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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, v. HON. FELIPE G. PACQUING, as Judge, Regional Trial Court of Manila; and ASSOCIATED DEVELOPMENT CORPORATION, Respondents.

Office of the City Legal Officer for petitioners.chanrobles virtual law library

Cayanga, Zuñiga & Angel for private respondent.

QUIASON, J.:

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.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

The Order dated April 11, 1994 denied the motion for reconsideration filed by petitioners of the Order dated May 28, 1994.chanroblesvirtualawlibrarychanrobles virtual law library

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.

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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.chanroblesvirtualawlibrarychanrobles virtual law library

Be it ordained by the Municipal Board of the City of Manila, that:chanrobles virtual law library

Sec. 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 for good reasons of general interest:chanrobles virtual law library

a. That the construction, establishment and maintenance of the jai-alai shall be at a place permissible under existing zoning ordinance of Manila;chanrobles virtual law library

b. That the games to be played daily shall commence not earlier than 5:00 in the afternoon;chanrobles virtual law library

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;chanrobles virtual law library

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;chanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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Sec. 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 financial statements of the entrepreneur shall be kept.chanroblesvirtualawlibrarychanrobles virtual law library

Sec. 3. This ordinance shall take effect upon its approval.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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 firm from Hongkong to design the fronton and contracted with a local firm for the construction of the building.chanroblesvirtualawlibrarychanrobles virtual law library

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 canceling all existing franchises to operate jai-alais.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

However, after the EDSA Resolution, President Corazon C. Aquino issued Executive Order No. 169, repealing P.D. No. 810.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

On August 2, 1988, private respondent filed a petition for mandamus and specific performance with the Regional Trial Court, Branch 40, Manila, docketed as Civil Case No. 88-45660.chanroblesvirtualawlibrarychanrobles virtual law library

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."chanrobles virtual law library

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 five conditions enumerated in subparagraphs "a" to "e" of Section 1 of the Ordinance. But a simple reading of 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.chanroblesvirtualawlibrarychanrobles virtual law library

It is therefore, quite 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 satisfied that the requirements of Sec. 3, Rule 65, have been met.chanroblesvirtualawlibrarychanrobles virtual law library

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 fulfilling 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.chanroblesvirtualawlibrarychanrobles virtual law library

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 was filed 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 final 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.chanroblesvirtualawlibrarychanrobles virtual law library

In 1991, the City of Manila filed an action to annul the franchise of private respondent with the Regional Trial Court, Branch 23, Manila, docketed as Civil Case No. 91-58913.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

The City of Manila filed 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."chanrobles virtual law library

It may be of interest to note that three Manila councilors also filed 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.chanroblesvirtualawlibrarychanrobles virtual law library

Judge Enrico A. Laxamana, presiding judge of Branch 37, made the following observations:

The license was issued by Mayor Lopez in obedience to a final 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 definitely would place a greater risk and danger of being cited in contempt of court? (Rollo, p. 184).

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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 verified statement of the dates when notice of the judgment, order or resolution subject thereof, was received, when a motion for reconsideration, if any, was filed, and when the notice of the denial thereof was received.chanroblesvirtualawlibrarychanrobles virtual law library

Private respondent averred that the certification 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 final and executory after the petitioners withdrew their appeal therefrom; (3) that petitioners had also filed Civil Case No. 91-58913, questioning the effectivity of Ordinance No. 7065, which was dismissed. Likewise, they alleged that the affidavit did not state the material dates necessary for the Court to determine the timelines of the filing of the petition (Rollo, pp. 108-110).chanroblesvirtualawlibrarychanrobles virtual law library

The certification 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 cases of the same nature and parties in any court or administrative body." Rightly, there was no case filed 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.chanroblesvirtualawlibrarychanrobles virtual law library

The affidavit 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 timelines 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 affidavit are sufficient for the Court to determine whether the petition was filed within a reasonable time contemplated in Rule 65.chanroblesvirtualawlibrarychanrobles virtual law library

There is, therefore, no violation of Circular No. 28-91 and Revised Circular No. 1-88 to speak of.chanroblesvirtualawlibrarychanrobles virtual law library

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 canceled 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).chanroblesvirtualawlibrarychanrobles virtual law library

Petitioners failed to appreciate the distinction between a void and an erroneous judgment and between jurisdiction and the exercise of jurisdiction.chanroblesvirtualawlibrarychanrobles virtual law library

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.]).chanroblesvirtualawlibrarychanrobles virtual law library

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]).chanroblesvirtualawlibrarychanrobles virtual law library

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 specific performance under Section 19(1) of the 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. Sibonghanay, 23 SCRA 29 [1968]).chanroblesvirtualawlibrarychanrobles virtual law library

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 Appeals (CA G.R. No. 16477-SP).chanroblesvirtualawlibrarychanrobles virtual law library

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]).chanroblesvirtualawlibrary chanrobles virtual law library

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 canceled by President Marcos because they failed to raise this issue in Civil Case No 88-54660.chanroblesvirtualawlibrary chanrobles virtual law library

