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:EnBanc

ENBANC

[G.R.No.138298.November29,2000]

RAOUL B. DEL MAR, petitioner, vs. PHILIPPINE AMUSEMENT AND GAMING

CORPORATION, BELLE JAIALAI CORPORATION, FILIPINAS GAMING
ENTERTAINMENTTOTALIZATORCORPORATION,respondents.

[G.R.No.138982.November29,2000]

FEDERICO S. SANDOVAL II and MICHAEL T. DEFENSOR, petitioners, vs.

PHILIPPINEAMUSEMENTANDGAMINGCORPORATION,respondent.
JUANMIGUELZUBIRI,intervenor.

DECISION
PUNO,J.:

These two consolidated petitions concern the issue of whether the franchise granted to the
PhilippineAmusementandGamingCorporation(PAGCOR)includestherighttomanageandoperate
jaialai.
First, we scour the significant facts. The Philippine Amusement and Gaming Corporation is a
governmentownedandcontrolledcorporationorganizedandexistingunderPresidentialDecreeNo.
1869 which was enacted on July 11, 1983. Pursuant to Sections 1 and 10 of P.D. No. 1869,
respondentPAGCORrequestedforlegaladvicefromtheSecretaryofJusticeastowhetherornotitis
authorizedbyitsChartertooperateandmanagejaialaifrontonsinthecountry.InitsOpinionNo.67,
Seriesof1996datedJuly15,1996,theSecretaryofJusticeopinedthattheauthorityofPAGCORto
operate and maintain games of chance or gambling extends to jaialai 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.[1] Similar favorable opinions were received by PAGCOR from the Office of the Solicitor
General per its letter dated June 3, 1996 and the Office of the Government Corporate Counsel
under its Opinion No. 150 dated June 14, 1996.[2] Thus, PAGCOR started the operation of jaialai
frontons.
On May 6, 1999, petitioner Raoul B. del Mar initially filed in G.R. No. 138298 a Petition for
ProhibitiontopreventrespondentPAGCORfrommanagingand/oroperatingthejaialaiorBasque
pelotagames,byitselforinagreementwithBelleCorporation,onthegroundthatthecontrovertedact
ispatentlyillegalanddevoidofanybasiseitherfromtheConstitutionorPAGCORsownCharter.
However, on June 17, 1999, respondent PAGCOR entered into an Agreement with private
respondents Belle Jai Alai Corporation (BELLE) and Filipinas Gaming Entertainment Totalizator
Corporation (FILGAME) wherein it was agreed that BELLE will make available to PAGCOR the
requiredinfrastructurefacilitiesincludingthemainfronton,aswellasprovidetheneededfundingfor
jaialai operations with no financial outlay from PAGCOR, while PAGCOR handles the actual
managementandoperationofjaialai.[3]
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Thus, on August 10, 1999, petitioner Del Mar filed a Supplemental Petition for Certiorari
questioning the validity of said Agreement on the ground that PAGCOR is without jurisdiction,
legislativefranchise,authorityorpowertoenterintosuchAgreementfortheopening,establishment,
operation,controlandmanagementofjaialaigames.
Alittleearlier,oronJuly1,1999,petitionersFedericoS.SandovalIIandMichaelT.Defensorfiled
aPetitionforInjunction,docketedasG.R.No.138982,whichseekstoenjoinrespondentPAGCOR
fromoperatingorotherwisemanagingthejaialaiorBasquepelotagamesbyitselforinjointventure
withBelleCorporation,forbeingpatentlyillegal,havingnobasisinthelawortheConstitution,andin
usurpation of the authority that properly pertains to the legislative branch of the government.In this
case, a Petition in Intervention was filed by Juan Miguel Zubiri alleging that the operation by
PAGCOR of jaialai is illegal because it is not included in the scope of PAGCORs franchise which
coversonlygamesofchance.
PetitionersRaoulB.delMar,FedericoS.SandovalII,MichaelT.Defensor,andintervenorJuan
Miguel Zubiri, are suing as taxpayers and in their capacity as members of the House of
Representatives representing the First District of Cebu City, the Lone Congressional District of
MalabonNavotas, the Third Congressional District of Quezon City, and the Third Congressional
DistrictofBukidnon,respectively.
Thebedrockissuesspawnedbythepetitionsatbarare:
G.R.No.138298
PetitionerDelMarraisesthefollowingissues:
I. The respondent PAGCOR has no jurisdiction or legislative franchise or acted with grave abuse of
discretion,tantamounttolackorexcessofjurisdiction,inarrogatinguntoitselftheauthorityorpower
toopen,pursue,conduct,operate,controlandmanagejaialaigameoperationsinthecountry.
II.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxinexecutingitsagreement
withcorespondentsBelleandFilgamefortheconductandmanagementofjaialaigameoperations,
uponunduerelianceonanopinionoftheSecretaryofJustice.
III.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxinenteringintoapartnership,
joint venture or business arrangement with its corespondents Belle and Filgame, through their
agreementxxx.TheAgreementwasenteredintothroughmanifestpartialityandevidentbadfaith
(Sec. 3 (e), RA 3019), thus manifestly and grossly disadvantageous to the government [AntiGraft
andCorruptPracticesAct,RA3019,Sec.3(g)].
IV. x x x Respondent PAGCOR has equally no jurisdiction or authority x x x to award to its co
respondentsBelleandFilgametherighttoavailofthetaxbenefitswhich,bylaw,inuressolelyand
exclusivelytoPAGCORitself.
V.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxtocausethedisbursementof
fundsfortheillegalestablishment,managementandoperationofjaialaigameoperations.
VI.xxxRespondentPAGCORhasequallynojurisdictionorauthorityxxxtoawardorgrantauthority
fortheestablishment,managementandoperationofofffrontonbettingstationsorbookies.
VII.TherespondentPAGCORhasnojurisdictionorauthorityxxxinawardinguntoitscorespondents
BelleandFilgame,withoutpublicbidding,thesubjectagreement.
Indefense,privaterespondentsBELLEandFILGAMEassert:
1.Thepetitionstatesnocauseofactionandmustbedismissedoutright
2.Thepetitionerhasnocauseofactionagainsttherespondents,henotbeingarealpartyininterest
3. The instant petition cannot be maintained as a taxpayer suit, there being no illegal disbursement of
publicfundsinvolved
4. The instant petition is essentially an action for quo warranto and may only be commenced by the
SolicitorGeneral

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5. The operation of jaialai is well within PAGCORs authority to operate and maintain. PAGCORs
franchise is intended to be wide in its coverage, the underlying considerations being, that: (1) the
franchisemustbeusedtointegrateallgamblingoperationsinonecorporateentity(i.e.PAGCOR)
and(2)itmustbeusedtogeneratefundsforthegovernmenttosupportitssocialimpactprojects
6. The agreement executed by, between and among PAGCOR, BJAC and FILGAME is outside the
coverageofexistinglawsrequiringpublicbidding.
SubstantiallythesamedefenseswereraisedbyrespondentPAGCORinitsComment.
G.R.No.138982
Petitionerscontendthat:
I.TheoperationofjaialaigamesbyPAGCORisillegalinthat:
1) the franchise of PAGCOR does not include the operation of jaialai since jaialai is a prohibited
activityundertheRevisedPenalCode,asamendedbyP.D.No.1602whichisotherwiseknown
astheAntiGamblingLaw
2)jaialaiisnotagameofchanceandthereforecannotbethesubjectofaPAGCORfranchise.
II.Afranchiseisaspecialprivilegethatshouldbeconstruedstrictlyagainstthegrantee.
III. To allow PAGCOR to operate jaialai under its charter is tantamount to a license to PAGCOR to
legalizeandoperateanygamblingactivity.
InitsComment,respondentPAGCORaversthat:
1.AnactionforinjunctionisnotamongthecasesorproceedingsoriginallycognizablebytheHonorable
SupremeCourt,pursuanttoSection1,Rule56ofthe1997RulesofCivilProcedure.
2. Assuming, arguendo, the Honorable Supreme Court has jurisdiction over the petition, the petition
shouldbedismissedforfailureofpetitionerstoobservethedoctrineonhierarchyofcourts.
3.xxxPetitionershavenolegalstandingtofileataxpayerssuitbasedontheircauseofactionnorare
theytherealpartiesininterestentitledtotheavailsofthesuit.
4.Respondentsfranchisedefinitelyincludestheoperationofjaialai.
5.Petitionershavenorightinessetobeentitledtoatemporaryrestrainingorderand/ortobeprotected
byawritofpreliminaryinjunction.
TheSolicitorGeneralclaimsthatthepetition,whichisactuallyanactionforquowarrantounder
Rule66oftheRulesofCourt,againstanallegedusurpationbyPAGCORofafranchisetooperatejai
alai,shouldbedismissedoutrightbecauseonlytheSolicitorGeneralorpublicprosecutorcanfilethe
same that P.D. No. 1869, the Charter of PAGCOR, authorizes PAGCOR to regulate and operate
games of chance and skill which include jaialai and that P.D. No. 1602 did not outlaw jaialai but
merely provided for stiffer penalties to illegal or unauthorized activities related to jaialai and other
formsofgambling.
Weshallfirstruleontheimportantproceduralissuesraisedbytherespondents.
Respondents in G.R. No. 138982 contend that the Court has no jurisdiction to take original
cognizanceofapetitionforinjunctionbecauseitisnotoneofthoseactionsspecificallymentionedin
Section1ofRule56ofthe1997RulesofCivilProcedure.Moreover,theyurgethatthepetitionshould
bedismissedforfailureofpetitionerstoobservethedoctrineonhierarchyofcourts.
Itisaxiomaticthatwhatdeterminesthenatureofanactionandhence,thejurisdictionofthecourt,
aretheallegationsofthepleadingandthecharacterofthereliefsought.[4]A cursoryperusal of the
petitionfiledinG.R.No.138982willshowthatitisactuallyoneforProhibitionunderSection2ofRule
65foritseekstopreventPAGCORfrommanaging,maintainingandoperatingjaialaigames. 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,warranttheimmediateexerciseofitsjurisdiction.[5]Itcannotbegainsaidthattheissuesraised
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in the present petitions have generated an oasis of concern, even days of disquiet in view of the
public interest at stake. In Tano, et al. vs. Socrates, et al.,[6] this Court did not hesitate to treat a
petition for certiorari and injunction as a special civil action for certiorari and prohibition to resolve an
issue of farreaching impact to our people. This is in consonance with our case law now accorded
nearreligiousreverencethatrulesofprocedurearebuttoolsdesignedtofacilitatetheattainmentof
justice such that when its rigid application tends to frustrate rather than promote substantial justice,
thisCourthasthedutytosuspendtheiroperation.[7]
Respondentsalsoassailthelocusstandiorthestandingofpetitionerstofilethepetitionsatbar
as taxpayers and as legislators. First, they allege that petitioners have no legal standing to file a
taxpayerssuitbecausetheoperationofjaialaidoesnotinvolvethedisbursementofpublicfunds.
Respondents' stance is not without oven ready legal support.A party suing as a taxpayer must
specificallyprovethathehassufficientinterestinpreventingtheillegalexpenditureofmoneyraised
bytaxation.[8]Inessence,taxpayersareallowedtosuewherethereisaclaimofillegaldisbursement
of public funds,[9] or that public money is being deflected to any improper purpose,[10] or where
petitioners seek to restrain respondent from wasting public funds through the enforcement of an
invalidorunconstitutionallaw.[11]
In the petitions at bar, the Agreement entered into between PAGCOR and private respondents
BELLEandFILGAMEwillshowthatallfinancialoutlayorcapitalexpenditurefortheoperationofjai
alai games shall be provided for by the latter. Thus, the Agreement provides, among others, that:
PAGCORshallmanage,operateandcontrolthejaialaioperationatnocostorfinancialrisktoit(Sec.
1[A][1])BELLEshallprovidefunds,atnocosttoPAGCOR,forallcapitalexpenditures(Sec.1[B][1])
BELLEshallmakeavailabletoPAGCOR,atnocosttoPAGCOR,theuseoftheintegratednationwide
network of online computerized systems (Sec. 1[B][2]) FILGAME shall make available for use of
PAGCORonarentfreebasisthejaialaifrontonfacilities(Sec.1[C][1])BELLE&FILGAMEjointly
undertake to provide funds, at no cost to PAGCOR, for preoperating expenses and working capital
(Sec.1[D][1])andthatBELLE&FILGAMEwillprovidePAGCORwithgoodwillmoneyintheamount
of P 200 million (Sec. 1 [D][2]). In fine, the record is barren of evidence that the operation and
managementofjaialaibythePAGCORinvolvesexpenditureofpublicmoney.
Bethatasitmay,inlinewiththeliberalpolicyofthisCourtonlocusstandiwhenacaseinvolves
an issue of overarching significance to our society,[12] we find and so hold that as members of the
House of Representatives, petitioners have legal standing to file the petitions at bar. In the instant
cases, petitioners complain that the operation of jaialai constitutes an infringement by PAGCOR of
the legislatures exclusive power to grant franchise. To the extent the powers of Congress are
impaired,soisthepowerofeachmemberthereof,sincehisofficeconfersarighttoparticipateinthe
exercise of the powers of that institution, so petitioners contend. The contention commands our
concurrence for it is now settled that a member of the House of Representatives has standing to
maintain inviolate the prerogatives, powers and privileges vested by the Constitution in his office.[13]
AsprescientlystressedinthecaseofKilosbayan,Inc.,viz:

