereason thatdespitediligentefforton itspart, counselhasbeenunable toget in touchorcommunicatewith itsprincipalclient."13

ThepetitionhavingbeengivenduecoursebyResolutionofSeptember19,2001, thepartieswere required tosubmit their respective Memoranda. Only respondents PAGCOR and SAGE submitted their Memoranda, onDecember6,200114andJanuary24,2002,15respectively.

Gonzaleshaving failed to filehisMemorandumwithin theprescribedperiod, thisCourtwhich, in themeantime,was informed of the alleged demise of Gonzales, required by Resolution of July 29, 2002 1) respondents toconfirmthedeathofGonzales,and2)thepartiestomanifestwhethertheywerestillinterestedinprosecutingthepetition,orwhethersuperveningeventshadrendereditmootandacademic.16

OnSeptember10,2002,Attys.ManuelB.ImbongandJoAureaM.ImbongfiledaMotionforSubstitutionstating,amongotherthings,that(1)GonzalesdiedonJanuary17,2002(2)hisheirsarenot interestedtopursueandprosecutethepresentspecialcivilactionorbesubstitutedaspetitionershereinand(3)thepetitionwasinstitutedbyGonzalesasaclasssuitinbehalfof"allFilipinocitizens,taxpayersandmembersofthePhilippineBar"and,assuch,surviveshisdeath.Theythuspraythatastheyareamongthe"Filipinocitizens,taxpayersandmembersofthePhilippineBar"forwhomthehereinclasssuitwasinstitutedandarebothcapableofprosecutingtheinstantcase, theybesubstitutedaspetitioners in lieuofGonzalesandthat theybegiventhirtydaysfromnoticewithinwhichtofiletheirmemorandum.17

ByResolutionofDecember9, 2002, thisCourt required respondents to file theirCommentson theMotion forSubstitutionfiledbyAttys.ImbongandImbong.

IntheirseparateComments,18respondentsPAGCORandSAGEbotharguethat,amongothersthings,movants

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Attys. Imbongand Imbongmaynotbesubstituted forGonzalesas the formerareneither legal representativesnorheirsofthelatterwithinthepurviewofSection16,Rule3oftheRulesofCourtwhichreads:

Sec. 16. Death of party, duty of counsel. Whenever a party to a pending action dies, and the claim is nottherebyextinguished,itshallbethedutyofhiscounseltoinformthecourtwithinthirty(30)daysaftersuchdeathof the fact thereof,and togive thenameandaddressofhis legal representativeor representatives.Failureofcounseltocomplywiththisdutyshallbeagroundfordisciplinaryaction.

Theheirsofthedeceasedmaybeallowedtobesubstitutedforthedeceased,withoutrequiringtheappointmentofanexecutororadministratorandthecourtmayappointaguardianadlitemfortheminorheirs.

Thecourtshallforthwithordersaidlegalrepresentativeorrepresentativestoappearandbesubstitutedwithinaperiodofthirty(30)daysfromnotice.

If no legal representative isnamedby thecounsel for thedeceasedparty,or if theonesonamedshall fail toappearwithinthespecifiedperiod,thecourtmayordertheopposingparty,withinaspecifiedtime,toprocuretheappointment of an executor or administrator for the estate of the deceased and the latter shall immediatelyappearforandonbehalfofthedeceased.Thecourtchargesinprocuringsuchappointment, ifdefrayedbytheopposingparty,mayberecoveredascosts.(16a,17a)(Emphasissupplied)

Respondents PAGCOR and SAGE further argue that neither Gonzales nor movants have substantiated theallegationthattheinstantcaseisaclasssuitasdefinedunderSection12,Rule3oftheRulesofCourt.Hence,sosaid respondents argue, the petition should be considered a personal actionwhichwas extinguishedwith thedeathofGonzales.

