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[G.R. No. 136445.March 27, 2001]
PAGCOR vs. HON. VIOLA, et al.
FIRST DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated MAR 27 2001.
G.R. No. 136445 (Philippine Amusement and Gaming Corporation vs. Hon. Omar T. Viola, as Judge of Angeles City, et al.)
In this petition for certiorari, petitioner Philippine Amusement Gaming Corporation (PAGCOR) seeks to annul the temporary restraining order and the writ of preliminary injunction issued by Branch 57 of the Regional Trial Court, Angeles City, the issuance of which has been affirmed by the Court of Appeals.
The facts of the case are undisputed. The factual findings of the Court of Appeals are herein reproduced below: 1 Rollo , pp. 66-68.
On July 27, 1995, petitioner and private respondent entered into an Agreement whereby petitioner granted private respondent authority to establish and operate a gambling casino at the Clark Special Economic Zone. Pursuant thereto, private respondent established and operated a casino known as Mimosa Regency Casino.
At various times thereafter, petitioner accused private respondent of alleged violation of the provisions of the Agreement. Private respondent denied all these allegations.
Petitioner refused to submit to Arbitration and decided to close the Mimosa Regency Casino.
Aware of the growing conflict, private respondent demanded that the matter be referred to Arbitration pursuant to the signed Agreement.
On March 11, 1998, private respondent filed the petition with prayer for the issuance of a Temporary Restraining Order with public respondent seeking that Orders be issued enjoining petitioner from closing down the casino or disrupting its operation.
On March 26, 1998, petitioner filed a Motion to Dismiss private respondent's petition, arguing that public respondent is without any jurisdiction to hear and decide the case filed as any order of petitioner as a quasi-judicial body maybe reviewed only by the Court of Appeals; that private respondent lacks cause of action as petitioner has not yet closed down the casino.
On March 27, 1998, petitioner revoked private respondent's authority to operate the casino for blatant violations of the Agreement. Private respondent received notice on April 1, 1998.
On April 1, 1998, the same date petitioner received the notice of closure public respondent issued a Temporary Restraining Order.
On April 14, 1998, public respondent issued the first assailed order denying petitioner's Motion to Dismiss.
Petitioner filed a motion for reconsideration of public respondent's Order. On April 21, 1998, the second assailed order denying petitioner's motion for reconsideration was issued.
On the same date, April 21, 1998, public respondent issued the third assailed order granting private respondent's prayer for the issuance of a preliminary injunction, the decretal portion of the order reads:
"WHEREFORE, pending resolution of the respondent's contemplated appeal to the Court of Appeals and the outcome of the trial of this case, this Court hereby enjoins/restrains PAGCOR, its officers, representatives and agents from closing the Mimosa Regency Casino and/or disrupting its operations and to immediately remove all its notices and stop all public announcements declaring that the Mimosa Regency Casino is closed and considering any gambling therein illegal and subject to criminal prosecution.
"This order shall take effect upon the petitioner's posting of an injunction bond which is hereby fixed at One Million Pesos (P1,000,000.00) which may either be put up in the form of cash or surety bond.
"Let copies of this Order be immediately served upon all the parties and their respective counsel.
"SO ORDERED."
The issuance by the trial court of a preliminary injunction prompted the petitioner to file a petition for certiorari under Rule 65 of the Revised Rules on Civil Procedure with the Court of Appeals. On 26 June 1998, the Court of Appeals denied the same for lack of merit. 2 Id ., at 66-76.The Court of Appeals in its Resolution dated 04 December 1998 likewise dismissed the motion for reconsideration filed by petitioners. 3 Id ., at 78.In view of such dismissal, petitioner seeks recourse to this Court raising the following assignment of errors: 4 Id ., at 30-31.
First Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ITS QUESTIONED DECISION AND RESOLUTION (ANNEXES "A" AND "B") IN RULING THAT PETITIONER PAGCOR IS NOT A QUASI-JUDICIAL AGENCY EXERCISING QUASI-JUDICIAL FUNCTIONS.
Second Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE COURT A QUO HAS NO JURISDICTION TO TAKE COGNIZANCE OVER THE NATURE AND/OR SUBJECT MATTER OF THE CASE BEFORE IT, AFFECTING FINAL ORDER OF REVOCATION OF RESPONDENT'S AUTHORITY TO OPERATE CASINO, ISSUED BY PETITIONER PAGCOR AS QUASI-JUDICIAL AGENCY, CONFORMABLY WITH SECTION 9 (3) OF BATAS PAMBANSA 129.