Wefindtheinstantpetitiontobeoftranscendentalimportancetothepublic.Theissuesitraisedareof
paramountpublicinterestandofacategoryevenhigherthanthoseinvolvedinmanyoftheaforecited
cases.Theramificationsofsuchissuesimmeasurablyaffectthesocial,economic,andmoralwell
beingofthepeopleevenintheremotestbarangaysofthecountryandthecounterproductiveand
retrogressiveeffectsoftheenvisionedonlinelotterysystemareasstaggeringasthebillionsinpesos
itisexpectedtoraise.Thelegalstandingthenofthepetitionersdeservesrecognitionxxx.

Afterhurdlingthethresholdproceduralissues,wenowcometothedecisivesubstantiveissueof
whether PAGCOR's legislative franchise includes the right to manage and operate jaialai.[14] The
issue is of supreme significance for its incorrect resolution can dangerously diminish the plenary
legislativepowerofCongress,moreespeciallyitsexerciseofpolicepowertoprotectthemoralityof

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ourpeople.Afteracircumspectconsiderationoftheclashingpositionsoftheparties,weholdthatthe
charterofPAGCORdoesnotgiveitanyfranchisetooperateandmanagejaialai.
FIRST. A franchise is a special privilege conferred upon a corporation or individual by a
governmentdulyempoweredlegallytograntit.[15]Itisaprivilegeofpublicconcernwhichcannotbe
exercisedatwillandpleasure,butshouldbereservedforpubliccontrolandadministration,either
by the government directly, or by public agents, under such conditions and regulations as the
governmentmayimposeonthemintheinterestofthepublic.[16]Afranchisethusemanatesfroma
sovereign power[17] and the grant is inherently a legislative power. It may, however, be derived
indirectly from the state through an agency to which the power has been clearly and validly
delegated.[18]Insuchcases,Congressprescribestheconditionson which the grant of a franchise
maybemade.[19]Thus,themannerofgrantingthefranchise,towhomitmaybegranted,themode
ofconductingthebusiness,thecharacterandqualityoftheservicetoberenderedandthedutyof
the grantee to the public in exercising the franchise are almost always defined in clear and
unequivocal language. In the absence of these defining terms, any claim to a legislative
franchisetooperateagameplayedforbetsanddenouncedasamenacetomoralityoughtto
berejected.
SECOND.Ahistorical study of the creation, growth and development of PAGCOR will readily
showthatitwasnevergivenalegislativefranchisetooperatejaialai.
(2.a)BeforethecreationofPAGCOR,a25yearrighttooperatejaialaiinManilawasgivenby
PresidentMarcostothePhilippineJaiAlaiandAmusementCorporationthencontrolledbyhis
inlaws,theRomualdezfamily.ThefranchisewasgrantedonOctober16,1975thruP.D.No.810
issuedbyPresidentMarcosintheexerciseofhismartiallawpowers.On thatverydate, the 25
year franchise of the prior grantee expired and was not renewed. A few months before, President
MarcoshadissuedP.D.No.771datedAugust20,1975,revokingtheauthorityoflocalgovernment
unitstoissuejaialaifranchises.Bytheseacts,theformerPresidentexercisedcompletecontrolofthe
sovereignpowertograntfranchises.
(2.b) Almost one year and a half after granting the Philippine JaiAlai and Amusement
Corporationa25yearfranchisetooperatejaialaiinManila,PresidentMarcoscreatedPAGCORon
January 1, 1977 by issuing P.D. No. 1067A. The decree is entitled Creating the Philippine
AmusementsandGamingCorporation,DefiningItsPowersandFunctions,ProvidingFundstherefor
andforOtherPurposes.ItsDeclarationofPolicy[20]trumpetedtheintentthatPAGCORwascreated
toimplementthepolicyoftheStatetocentralizeandintegrateallgamesofchancenotheretofore
authorizedbyexistingfranchisesorpermittedbylawxxx.Oneofitswhereasclausesreferredto
theneedtopreventtheproliferationofillegalcasinosorclubsconductinggamesofchancexxx.[21]
To achieve this objective, PAGCOR was empowered to establish and maintain clubs, casinos,
branches,agenciesorsubsidiaries,orotherunitsanywhereinthePhilippinesxxx.[22]
(2.c) On the same day after creating PAGCOR, President Marcos issued P.D. No. 1067B
grantingPAGCORxxxaFranchisetoEstablish,Operate,andMaintainGamblingCasinosonLand
or Water Within the Territorial Jurisdiction of the Republic of the Philippines. Obviously, P.D. No.
1067AwhichcreatedthePAGCORisnotagrantoffranchisetooperatethegameofjaialai.Onthe
otherhand,Section1ofP.D.No.1067BprovidesthenatureandtermofPAGCORSfranchise to
maintaingamblingcasinos(notafranchisetooperatejaialai),viz:

SECTION1.NATUREANDTERMOFFRANCHISE.Subjecttothetermsandconditionsestablished
inthisDecree,thePhilippineAmusementsandGamingCorporationisherebygrantedforaperiodof
twentyfive(25)years,renewableforanother25years,theright,privilege,andauthoritytooperate
andmaintaingamblingcasinos,clubsandotherrecreationoramusementplaces,sports,gaming
pools,i.e.,basketball,football,etc.,whetheronlandorsea,withintheterritorialjurisdictionofthe
RepublicofthePhilippines.

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Section 2 of the same decree spells out the scope of the PAGCOR franchise to maintain
gamblingcasinos(notafranchisetooperatejaialai),viz:

SEC.2.SCOPEOFFRANCHISE.InadditiontotherightandprivilegesgranteditunderSec.1,this
Franchiseshallentitlethefranchiseholdertodoandundertakethefollowing:

(1)Enterintooperatorsand/ormanagementcontractswithdulyregisteredandaccreditedcompany
possessingtheknowledge,skill,expertiseandfacilitiestoinsuretheefficientoperationofgambling
casinosProvided,Thattheservicefeesofsuchmanagementand/oroperatorcompanieswhose
servicesmayberetainedbythefranchiseholderofthisFranchiseshallnotintheaggregateexceed
ten(10%)percentofthegrossincome.

(2)Purchaseforeignexchangethatmayberequiredfortheimportationofequipment,facilitiesand
othergamblingparaphernaliaindispensablyneededorusefultoinsurethesuccessfuloperationof
gamblingcasinos.

(3)Acquiretherightofway,accesstoorthrupubliclands,publicwatersorharbors,includingthe
ManilaBayAreasuchrighttoinclude,butnotlimitedto,therighttoleaseand/orpurchasepublic
lands,governmentreclaimedlands,aswellaslandofprivateownershiporthoseleasedfromthe
government.Thisrightshallcarrywithittheprivilegeofthefranchiseholdertoutilizepiers,quays,
boatlandings,andsuchotherpertinentandrelatedfacilitieswithinthesespecifiedareasforuseas
landing,anchoring,orberthingsitesinconnectionwithitsauthorizedcasinooperations.