ThecriteriafordeterminingwhetheranactionsurvivesthedeathofaplaintifforpetitionerwaselucidateduponinBonillav.Barcena19asfollows:

xxxThequestionastowhetheranactionsurvivesornotdependsonthenatureoftheactionandthedamagesuedfor.Ifthecausesofactionwhichsurvivethewrongcomplained[of]affectsprimarilyandprincipallypropertyandpropertyrights,theinjuriestothepersonbeingmerelyincidental,whileinthecausesofactionwhichdonotsurvivetheinjurycomplainedofistothepersonthepropertyandrightsofpropertyaffectedbeingincidental.xxx20(Emphasissupplied)

Inclaimingstandingtobringtheinstantsuit,Gonzalesnecessarilyasserted"apersonalandsubstantialinterestinthecase"suchthathe"hassustainedorwillsustaindirectinjuryasaresultofthegovernmentalactthatisbeingchallenged."21AreadingoftheallegationsinthepetitionreadilyshowsthatGonzalesallegedinterestdoesnotinvolve any claim tomoney or property which he could have assigned to another or transmitted to his heirs.Rather,heclaimedtobevindicatinghisrightsasacitizen,taxpayerandmemberofthebar.Beingpersonalandnontransferableinnature,anyinterestthathemighthavehadintheoutcomeofthiscasecannotbedeemedtohavesurvivedhisdeath.

Movantsargue,however, that"unlessthehereinsubstitution isallowed, thecitizensandtaxpayersrepresentedbyGonzales inthisclasssuitwillbedenieddueprocess."22Fromthisargumentaswellas theiraverment thattheyare "among the Filipinocitizensand taxpayersandmember[s]of thePhilippineBar forwhom thehereinclasssuitwasinstitutedandareinterestedtopursuethiscase,"23itisevidentthatmovantsarenotassertinganyright or interest transmitted to them by the death ofGonzales, but are seeking to protect their own individualinterestsasmembersoftheclassesallegedtohavebeenrepresentedbyGonzales.

As such, themore proper procedure would have been for them to file aMotion for Intervention as expresslyprovidedforinSection12,Rule3oftheRulesofCourt,andnotaMotionforSubstitutionunderSection17ofthesamerule.Ideally,suchaMotionforInterventionshouldbefiledbeforethepossibilityofabatementisraisedbythedeathofthenamed/representativeparty(orparties)totheclasssuitorwheresuchisnotpossible,withinareasonabletimefromthedeathofthenamedorrepresentativeparty.

Consideringthatmovants,asformerlawpartnersofGonzales,couldnothavebeenunawareofthelattersdeathonJanuary17,2002, respondents rightlyquestion the timelinessof theMotion forSubstitution, it havingbeenfiledalmosteightmonthsthereafter,oronlyonSeptember10,2002.

Butevenif thisCourtweretoconsidertheMotionforSubstitutionasaseasonablyfiledMotionforIntervention,stilltheinstantpetitionwouldhavetobedismissedforbeingmootandacademic.

The Petition in essence raises two substantive issues. First, whether Presidential Decree (P.D.) 1869, asamended(thePAGCORCharter), isunconstitutionalforhavingbeenissuedpursuanttoanunlawfulexerciseoflegislative power by then President Ferdinand E. Marcos. Second, whether the contracts entered into byPAGCORwithitscorespondentsarevoidforbeingunduedelegationsbyPAGCORofitsfranchise24tooperate

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andmaintaingamblingcasinos,sports,gamingpoolsandthelike.

Thesecond issuehasalreadybeenraised in theDelMarcases,25 thisCourt ruling thatPAGCOR"hasavalidfranchise to,butonlyby itself (i.e.,not inassociationwithanyotherpersonorentity)operate,maintainand/ormanagethegameofjaialai,"andthat,consequently,theAgreementofJune17,1999amongPAGCOR,BELLEandFILGAMEwaswithout forceandeffect.This rulingwas recently reiterated inJaworski v. Phil. AmusementandGamingCorp.26wherethisCourtheld:

Inthecaseatbar,PAGCORexecutedanagreementwithSAGEwherebytheformergrantsthelattertheauthoritytooperateandmaintainsportsbettingstationsandInternetgamingoperations.Inessence,thegrantofauthoritygivesSAGE theprivilege toactivelyparticipate,partakeandsharePAGCORs franchise tooperateagamblingactivity.Thegrantof franchise isaspecialprivilege that constitutesa rightandaduty tobeperformedby thegrantee.Thegranteemustnotperformitsactivitiesarbitrarilyandwhimsicallybutmustabidebythelimitssetbyits franchise and strictly adhere to its terms and conditionalities. A corporation as a creature of the State ispresumedtoexist for thecommongood.Hence, thespecialprivilegesand franchises it receivesaresubject tothelawsoftheStateandthelimitationsof itscharter.ThereisthereforeareservedrightoftheStatetoinquirehowtheseprivilegeshadbeenemployed,andwhethertheyhavebeenabused.

