EN BANC
SENATOR ROBERT S.
JAWORSKI,
Petitioner,
G.R.
No.
144463
January 14, 2004
-versus-
PHILIPPINE AMUSEMENT
AND GAMING CORPORATIONAND
SPORTS AND GAMES
ENTERTAINMENT CORPORATION,
Respondents.
D E C I S I
O N
YNARES-SANTIAGO,
J.:chanroblesvirtuallawlibrary
The instant petition for
certiorari and prohibition under Rule 65 of the Rules of Court seeks to
nullify the "Grant of Authority and Agreement for the Operation of
Sports
Betting and Internet Gaming," executed by respondent Philippine
Amusement
and Gaming Corporation (hereinafter referred to as PAGCOR) in favor of
respondent Sports and Games and Entertainment Corporation (also
referred
to as SAGE).
The facts may be summarized
as follows:
PAGCOR is a
government owned and controlled corporation existing under Presidential
Decree No. 1869 issued on July 11, 1983 by then President Ferdinand
Marcos.
Pertinent provisions of said enabling law read:
SECTION 1.
Declaration
of Policy. – It is hereby declared to be the policy of the State to
centralize
and integrate all games of chance not heretofore authorized by existing
franchises or permitted by law in order to attain the following
objectives:chanrobles virtuallaw libraryred
x x
x
x x x x x x
b) To establish
and
operate clubs and casinos, for amusement and recreation, including
sports,
gaming pools (basketball, football, lotteries, etc.) and such other
forms
of amusement and recreation including games of chance, which may be
allowed
by law within the territorial jurisdiction of the Philippines and which
will: x x x (3) minimize, if not totally eradicate, the evils,
malpractices
and corruptions that are normally prevalent in the conduct and
operation
of gambling clubs and casinos without direct government involvement.
x x
x
x x x x x x
TITLE IV – GRANT
OF
FRANCHISE
Sec.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,
privileges
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 Philippines.chanrobles virtuallaw libraryred
On March 31, 1998,
PAGCOR’s
board of directors approved an instrument denominated as "Grant of
Authority
and Agreement for the Operation of Sports Betting and Internet Gaming",
which granted SAGE the authority to operate and maintain Sports Betting
station in PAGCOR’s casino locations, and Internet Gaming facilities to
service local and international bettors, provided that to the
satisfaction
of PAGCOR, appropriate safeguards and procedures are established to
ensure
the integrity and fairness of the games.
On September 1, 1998,
PAGCOR, represented by its Chairperson, Alicia Ll. Reyes, and SAGE,
represented
by its Chairman of the Board, Henry Sy, Jr., and its President, Antonio
D. Lacdao, executed the above-named document.cralaw:red
Pursuant to the authority
granted by PAGCOR, SAGE commenced its operations by conducting gambling
on the Internet on a trial-run basis, making pre-paid cards and
redemption
of winnings available at various Bingo Bonanza outlets.cralaw:red
Petitioner, in his capacity
as member of the Senate and Chairman of the Senate Committee on Games,
Amusement and Sports, files the instant petition, praying that the
grant
of authority by PAGCOR in favor of SAGE be nullified. He maintains that
PAGCOR committed grave abuse of discretion amounting to lack or excess
of jurisdiction when it authorized SAGE to operate gambling on the
internet.
He contends that PAGCOR is not authorized under its legislative
franchise,
P.D. 1869, to operate gambling on the internet for the simple reason
that
the said decree could not have possibly contemplated internet gambling
since at the time of its enactment on July 11, 1983 the internet was
yet
inexistent and gambling activities were confined exclusively to
real-space.
Further, he argues that the internet, being an international network of
computers, necessarily transcends the territorial jurisdiction of the
Philippines,
and the grant to SAGE of authority to operate internet gambling
contravenes
the limitation in PAGCOR’s franchise, under Section 14 of P.D. No. 1869
which provides:
Place. – The Corporation
[i.e., PAGCOR] shall conduct gambling activities or games of chance on
land or water within the territorial jurisdiction of the Republic of
the
Philippines. x x x
Moreover, according
to petitioner, internet gambling does not fall under any of the
categories
of the authorized gambling activities enumerated under Section 10 of
P.D.
No. 1869 which grants PAGCOR the "right, privilege and authority to
operate
and maintain gambling casinos, clubs, and other recreation or amusement
places, sports gaming pools, within the territorial jurisdiction of the
Republic of the Philippines."[1]
He contends that internet gambling could not have been included within
the commonly accepted definition of "gambling casinos", "clubs" or
"other
recreation or amusement places" as these terms refer to a physical
structure
in real-space where people who intend to bet or gamble go and play
games
of chance authorized by law.chanrobles virtuallaw libraryred
The issues raised by
petitioner are as follows:
I.