Third Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION WERE "VALIDLY ISSUED" BY THE COURT A QUO.
Fourth Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ACCUSING PETITIONER OF HAVING ALLEGEDLY VIOLATED RESPONDENT'S RIGHT TO DUE PROCESS WHEN THE FORMER REVOKED THE LATTER'S AUTHORITY TO
OPERATE THE MIMOSA REGENCY CASINO.
Fifth Error
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ERROR OF JUDGMENT AND/OR SERIOUS ABUSE OF DISCRETION IN HOLDING THAT PETITIONER PAGCOR IS GUILTY OF ESTOPPEL, BY ITS ACTWE PARTICIPATION IN THE PROCEEDINGS BEFORE THE COURT A QUO, AS WHEN PETITIONER FILED A MOTION TO SUSPEND PROCEEDINGS, WHICH ALLEGEDLY AMOUNTED TO SUBMISSION OF THE TRIAL COURT'S JURISDICTION.
Sixth Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE INITIATORY PETITION FILED WITH THE COURT A QUO WAS ONE FOR 'INJUNCTION.'
The petition before this Court is without merit.
The resolution of this case hinges on the determination of whether or not PAGCOR, in the exercise of its licensing powers, performs quasi-judicial functions.
Petitioner PAGCOR maintains the view that its revocation of private respondent's authority to operate a casino was an exercise of its quasi-judicial functions. As a quasi-judicial regulatory body, PAGCOR's acts are subject to review by the Court of Appeals and not the Regional Trial Court. Since the trial court has no jurisdiction over the subject matter of the case, the temporary restraining order and the preliminary injunction issued are void.
Private respondent Mondragon, on the other hand, contends that the Regional Trial Court properly took cognizance of the case since PAGCOR is not a quasi-judicial agency. According to private respondent, nowhere is it provided in petitioner's charter, Presidential Decree No. 1869, that it is vested with quasi-judicial powers. This view is shared by the appellate court, which in the assailed decision stated:
Petitioner however is not a quasi-judicial agency. It is not authorized under its Charter to exercise quasi-judicial powers. Jurisdiction of administrative agencies are (sic) conferred by statute. Powers of administrative agencies are limited to those granted in the legislation creating such body.
A review of the Presidential Decree No. 1869, the law creating petitioner, shows that petitioner is without any quasi-judicial functions. xxx
Section 9 of P.D. 1869 cited by petitioner as the authority which vests PAGCOR quasi-judicial power is, to the mind of the court, not correct. The power of PAGCOR refers only to its regulatory functions similar to that of the Securities and Exchange Commission. It does not refer to quasi-judicial and adjudicatory power of PAGCOR as it has none. The heading of Section 9 is very clear: REGULATORY POWER. If quasi-judicial power is included, the same should have been stated in clear and unmistakable term. 5 Id ., at 70-71.
We see no reason to reverse the above findings of the Court of Appeals.
A circumspect reading of Presidential Decree No. 1869, which consolidated all laws relative to the Philippine Amusement and Gaming Corporation into one statute, will reveal that there is no express grant upon petitioner PAGCOR of quasi-judicial powers. In Pilipinas Shell-Petrolium Corporation vs. Oil Industry Commission, 6 145 SCRA 433, 439 (1986).we declared that unless expressly empowered, administrative agencies are bereft of quasi-judicial powers. The power exercised by administrative agencies, having legislative and executive as well as judicial characteristics, has been termed "quasi-judicial" when it takes the form of adjudication in contested cases. 7 Hackensack v. Winner, 410 A.2d 1146 (N.J. 1980).
Nowhere is it stated in the PAGCOR Charter that said agency has the power to adjudicate and try cases relative to the grant and revocation of licenses to operate casinos. PAGCOR simply exercises regulatory powers over all businesses primarily engaged in gambling operations as set forth in P. D. 1869:
Section 9. Regulatory Power. -The Corporation shall maintain a registry of the affiliated entities, and shall exercise all the power. authority and responsibilities vested in the Securities and Exchange Commission over such affiliated entities mentioned in the preceding section, including but not limited to amendments of Articles of Incorporation and By-Laws, changes in incorporated term, structure, capitalization and other matters concerning the operation of the affiliating entities , the provisions of the Corporation Code to the contrary notwithstanding, except only with respect to original incorporation.
