G.R. No.

115044 September 1, 1994

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila;

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

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

Cayanga, Zuñiga & Angel for private respondent.

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of

Court to set aside the Orders dated March 28, 1994, April 11, 1994
and April 20, 1994 of Judge Felipe G. Pacquing, presiding judge of
the Regional Trial Court, Branch 40, Manila, issued in Civil Case No.
88-45660. chanroblesvirtualawlibrary chanrobles virtual law library

The Order dated March 28, 1994 granted the motion of private
respondent to compel petitioner Mayor Alfredo S. Lim to issue a
permit or license in favor of private respondent pursuant to
Ordinance No. 7065 upon compliance by private respondent with all
the requirements set thereunder. chanroblesvirtualawlibrary chanrobles virtual law library

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

The Order dated April 20, 1994 reiterated the order of March 28,
1994, directing Mayor Lim to immediately issue to private
respondent the necessary permit or license pursuant to Ordinance
No. 7065.

I chanrobles virtual law library

On September 7, 1971, the Municipal Board of Manila passed

Ordinance No. 7065 pursuant to Section 18(jj) of the Revised
Charter of Manila, granting private respondent a franchise to
operate a jai-alai in the city. The ordinance is reproduced as
follows;

AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW AND PERMIT

THE ASSOCIATED DEVELOPMENT CORPORATION TO ESTABLISH,
MAINTAIN AND OPERATE A JAI-ALAI IN THE CITY OF MANILA,
UNDER CERTAIN TERMS AND CONDITIONS AND FOR OTHER
PURPOSES. chanroblesvirtualawlibrary chanrobles virtual law library

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

Sec. 1. The Mayor is authorized, as he is hereby authorized to allow

and permit the Associated Development Corporation to establish,
maintain and operate a jai-alai in the City of Manila, under the
following terms and conditions and such other terms and conditions
as he (the Mayor) may prescribe for good reasons of general
interest: chanrobles virtual law library

a. That the construction, establishment and maintenance of the jai-

alai shall be at a place permissible under existing zoning ordinance
of Manila; chanrobles virtual law library

b. That the games to be played daily shall commence not earlier

than 5:00 in the afternoon; chanrobles virtual law library

c. That the City of Manila will receive a share of 2 1/2% on the

annual gross receipts on all wagers or bets, 1/2% of which will
accrue to the Games and Amusement Board as now provided by
law; chanrobles virtual law library

d. That the corporation will, in addition, pay to the city an annual

license fee of P3,000.00 and a daily permit fee of P200.00; chanrobles virtual law library

e. That the corporation will, to insure its faithful compliance of all

the terms and conditions under this ordinance, put up a
performance bond from a surety acceptable to the city, in the
amount of at least P30,000.00. chanroblesvirtualawlibrary chanrobles virtual law library

  chanrobles virtual law library

Sec. 2. The Mayor and the City Treasurer or their duly authorized
representatives are hereby empowered to inspect at all times during
regular business hours the books, records and accounts of the
establishment, as well as to prescribe the manner in which the
books and financial statements of the entrepreneur shall be kept.
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Sec. 3. This ordinance shall take effect upon its approval. chanroblesvirtualawlibrary chanrobles virtual law library

Enacted originally by the Municipal Board on September 7, 1971;

vetoed by the Mayor on September 27, 1971; modified and
amended by the Municipal Board at its regular session today,
October 12, 1971. chanroblesvirtualawlibrary chanrobles virtual law library

Approved by His Honor, the Mayor, on 13 November 1971.

Thereafter, private respondent took steps preparatory to the

establishment of the jai-alai at Ermita, Manila. Private respondent
retained the services of an architectural firm from Hongkong to
design the fronton and contracted with a local firm for the
construction of the building. chanroblesvirtualawlibrary chanrobles virtual law library

On August 20, 1975, after the declaration of Martial Law, President

Ferdinand E. Marcos promulgated Presidential Decree No. 771
revoking the powers of the local government to grant permits or
licenses and canceling all existing franchises to operate jai-alais. chanroblesvirtualawlibrary chanrobles virtual law library