WHETHER OR NOT
RESPONDENT
PAGCOR IS AUTHORIZED UNDER P.D. NO. 1869 TO OPERATE GAMBLING ACTIVITIES
ON THE INTERNET;
II.
WHETHER RESPONDENT
PAGCOR ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION, OR GRAVE ABUSE
OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, WHEN IT
AUTHORIZED
RESPONDENT SAGE TO OPERATE INTERNET GAMBLING ON THE BASIS OF ITS RIGHT
"TO OPERATE AND MAINTAIN GAMBLING CASINOS, CLUBS AND OTHER AMUSEMENT
PLACES"
UNDER SECTION 10 OF P.D. 1869;
III.
WHETHER RESPONDENT
PAGCOR ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH GRAVE
ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
GRANTED
AUTHORITY TO SAGE TO OPERATE GAMBLING ACTIVITIES IN THE INTERNET.
The above-mentioned
issues may be summarized into a single pivotal question: Does PAGCOR’s
legislative franchise include the right to vest another entity, SAGE in
this case, with the authority to operate Internet gambling? Otherwise
put,
does Presidential Decree No. 1869 authorize PAGCOR to contract any part
of its franchise to SAGE by authorizing the latter to operate Internet
gambling?
Before proceeding with
our main discussion, let us first try to hurdle a number of important
procedural
matters raised by the respondents.cralaw:red
In their separate Comments,
respondents PAGCOR and SAGE insist that petitioner has no legal
standing
to file the instant petition as a concerned citizen or as a member of
the
Philippine Senate on the ground that he is not a real party-in-interest
entitled to the avails of the suit. In this light, they argue that
petitioner
does not have the requisite personal and substantial interest to impugn
the validity of PAGCOR’s grant of authority to SAGE.cralaw:red
Objections to the legal
standing of a member of the Senate or House of Representative to
maintain
a suit and assail the constitutionality or validity of laws, acts,
decisions,
rulings, or orders of various government agencies or instrumentalities
are not without precedent. Ordinarily, before a member of Congress may
properly challenge the validity of an official act of any department of
the government there must be an unmistakable showing that the
challenged
official act affects or impairs his rights and prerogatives as
legislator.[2]
However in a number of cases,[3]
we clarified that where a case involves an issue of utmost importance,
or one of overreaching significance to society, the Court, in its
discretion,
can brush aside procedural technicalities and take cognizance of the
petition.
Considering that the instant petition involves legal questions that may
have serious implications on public interests, we rule that petitioner
has the requisite legal standing to file this petition.chanrobles virtuallaw libraryred
Respondents likewise
urge the dismissal of the petition for certiorari and prohibition
because
under Section 1, Rule 65 of the 1997 Rules of Civil Procedure, these
remedies
should be directed to any tribunal, board, officer or person whether
exercising
judicial, quasi-judicial, or ministerial functions. They maintain that
in exercising its legally-mandated franchise to grant authority to
certain
entities to operate a gambling or gaming activity, PAGCOR is not
performing
a judicial or quasi-judicial act. Neither should the act of granting
licenses
or authority to operate be construed as a purely ministerial act.
According
to them, in the event that this Court takes cognizance of the instant
petition,
the same should be dismissed for failure of petitioner to observe the
hierarchy
of courts.cralaw:red
Practically the same
procedural infirmities were raised in Del Mar v. Philippine Amusement
and
Gaming Corporation where an almost identical factual setting obtained.
Petitioners therein filed a petition for injunction directly before the
Court which sought to enjoin respondent from operating the jai-alai
games
by itself or in joint venture with another corporate entity allegedly
in
violation of law and the Constitution. Respondents contended that the
Court
had no jurisdiction to take original cognizance of a petition for
injunction
because it was not one of the actions specifically mentioned in Section
1 of Rule 56 of the 1997 Rules of Civil Procedure. Respondents likewise
took exception to the alleged failure of petitioners to observe the
doctrine
on hierarchy of courts. In brushing aside the apparent procedural
lapse,
we held that "x x x this Court has the discretionary power to take
cognizance
of the petition at bar if compelling reasons, or the nature and
importance
of the issues raised, warrant the immediate exercise of its
jurisdiction."[4]
In the case at bar,
we are not inclined to rule differently. The petition at bar seeks to
nullify,
via a petition for certiorari and prohibition filed directly before
this
Court, the "Grant of Authority and Agreement for the Operation of
Sports
Betting and Internet Gaming" by virtue of which SAGE was vested by
PAGCOR
with the authority to operate on-line Internet gambling. It is well
settled
that averments in the complaint, and not the nomenclature given by the
parties, determine the nature of the action.[5]
Although the petition alleges grave abuse of discretion on the part of
respondent PAGCOR, what it primarily seeks to accomplish is to prevent
the enforcement of the "Grant of Authority and Agreement for the
Operation
of Sports Betting and Internet Gaming." Thus, the action may properly
be
characterized as one for Prohibition under Section 2 of Rule 65, which
incidentally, is another remedy resorted to by petitioner.chanrobles virtuallaw libraryred
Granting arguendo that
the present action cannot be properly treated as a petition for
prohibition,
the transcendental importance of the issues involved in this case
warrants
that we set aside the technical defects and take primary jurisdiction
over
the petition at bar. One cannot deny that the issues raised herein have
potentially pervasive influence on the social and moral well being of
this
nation, specially the youth; hence, their proper and just determination
is an imperative need. This is in accordance with the well-entrenched
principle
that rules of procedure are not inflexible tools designed to hinder or
delay, but to facilitate and promote the administration of justice.