(4)Buildorconstructstructures,buildings,coastways,piers,docks,aswellasanyotherformofland
andberthingfacilitiesforitsfloatingcasinos.

(5)Todoandperformsuchotheractsdirectlyrelatedtotheefficientandsuccessfuloperationand
conductofgamesofchanceinaccordancewithexistinglawsanddecrees.

(2.d)StillonthedayaftercreatingPAGCOR,PresidentMarcosissuedP.D.No.1067Camending
P.D.Nos.1067AandB.TheamendmentprovidesthatPAGCORsfranchisetomaintaingambling
casinos x x x shall become exclusive in character, subject only to the exception of existing
franchisesandgamesofchanceheretoforepermittedbylaw,uponthegenerationbythefranchise
holder of gross revenues amounting to P1.2 billion and its contribution therefrom of the amount of
P720millionasthegovernmentsshare.
(2.e)OnJune2,1978,PresidentMarcosissuedP.D.No.1399amendingP.D.Nos.1067Aand
1067B. The amendments did not change the nature and scope of the PAGCOR franchise to
maintaingamblingcasinos.Rather, they referred to the Composition of the Board of Directors,[23]
SpecialConditionofFranchise,[24]`Exemptions,[25]andOtherConditions.[26]
(2.f)OnAugust13,1979,PresidentMarcosissuedP.D.No.1632.Again,theamendmentsdid
not change a comma on the nature and scope of PAGCORs franchise to maintain gambling
casinos.Theyrelatedtotheallocationofthe60%shareofthegovernmentwherethehostareaisa
city or municipality other than Metro Manila,[27] and the manner of payment of franchise tax of
PAGCOR.[28]
(2.g) On July 11, 1983, President Marcos issued P.D. No. 1869 entitled Consolidating and
AmendingP.D.Nos.1067A,1067B,1067C,1399and1632RelativetotheFranchiseandPowerof
the PAGCOR. As a consolidated decree, it reiterated the nature and scope of PAGCORs
existingfranchisetomaintaingamblingcasinos(notafranchisetooperatejaialai),thus:

SEC.10.Natureandtermoffranchise.Subjecttothetermsandconditionsestablishedinthis
Decree,theCorporationisherebygrantedforaperiodoftwentyfive(25)years,renewablefor
anothertwentyfive(25)years,therights,privilegeandauthoritytooperateandmaintaingambling
casinos,clubs,andotherrecreationoramusementplaces,sports,gamingpools,i.e.basketball,
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football,lotteries,etc.,whetheronlandorsea,withintheterritorialjurisdictionoftheRepublicofthe
Philippines.

SEC.11.ScopeofFranchise.Inadditiontotherightsandprivilegesgranteditunderthepreceding
Section,thisFranchiseshallentitlethecorporationtodoandundertakethefollowing:

(1)Enterintooperatingand/ormanagementcontractswithanyregisteredandaccreditedcompany
possessingtheknowledge,skill,expertiseandfacilitiestoinsuretheefficientoperationofgambling
casinosprovided,thattheservicefeesofsuchmanagementand/oroperatorcompanieswhose
servicesmayberetainedbytheCorporationshallnotintheaggregateexceedten(10%)percentof
thegrossincome

(2)Purchaseforeignexchangethatmayberequiredfortheimportationofequipment,facilitiesand
othergamblingparaphernaliaindispensablyneededorusefultoinsurethesuccessfuloperationof
gamblingcasinos

(3)Acquiretherightofwayoraccesstoorthrupublicland,publicwatersorharbors,includingthe
ManilaBayAreasuchrightshallinclude,butnotbelimitedto,therighttoleaseand/orpurchase
publiclands,governmentreclaimedlands,aswellaslandsofprivateownershiporthoseleasedfrom
theGovernment.ThisrightshallcarrywithittheprivilegeoftheCorporationtoutilizepiers,quays,
boatlandings,andsuchotherpertinentandrelatedfacilitieswithinthesespecifiedareasforuseas
landing,anchoringorberthingsitesinconnectionwithitsauthorizedcasinooperations

(4)Buildorconstructstructures,buildings,castways,piers,decks,aswellasanyotherformof
landingandboardingfacilitiesforitsfloatingcasinosand

(5)Todoandperformsuchotheractsdirectlyrelatedtotheefficientandsuccessfuloperationand
conductofgamesofchanceinaccordancewithexistinglawsanddecrees.

(2.h)Thencamethe1986EDSArevolutionandtheendoftheMarcosregime.OnMay8,1987,
President Corazon Aquino issued Executive Order No. 169 repealing P.D. Nos. 810, 1124 and
1966 thus revoking the franchise of the Philippine JaiAlai and Amusement Corporation
controlled by the Romualdezes to operate jaialai in Manila. PAGCORs franchise to operate
gamblingcasinoswasnotrevoked.Neitherwasitgivenafranchisetooperatejaialai.
THIRD.Inlightofitslegalhistory,weholdthatPAGCORcannotmaintainthatsection10of
P.D.No.1869grantsitafranchisetooperatejaialai.Section10provides:

SEC.10Natureandtermoffranchise.Subjecttothetermsandconditionsestablishedinthis
Decree,theCorporationisherebygrantedforaperiodoftwentyfive(25)years,renewablefor
anothertwentyfive(25)years,therights,privilegeandauthoritytooperateandmaintaingambling
casinos,clubs,andotherrecreationoramusementplaces,sports,gamingpools,i.e.,basketball,
football,lotteries,etc.,whetheronlandorsea,withintheterritorialjurisdictionoftheRepublicofthe
Philippines.

(3.a) P.D. No. 1869 is a mere consolidation of previous decrees dealing with PAGCOR.
PAGCORcannotseekcomfortinsection10asitisnotanewprovisioninP.D.No.1869and,from
the beginning of its history, was never meant to confer it with a franchise to operate jaialai. It is a
reiterationofsection1ofP.D.No.1067Bwhichprovides:

SECTION1.NatureandTermofFranchise.Subjecttothetermsandconditionsestablishedinthis
Decree,thePhilippineAmusementsandGamingCorporationisherebygrantedforaperiodoftwenty
five(25)years,renewableforanother25years,theright,privilege,andauthoritytooperateand
maintaingamblingcasinos,clubsandotherrecreationoramusementplaces,sportsgamingpools,

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i.e.,basketball,football,etc.,whetheronlandorsea,withintheterritorialjurisdictionoftheRepublicof
thePhilippines.

(3.b)Plainly,section1ofP.D.No.1067Bwhichwasreenactedassection10ofP.D.No.1869is
not a grant of legislative franchise to operate jaialai. P.D. No. 1067B is a franchise to maintain
gamblingcasinosalone.Thetwofranchisesareasdifferentasdayandnightandnoalchemyoflogic
willeffacetheirdifference.
(3.c)PAGCOR's stance becomes more sterile when we consider the law's intent. It cannot be
theintentofPresidentMarcostograntPAGCORafranchisetooperatejaialaibecauseayear
andahalfbeforeitwaschartered,heissuedP.D.No.810grantingPhilippineJaiAlaiandAmusement
Corporationa25yearfranchisetooperatejaialaiinManila.Thiscorporationiscontrolledbyhisin
laws, the Romualdezes.[29] To assure that this Romualdez corporation would have no competition,
President Marcos earlier revoked the power of local governments to grant jaialai franchises. Thus,
PAGCORs stance that P.D. No. 1067B is its franchise to operate jaialai, which would have
competedwiththeRomualdezesfranchise,extendscredulitytothelimit.Indeed,P.D.No.1067
A which created PAGCOR made it crystal clear that it was to implement "the policy of the State to
centralizeandintegrateallgamesofchancenotheretoforeauthorizedbyexistingfranchisesor
permittedbylaw,"whichincludedthePhilippineJaiAlaiandAmusementCorporation.
(3.d)There can be no sliver of doubt that under P.D. No. 1869, PAGCORs franchise is only to
operate gambling casinos and not jaialai. This conclusion is compelled by a plain reading of its
variousprovisions,viz:

"SECTION1.DeclarationofPolicy.ItisherebydeclaredtobethepolicyoftheStatetocentralize
andintegrateallgamesofchancenotheretoforeauthorizedbyexistingfranchisesorpermittedbylaw
inordertoattainthefollowingobjectives:

xxxxxx
(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
recreationincludinggamesofchance,whichmaybeallowedbylawwithintheterritorialjurisdictionof
thePhilippinesandwhichwill:xxx(3)minimize,ifnottotallyeradicate,theevils,malpractices
and corruptions that are normally prevalent in the conduct and operation of gambling clubs
andcasinoswithoutdirectgovernmentinvolvement.
xxxxxx

TITLEIVGRANTOFFRANCHISE

SEC.10.Natureandtermoffranchise.SubjecttothetermsandconditionsestablishedinthisDecree,
theCorporationisherebygrantedforaperiodoftwentyfive(25)years,renewableforanothertwenty
five(25)years,therights,privilegesandauthoritytooperateandmaintaingamblingcasinos,
clubs,andotherrecreationoramusementplaces,sports,gamingpools,i.e.basketball,football,
lotteries,etc.whetheronlandorsea,withintheterritorialjurisdictionoftheRepublicofthe
Philippines.

SEC.11.ScopeofFranchise.Inadditiontotherightsandprivilegesgranteditunderthepreceding
Section,thisFranchiseshallentitletheCorporationtodoandundertakethefollowing:

(1)Enterintooperatingand/ormanagementcontractswithanyregisteredandaccreditedcompany
possessingtheknowledge,skill,expertiseandfacilitiestoinsuretheefficientoperationof
gamblingcasinosprovided,thattheservicefeesofsuchmanagementand/oroperatorcompanies
whoseservicesmayberetainedbytheCorporationshallnotintheaggregateexceedten(10%)
percentofthegrossincome

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(2)Purchaseforeignexchangethatmayberequiredfortheimportationofequipment,facilitiesand
othergamblingparaphernaliaindispensablyneededorusefultoinsurethesuccessfuloperationof
gamblingcasinos

(3)Acquiretherightofwayoraccesstoorthrupublicland,publicwatersorharborsxxx.Thisright
shallcarrywithittheprivilegeoftheCorporationtoutilizexxxsuchotherpertinentandrelated
facilitieswithinthesespecifiedareasxxxinconnectionwithitsauthorizedcasinooperations

(4)Buildorconstructstructures,buildingcastways,piers,decks,aswellasanyotherformoflanding
andboardingfacilitiesforitsfloatingcasinos

xxxxxx
SEC.13.Exemptions.