While PAGCOR is allowed under its charter to enter into operators and/or management contracts, it is notallowed under the same charter to relinquish or share its franchise, much less grant a veritable franchise toanother entity such as SAGE. PAGCOR can not delegate its power in view of the legal principle of delegatapotestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expresslyauthorized todoso. InLimv.Pacquing, theCourtclarified that "sinceADChasno franchise fromCongress tooperatethejaialai,itmaynotsooperateevenifithasalicenseorpermitfromtheCityMayortooperatethejaialaiintheCityofManila."Bythesametoken,SAGEhastoobtainaseparatelegislativefranchiseandnot"rideon"PAGCORsfranchiseifitweretolegallyoperateonlineInternetgambling.

WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The "Grant of Authority andAgreementtoOperateSportsBettingandInternetGaming"executedbyPAGCORinfavorofSAGEisdeclaredNULLandVOID.

SOORDERED.27(Emphasissuppliedcitationsomitted)

Thefirstissuehaslikewisebeenrenderedmootandacademic.

Inassailing theconstitutionalityofP.D.1869,petitionerdoesnotpoint toany inconsistencybetween itand thepresent Constitution. Instead, it questions its issuance as an illegal exercise of legislative powers by thenPresidentMarcos.

Thus, petitioner argues that: (1) P.D. 1416, which gives the President continuing authority to reorganize thenational government and is the basis of P.D. 1869, is an undue delegation to the President of the legislativepowertocreatepublicoffices(2)P.D.1869isanunduedelegationoflegislativepowertothePresidenttocreatePAGCOR,apubliccorporation,andempowering it togrant franchises (3)Proclamation1081declaringmartiallawandauthorizing thePresident to issuedecrees is unconstitutional, henceP.D. 1416andP.D. 1869 issuedpursuanttheretoarelikewiseunconstitutionaland(4)the1973Constitutionwasnotvalidlyratified,henceitcouldnothavelegitimizedProclamation1081.

Petitionersargumentscomealmost thirty years too late.Ashehimselfwasaware, the issuessurrounding theeffectivity of Proclamation 1081, the force and effectivity of the 1973 Constitution, and the former PresidentslegislativepowersunderMartialLawandthe1973ConstitutionweresettledinthecasesofJavellanav.ExecutiveSecretary,28 Aquino, Jr. v. Enrile,29 Aquino, Jr. v. Commission on Elections,30 and Legaspi v. Minister ofFinance.31 While legal scholars may continue to debate the wisdom and reasoning of these decisions, theirobjectiveexistenceandhistoricalimpactonthePhilippinelegalsystemcannotseriouslybequestioned.

Indeed,whilepetitionermadeseveralpoignantobservationsregardingthejurisprudenceintheforegoingcases,this Court is unable to accept his invitation to reexamine said cases for the simple reason that the powerconferredonitbytheConstitution is limitedtotheadjudicationofactualcontroversiesand thedeterminationofwhetherabranchorinstrumentalityofthegovernmenthasactedwithgraveabuseofdiscretionamountingtolackorexcessof jurisdiction.32Evenwith itsexpanded jurisdiction, it isbeyond thepowersof thisCourt to rewritehistory.

Tobesure,thePeoplePowerRevolutionof1986putanendtoboththedictatorshipofMr.Marcosandthe1973Constitution.Atthesametime,theratificationofthe1987ConstitutionandtheconveningofthefirstCongressonJuly27,1987haverestoredtheseparationoflegislativeandexecutivepowers.33Thereis,therefore,nolongeranyoccasionforthisCourttopassuponthevalidityofthelatedictatorsexerciseoflawmakingpowers.

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Furthermore,Section3,ArticleXVIIIoftheConstitutionexpresslyprovides:

Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other executiveissuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked.(Emphasissupplied)

SincepetitionerdidnotendeavortoshowthatP.D.1869itselfisinconsistentwiththeConstitution,hisprayerthatPAGCOR be enjoined from continuing its operations and doing acts in furtherance of its existence mustnecessarilybedenied.

MovantsmayderivesomesatisfactionintheknowledgethatGonzalesprayerthatrespondentsbeenjoinedfromenforcingthe"Agreement"amongPAGCOR,BELLEandFILGAMEtoconductjaialaioperationsandthe"GrantofanAuthorityandAgreementfortheOperationofSportsBettingandInternetGambling"betweenPAGCORandSAGEhadbeengranted,albeitintheseparateaforementionedcasesofDelMarandJaworski.

