Gonzales v. PAGCOR : 144891 : May 27, 2004 : J. Carpio-Morales : Third
Division : Decision
[G.R. NO. 144891 : May 27, 2004]
RAMON A. GONZALES, Petitioner, v. PHILIPPINE AMUSEMENT AND GAMING CORPORATION, SPORTS AND GAMES ENTERTAINMENT
CORPORATION, BEST WORLD GAMING AND ENTERTAINMENT CORPORATION, BELLE JAI-ALAI
CORPORATION, and FILIPINAS GAMING ENTERTAINMENT TOTALIZATOR CORPORATION, Respondents.
D E C I S I O N
CARPIO MORALES, J.:
At bar is a special civil action for prohibition assailing the
constitutionality of the creation of the Philippine Amusement and Gaming
Corporation (PAGCOR) as well as the grant of franchises by PAGCOR to 1)
Sports and Games Entertainment Corporation (SAGE) to engage in internet
gambling, 2) Best World Gaming and Entertainment Corporation (BEST WORLD) to
engage in computerized bingo gaming, and 3) Belle Jai-alai Corporation (BELLE)
and Filipinas Gaming Entertainment Totalizator Corporation (FILGAME) to engage
in jai-alai operations.
Ramon A. Gonzales, as a citizen, taxpayer and member of the
Philippine Bar, filed on September 28, 2000 the instant Petition1 as a class suit under Section 12, Rule 3 of the Rules of Court2 seeking to restrain PAGCOR from continuing its operations and prohibit it and
its co-respondents from enforcing: (1) the Grant of an Authority and Agreement
for the Operation of Sports Betting and Internet Gambling3 executed between PAGCOR and SAGE; (2) the Grant of Authority to Operate
Computerized Bingo Games4 between PAGCOR and BEST WORLD; and (3) the Agreement5 among PAGCOR, BELLE and FILGAME
conduct jai-alai operations.
In compliance with this Courts Resolution of October 18, 2000,
respondents filed their respective comments on the petition, to which
petitioner filed corresponding replies.
In Del Mar v. Phil. Amusement and Gaming
Corp., et al.,6 this Court, by Decision of November 29, 2000, enjoined PAGCOR, BELLE, and
FILGAME from managing, maintaining and operating jai-alai games, and from
enforcing the agreement entered into by them for that purpose.7 cralawred
Their motions for reconsideration of said decision in Del Mar having
been denied,8 PAGCOR, BELLE and FILGAME filed motions for clarification which this Court, by
Resolution of August 24, 2001, resolved in this wise:chanroblesvirtua1awlibrary
WHEREFORE,. .. the Court resolves (a) to partially GRANT the
motions for clarification insofar as it is prayed that Philippine Amusement and Gaming Corporation (PAGCOR) has a valid
franchise to, but only by itself (i.e.,
not in association with any other person or entity) operate, maintain and/or
manage the game of jai-alai, and (b) to DENY the motions insofar as respondents
would also seek a reconsideration of the Courts decision of 29 November 2000
that has, since then, (i) enjoined the continued operation, maintenance, and /or
management of jai-alai games by PAGCOR in association with its co-respondents
Belle Jai-Alai Corporation and/or Filipinas Gaming Entertainment Totalizator
Corporation and (ii) held to be without force and effect the agreement of 17
June 1999 among said respondents.
SO ORDERED.9 (Emphasis supplied)cralawlibrary
Respondents BELLE and FILGAME thus filed on December 6, 2001 a
Manifestation stating that:chanroblesvirtua1awlibrary
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 Gaming
However, the said Agreement was already declared
invalid by the Supreme Court (en banc) in the consolidated cases of Del Mar v. PAGCOR, et al. [G.R. NO. 138298] and Sandoval v. PAGCOR, et al. [G.R. NO. 138982] through its Resolution dated 16 August 2001, which has already become
final and executory.