(1)Customsduties,taxesandotherimpostsonimportations.Allimportationsofequipment,vehicles,
automobiles,boats,ships,barges,aircraftandsuchothergamblingparaphernalia,including
accessoriesorrelatedfacilities,forthesoleandexclusiveuseofthecasinos,theproperand
efficientmanagementandadministrationthereof,andsuchotherclubs.Recreationoramusement
placestobeestablishedunderandbyvirtueofthisFranchiseshallbeexemptfromthepaymentofall
kindsofcustomsduties,taxesandotherimposts,includingallkindsoffees,levies,orchargesofany
kindornature,whetherNationalorLocal.

Vesselsand/oraccessoryferryboatsimportedortobeimportedbyanycorporationhavingexisting
contractualarrangementswiththeCorporation,forthesoleandexclusiveuseofthecasinoorto
beusedtoservicetheoperationsandrequirementsofthecasino,shalllikewisebetotally
exemptfromthepaymentofallcustomsduties,xxx.

(2)Incomeandothertaxes.(a)xxx

(b)Others:Theexemptionhereingrantedforearningsderivedfromtheoperationsconductedunder
thefranchisexxxshallinuretothebenefitofandextendtocorporation(s)xxxwithwhomthe
Corporationoroperatorhasanycontractualrelationshipinconnectionwiththeoperationsofthe
casino(s)authorizedtobeconductedunderthisFranchisexxx.

(3)DividendIncome.xxxThedividendincomeshallnotinsuchcasebeconsideredaspartof
beneficiariestaxableincomeprovided,however,thatsuchdividendincomeshallbetotallyexempted
fromincomeorotherformsoftaxesifinvestedwithinsix(6)monthsfromdatethedividendincomeis
received,inthefollowing:

(a)operationofthecasino(s)orinvestmentsinanyaffiliateactivitythatwillultimatelyredoundtothe
benefitoftheCorporationoranyothercorporationwithwhomtheCorporationhasanyexisting
arrangementsinconnectionwithorrelatedtotheoperationsofthecasino(s)

xxxxxx

(4)UtilizationofForeignCurrencies.TheCorporationshallhavetherightandauthority,solelyand
exclusivelyinconnectionwiththeoperationsofthecasino(s),topurchase,receive,exchange
anddisburseforeignexchange,subjecttothefollowingtermsandconditions:

(a)Aspecificareainthecasino(s)orgamingpitshallbeputupsolelyandexclusivelyforplayersand
patronsutilizingforeigncurrencies

(b)TheCorporationshallappointanddesignateadulyaccreditedcommercialbankagentofthe
CentralBank,tohandle,administerandmanagetheuseofforeigncurrenciesinthecasino(s)

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(c)TheCorporationshallprovideanofficeatcasino(s)fortheemployeesofthedesignatedbank,
agentoftheCentralBank,wheretheCorporationwillmaintainadollaraccountwhichwillbeutilized
exclusivelyfortheabovepurposeandthecasinodollartreasuryemployees

xxxxxx

(f)Thedisbursement,administration,managementandrecordingofforeignexchangecurrencies
usedinthecasino(s)shallbecarriedoutinaccordancewithexistingforeignexchangeregulationsx
xx.

SEC.14.OtherConditions.

(1)Place.TheCorporationshallconductthegamblingactivitiesorgamesofchanceonlandorwater
withintheterritorialjurisdictionoftheRepublicofthePhilippines.Whenconductedonwater,the
Corporationshallhavetherighttodockthefloatingcasino(s)inanypartofthePhilippineswhere
vessels/boatsareauthorizedtodockundertheCustomsandMaritimeLaws.

(2)Time.Gamblingactivitiesmaybeheldandconductedatanytimeofthedayornightprovided,
however,thatinplaceswherecurfewhoursareobserved,allplayersandpersonnelofgambling
casinosshallremainwithinthepremisesofthecasinos.

(3)Personsallowedtoplay.xxx

(4)Personsnotallowedtoplay.

xxxxxx

Fromtheseareexceptedthepersonnelemployedbythecasinos,specialguests,orthosewhoat
thediscretionoftheManagementmaybeallowedtostayinthepremises.

TITLEVIEXEMPTIONFROMCIVILSERVICELAW

SEC.16.Exemption.AllpositionintheCorporation,whethertechnical,administrative,professionalor
managerialareexemptfromtheprovisionsoftheCivilServiceLaw,rulesandregulations,andshall
begovernedonlybythepersonnelmanagementpoliciessetbytheBoardofDirectors.All
employeesofthecasinosandrelatedservicesshallbeclassifiedasConfidentialappointees.

TITLEVIITRANSITORYPROVISIONS

SEC.17.TransitoryProvisions.xxx

SEC.18.ExemptionfromLaborLaws.Nounionoranyformofassociationshallbeformedbyall
thoseworkingasemployeesofthecasinoorrelatedserviceswhetherdirectlyorindirectly.Forsuch
purpose,allemployeesofthecasinosorrelatedservicesshallbeclassifiedasconfidential
appointeesandtheiremploymentthereof,whetherbythefranchiseholder,ortheoperators,orthe
managers,shallbeexemptfromtheprovisionsoftheLaborCodeoranyimplementingrulesand
regulationsthereof.

Fromitscreationin1977anduntil1999,PAGCORneverallegedthatithasafranchiseto
operate jaialai. Twentytwo years is a long stretch of silence. It is inexplicable why it never
claimeditsallegedfranchiseforsolongatimewhichcouldhaveallowedittoearnbillionsof
pesosasadditionalincome.
(3.e)To be sure, we need not resort to intellectual jujitsu to determine whether PAGCOR has a
franchisetooperatejaialai.Itiseasytotellwhetherthereisalegislativegrantornot.Knownasthe
gameofathousandthrills,jaialaiisadifferentgame,hence,thetermsandconditionsimposed
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on a franchisee are spelled out in standard form. A review of some laws and executive orders
grantingafranchisetooperatejaialaiwilldemonstratethesestandardtermsandconditions,viz:
(3.e.1)CommonwealthActNo.485(AnActtoPermitBetsintheGameofBasquePelota)June
18,1939

BeitenactedbytheNationalAssemblyofthePhilippines:

SECTION1.Anyprovisionofexistinglawtothecontrarynotwithstanding,itshallbepermissibleinthe
gameofBasquepelota,agameofskill(includingthegamesofpala,raqueta,cestapunta,remonte
andmano),inwhichprofessionalplayersparticipate,tomakeeitherdirectbetsorbetsbymeansofa
totalizerProvided,ThatnooperatorormaintainerofaBasquepelotacourtshallcollectas
commissionafeeinexcessoftwelvepercentumonsuchbets,ortwelvepercentumofthereceiptsof
thetotalizer,andofsuchpercentumthreeshallbepaidtotheGovernmentofthePhilippines,for
distributioninequalsharesbetweentheGeneralHospitalandthePhilippineAntituberculosisSociety.

SEC.2.Anyperson,companyorcorporation,thatshallbuildacourtforBasquepelotagameswith
betswithineighteenmonthsfromthedateoftheapprovalofthisAct,shallthereunderhavethe
privilegetomaintainandoperatethesaidcourtforatermoftwentyfiveyearsfromthedateinwhich
thefirstgamewithbetsshallhavetakenplace.Attheexpirationofthesaidtermoftwentyfiveyears,
thebuildingsandthelandonwhichthecourtandthestadiumshallbeestablished,shallbecomethe
propertyoftheGovernmentofthePhilippines,withoutpayment.

SEC.3.ThelocationanddesignofthebuildingsthatshallbeusedforthesamegamesofBasque
pelota,shallhavepriorapprovaloftheBureauofPublicWorksandtheoperatorshallpayalicense
feeoffivehundredpesosayeartothecityormunicipalityinwhichtheestablishmentshallbe
situated,inadditiontotherealestatetaxdueonsuchrealproperty.

SEC.4.ThisActshalltakeeffectuponitsapproval.

ENACTED,withoutExecutiveapproval,June18,1939.

(3.e.2) Executive Order No. 135 (Regulating the Establishment, Maintenance and Operation of
FrontonsandBasquePelotaGames[JaiAlai])May4,1948

ByvirtueofthepowersvestedinmebyCommonwealthActNo.601,entitledAnActtoregulatethe
establishment,maintenanceandoperationofplacesofamusementsincharteredcities,municipalities
andmunicipaldistricts,thefollowingrulesandregulationsgoverningfrontonsandbasquepelota
gamesareherebypromulgated:

SECTION1.Definitions.WheneverusedinthisOrderandunlessthecontextindicatesadifferent
meaning,thefollowingtermsshallbearthemeaningindicatedherein:

(a)Basquepelotagameshallincludethepelotagamewiththeuseofpala,raqueta,cestapunta,
remonteandmano,inwhichprofessionalplayersparticipate.

(b)Frontoncomprisesthecourtwherebasquepelotagamesareplayed,inlcudingtheadjoining
structuresusedinconnectionwithsuchgames,suchasthebettingboothsandgalleries,totalizator
equipment,andthegrandstandswherethepublicisadmittedinconnectionwithsuchgames.

(c)Pelotariisaprofessionalplayerengagedinplayingbasquepelota.

(d)Professionalplayerisonewhoplaysforcompensation.

SEC.2.Supervisionovertheestablishmentandoperationoffrontonsandbasquepelotagames.
SubjecttotheadministrativecontrolandsupervisionoftheSecretaryoftheInterior,cityormunicipal
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mayorsshallexercisesupervisionovertheestablishment,maintenanceandoperationoffrontonsand
basquepelotagameswithintheirrespectiveterritorialjurisdiction,aswellasovertheofficialsand
employeesofsuchfrontonsandshallseetoitthatalllaws,ordersandregulationsrelatingtosuch
establishmentsaredulyenforced.Subjecttosimilarapproval,theyshallappointsuchpersonnelas
maybeneededinthedischargeoftheirdutiesandfixtheircompensationwhichshallbepaidoutof
theallotmentofonehalfpercentum(1/2%)outofthetotalbetsorwagerfundssetasideandmade
availableforthepurposeinaccordancewithSection19hereof.TheSecretaryoftheInteriorshall
havethepowertoprohibitorallowtheoperationofsuchfrontonsonanydayordays,ormodifytheir
hourofoperationandtoprescribeadditionalrulesandregulationsgoverningthesame.

