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 PAGCOR’s 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 PAGCOR’s 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 jai-alai.
o Section 1 of PD 1067-B provides the nature and term of PAGCOR’s franchise to maintain
gambling casinos (not a franchise to operate jai-alai);
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 jai-alai);
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. PAGCOR’s 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, PAGCOR’s 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.