Their
strict and rigid application, which would result in technicalities that
tend to frustrate, rather than promote substantial justice, must always
be eschewed.[6]
Having disposed of these
procedural issues, we now come to the substance of the action.cralaw:red
A legislative franchise
is a special privilege granted by the state to corporations. It is a
privilege
of public concern which cannot be exercised at will and pleasure, but
should
be reserved for public control and administration, either by the
government
directly, or by public agents, under such conditions and regulations as
the government may impose on them in the interest of the public. It is
Congress that prescribes the conditions on which the grant of the
franchise
may be made. Thus the manner of granting the franchise, to whom it may
be granted, the mode of conducting the business, the charter and the
quality
of the service to be rendered and the duty of the grantee to the public
in exercising the franchise are almost always defined in clear and
unequivocal
language.[7]
After a circumspect
consideration of the foregoing discussion and the contending positions
of the parties, we hold that PAGCOR has acted beyond the limits of its
authority when it passed on or shared its franchise to SAGE.cralaw:red
In the Del Mar case
where a similar issue was raised when PAGCOR entered into a joint
venture
agreement with two other entities in the operation and management of
jai
alai games, the Court,[8]
in an En Banc Resolution dated 24 August 2001, partially granted the
motions
for clarification filed by respondents therein insofar as it prayed
that
PAGCOR has a valid franchise, but only by itself (i.e. not in
association
with any other person or entity), to operate, maintain and/or manage
the
game of jai-alai.chanrobles virtuallaw libraryred
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 PAGCOR’s 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.[9]
While PAGCOR is allowed
under its charter to enter into operator’s 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,[10]
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" PAGCOR’s franchise if it were to legally operate on-line
Internet gambling.cralaw:red
WHEREFORE, in view of
all the foregoing, the instant petition is GRANTED. The "Grant of
Authority
and Agreement to Operate Sports Betting and Internet Gaming" executed
by
PAGCOR in favor of SAGE is declared NULL and VOID.chanrobles virtuallaw libraryred
SO ORDERED.cralaw:red
Davide, Jr., C.J., Puno,
Vitug, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio,
Austria-Martinez,
Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
____________________________
Endnotes:
[1]
Rollo, p. 18.
[2]
Philippine Constitutional Association v. Enriquez, G.R. No. 113888, 19
August 1994, 235 SCRA 506; Bayan (Bagong Alyansang Makabayan) v.
Zamora,
G.R. No. 138570, 10 October 2000, 342 SCRA 450.chanrobles virtuallaw libraryred
[3]
Kilosbayan Inc. v. Guingona, G.R. No. 113375, 5 May 1994, 232 SCRA 110;
Lopez, et al. v. Philippine International Air Terminals Co., Inc, et
al.,
G.R. No. 155661, 5 May 2003.
[4]
Del Mar v. Philippine Amusement and Gaming Corporation, G.R. No.
138298,
29 November 2000, 346 SCRA 501; citing Fortich, et al. v. Corona, et
al.,
G.R. No. 131457, 24 April 1998, 289 SCRA 624.
[5]
Abad v. Court of First Instance of Pangasinan, Br. VIII, G.R. Nos.
58507-08,
26 February 1992, 206 SCRA 567, 579; Solid Homes, Inc. v. Court of
Appeals,
337 Phil. 605 (1997).
[6]
Serrano v. Galant Maritime Services, et al., G.R. No. 151833, 7 August
2003.chanrobles virtuallaw libraryred
[7]
Supra, note 3.chanrobles virtuallaw libraryred
[8]
Del Mar v. Philippine Amusement and Gaming Corporation, et al., 416
Phil.
172 (2001).
[9]
Bataan Shipyard & Engineering Co., Inc. v. PCGG, G.R. No. No
L-75885,
27 May 1987, 150 SCRA 181.
[10]
310 Phil. 722 (1995). |