SEC.3.Particulardutiesofcityormunicipalmayorsregardingoperationofbasquepelotagamesand
frontons.Inconnectionwiththeirdutytoenforcethelaws,orders,rulesandregulationsrelatingto
frontonsandbasquepelotagames,thecityormunicipalmayorshallrequirethatsuchfrontonsshall
beproperlyconstructedandmaintainedinaccordancewiththeprovisionsofCommonwealthActNo.
485shallseethatthepropersanitaryaccommodationsareprovidedinthegrandstandsandother
structurescomprisingsuchfrontonsandshallrequirethatsuchfrontonsbeprovidedwithaproperly
equippedclinicforthetreatmentofinjuriestothepelotaris.

SEC.4.Permits.Intheabsenceofalegislativefranchise,itshallbeunlawfulforanypersonorentity
toestablishand/oroperatefrontonsandconductbasquepelotagameswithoutapermitissuedbythe
correspondingcityormunicipalmayor,withtheapprovaloftheprovincialgovernorinthelattercase.
Anypermitissuedhereundershallbereportedbytheprovincialgovernororcitymayor,asthecase
maybe,totheSecretaryoftheInterior.

SEC.5.Licensefees.Thefollowinglicensefeesshallbepaid:

(a)Foreachbasquepelotafronton,fivehundredpesos(P500)annually,oronehundredandtwenty
fivepesos(P125)quarterly.

(b)Forpelotaris,judgesorrefereesandsuperintendents(intendentes)ofbasquepelotagames,
eighteenpesos(P18)eachannually.

Theabovelicensefeesshallaccruetothefundsofthecityormunicipalitywherethefrontonis
operated.

SEC.6.Location.ExceptinthecaseofanybasquepelotafrontonlicensedasofDecember8,1941,
nobasquepelotafrontonshallbemaintainedoroperatedwithinaradiusof200linealmetersfrom
anycityhallormunicipalbuilding,provincialcapitolbuilding,nationalcapitolbuilding,publicplayaor
park,publicschool,church,hospital,athleticstadium,oranyinstitutionoflearningorcharity.

SEC.7.Buildings,sanitaryandparkingrequirements.Nopermitorlicensefortheconstructionor
operationofabasquepelotafrontonshallbeissuedwithoutpropercertificateoftheprovincialorcity
engineerandarchitectcertifyingtothesuitabilityandsafetyofthebuildingandofthedistrictorcity
healthofficercertifyingtothesanitaryconditionofsaidbuilding.Thecityormunicipalmayormay,in
hisdiscretionandascircumstancesmaywarrant,requirethatthefrontonbeprovidedwithsufficient
spaceforparkingsothatthepublicroadsandhighwaysbenotusedforsuchpurposes.

SEC.8.Protestandcomplaint.Anypersonwhobelievesthatanybasquepelotafrontonislocatedor
establishedinanyplacenotauthorizedhereinorisbeingoperatedinviolationofanyprovisionofthis
ordermayfileaprotestorcomplaintwiththecityormunicipalmayorconcerned,andafterproper
investigationofsuchcomplaintthecityormunicipalmayormaytakesuchactionashemayconsider
necessaryinaccordancewiththeprovisionsofsection10hereof.Anydecisionrenderedonthe
matterbythecityormunicipalmayorshallbeappealabletotheSecretaryoftheInterior.

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SEC.9.Personsprohibitedadmission.Personsunder16yearsofage,personscarryingfirearmsor
deadlyweaponsofanydescription,exceptgovernmentofficialsactuallyperformingtheirofficialduties
therein,intoxicatedpersons,andpersonsofdisorderlynatureandconductwhoareapttodisturb
peaceandorder,shallnotbeadmittedorallowedinanybasquepelotafronton:Provided,That
personsunder16yearsofagemay,whenaccompaniedbytheirparentsorguardians,beadmitted
thereinbutinnocaseshallsuchminorsbeallowedtobet.

SEC.10.Gamblingprohibited.Nocardgamesoranyoftheprohibitedgamesshallbepermitted
withinthepremisesofanybasquepelotafrontonanduponsatisfactoryevidencethattheoperatoror
entityconductingthegamehastoleratedtheexistenceofanyprohibitedgamewithinitspremises,the
cityormunicipalmayormaytakethenecessaryactioninaccordancewiththeprovisionsofsection11
hereof.

SEC.11.Revocationorsuspensionofpermitsandlicenses.Thecityormunicipalmayor,subjectto
theapprovaloftheSecretaryoftheInterior,maysuspendorrevokeanylicensegrantedunderthis
Ordertoanybasquepelotafrontonortoanyofficialoremployeethereof,forviolationofanyofthe
rulesandregulationsprovidedinthisOrderorthosewhichsaidcityormunicipalmayormay
prescribe,orforanyjustcause.Suchsuspensionorrevocationshalloperatetoforfeittothecityor
municipalityconcernedallsumspaidtherefor.

SEC.12.Appeals.AnyactiontakenbythecityormunicipalmayorundertheprovisionsofthisOrder
shallstand,unlessmodifiedorrevokedbytheSecretaryoftheInterior.

SEC.13.Books,recordsandaccounts.Thecityormunicipalmayor,orhisdulyauthorized
representative,shallhavethepowertoinspectatalltimesthebooks,records,andaccountsofany
basquepelotafronton.Hemay,inhisdiscretionandasthecircumstancesmaywarrant,requirethat
thebooksandfinancialorotherstatementsofthepersonorentityoperatingthegamebekeptinsuch
mannerashemayprescribe.

SEC.14.Daysandhoursofoperation.Exceptasmayotherwisebeprovidedherein,basquepelota
gameswithbettingshallbeallowedeveryday,exceptingSundays,from2oclockp.m.tonotlater
than11oclockp.m.

SEC.15.Pelotaris,judges,referees,etc.shallbelicensed.Nopersonorentityoperatingabasque
pelotafronton,whereingamesareplayedwithbetting,shallemployanypelotari,judgeorreferee,
superintendentofgames(intendente),oranyotherofficialwhosedutiesareconnectedwiththe
operationorsupervisionofthegames,unlesssuchpersonhasbeendulylicensedbythecityor
municipalmayorconcerned.Suchlicenseshallbegranteduponsatisfactoryproofthattheapplicantis
ingoodhealth,knowtherulesandusagesofthegame,andisapersonofgoodmoralcharacterand
ofundoubtedhonesty.Inthecaseofpelotaris,suchlicenseshallbegrantedonlyuponthefurther
conditionthattheyareabletoplaythegamewithreasonableskillandwithsafetytothemselvesand
totheiropponents.Thecityormunicipalmayormayfurtherrequireotherreasonablequalificationsfor
applicantstoalicense,nototherwiseprovidedherein.Suchlicenseshallbeobtainedyearly.

SEC.16.Installationofautomaticelectrictotalizator.Anypersonorentityoperatingafrontonwherein
bettinginanyformisallowedshallinstallinitspremiseswithintheperiodofoneyearfromthedate
thisOrdertakeseffect,anautomaticelectricallyoperatedindicatorsystemandticketsellingmachine,
commonlyknownastotalizator,whichshallclearlyrecordeachticketpurchasedoneveryplayerin
anygame,thetotalnumberofticketssoldoneachevent,aswellasthedividendsthatcorrespondto
holdersofwinningnumbers.Thisrequirementshall,however,notapplytodoubleeventsorforecast
poolsortoanybettingmadeonthebasisofacombinationorgroupingofplayersuntilatotalizator
thatcanregistersuchbetshasbeeninventedandplacedonthemarket.

SEC.17.Supervisionoversaleofbettingticketsandpaymentofdividends.Forthepurposeof
verifyingtheaccuracyofreportsinconnectionwiththesaleofbettingticketsandthecomputationof
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dividendsawardedtowinnersoneachevent,aswellasotherstatementswithreferencetothebetting
inthegamesplayed,thecityormunicipalmayorshallassignsuchnumberofauditingofficersand
checkersasmaybenecessaryforthepurpose.Theseauditingofficersandcheckersshallbeplaced
intheticketsellingbooths,dividendcomputationboothsandsuchotherpartsofthefronton,where
bettingticketsaresoldanddividendscomputed.Itshallbetheirdutytocheckupandcorrectany
irregularityoranyerroneousreportorcomputationthatmaybemadebyofficialsofthefronton,in
connectionwiththesaleofticketsandthepaymentofdividends.

SEC.18.Wagerticketsanddividends.Thefacevalueofthewagerticketsforanyeventshallnot
exceedP5whetherforwinorplace,orforanycombinationorgroupingofwinningnumbers.Theface
valueofsaidtickets,asthecasemaybe,shallbethebasisforthecomputationofthedividendsand
suchdividendsshallbepaidaftereliminatingfractionsoftencentavos(P0.10)forexample:ifthe
resultingdividendisP10.43,thedividendthatshallbepaidwillbeonlyP10.40.

SEC.19.Distributionofwagerfunds.Thetotalwagerfundsorgrossreceiptsfromthesaleofthe
bettingticketsshallbeapportionedasfollows:acommissionnotexceedingtenandonehalfper
centum(10%)onthetotalbetsoneachgameoreventshallbesetasideforthepersonorentity
operatingthefrontonandfourandonehalfpercentum(4%)ofsuchbetsshallbecoveredintothe
NationalTreasuryfordispositionasmaybeauthorizedbylaworexecutiveorderandthebalanceor
eightyfivepercentum(85%)ofthetotalbetsshallbedistributedintheformofdividendsamong
holdersofwinorplacenumbersorholdersofthewinningcombinationorgroupingofnumbers,asthe
casemaybe:Provided,however,Thatofthetenandonehalfpercentum(10%)representingthe
commissionofthepersonorentityoperatingthefronton,anamountequivalenttoonehalfpercentum
(1/2%)ofthetotalbetsorwagerfundsshallbesetasideandmadeavailabletocovertheexpensesof
thepersonnelassignedtosupervisetheoperationofbasquepelotagamesandfrontons,including
paymentofsalariesofsuchpersonnel,purchaseofnecessaryequipmentandothersundryexpenses
asmaybeauthorizedbycompetentauthority.