Less than two months after P.D. No. 771 was issued, the Philippine
Jai-Alai and Amusement Corporation, an enterprise controlled by
Alfredo Romualdez, a brother-in-law of President Marcos, was
granted a franchise to operate a jai-alai within the Greater Manila
Area under P.D. No. 810. chanroblesvirtualawlibrary chanrobles virtual law library

However, after the EDSA Resolution, President Corazon C. Aquino

issued Executive Order No. 169, repealing P.D. No. 810. chanroblesvirtualawlibrary chanrobles virtual law library

On May 5, 1988, private respondent sought the resumption of its

business operations under its franchise issued under Ordinance No.
7065. Mayor Gemiliano C. Lopez denied private respondent's
request, as well as its motion for reconsideration. chanroblesvirtualawlibrary chanrobles virtual law library
On August 2, 1988, private respondent filed a petition
for mandamus and specific performance with the Regional Trial
Court, Branch 40, Manila, docketed as Civil Case No. 88-45660. chanroblesvirtualawlibrary chanrobles virtual law library

In a decision dated September 9, 1989, Judge Augusto E. Villarin of

Branch 40 held that Ordinance No. 7065 created a binding contract
between the City of Manila and private respondent and that the City
Mayor had no discretion but "to grant the necessary permit or
license allowing it to operate and maintain a jai-alai in the City of
Manila pursuant to Ordinance No. 7065." chanrobles virtual law library

The trial court noted:

A careful reading, however, of Ordinance No. 7065 will readily show

that the discretion, if any, allowed respondent Mayor, under the
Ordinance, will be exercisable only after the permit, which he is
mandated to issue, has been issued and the jai-alai fronton is
already operational. The Ordinance stipulates that the Mayor is
authorized "to allow and permit petitioner to establish, maintain and
operate a jai-alai in the City of
Manila ," under the five conditions enumerated in subparagraphs "a"
to "e" of Section 1 of the Ordinance. But a simple reading of these
"terms and conditions" patently shows that subparagraphs "b" to
"e" are clearly conditions that will only come into play after the jai-
alai fronton has been put up or established; while the condition
under sub-paragraph "a" appears to have been complied with
satisfactorily by the petitioner, since no objection at all has been
made by respondents to the proposed site for the jai-alai fronton,
that is, the 25,000 sq. m. land area behind the present Harrison
Plaza Complex located at Ermita, Manila. chanroblesvirtualawlibrary chanrobles virtual law library

It is therefore, quite evident to this Court that no discretion is left to

the respondent Mayor to allow or not petitioner "to establish,
maintain and operate a jai-alai in the City of Manila." The Court is
satisfied that the requirements of Sec. 3, Rule 65, have been
met.chanroblesvirtualawlibrary chanrobles virtual law library

Moreover, it is well-settled that the grant of a franchise, when

accepted and acted upon by the grantee, creates a contract. And,
going by contract law, under the undisputed circumstances in this
case, respondent Mayor, in behalf of the City, is obliged to comply
with what is required of him under the Ordinance. At the very least,
the enactment and approval of Ordinance No. 7065 on November
13, 1971, created a bilateral contract between petitioner and
respondents. Petitioner has commenced the performance of its
obligation under the contract, but was prevented by events over
which it has no control from completely fulfilling what was called for
on its part to establish, operate and maintain a jai-alai in the City of
Manila (Rollo, pp. 39-40).

The trial court disposed as follows;

WHEREFORE, the petitioner is GRANTED and respondent City of

Manila, is ordered to immediately issue to petitioner, the
permit/license required under Ordinance No. 7065 (Rollo, p. 40).

Mayor Lopez appealed said decision to the Court of Appeals (CA

G.R. No. 16477 SP) but on February 9, 1989, he filed a Notice of
Withdrawal of Appeal. chanroblesvirtualawlibrary chanrobles virtual law library

On May 5, 1989, the Court of Appeals promulgated a resolution, the

dispositive part of which reads as follows:

For the reasons stated in the NOTICE OF WITHDRAWAL OF APPEAL

which was filed on February 9, 1989 by respondents appellants thru
counsel let their appeal from the Decision dated September 9, 1989
and Order dated August 25, 1988, of the Regional Trial Court of
Manila in Civil Case No. 88-45660 be as it is hereby considered
WITHDRAWN (Rollo, p. 126).

