Del Mar v.

PAGCOR
Facts:

PAGCOR requested for legal advice from the Secretary of Justice as to

whether or not it is authorized by its Charter to operate and manage jai-alai
frontons (courts) in the country.
The Secretary of Justice opined that the authority of PAGCOR to operate and
maintain games of chance or gambling extends to jai-alai which is a form of
sport or game played for bets and that the Charter of PAGCOR amounts to a
legislative franchise for the purpose.
Petitioner Raoul B. Del Mar initially filed a Petition for Prohibition (GR
138298) to prevent PAGCOR from managing and/or operating the jai-alai or
Basque pelota games, by itself of in agreement with Belle Corporation, on the
ground that the controverted act is patently illegal and devoid of any basis
either from the Constitution or PAGCORs own Charter.
PAGCOR later entered into an agreement with Belle Jai Alai Corporation,
wherein Belle will make available to PAGCOR the required facilities, as well as
provide the needed funding for jai-alai operations with no financial outlay
from PAGCOR, while PAGCOR handles the actual management and operation
of jai-alai.
Petitioner Del Mar filed a Supplemental Petition for Certiorari questioning
the validity of the agreement on the ground that PAGCOR is without
jurisdiction, legislative franchise, authority or power to enter into such
Agreement for the opening, establishment, operation, control and
management of jai-alai games.
Petitioners Federico S. Sandoval II and Michael T. Defensor filed a Petition
for Injunction (GR 138982) to enjoin PAGCOR from operating or managing
said jai-alai games.
In this case, a Petition in Intervention was filed by Juan Miguel Zubiri
alleging that the operatin by PAGCOR of jai-alai is illegal because it is not
included in the scope of PAGCORs franchise which covers only games of
chance.

Procedural Issue:

Does the Court have jurisdiction to take original cognizance of a petition for
injunction because it is not one of those actions specifically mentioned in Sec.
1, Rule 57?

Substantive Issue:

Does PAGCOR have the authorization to manage or otherwise operate jai-alai

games?

Ruling on Procedural Issue:

YES. It is axiomatic that what determines the nature of an action and hence,
the jurisdiction of the court, are the allegations of the pleading and the
character of the relief sought.
A cursory perusal of the petition in GR 138982 will show that it is actually
one for Prohibition.
Even assuming arguendo, that it is an action for injunction, 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.
Rules of procedure are but tools designed to facilitate the attainment of
justice such that when its rigid applications tends to frustrate rather than
promote substantial justice, this Court has the duty to suspend their
operation.

Ruling on Substantive Issue:

NO. A historical study of the creation, growth and development of PAGCOR

will really show that it was never given a legislative franchise to operate jaialai.
o Section 1 of PD 1067-B provides the nature and term of PAGCORs
franchise to maintain gambling casinos (not a franchise to operate jaialai);
o Section 2 of the same decree spells out of the scope of the PAGCOR
franchise to maintain gambling casinos (not a franchise to operate jaialai);
o PD 1399, amending PD 1067-A and PD 1067-B did not have any
amendments that changed the nature and scope of the PAGCOR
franchise to maintain gambling casinos.
o EO No. 169, issued by President Corazon Aquino, revoked the
franchise of the Philippines Jai-Alai and Amusement Corporation
controlled by the Romualdezes to operate jai-alai in Manila. PAGCORs
franchise to operate gambling casinos was not revoked; but neither
was it given a franchise to operate jai-alai.
It is abundantly clear from the aforequoted laws, executive orders and
decrees that the legislative practice is that a franchise to operate jai-alai is
granted solely for that purpose and the terms and conditions of the grant are
unequivocably defined by the grantor. Such express grant and its
conditionalities protective of the public interest are evidently
wanting in PD 1869, the present Charter of PAGCOR.
In fine, PD 1869 does not have the standard marks of a law granting a
franchise to operate jai-alai as those found under PD 810 or EO 135. PD 1869
deals with details pertinent alone to the operation of gambling casinos.
The short point is that PD 1869 does not have the usual provisions
with regards to jai-alai.

Legislative franchise to operate jai-alai is imbued with public interest and

involves an exercise of police power. The familiar rule is that laws which grant
the right to exercise a part of the police power of the state are to be
construed strictly and any doubt must be resolved against the grant.
A statute which legalizes a gambling activity or business should be strictly
construed and every reasonable doubt must be resolved to limit the powers
and rights claimed under its authority.
In addition, PAGCORs franchise was not granted by a real Congress where
the passage of the law requires a more rigorous process; it was enacted in
the exercise of the legislative power of President Marcos. It is self-evident that
there is a need to be extra cautious in treating this alleged grant of a
franchise as a grant by the legislature, as a grant by the representatives of
our people, for plainly it is not.