SEC.20.Supervisionovertheconductofgamesenforcementofrulesandregulations.Thecityor
municipalmayorisauthorizedtoplacewithinthepremisesofthefrontonsuchnumberofinspectors
andagentsasmaybedeemednecessarytosupervisetheconductofthegamestoseethattherules
ofthegamesarestrictlyenforced,andtocarryouttheprovisionsofthisOrderaswellassuchother
regulationsasmayhereafterbeprescribed.

SEC.21.Rulesgoverningthegamesandpersonnelofthefronton.Therulesandregulationsthat
havebeenadoptedbyanyfrontontogoverntheoperationofitsgamesandthebehavior,dutiesand
performanceoftheofficialsandpersonnelconnectedtherewith,suchaspelotaris,judges,refereesor
superintendentsofgames(intendentes)andothers,shallbetherecognizedrulesandregulationsof
suchfrontonuntilthesamearealteredorrepealedbytheSecretaryoftheInteriorandanyfronton
mayintroduceanytypeorformofgamesorevents,providedtheyarenotcontrarytotheprovisionsof
thisOrderoranyruleorregulationhereafterissuedbytheSecretaryoftheInterior.

SEC.22.Regulationsgoverningpelotaris.Anyruleorregulationadoptedbyanyestablishedfronton
governingtheconductorperformanceofpelotaristothecontrarynotwithstanding,thefollowing
regulationsshallbeobserved:

(a)Thepelotariswhoareparticipatinginthegamesshallnotbeallowedtocommunicate,talkor
makesignswithanyoneinthepublicorwithanyofficialoremployeeofthefrontonduringthegames,
exceptwiththejudgesorrefereesorthesuperintendent(intendente)inchargeofthegames

(b)Theprogramofgamesorevents,aswellasthelineupororderofplayingofthepelotarisineach
eventshallbedeterminedbythesuperintendentofthegames(intendente),subjecttotheapprovalof
thecityormunicipalmayor,orhisauthorizedrepresentatives

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(c)Pelotarisshallbeingoodphysicalconditionbeforeparticipatinginanygameandshallbelaidoff
fromplayingatleasttwodaysinaweek.Everypelotarishallonceamonthsecureamedical
certificatefromagovernmentphysiciantobedesignatedbythecityormunicipalmayorconcerned
certifyingtohisphysicalfitnesstoengageinthegamesand

(d)Theamountofdividendscomputedforanyeventshallnotbepostedwithintheviewofthe
pelotarisparticipatingintheeventuntilaftertheterminationofsaidevent.

(3.e.3) Presidential Decree No. 810 (An Act Granting the Philippine JaiAlai and Amusement
CorporationaFranchisetoOperate,ConstructandMaintainaFrontonforBasquePelotaandSimilar
GamesofSkillintheGreaterManilaArea)October16,1975

WHEREAS,byvirtueoftheprovisionsofCommonwealthActNumbered485thefranchisetooperate
andmaintainafrontonfortheBasquepelotaandsimilargamesofskillintheCityofManila,shall
expireonOctober,1975whereupontheownershipoftheland,buildingsandimprovementsusedin
thesaidgamewillbetransferredwithoutpaymenttothegovernmentbyoperationoflaw

WHEREAS,thereisapressingneednotonlytofurtherdevelopthegameasasportandamusement
forthegeneralpublicbutalsotoexploititsfullpotentialinsupportofthegovernmentsobjectivesand
developmentprograms

WHEREAS,Basquepelotaisagameofinternationalrenown,themaintenanceandpromotionof
whichwillsurelyassistthetourismindustryofthecountry

WHEREAS,thetourismappealofthegamewillbeenhancedonlywiththegovernmentssupportand
inducementindevelopingthesporttoalevelatparwithinternationalstandards

WHEREAS,oncesuchtourismappealisdeveloped,thesamewillserveasastableandexpanding
baseforrevenuegenerationforthegovernmentsdevelopmentprojects.

NOW,THEREFORE,I,FERDINANDE.MARCOS,PresidentofthePhilippines,byvirtueofthe
powersvestedinmebytheConstitution,herebydecreeasfollows:

SECTION1.Anyprovisionoflawtothecontrarynotwithstanding,thereisherebygrantedtothe
PhilippineJaiAlaiandAmusementCorporation,acorporationdulyorganizedandregisteredunder
thelawsofthePhilippines,hereinaftercalledthegranteeoritssuccessors,foraperiodoftwentyfive
yearsfromtheapprovalofthisAct,extendableforanothertwentyfiveyearswithoutthenecessityof
anotherfranchise,theright,privilegeandauthoritytoconstruct,operateandmaintainacourtfor
BasquePelota(includingthegamesofpala,raqueta,cestapunta,remonteandmano)withinthe
GreaterManilaArea,establishbranchesthereofforbookingpurposesandholdorconductBasque
pelotagamesthereinwithbettingseitherdirectlyorbymeansofelectricand/orcomputerized
totalizator.

ThegamestobeconductedbythegranteeshallbeunderthesupervisionoftheGamesand
AmusementsBoard,hereinafterreferredtoastheBoard,whichshallenforcethelaws,rulesand
regulationsgoverningBasquepelotaasprovidedinCommonwealthActnumberedfourhundredand
eightyfive,asamended,andalltheofficialsofthegameandpelotaristhereinshallbedulylicensed
assuchbytheBoard.

SEC.2.Thegranteeoritsdulyauthorizedagentmayoffer,takeorarrangebetswithinoroutsidethe
place,enclosureorcourtwheretheBasquepelotagamesareheld:Provided,Thatbetsoffered,taken
orarrangedoutsidetheplace,enclosureorcourtwherethegamesareheld,shallbeoffered,takenor
arrangedonlyinplacesdulylicensedbythecorporationProvided,however,Thatthesameshallbe
subjecttothesupervisionoftheBoard.Nopersonotherthanthegranteeoritsdulyauthorizedagents
shalltakeorarrangebetsonanypelotarioronthegame,ormaintainoruseatotalizatororother
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device,methodorsystemtobetonanypelotarioronthegamewithinorwithouttheplace,enclosure
orcourtwherethegamesareheldbythegrantee.Anyviolationofthissectionshallbepunishedbya
fineofnotmorethantwothousandpesosorbyimprisonmentofnotmorethansixmonths,orbothin
thediscretionoftheCourt.Iftheoffenderisapartnership,corporation,orassociation,thecriminal
liabilityshalldevolveuponitspresident,directorsoranyotherofficialsresponsiblefortheviolation.

SEC.3.Thegranteeshallprovidemechanicaland/orcomputerizeddevices,namely:a)electric
totalizatorb)machinedirectlyconnectedtoacomputerinadisplayboard,forthesaleoftickets,
including,thosesoldfromtheoffcourtstationsc)modernsoundsystemandloudspeakersd)
facilitiesthatbringsafety,security,comfortandconveniencetothepublice)modern
intercommunicationdevicesandf)suchotherfacilities,devicesandinstrumentsforclean,honest
andorderlyBasquepelotagames,withinthreeyearsfromtheapprovalofthisAct.

TheBoardshallassignitsauditorsand/orinspectorstosuperviseandregulatetheplacingofbets,
propercomputationofdividendsandthedistributionofwagerfunds.

SEC.4.Thetotalwagerfundorgrossreceiptsfromthesaleofbettingticketswillbeapportionedas
follows:eightyfivepercentum(85%)shallbedistributedintheformofdividendsamongtheholders
ofwinorplacenumbersorholdersofthewinningcombinationorgroupingofnumbersasthecase
maybe.Theremainingbalanceoffifteenpercentum(15%)shallbedistributedasfollows:elevenand
onehalfpercentum(11%)shallbesetasideasthecommissionfeeofthegrantee,andthreeand
onehalfpercentum(3%)thereofshallbesetasideandallotedtoanyspecialhealth,educational,
civic,cultural,charitable,socialwelfare,sports,andothersimilarprojectsasmaybedirectedbythe
President.Thereceiptsfrombettingcorrespondingtothefractionoftencentavoseliminatedfromthe
dividendspaidtothewinningtickets,commonlyknownasbreakage,shallalsobesetasideforthe
abovenamedspecialprojects.

SEC.5.Theprovisionofanyexistinglawtothecontrarynotwithstanding,thegranteeishereby
authorizedtoholdBasquepelotagames(includingthegamesofpala,raqueta,cestapunta,remonte
andmano)onalldaysoftheweekexceptSundaysandofficialholidays.

SEC.6.TheprovisionsofCommonwealthActnumberedfourhundredandeightyfiveasamended,
shallbedeemedincorporatedherein,providedthattheprovisionsofthisActshalltakeprecedence
overtheprovisionsthereofandallotherlaws,executiveordersandregulationswhichareinconsistent
herewith.

SEC.7.Thegranteeshallnotlease,transfer,granttheusufructof,sellorassignthisfranchisepermit,
ortherightsorprivilegesacquiredthereundertoanyperson,firm,company,corporationorother
commercialorlegalentity,normergewithanyotherperson,companyorcorporationorganizedforthe
samepurpose,withoutthepreviousapprovalofthePresidentofthePhilippines.

SEC.8.Forpurposesofthisfranchise,thegranteeishereinauthorizedtomakeuseoftheexisting
fronton,stadiumandfacilitieslocatedalongTaftAvenue,CityofManila,belongingtothegovernment
byvirtueoftheprovisionsofCommonwealthActnumberedfourhundredandeightyfive.