With the withdrawal of the appeal, the judgment in Civil Case No.
45560 became final and executory and was entered in the Book of
Entries of Judgment of the Court of Appeals on May 26, 1989 and in
the Book of Entries of Judgment of the Regional Trial Court on
October 27, 1992. chanroblesvirtualawlibrary chanrobles virtual law library

In 1991, the City of Manila filed an action to annul the franchise of

private respondent with the Regional Trial Court, Branch 23, Manila,
docketed as Civil Case No. 91-58913. chanroblesvirtualawlibrary chanrobles virtual law library
In said complaint, the City of Manila claimed that private respondent
had abandoned its franchise granted under Ordinance No. 7065 and
that said ordinance had been repealed by P.D. Nos. 771 and 810.
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Judge William Bayhon of Branch 23 noted that the issue of

abandonment was squarely raised and resolved in Civil Case No. 88-
45660, while the issue of the repeal of Ordinance No. 7065 could
have been pleaded but was not by the City of Manila as a defense in
Civil Case No. 88-45660. According to him, the city had waived such
a defense. To make matters worse, the city was in estoppel to raise
said issue since it had been issuing permits pursuant to the decision
in Civil Case No. 88-45660 and collecting the corresponding fees.
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Civil Case No. 91-58913, questioning the effectivity of the franchise

granted private respondent under Ordinance No. 7065, was
therefore dismissed on December 21, 1991. No appeal was taken
from said dismissal of the case.chanroblesvirtualawlibrary chanrobles virtual law library

The City of Manila filed with this Court another case for declaratory
judgment to nullify the franchise to operate a jai-alai under
Ordinance No. 7065 (G.R. No. 101768). The petition was dismissed
in a resolution dated October 3, 1991 "for lack of jurisdiction." chanrobles virtual law library

It may be of interest to note that three Manila councilors also filed

an action to compel Mayor Lopez to cancel the permit and license he
issued in favor of private petitioner pursuant to Ordinance No. 7065
(Maceda v. Lopez, Civil Case No. 91-58930, Regional Trial Court,
Branch 37, Manila). In his answer to said petition, Mayor Lopez
pointed out that in issuing the permit and license, he was just acting
in obedience to the final judgment in Civil Case No. 88-45660. chanroblesvirtualawlibrary chanrobles virtual law library

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

following observations:

The license was issued by Mayor Lopez in obedience to a final order

of a court of justice. For him to refuse to issue the license would
place him in danger of being cited in contempt of court. And for him
now to revoke or cancel such license or permit definitely would
place a greater risk and danger of being cited in contempt of court?
(Rollo, p. 184).
 II chanrobles virtual law library

As a preliminary issue, private respondent urged the dismissal of

the petition on the grounds that it was in violation of Circular No.
28-91, prohibiting forum shopping, and Revised Circular No. 1-88,
requiring the inclusion in the petition of a verified statement of the
dates when notice of the judgment, order or resolution subject
thereof, was received, when a motion for reconsideration, if any,
was filed, and when the notice of the denial thereof was received.
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Private respondent averred that the certification submitted by

petitioners did not disclose (1) that the trial court had rendered a
decision in Civil Case No. 88- 45660 on September 9, 1988 holding
that Ordinance No. 7065 was in full force and effect; (2) that said
decision had become final and executory after the petitioners
withdrew their appeal therefrom; (3) that petitioners had also filed
Civil Case No. 91-58913, questioning the effectivity of Ordinance
No. 7065, which was dismissed. Likewise, they alleged that the
affidavit did not state the material dates necessary for the Court to
determine the timelines of the filing of the petition (Rollo, pp. 108-
110). chanroblesvirtualawlibrary chanrobles virtual law library

The certification submitted in compliance with Circular No. 28-91

stated that the petitioner in said petition "has not commenced a
similar action in any court or administrative body against said
respondents nor is there any pending cases of the same nature and
parties in any court or administrative body." Rightly, there was no
case filed nor was there any case pending wherein the question of
whether the decision in Civil Case No. 88-45660 can be executed by
motion is raised. chanroblesvirtualawlibrary chanrobles virtual law library