In turn, Section 8 of P. D. 1969, the "preceding section" referred to, reads:
Sec. 8. Registration. - all persons primarily engaged in gambling, together with their allied business with contract or franchise from the Corporation, shall register and affiliate their business with the Corporation. The Corporation shall issue the corresponding certificates of affiliation upon compliance by registering the entity with the promulgated rules and regulations thereon.
As correctly pointed out by the appellate court, the above powers of PAGCOR cannot be in anyway characterized as adjudicatory in nature:
The order of the petitioner canceling private respondent's authority to operate a casino is not an order rendered in a legal controversy before it wherein the parties filed their respective pleadings and presented evidence after which the questioned orders were issued; and as admitted by petitioner itself, the order was issued in the exercise of its regulatory powers. x x x
It bears stressing that PAGCOR's capacity to rescind the agreement finds basis in the agreement itself, which states:
6.2 PAGCOR may, by notice, terminate this Agreement in any of the following events:
(a) Mondragon shall commit a material breach or makes any default which PAGCOR considers material in the due and punctual performance of observance of any of the obligations or undertakings contained in this Agreement and MONDRAGON shall fail to remedy such default. Should MONDRAGON fail to remit the consideration as specified in paragraph 4.2 of Article 4, PAGCOR may proceed against the surety bond or terminate this Agreement by written notice to MONDRAGON, or do both simultaneously, at the discretion of PAGCOR;
(b) There shall be any failure on the part of MONDRAGON which PAGCOR considers material to comply with any provision of this Agreement which is expressed to be a condition of this Agreement and MONDRAGON shall fail to remedy the same within three (3) months after notice specifying the default.
(c) MONDRAGON has been declared insolvent.
6.3 Notice given by PAGCOR to MONDRAGON pursuant to Article 6.2 shall specify the nature of the default or other ground to entitle PAGCOR to exercise such right of termination. xxx 8 Rollo , pp. 316-317.
However, the power of PAGCOR to rescind the agreement based on default, failure, breach or agreement must be read in conjunction with the provisions on settlement of disputes provided for in the agreement:
Article 7. SETTLEMENT OF DISPUTES
7.1.The Parties agree that they shall endeavor to exert their best efforts in arriving at an amicable settlement of any dispute before such dispute is referred to arbitration.
7.2.A Party may contest the alleged default, failure or breach referred to above, or the materiality of any such default, failure or breach within thirty (30) days after written notice of any such default, failure or breach is given and refer the same to arbitration in accordance with the arbitration laws, rules and regulations of the Philippines. For purposes of arbitration, PAGCOR shall be considered as one Party entitled to nominate one arbiter and MONDRAGON another arbiter. The third arbiter shall be nominated by both parties.
7.3.The Parties undertake to comply with the arbitration award within a reasonable time to be fixed by that award provided that if the arbitrator finds that there was a bona fide dispute and that the complaining Party, as the case may be, was not dilatory in pursuing the arbitration, the time for compliance with the arbitration award shall not be less than sixty (60) days from the date of such award.
7.4.If the default, failure or breach hereinabove referred to are not remedied after receipt of the notice within the time specified herein, or within the time fixed by the arbitration, the complaining Party may, at its option, itself remedy such default or failure or cause the same to be remedied instead of terminating this Agreement, and the actual costs and expenses incurred by the complaining party in remedying or causing to be remedied such default shall be a debt payable by the defaulting Party on demand. 9 Id ., at 317-318.
Based on the above, it is clear that the authority of PAGCOR to rescind the agreement is not based on any quasi-judicial power but on the above contract provisions. The determination by PAGCOR of the default, failure or breach. cannot be in any way considered as an exercise of quasi-judicial powers. Had it been so then PAGCOR's determination of default, failure or breach on the part of MONDRAGON should be questioned before the Court of Appeals and not be referred to arbitration as stated above.
It is of note too that neither does P.D. 1869 nor the agreement between PAGCOR and MONDRAGON mention of any adjudicatory process that has to be followed before MONDRAGON's license or any other entity's license to operate a casino may be granted or revoked.
Having settled that PAGCOR's revocation of MONDRAGON's authority to operated a casino was not an exercise of quasi-judicial powers then it follows that the case was properly filed before the Regional Trial Court. Hence, as the Regional Trial Court had jurisdiction to take cognizance of the case, petitioner's contention that the temporary restraining order and preliminary injunction issued by the trial court are void must fail.
IN VIEW OF THE FOREGOING, the petition is DENIED for lack of merit.
Very truly yours,
(Sgd.) VIRGINIA ANCHETA-SORIANO
Clerk of Court
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