Considering that there is no more privity of contract between PAGCOR,
[BELLE] and FILGAME, it is respectfully submitted that the participation of
respondents [BELLE] and FILGAME is no longer warranted.
Thus, there is no more necessity for
respondents [BELLE] and FILGAME to file a memorandum in the instant case.10 (Emphasis supplied)cralawlibrary
In its Comment on the petition at bar filed on March 29, 2001,
BEST WORLD stated that it had been unable to operate its bingo terminals and
bingo games since its closure and shut down by PAGCOR and DILG pursuant to a
Memorandum dated October 19, 2000 issued by then President Joseph Ejercito
Estrada.11 A copy of said Memorandum addressed to the Chairman of PAGCOR, which was
attached to BEST WORLDs Comment, reads:chanroblesvirtua1awlibrary
MEMORANDUM FROM THE PRESIDENT
Amusements and Gaming Corporation
SUBJECT:CLOSURE OF CERTAIN PAGCOR
FACILITIES AND OUTLETS
DATE:19 October 2000
You are hereby directed to
take immediate steps to close down all PAGCOR facilities and outlets in Jai-alai,
on-line bingo and internet casino gaming.
For this purpose, you are authorized to secure the support of the
Philippine National Police and all concerned local government units.
I expect an initial report on the implementation of this directive,
through the Executive Secretary, within 48 hours from receipt hereof.
For direct and immediate compliance.
(SGD. Joseph E. Estrada)12 (Emphasis supplied)cralawlibrary
This Court, by Resolution of August 13, 2001, granted the motion
of Attys. Jose Salvador M. Rivera, E. Hans S. Santos and Agnes H. Maranan of
Rivera Santos and Maranan to withdraw as counsel for BEST WORLD for the reason
that despite diligent effort on its part, counsel has been unable to get in
touch or communicate with its principal client.13 cralawred
The petition having been given due course by Resolution of
September 19, 2001, the parties were required to submit their respective
Only respondents PAGCOR and
SAGE submitted their Memoranda, on December 6, 200114 and January 24, 2002,15 respectively.
Gonzales having failed to file his Memorandum within the
prescribed period, this Court which, in the meantime, was informed of the
alleged demise of Gonzales, required by Resolution of July 29, 2002 1)
respondents to confirm the death of Gonzales, and 2) the parties to manifest
whether they were still interested in prosecuting the petition, or whether
supervening events had rendered it moot and academic.16 cralawred
On September 10, 2002, Attys. Manuel B. Imbong and Jo Aurea M.
Imbong filed a Motion for Substitution stating, among other things, that (1)
Gonzales died on January 17, 2002; (2) his heirs are not interested to pursue
and prosecute the present special civil action or be substituted as petitioners
herein; and (3) the petition was instituted by Gonzales as a class suit in
behalf of all Filipino citizens, taxpayers and members of the Philippine Bar
and, as such, survives his death.
thus pray that as they are among the Filipino citizens, taxpayers and members
of the Philippine Bar for whom the herein class suit was instituted and are
both capable of prosecuting the instant case, they be substituted as
petitioners in lieu of Gonzales and that they be given thirty days from notice
within which to file their memorandum.17 cralawred
By Resolution of December 9, 2002, this Court required
respondents to file their Comments on the Motion for Substitution filed by
Attys. Imbong and Imbong.
In their separate Comments,18 respondents PAGCOR and SAGE both argue that, among others things, movants
Attys. Imbong and Imbong may not be substituted for Gonzales as the former are
neither legal representatives nor heirs of the latter within the purview of
Section 16, Rule 3 of the Rules of Court which reads:chanroblesvirtua1awlibrary
Sec. 16. Death of party, duty
of counsel. Whenever a party to a pending action dies, and the claim is
not thereby extinguished, it shall be the duty of his counsel to inform the
court within thirty (30) days after such death of the fact thereof, and to give
the name and address of his legal representative or representatives. Failure of
counsel to comply with this duty shall be a ground for disciplinary action.