The affidavit on the material dates submitted by petitioners attested

to the dates when petitioners received the three orders of
respondent judge being questioned in the petition for certiorari.
These are the dates material for reckoning the timelines of the filing
of the petition to nullify said orders. As far as the issue of the
proper mode for executing the decision is concerned, the dates
given in the affidavit are sufficient for the Court to determine
whether the petition was filed within a reasonable time
contemplated in Rule 65. chanroblesvirtualawlibrary chanrobles virtual law library
There is, therefore, no violation of Circular No. 28-91 and Revised
Circular No. 1-88 to speak of. chanroblesvirtualawlibrary chanrobles virtual law library

On their part, petitioners alleged that the decision in Civil Case No.
88-45660, which is being implemented by the three orders in
question, is null and void for want of jurisdiction of the trial court
that rendered it. They posited their claim on the theory that
Ordinance No. 7065 had been canceled by P.D. No. 771 in 1975 and
that the trial court had traduced the law when it made it appear in
its decision that Ordinance No. 7065 was still in full force and effect
(Rollo, pp. 10-13). chanroblesvirtualawlibrary chanrobles virtual law library

Petitioners failed to appreciate the distinction between a void and an

erroneous judgment and between jurisdiction and the exercise of
jurisdiction.
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Jurisdiction should be distinguished from the exercise thereof

(Lamagan v. De La Cruz, 40 SCRA 101 [1971]). The authority to
decide a case at all and not the decision rendered therein, is what
makes up jurisdiction. The fact that the decision is erroneous does
not divest the court that rendered it of the jurisdiction conferred by
law to try the case (Quiason, Philippine Courts and their
Jurisdictions, p. 199 [1993 ed.]). chanroblesvirtualawlibrary chanrobles virtual law library

Since jurisdiction is the power to hear and determine a particular

case, or the jurisdiction over the subject matter, it does not depend
upon the regularity of the exercise by the court of its power
(Century Insurance Co. v. Fuentes, 2 SCRA 1168 [1961]). chanroblesvirtualawlibrary chanrobles virtual law library

In the case at bench, there is no question that the Regional Trial

Court has the competence to hear and decide Civil Case No. 88-
45660, a special civil action for mandamus under Rule 65 of the
Revised Rules of Court. There is also no quarrel that said court has
jurisdiction over an action for specific performance under Section
19(1) of the Judiciary Reorganization Act of 1990 (Lapitan v.
Scandia, 24 SCRA 479 [1968]). Assuming arguendo  that the
Regional Trial Court did not have jurisdiction over the said civil case,
the principle of estoppel will operate to bar petitioners from raising
the question of jurisdiction for the first time in the instant case
(Tijam v. Sibonghanay, 23 SCRA 29 [1968]). chanroblesvirtualawlibrary chanrobles virtual law library
Having jurisdiction over the civil case, whatever error may be
attributed to the trial court, is simply one of judgment, not of
jurisdiction. An error of judgment cannot be corrected
by certiorari but by appeal (Robles v. House of Representatives
Electoral Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta Motor
Sales Corporation, 57 SCRA 344 [1978]; Galang v. Endencia, 73
Phil. 391 [1941]). In fact, Mayor Lopez availed of such a remedy
when he appealed the decision in Civil Case No. 88-45660 to the
Court of Appeals (CA G.R. No. 16477-SP). chanroblesvirtualawlibrary chanrobles virtual law library

The issue on the cancellation of Ordinance No. 7065 by President

Marcos could have been raised as a special defense in Civil Case No.
88-54660 but was not. The Revised Rules of Court frown at the
piecemeal presentation of issues, and jurisprudence bars from
subsequent litigation between the same parties matters that could
have been raised in a previous case (Revised Rules of Court, Rule
39, Sec. 49[b]; Gonzales v. Gonzales, 26 SCRA 72 [1968]).   chanroblesvirtualawlibrary chanrobles virtual law library