It is abundantly clear from the aforequoted laws, executive orders and decrees that the
legislativepracticeisthatafranchisetooperatejaialaiisgrantedsolelyforthatpurposeand
thetermsandconditionsofthegrantareunequivocablydefinedbythegrantor.Suchexpress
grantanditsconditionalitiesprotectiveofthepublicinterestareevidentlywantinginP.D.No.
1869, the present Charter of PAGCOR. Thus, while E.O. 135 and P.D. No. 810 provided for the
apportionment of the wager funds or gross receipts from the sale of betting tickets, as well as the
distributionofdividendsamongholdersofwinorplacenumbersorholdersofthewinningcombination
orgroupingofnumbers,nosuchprovisionscanbefoundinP.D.No.1869.Likewise,whileP.D.No.
810describeswhereandhowthegamesaretobeconductedandbettingstobemade,andimposes
apenaltyincaseofaviolationthereof,suchprovisionsareabsentinP.D.No.1869.
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In fine, P.D. No. 1869 does not have the standard marks of a law granting a franchise to
operate jaialai as those found under P.D. No. 810 or E.O. 135. We cannot blink away from the
stubbornrealitythatP.D.No.1869dealswithdetailspertinentalonetotheoperationofgambling
casinos.Itprescribestherulesandregulationsconcerningtheoperationofgamblingcasinossuchas
the place, time, persons who are and are not entitled to play, tax exemptions, use of foreign
exchange,andtheexemptionofcasinoemployeesfromthecoverageoftheCivilServiceLawandthe
Labor Code. The short point is that P.D. No. 1869 does not have the usual provisions with
regardstojaialai.ThelogicalinferenceisthatPAGCORwasnotgivenafranchisetooperatejaialai
frontons. There is no reason to resist the beguiling rule that acts of incorporation, and statutes
grantingotherfranchisesorspecialbenefitsorprivilegestocorporations,aretobeconstruedstrictly
againstthecorporationsandwhateverisnotgiveninunequivocaltermsisunderstoodtobewithheld.
[30]

FOURTH.The tax treatment between jaialai operations and gambling casinos are distinct from
eachother.Letters of Instruction No. 1439 issued on November 2, 1984 directed the suspension of
theimpositionoftheincreasedtaxonwinningsinhorseracesandjaialaiundertheoldrevenuecode,
towit:

WHEREAS,theincreasedtaxonwinningsonhorseracesandjaialaiunderPresidentialDecree1959
hasalreadyaffectedtheholdingofhorseracesandjaialaigames,resultingingovernmentrevenue
lossandaffectingthelivelihoodofthosedependentthereon

WHEREAS,themanneroftaxationapplicabletheretoisuniqueanditseffectsandincidenceareinno
waysimilartothetaxesoncasinooperationortoanyshiftabletax

NOW,THEREFORE,I,FERDINANDE.MARCOS,PresidentofthePhilippines,byvirtueofthe
powersvestedinmebytheConstitution,doherebyorderandinstructtheMinisterofFinance,the
CommissioneroftheBureauofInternalRevenue,andtheChairman,Games&AmusementsBoard,
tosuspendtheimplementationoftheincreasedrateoftaxwinningsinhorseracesandjaialaigames
andcollectinsteadtherateapplicablepriortotheeffectivityofPD1959.

Similarly,underRepublicActNo.8424,ortheTaxReformActof1997,thereisanamusementtax
imposedonoperatorsofjaialai(Section125)andastamptaxonjaialaitickets(Section190).There
isnocorrespondingimpositionongamblingcasinos.Welltonote,section13ofP.D.No.1869grants
tothefranchiseholderandcasinooperatorstaxexemptionsfromthepaymentofcustomsdutiesand
income tax, except a franchise tax of five (5%) percent which shall be in lieu of all kinds of taxes,
levies,feesorassessmentsofanykind,natureordescription,levied,establishedorcollectedbyany
municipal,provincial,ornationalgovernmentauthority.Nosimilarexemptionshavebeenextendedto
operatorsofjaialaifrontons.
FIFTH.P.D.No.1869,thepresentCharterofPAGCOR,isaconsolidationofP.D.Nos.1067A,
1067Band1067CallissuedonJanuary1,1977.P.D.No.1067AcreatedthePAGCORanddefined
its powers and functions P.D. No. 1067B granted to PAGCOR a franchise to establish, operate,
andmaintaingamblingcasinosonlandorwaterwithintheterritorialjurisdictionoftheRepublicof
thePhilippinesandP.D.No.1067CgrantedPAGCORtheexclusiveright,privilegeandauthorityto
operate and maintain gambling casinos, subject only to the exception of existing franchises and
gamesofchancepermittedbylaw.
Beyond debate, P.D. No. 1869 adopted substantially the provisions of said prior decrees,
withsomeadditionswhich,however,havenobearingonthefranchisegrantedtoPAGCORto
operategamblingcasinosalone,suchastheAffiliationProvisionsunderTitleIIIandtheTransitory
ProvisionsunderTitleVII.ItalsoaddedthetermlotteriesunderSection1(b)onDeclarationofPolicy
andSection10ontheNatureandTermofFranchise.ItoughttofollowthatP.D.No.1869carrieswith
itthesamelegislativeintentthatinfusedP.D.Nos.1067A,1067Band1067C.Tobesure,bothP.D.
No.1067AandP.D.No.1869seektoenforcethesameavowedpolicyoftheStatetominimize,ifnot
totally eradicate, the evils, malpractices and corruptions that normally are found prevalent in the
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conductandoperationofgamblingclubsandcasinoswithoutdirectgovernmentinvolvement.Itdid
notaddressthemoralmalevolenceofjaialaigamesandtheneedtocontainitthruPAGCOR.
WecannotdefacethislegislativeintentbyholdingthatthegranttoPAGCORunderP.D.Nos.1067A
and1067Btoestablish,operate,andmaintaingamblingcasinos,hasbeenenlarged,broadenedor
expandedbyP.D.No.1869soastoincludeagranttooperatejaialaifrontons.Then and now, the
intentionwasmerelytograntPAGCORafranchisetooperategamblingcasinos,nomore,noless.
SIXTH. Lest the idea gets lost in the shoals of our subconsciousness, let us not forget that
PAGCORisengagedinbusinessaffectedwithpublicinterest.Thephraseaffectedwithpublicinterest
means that an industry is subject to control for the public good[31] it has been considered as the
equivalent of subject to the exercise of the police power.[32] Perforce, a legislative franchise to
operate jaialai is imbued with public interest and involves an exercise of police power. The
familiarruleisthatlawswhichgranttherighttoexerciseapartofthepolicepowerofthestate
are to be construed strictly and any doubt must be resolved against the grant.[33] The
legislature is regarded as the guardian of society, and therefore is not presumed to disable
itself or abandon the discharge of its duty. Thus, courts do not assume that the legislature
intendedtopartawaywithitspowertoregulatepublicmorals.[34]Thepresumptionisinfluenced
byconstitutionalconsiderations.Constitutionsarewidelyunderstoodtowithholdfromlegislaturesany
authoritytobargainawaytheirpolicepower[35]forthepowertoprotectthepublicinterestisbeyond
abnegation.
Itisstressedthatthecaseatbardoesnotinvolveafranchisetooperateapublicutility(suchas
water, transportation, communication or electricity) the operation of which undoubtedly redounds to
the benefit of the general public. What is claimed is an alleged legislative grant of a gambling
franchise a franchise to operate jaialai. 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
rightsclaimedunderitsauthority.[36]
The dissent would like to make capital of the fact that the cases of Stonevs.Mississippi and
Aicardivs.Alabamaarenotonallfourstothecasesatbarand,hence,therulingsthereindonot
apply.Theperceivedincongruityismoreapparentthanreal.
Stone[37] involves a contract entered into by the State of Mississippi with the plaintiffs which
allowed the latter to sell and dispose of certificates of subscription which would entitle the holders
thereof to such prizes as may be awarded to them, by the casting of lots or by lot, chance or
otherwise. The contract was entered into by plaintiffs pursuant to their charter entitled An Act
Incorporating the Mississippi Agricultural, Educational and Manufacturing Aid Society which
purportedlygrantedthemthefranchisetoissueandselllotterytickets.However,thestateconstitution
expressly prohibits the legislature from authorizing any lottery or allowing the sale of lottery tickets.
Mississippilawmakesitunlawfultoconductalottery.
ThequestionraisedinStoneconcernedtheauthorityoftheplaintiffstoexercisethefranchiseor
privilegeofissuingandsellinglotterytickets.Thisisessentiallytheissueinvolvedinthecasesatbar,
thatis,whetherPAGCORscharterincludesthefranchisetooperatejaialaifrontons.Moreover,even
assumingarguendothatthefactsinthecasesatbararenotidentical,theprinciplesoflawlaiddown
inStoneareilluminating.Forone,itwasheldinStonethat:

Experiencehasshownthatthecommonformsofgamblingarecomparativelyinnocuouswhenplaced
incontrastwiththewidespreadpestilenceoflotteries.Theformerareconfinedtoafewpersonsand
places,butthelatterinfeststhewholecommunityitenterseverydwellingitreacheseveryclassit
preysuponthehardearningsofthepooranditplunderstheignorantandsimple.xxx[38]