The heirs of the deceased
may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a
guardian ad litem for the minor
The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period of thirty (30)
days from notice.
If no legal representative is named by the counsel for the deceased
party, or if the one so named shall fail to appear within the specified period,
the court may order the opposing party, within a specified time, to procure the
appointment of an executor or administrator for the estate of the deceased and
the latter shall immediately appear for and on behalf of the deceased. The
court charges in procuring such appointment, if defrayed by the opposing party,
may be recovered as costs. (16a, 17a) (Emphasis supplied)cralawlibrary
Respondents PAGCOR and SAGE further argue that neither Gonzales nor
movants have substantiated the allegation that the instant case is a class suit
as defined under Section 12, Rule 3 of the Rules of Court.
Hence, so said respondents argue, the
petition should be considered a personal action which was extinguished with the
death of Gonzales.
The criteria for determining whether an action survives the death
of a plaintiff or petitioner was elucidated upon in Bonilla v. Barcena19 as follows:chanroblesvirtua1awlibrary
x x x The question as to whether an action survives or not depends
on the nature of the action and the damage sued for.If the causes of action
which survive the wrong complained [of] affects primarily and principally
property and property rights, the injuries to the person being merely
incidental, while in the causes of action which do not survive the injury
complained of is to the person the property and rights of property affected
being incidental. x x x20 (Emphasis supplied)cralawlibrary
In claiming standing to bring the instant suit, Gonzales
necessarily asserted a personal and substantial interest in the case
such that he has sustained or will sustain direct injury as a result of the
governmental act that is being challenged.21 A reading of the allegations in the petition readily shows that Gonzales alleged
interest does not involve any claim to money or property which he could have
assigned to another or transmitted to his heirs.Rather, he claimed to be vindicating his rights as a citizen,
taxpayer and member of the bar.
personal and non-transferable in nature, any interest that he might have had in
the outcome of this case cannot be deemed to have survived his death.
Movants argue, however, that unless the herein substitution is
allowed, the citizens and taxpayers represented by Gonzales in this class suit
will be denied due process.22 From this argument as well as their averment that they are among the Filipino
citizens and taxpayers and member[s] of the Philippine Bar for whom the herein
class suit was instituted and are interested to pursue this case,23 it is evident that movants are not asserting any right or interest transmitted
to them by the death of Gonzales, but are seeking to protect their own
individual interests as members of the classes alleged to have been
represented by Gonzales.
As such, the more proper procedure would have been for them to
file a Motion for Intervention as expressly provided for in Section 12, Rule 3
of the Rules of Court, and not a Motion for Substitution under Section 17 of
the same rule. Ideally, such a Motion for Intervention should be filed before
the possibility of abatement is raised by the death of the named/representative
party (or parties) to the class suit; or where such is not possible, within a
reasonable time from the death of the named or representative party.
Considering that movants, as former law partners of Gonzales,
could not have been unaware of the latters death on January 17, 2002,
respondents rightly question the timeliness of the Motion for Substitution, it
having been filed almost eight months thereafter, or only on September 10,
But even if this Court were to consider the Motion for
Substitution as a seasonably filed Motion for Intervention, still the instant
petition would have to be dismissed for being moot and academic.
The Petition in essence raises two substantive issues.
First, whether Presidential Decree (P.D.)
1869, as amended (the PAGCOR Charter),
is unconstitutional for having been
issued pursuant to an unlawful exercise of legislative power by then President
Ferdinand E. Marcos.
the contracts entered into by PAGCOR with its co-respondents are void for being
undue delegations by PAGCOR of its franchise24 to operate and maintain gambling casinos, sports, gaming pools and the like.