The City of Manila should have pursued in the appellate courts its
appeal questioning the dismissal of Civil Case No. 91-58913, where
the trial court ruled that Mayor Lopez and the city could no longer
claim that Ordinance No. 7065 had been canceled by President
Marcos because they failed to raise this issue in Civil Case No 88-
54660.   chanroblesvirtualawlibrary chanrobles virtual law library

At any rate, the unilateral cancellation of the franchise, which has

the status of a contract, without notice, hearing and justifiable
cause is intolerable in any system where the Rule of Law prevails
(Poses v. Toledo Transportation Co., 62 Phil. 297 [1935]); Manila
Electric Co., v. Public Utility commissioners, 30 Phil. 387 [1915]).
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As a fall-back, petitioners claimed that assuming arguendo  that the

judgment in Civil Case No. 88-45660 dated September 9, 1986 is
valid, its execution by mere motion on March 11, 1994 is irregular.
Citing Section 6 of Rule 39 of the Revised Rules of Court, they
contended that the decision must be enforced by action, not motion
(Rollo, pp. 13-14). chanroblesvirtualawlibrary chanrobles virtual law library

Petitioners erroneously counted the five-year period under Section 6

of Rule 39 from the date of the decision. Said Rule provides:
Execution by Motion or by Independent Action. A judgment may be
executed on motion within five (5) years from the date of its entry
or from the date it becomes final and executory. After the lapse of
such time and before it is barred by the statute of limitations, a
judgment may be enforced by action.

It must be remembered that Mayor Lopez appealed the decision in

Civil Case No. 88-45660 to the Court of Appeals, that he filed the
motion to withdraw the appeal on February 9, 1989, and that the
Court of Appeals approved the withdrawal of the appeals only on
May 5, 1989. The entries of judgment were made on May 26, 1989
in the Court of Appeals, and on October 27, 1992 in the Regional
Trial Court. The motion to compel the City Mayor to issue the permit
or license pursuant to Ordinance No. 7065, was filed on March 14,
1994, or well within the five-year period whether such period is
counted from May 5, 1989, May 26, 1989 or October 27, 1992. chanroblesvirtualawlibrary chanrobles virtual law library

Petitioners hypothesized that the withdrawal of an appeal operates

as if no appeal was taken at all and that the five-year period should
be counted from January 24, 1989, the fifteenth day from the
service of a copy of the decision on Mayor Lopez. Petitioners
anchored their theory on Section 9, Rule 40 and Section 2, Rule 50
of the Revised Rules of Court (Rollo, pp. 15-16). chanroblesvirtualawlibrary chanrobles virtual law library

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

Sec. 9 of Rule 40, in pertinent part, provides:

. . . If the appeal is withdrawn, or dismissed for failure to prosecute,

the judgment shall be deemed revived and shall forthwith be
remanded to the justice of the peace or municipal court for
execution.

Rule 40 governed the procedure for appeals from the inferior courts
to the Court of First Instance before they became courts of record.
A provision on the revival of the judgment was necessary because
at those times the decisions appealed from were automatically
vacated and trials de novo had to be conducted by the Court of First
Instance.chanroblesvirtualawlibrary chanrobles virtual law library
Sec. 2 of Rule 50, which governs the dismissal of an appeal by the
Court of Appeals, in pertinent part, provides:

Upon the receipt of such certification [of the Clerk of Court that the
appeal has been dismissed] in the lower court the case shall stand
there as though no appeal had ever been taken, and the judgment
of the said court may be enforced with the additional costs allowed
by the appellate court upon dismissing the appeal.

The phrase "the case shall stand there as if no appeal has been
taken" refers to the manner of how the judgment may be enforced
as can be gleaned from the phrase following it that "the judgment of
said court may be enforced with the additional costs allowed by the
appellate court . . ." In other words, the judgment shall be executed
in accordance with its original disposition, no modifications thereof
having been ordered by the Court of Appeals. chanroblesvirtualawlibrary chanrobles virtual law library

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

Mayor Lim's vow to clean the city of vices, like gambling, is

commendable. But in the process, he should bear in mind that there
are forms of gambling, and jai-alai is one them, that Congress has
deigned to allow. chanroblesvirtualawlibrary chanrobles virtual law library