At any rate, the unilateral cancellation of the franchise, which has the status of a contract, without notice, hearing and justifiable 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]).chanroblesvirtualawlibrarychanrobles virtual law library

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).chanroblesvirtualawlibrarychanrobles virtual law library

Petitioners erroneously counted the five-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 five (5) years from the date of its entry or from the date it becomes final 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 filed the motion to withdraw the appeal on February 9, 1989, and that the Court of Appeals approved the withdrawal of the appeals 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 filed on March 14, 1994, or well within the five-year period whether such period is counted from May 5, 1989, May 26, 1989 or October 27, 1992.chanroblesvirtualawlibrarychanrobles virtual law library

Petitioners hypothesized that the withdrawal of an appeal operates as if no appeal was taken at all and that the five-year period should be counted from January 24, 1989, the fifteenth 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).chanroblesvirtualawlibrarychanrobles virtual law library

We find nothing in said Rules to support petitioners' posture.chanroblesvirtualawlibrarychanrobles virtual law library

Sec. 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.chanroblesvirtualawlibrarychanrobles virtual law library

Sec. 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 certification [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 the 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 modifications thereof having been ordered by the Court of Appeals.chanroblesvirtualawlibrarychanrobles virtual law library

Certainly, said Rule has nothing to do with the five-year period for enforcing a judgment by motion, which is governed by Section 6 of Rule 39.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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 perse. 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 fit. 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 sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting and
horse-racing. In making such choices, Congress has consulted 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 conflicting 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 benefits that will accrue to the city with the operation of the jai-alai. Explaining his motion to withdraw the appeal from the decision in Civil Case No. 88-45660, he said:

The beneficient 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 five 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.chanroblesvirtualawlibrarychanrobles virtual law library

The Office 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 finish the construction of the jai-alai building and fronton.chanroblesvirtualawlibrarychanrobles virtual law library

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).chanroblesvirtualawlibrarychanrobles virtual law library

Said Rule and law refer to appeals to the Supreme Court from the decisions of the Regional Trial Court. Clearly, they do not involved the review of orders of the Regional Trial Court rendered after the decision of the trial court has become final 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 find no abuse of discretion, much less lack of or excess of jurisdiction, on the part of respondent judge.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the petition for certiorari is DISMISSED.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.

Bellosillo, and Kapunan, JJ. concur.chanroblesvirtualawlibrarychanrobles virtual law library

Cruz, J., is on leave.

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Separate Opinions

DAVIDE, JR., J., concurring:chanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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 modified and amended by the Municipal Board on 12 October 1971. The amended ordinance was approved by the Mayor on 13 November 1971.chanroblesvirtualawlibrarychanrobles virtual law library

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:

Sec. 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.chanrobles virtual law library

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Sec. 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 filed with the Regional Trial Court (RTC) of Manila a petition for mandamus and specific performance, which was docketed as Civil Case No. 88-45660 and assigned to Branch 40 thereof.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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 repealed said Ordinance No. 7065. The court (per Judge Wiliam 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. 88-45660 and collecting the corresponding fees. The City of Manila did not appeal from the dismissal order.chanroblesvirtualawlibrarychanrobles virtual law library

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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 pursuant to Ordinance No. 7065.chanroblesvirtualawlibrarychanrobles virtual law library

Hence this petition.chanroblesvirtualawlibrarychanrobles virtual law library

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 franchise 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 specifically, 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 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.chanroblesvirtualawlibrarychanrobles virtual law library

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 first 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 official 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. (italics supplied)

In any event, as earlier stated, P.D. No. 771 cannot validly revoke Ordinance No. 7065 and the franchise granted therein.

Separate Opinions

DAVIDE, JR., J., concurring:chanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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 modified and amended by the Municipal Board on 12 October 1971. The amended ordinance was approved by the Mayor on 13 November 1971.chanroblesvirtualawlibrarychanrobles virtual law library

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:

Sec. 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.chanrobles virtual law library

xxx xxx xxxchanrobles virtual law library

Sec. 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 filed with the Regional Trial Court (RTC) of Manila a petition for mandamus and specific performance, which was docketed as Civil Case No. 88-45660 and assigned to Branch 40 thereof.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

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 repealed said Ordinance No. 7065. The court (per Judge Wiliam 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. 88-45660 and collecting the corresponding fees. The City of Manila did not appeal from the dismissal order.chanroblesvirtualawlibrarychanrobles virtual law library

 chanrobles virtual law library

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 pursuant to Ordinance No. 7065.chanroblesvirtualawlibrarychanrobles virtual law library

Hence this petition.chanroblesvirtualawlibrarychanrobles virtual law library

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 franchise 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 specifically, 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 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.chanroblesvirtualawlibrarychanrobles virtual law library

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 first 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 official 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. (italics supplied)

In any event, as earlier stated, P.D. No. 771 cannot validly revoke Ordinance No. 7065 and the franchise granted therein.




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