The second issue has already been raised in the Del Mar cases,25 this Court ruling that PAGCOR has a valid franchise to, but only by itself
(i.e., not in association with any
other person or entity) operate, maintain and/or manage the game of
jai-alai, and that, consequently, the Agreement of June 17, 1999 among PAGCOR,
BELLE and FILGAME was without force and effect.This rulingwas
recently reiterated in Jaworski v. Phil. Amusement and Gaming Corp. 26 where this Court held:chanroblesvirtua1awlibrary
In the case at bar, PAGCOR
executed an agreement with SAGE whereby the former grants the latter the
authority to operate and maintain sports betting stations and Internet gaming
operations. In essence, the grant of authority gives SAGE the privilege to
actively participate, partake and share PAGCORs franchise to operate a
gambling activity. The grant of franchise is a special privilege that
constitutes a right and a duty to be performed by the grantee. The grantee must
not perform its activities arbitrarily and whimsically but must abide by the
limits set by its franchise and strictly adhere to its terms and
conditionalities. A corporation as a creature of the State is presumed to exist
for the common good. Hence, the special privileges and franchises it receives
are subject to the laws of the State and the limitations of its charter. There
is therefore a reserved right of the State to inquire how these privileges had
been employed, and whether they have been abused.
While PAGCOR is allowed under
its charter to enter into operators and/or management contracts, it is not
allowed under the same charter to relinquish or share its franchise, much less
grant a veritable franchise to another entity such as SAGE.
PAGCOR can not delegate its power in view of
the legal principle of delegata potestas
delegare non potest, inasmuch as there is nothing in the charter to show
that it has been expressly authorized to do so. In Lim v. Pacquing, the Court clarified that since ADC has no
franchise from Congress to operate the jai-alai, it may not so operate even if
it has a license or permit from the City Mayor to operate the jai-alai in the
City of Manila. By the same token, SAGE has to obtain a separate
legislative franchise and not ride on PAGCORs franchise if it were to
legally operate on-line Internet gambling.
WHEREFORE, in view of all the foregoing, the instant petition is
The Grant of Authority and Agreement to Operate Sports Betting and
Internet Gaming executed by PAGCOR
favor of SAGE is declared NULL and VOID.
SO ORDERED.27 (Emphasis supplied; citations omitted) chanroblesvirtuallawlibrary
The first issue has likewise been rendered moot and academic.
In assailing the constitutionality of P.D. 1869, petitioner does
not point to any inconsistency between it and the present Constitution.
Instead, it questions its issuance as an
illegal exercise of legislative powers by then President Marcos.
Thus, petitioner argues that: (1) P.D. 1416, which gives the
President continuing authority to reorganize the national government and is the
basis of P.D. 1869, is an undue delegation to the President of the legislative
power to create public offices; (2) P.D. 1869 is an undue delegation of
legislative power to the President to create PAGCOR, a public corporation, and
empowering it to grant franchises; (3) Proclamation 1081 declaring martial law
and authorizing the President to issue decrees is unconstitutional, hence P.D.
1416 and P.D. 1869 issued pursuant thereto are likewise unconstitutional; and
(4) the 1973 Constitution was not validly ratified, hence it could not have
legitimized Proclamation 1081.
Petitioners arguments come almost thirty years too late.
As he himself was aware, the issues
surrounding the effectivity of Proclamation 1081, the force and effectivity of
the 1973 Constitution, and the former Presidents legislative powers under
Martial Law and the 1973 Constitution were settled in the cases of Javellana v. Executive Secretary,28 Aquino, Jr. v. Enrile,29 Aquino, Jr. v. Commission on Elections,30 and Legaspi v. Minister of Finance.31 While legal scholars may continue to debate the wisdom and reasoning of these
decisions, their objective existence and historical impact on the Philippine
legal system cannot seriously be questioned.
Indeed, while petitioner made several poignant observations
regarding the jurisprudence in the foregoing cases, this Court is unable to
accept his invitation to re-examine said cases for the simple reason that the
power conferred on it by the Constitution is limited to the adjudication of actual
controversies and the determination of whether a branch or instrumentality
of the government has acted with grave abuse of discretion amounting to lack or
excess of jurisdiction.32 Even with its expanded jurisdiction, it is beyond the powers of this Court to
To be sure, the People Power Revolution of 1986 put an end to
both the dictatorship of Mr. Marcos and the 1973 Constitution.