WHEREFORE,theinstantPetitionisherebyDISMISSED.

SOORDERED.

Vitug,(ChairmanandActingChiefJustice),SandovalGutierrez,andCorona,JJ.,concur.

Footnotes

1Rolloat3104.

2Sec.12.ClasssuitWhenthesubjectmatterofthecontroversyisoneofcommonorgeneralinteresttomanypersonssonumerousthatitisimpracticabletojoinallasparties,anumberofthemwhichthecourtfinds tobesufficientlynumerousandrepresentativeas to fullyprotect the interestsofallconcernedmaysue or defend for the benefit of all. Any party in interest shall have the right to intervene to protect hisindividualinterest.(12a)

3Rolloat7178.

4Id.at8690.

5Id.at7985.

6346SCRA485(2000).

7Id.At530531.

8DelMarv.Phil.AmusementandGamingCorp.,etal.,358SCRA768(2001).

9DelMarv.Phil.AmusementandGamingCorp.,etal.,363SCRA681,683684(2001).

10Rolloat451452.

11Id.at341342.

12Id.at353.

13Id.at387,390.

14Id.at422449.

15Id.at461470.

16Id.at482.

17Id.at488500.

18Id.at509514525530.

1971SCRA491(1976).

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20Id.at495496citationsomitted.

21VideJoyav.PresidentialCommissiononGoodGovernment,225SCRA568,576(1993)

22Rolloat493.

23Id.at489.

24Sections10and11ofP.D.1869provideasfollows:

TITLEIVGRANTOFFRANCHISE

SECTION10.Natureandtermoffranchise.SubjecttothetermsandconditionsestablishedinthisDecree, the Corporation is hereby granted for a period of twentyfive (25) years, renewable foranother twentyfive (25)years, therights,privilegeandauthority tooperateandmaintaingamblingcasinos, clubs, and other recreation or amusement places, sports, gaming pools, i.e. basketball,football, lotteries,etc.whetheronlandorsea,withintheterritorial jurisdictionoftheRepublicofthePhilippines.

SECTION 11. Scope of Franchise. In addition to the rights and privileges granted it under theprecedingSection,thisFranchiseshallentitletheCorporationtodoandundertakethefollowing:

(1) Enter into operating and/or management contracts with any registered and accreditedcompany possessing the knowledge, skill, expertise and facilities to insure the efficientoperation of gambling casinos provided, that the service fees of suchmanagement and/oroperator companies whose services may be retained by the Corporation shall not in theaggregateexceedten(10%)percentofthegrossincome

(2)Purchaseforeignexchangethatmayberequiredfortheimportationofequipment,facilitiesand other gambling paraphernalia indispensably needed or useful to insure the successfuloperationofgamblingcasinos

(3)Acquiretherightofwayoraccesstoorthrupublicland,publicwatersorharbors,includingtheManila BayArea such right shall include but not be limited to the right to lease and/orpurchasepublic lands,governmentreclaimed lands,aswellas landsofprivateownershiporthoseleasedfromtheGovernment.ThisrightshallcarrywithittheprivilegeoftheCorporationtoutilizepiers,quays,boatlandings,andsuchotherpertinentandrelatedfacilitieswithinthesespecifiedareasforuseaslanding,anchoringorberthingsitesinconnectionwithitsauthorizedcasinooperations

(4)Buildorconstructstructures,buildingscastways,piers,decks,aswellasanyotherformoflandingandboardingfacilitiesforitsfloatingcasinosand

(5)Todoandperformsuchotheractsdirectlyrelatedtotheefficientandsuccessfuloperationandconductofgamesofchanceinaccordancewithexistinglawsanddecrees.

25Supra.

26G.R.No.144463.January14,2004.

27 Per this Courts Resolution of March 30, 2004 in Jaworski, respondent SAGE filed a Motion forReconsideration with the Court en banc. SAGE was required to Reply to the petitionersOpposition/Comments toSAGEsMotion forReconsideration.TheOrder requiringaReplywasmailed tocounselforSAGEonApril23,2004.

2850SCRA30(1973).

2959SCRA183(1974).

3062SCRA275(1975).

31115SCRA418(1982).

32Const.,art.VIII,sec.1.

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33Const.,art.XVIII,sec.6vide:MunicipalityofSanJuan,MetroManila,279SCRA711(1997).

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gonzales v. pagcor

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