TheveritythatallspeciesofgamblingareperniciouspromptedtheMississippiCourttorulethatthe
legislaturecannotbargainawaypublichealthorpublicmorals.Wecantakejudicialnoticeofthefact
thatjaialaifrontonshavemushroomedineverynookandcornerofthecountry.Theyareaccessible
toeveryoneandtheyspeciallymanglethemoralsofthemarginalizedsectorofsociety.Itcannotbe
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gainsaid that there is but a miniscule of a difference between jaialai and lottery with respect to the
evilssoughttobeprevented.
InthecaseofAicardivs.Alabama,Moses&Co.wasgrantedalegislativefranchisetocarryon
gamingintheformspecifiedtherein,anditsagent,AntonioAicardi,wasindictedforkeepingagaming
table. In ascertaining whether the scope of the companys franchise included the right to keep a
gaming table, the Court there held that such an Act should be construed strictly. Every reasonable
doubtshouldbesoresolvedastolimitthepowersandrightsclaimedunderitsauthority.Implications
andintendmentsshouldhavenoplaceexceptastheyareinevitablefromthelanguageorthecontext.
Theviewexpressedinthedissentthattheaforequotedrulingwastakenoutofcontextisperched
onthepremisethatPAGCORsfranchiseiscouchedinalanguagethatisbroadenoughtocoverthe
operations of jaialai. This view begs the question for as shown in our disquisition, PAGCOR's
franchise is restricted only to the operation of gambling casinos. Aicardi supports the thesis that a
gamblingfranchiseshouldbestrictlyconstruedduetoitsilleffectsonpublicorderandmorals.
SEVENTH. The dissent also insists that the legislative intent must be sought first of all in the
languageofthestatuteitself.In applying a literal interpretation of the provision under Section 11 of
P.D. 1869 that x x x the Corporation is hereby granted x x x 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. x x x, it contends that the extent and nature of
PAGCORsfranchiseissobroadthatliterallyallkindsofsportsandgamingpools,includingjaialai,
are covered therein. It concluded that since under Section 11 of P.D. No. 1869, games of skill like
basketball and football have been lumped together with the word lotteries just before the word etc.
andafterthewordsgamingpools,itmaybededucedfromthewordingofthelawthatwhenbetsor
stakes are made in connection with the games of skill, they may be classified as games of chance
underthecoverageofPAGCORsfranchise.
We reject this simplistic reading of the law considering the social, moral and public policy
implicationsembeddedinthecasesatbar.The plain meaning rule used in the dissent rests on the
assumptionthatthereisnoambiguityorobscurityinthelanguageofthelaw.Thefact,however,that
the statute admits of different interpretations is the best evidence that the statute is vague and
ambiguous.[39] It is widely acknowledged that a statute is ambiguous when it is capable of being
understoodbyreasonablywellinformedpersonsineitheroftwoormoresenses.[40]Inthecasesat
bar,itisdifficulttoseehowaliteralreadingofthestatutorytextwouldunerringlyrevealthelegislative
intent. To be sure, the term jaialai was never used and is nowhere to be found in the law. The
conclusionthatitisincludedinthefranchisegrantedtoPAGCORcannotbebasedonamerecursory
perusalofandablindrelianceontheordinaryandplainmeaningofthestatutorytermsusedsuchas
gaming pools and lotteries. Sutherland tells us that a statute is ambiguous, and so open to
explanation by extrinsic aids, not only when its abstract meaning or the connotation of its terms is
uncertain, but also when it is uncertain in its application to, or effect upon, the factsituation of the
caseatbar.[41]
Similarly,thecontentioninthedissentthat:

xxxEveniftheCourtisfullypersuadedthatthelegislaturereallymeantandintendedsomething
differentfromwhatitenacted,andthatthefailuretoconveytherealmeaningwasduetoinadvertence
ormistakeintheuseofthelanguage,yet,ifthewordschosenbythelegislaturearenotobscureor
ambiguous,butconveyapreciseandsensiblemeaning(excludingthecaseofobviousclericalerrors
orellipticalformsofexpression),thentheCourtmusttakethelawasitfindsit,andgiveititsliteral
interpretation,withoutbeinginfluencedbytheprobablelegislativemeaninglyingatthebackofthe
words.Inthatevent,thepresumptionthatthelegislaturemeantwhatitsaid,thoughitbecontraryto
thefact,isconclusive.

cannotapplyinthecasesatbarconsideringthatithasnotbeenshownthatthefailuretoconveythe
trueintentionofthelegislatureisattributabletoinadvertenceoramistakeinthelanguageused.

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EIGHTH.Finally,thereisanotherreasonwhyPAGCOR'sclaimtoalegislativegrantofafranchise
to operate jaialai should be subjected to stricter scrutiny. The socalled legislative grant to
PAGCOR did not come from a real Congress. It came from President Marcos who assumed
legislative powers under martial law. The grant is not the result of deliberations of the duly elected
representativesofourpeople.
ThisisnottoassailPresidentMarcoslegislativepowersgrantedbyAmendmentNo.6ofthe1973
Constitution, as the dissent would put it. It is given that in the exercise of his legislative power,
President Marcos legally granted PAGCOR's franchise to operate gambling casinos. The validity of
thisfranchisetooperategamblingcasinosisnot,however,theissueinthecasesatbar.Theissueis
whetherthisfranchisetooperategamblingcasinosincludestheprivilegetooperatejaialai.PAGCOR
says it does. We hold that it does not. PAGCOR's overarching claim should be given the strictest
scrutinybecauseitwasgrantedbyonemanwhogovernedwhenthecountrywasundermartiallaw
andwhosegovernancewasrepudiatedbyourpeopleinEDSA1986.Thereasonforthissubmission
isrootedinthetruththatPAGCOR'sfranchisewasnotgrantedbyarealCongresswherethepassage
of a law requires a more rigorous process in terms of floor deliberations and voting by members of
both the House and the Senate. It is selfevident 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
representativesofourpeople,forplainlyitisnot.WenowhavearealCongressanditisbestto
letCongressresolvethisissueconsideringitspolicyramificationsonpublicorderandmorals.
Inviewofthisruling,weneednotresolvetheotherissuesraisedbypetitioners.
WHEREFORE, the petitions are GRANTED. Respondents PAGCOR, Belle Jai Alai Corporation
and Filipinas Gaming Entertainment Totalizator Corporation are ENJOINED from managing,
maintainingandoperatingjaialaigames,andfromenforcingtheagreemententeredintobythemfor
thatpurpose.
SOORDERED.
Melo,Panganiban,Pardo,Buena,GonzagaReyes,andYnaresSantiagoJJ.,concur.
Davide,Jr.,C.J.,VitugandDeLeonJr.,JJ.,seeseparateopinion.
Bellosillo,Kapunan,andQuisumbing,JJ.,jointheopinionofJ.DeLeon.
Mendoza,J.,joinintheseparateopinionofVitug,J.

[1] AnnexD,Petition,G.R.No.138298Rollo,171174.

[2] AnnexA,id.Ibid.,23.

[3] AnnexA,SupplementalPetition,G.R.No.138298Ibid.,162168.

[4] TimesBroadcastingNetworkvs.CA,etal.,274SCRA366(1997)EstateofthelateMercedesJacobvs.CA,etal.,283SCRA474
(1997).
[5] Fortich,etal.vs.Corona,etal.,289SCRA624(1998).

[6] 278SCRA154(1997).

[7] Ramosvs.CA,etal.,269SCRA34(1997).

[8] BugnayConstruction&Dev.Corp.vs.Laron,176SCRA240(1989).

[9] Pascualvs.Sec.ofPublicWorks,110Phil331(1960)Sanidadvs.Comelec,73SCRA333(1976)Kilosbayan,Inc.,etal.vs.
Morato,etal.,250SCRA130(1995).
[10] Dumlaovs.Comelec,95SCRA392(1980).

[11] Philconsavs.Mathay,18SCRA300(1966).

[12] Philconsavs.Gimenez,15SCRA479(1965)CivilLibertiesUnionvs.ExecutiveSecretary,194SCRA317(1991)Guingonavs.
Carague,196SCRA221(1991)Osmeavs.Comelec,199SCRA750(1991)Bascovs.PAGCOR,197SCRA52(1991)Carpiovs.
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ExecutiveSecretary,206SCRA290(1992).
[13] Philconsavs.Mathay,supra.

[14] The game was introduced to the country during the Spanish colonial period. The first games were played at a fronton in
NumanciaStreet,Binondo,Manila.In1917,thegamesweremovedtoalargerfrontonatthecornerofTaftAvenueandSanLuis
StreetinErmitawhereitgainedpopularity.Fromaplainsport,jaialaibecameaformofgamblingwhenthePhilippineLegislature
issuedafranchiselegalizingbettinginJune1939.ThefrontonwasthenoperatedbytheMadrigals,afamilyclosetoCommonwealth
PresidentManuelQuezon.DevastatedbyWorldWarII,thefrontonwasrebuiltin1948.DuringthetermofPresidentMarcos,thejai
alai franchise was granted to the Romualdez family.After the EDSA revolution, theAquino administration closed down jaialai.
Then,in1994,duringthetermofPresidentRamos,theAssociatedDevelopmentCorporation(ADC)revivedthegamesatanew
locationinHarrisonPlaza,Manila.However,afteronlyafewmonthsofoperation,thisCourtruledthatacongressionalfranchisewas
requiredforthegames.
[15] CityofOaklandvs.Hogan,106P.2d987,994,41Cal.App.2d333.

[16] CentralPac.R.Co.vs.PeopleofStateofCalifornia,16S.Ct.766,778,162U.S.91,40LEd.903Hamillvs.Hawks,C.C.A.Okl.,
58F.2d41,44.
[17] Peopleexrel.Foleyvs.Begole,56P.2d931,933,98Colo.354.

[18] CityofHelenavs.HelenaLightandR.Co.,207O.337,63Mont.108.

[19] Beekmanvs.ThirdAve.R.Co.,47N.E.277,153N.Y.144.

[20] Section1ofP.D.No.1067A.

[21] Seethirdwhereasclause.

[22] Seesection3(2)ofP.D.No.1067A.

[23] Seesection5ofP.D.No.1067A.

[24] Seesection3ofP.D.No.1067C.

[25] Seesection4ofP.D.No.1067B.

[26] Seesection5,par.1ofP.D.No.1067B.

[27] Seesection1ofP.D.No.1632.

[28] Seesection2ofP.D.No.1632.

[29] SeeDissentingOpinioninLimv.Pacquing,etal.,240SCRA649(1995),pp.720and729.

[30] BlackonInterpretationofLaws,2 nded.,pp.504506.

[31] NebbiavNewYork,291U.S.502.

[32] Bernas,The1987ConstitutionoftheRepublicofthePhilippines,ACommentary,1996ed.,p.1053.

[33] PeoplevChicago,103N.E.609SlaughtervOBerry,35S.E.241,48L.R.A.442.

[34] StonevMississippi,101U.S.814.

[35] SutherlandStatutoryConstruction,Vol.3,5 thed.,p.244.

[36] AicardivAlabama,22L.Ed.215WestIndies,Inc.vFirstNationalBank,214P.2d144.

[37] 101U.S.1079.

[38] Ibid.atp.1080.

[39] MarathonLeTourneauCo.,MarineDivisionv.NationalLaborRelationsBoard,414F.Supp1074(1976).

[40] Wisconsin Dept. of Revenue v. NagleHart, Inc., 234 NW2d 350 (1975) Allen v. Juneau County Forest Withdrawal Appeal
ReviewCommittee,295NW2d218(1980)KimberlyClarkCorp.v.PublicServiceCommission,320NW2d5(1982).
[41] SutherlandStatutoryConstruction,Vol.2A,5 thed.,1992Revision,p.713.

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