At the same time, the ratification of the
1987 Constitution and the convening of the first Congress on July 27, 1987 have
restored the separation of legislative and executive powers.33 There is, therefore, no longer any occasion for this Court to pass upon the
validity of the late dictators exercise of lawmaking powers.
Furthermore, Section 3, Article XVIII of the Constitution
Sec. 3. All existing laws,
decrees, executive orders,
proclamations, letters of instructions, and other executive issuances not inconsistent with this Constitution
shall remain operative until amended, repealed or revoked. (Emphasis supplied)cralawlibrary
Since petitioner did not endeavor to show that P.D. 1869 itself
is inconsistent with the Constitution, his prayer that PAGCOR be enjoined from
continuing its operations and doing acts in furtherance of its existence must
necessarily be denied.
Movants may derive some
satisfaction in the knowledge that Gonzales prayer that respondents be
enjoined from enforcingthe Agreement among PAGCOR, BELLE and FILGAME
to conduct jai-alai operations and theGrant
of an Authority and Agreement for the Operation of Sports Betting and Internet
Gambling between PAGCOR and SAGE had been granted, albeit in the separate
aforementioned cases of Del Mar and Jaworski.
WHEREFORE, the instant
Petition is hereby DISMISSED.
Vitug, (Chairman and Acting Chief Justice),
Sandoval-Gutierrez, and Corona, JJ., concur.
2 Sec. 12. Class suit When the subject
matter of the controversy is one of common or general interest to many persons
so numerous that it is impracticable to join all as parties, a number of them
which the court finds to be sufficiently numerous and representative as to
fully protect the interests of all concerned may sue or defend for the benefit
of all. Any party in interest shall have the right to intervene to protect his
individual interest. (12a)
18 Id. at 509-514; 525-530.
20 Id. at 495-496; citations omitted.
Joya v. Presidential Commission on Good Government, 225 SCRA 568,
24 Sections 10 and 11 of P.D. 1869 provide as follows:
SECTION 10.Nature and term of franchise. Subject to
the terms and conditions established in this Decree, the Corporation is hereby
granted for a period of twenty-five (25) years, renewable for another
twenty-five (25) years, the rights, privilege and authority to operate and
maintain gambling casinos, clubs, and other recreation or amusement places,
sports, gaming pools, i.e. basketball, football, lotteries, etc. whether on
land or sea, within the territorial jurisdiction of the Republic of the
SECTION 11.Scope of Franchise. In addition to the
rights and privileges granted it under the preceding Section, this Franchise
shall entitle the Corporation to do and undertake the following:chanroblesvirtua1awlibrary
(1) Enter into
operating and/or management contracts with any registered and accredited
company possessing the knowledge, skill, expertise and facilities to insure the
efficient operation of gambling casinos; provided, that the service fees of
such management and/or operator companies whose services may be retained by the
Corporation shall not in the aggregate exceed ten (10%) percent of the gross
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;chanroblesvirtuallawlibrary
(3) Acquire the
right of way or access to or thru public land, public waters or harbors,
including the Manila Bay 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 sites in
connection with its authorized casino operations;chanroblesvirtuallawlibrary
(4) Build or
construct structures, buildings castways, piers, decks, as well as any other
form of landing and boarding facilities for its floating casinos; andcralawlibrary
(5) To do and
perform such other acts directly related to the efficient and successful
operation and conduct of games of chance in accordance with existing laws and
26 G.R. No. 144463 : January
27 Per this Courts Resolution of March 30,
2004 in Jaworski, respondent SAGE filed a Motion for Reconsideration
with the Court en banc.
required to Reply to the petitioners Opposition/Comments to SAGEs Motion for
Reconsideration. The Order requiring a Reply was mailed to counsel for SAGE on
April 23, 2004.
32 Const., art. VIII, sec. 1.
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