The pronouncement of Justice Isagani A. Cruz in Mayor Pablo

Magtales v. Pryce Properties Corporation, G.R. No. 111097. July 20,
1994, apropos  the operation of a gambling casino in Cagayan de
Oro by the Philippine Amusement and Games Inc., is cogent to the
instant case, thus:

The morality of gambling is not a justiciable issue. Gambling is not

illegal perse. While it is generally considered inimical to the interests
of the people, there is nothing in the Constitution categorically
proscribing or penalizing gambling or, for that matter, even
mentioning it at all. It is left to Congress to deal with the activity as
it sees fit. In the exercise of its own discretion, the legislature may
prohibit gambling altogether or allow it without limitation or it may
prohibit some forms of gambling and allow others for whatever
reasons it may consider sufficient. Thus, it has
prohibited jueteng and monte but permits lotteries, cockfighting and
horse-racing. In making such choices, Congress has consulted its
own wisdom, which this Court has no authority to review, much less
reverse. Well has it been said that courts do not sit to resolve the
merits of conflicting theories. (Garcia v. Executive Secretary, 204
SCRA 516, quoting Cooley, Constitutional Limitations, 8th ed., 379-
380) That is the prerogative of the political departments. It is
settled that questions regarding the wisdom, morality, or
practicability of statutes are not addressed to the judiciary but may
be resolved only by the legislative and executive departments, to
which the function belongs in our scheme of government (Decision,
p. 8).

It was Mayor Lopez himself who assessed the benefits that will
accrue to the city with the operation of the jai-alai. Explaining his
motion to withdraw the appeal from the decision in Civil Case No.
88-45660, he said:

The beneficient effects to the appellant City of Manila, especially

during this critical period in our national economy, are manifold and
undeniable. The franchise operation shall be a great boost toward
generating much needed revenues for the City coffers estimated at
P100,000.00 a day by way of franchise fees alone, not to mention
other municipal taxes and regulatory fees. Millions of pesos in real
estate taxes on the improvements would be realizable. Employment
opportunities to little less than five hundred people in the main
building and hundreds of others in the off track fronton shall also be
created. These is also the fact that the jai-alai building, together
with all the equipment therein, with an aggregate estimated cost of
P100 million shall belong to the city upon termination of the
franchise terms (Rollo, p. 127).

Considerations of equity and fair play militate against the

petition.
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The Office of the Mayor of the City of Manila issued on January 19,
1990, January 21, 1991 and May 25, 1992 business permits in favor
of private respondent to operate a jai-alai fronton and collected the
corresponding license and regulatory fees (Rollo, pp. 151-153; 175-
177; 178-198). Private respondent has spent close to
P100,000,000.00 to finish the construction of the jai-alai building
and fronton. chanroblesvirtualawlibrary chanrobles virtual law library

The petition was brought under "Rule 42, Section 1 in relation to

R.A. No. 5440, to declare null and void ab initio  for want of
jurisdiction, the Decision and Orders dated March 28, 1994, April
11, 1994 and April 20, 1994 issued in Civil Case No. 88-45660 of
the Regional Trial Court of Manila, Branch 40" (Rollo, p. 2). chanroblesvirtualawlibrary chanrobles virtual law library

Said Rule and law refer to appeals to the Supreme Court from the
decisions of the Regional Trial Court. Clearly, they do not involved
the review of orders of the Regional Trial Court rendered after the
decision of the trial court has become final and executory. Such a
review must be taken under
Rule 65, which can be given due course only when there is a
showing of lack or excess of jurisdiction or grave abuse of discretion
on the part of the trial court (Revised Rules of Court, Rule 67,
Section 1; Planter's Products v. Court of Appeals, 193 SCRA 563
[1991]). We find no abuse of discretion, much less lack of or excess
of jurisdiction, on the part of respondent judge. chanroblesvirtualawlibrary chanrobles virtual law library

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

SO ORDERED.

Bellosillo, and Kapunan, JJ. concur. chanroblesvirtualawlibrary chanrobles virtual law library

Cruz, J., is on leave.

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Separate Opinions

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

I concur in the result. I wish, however, to express my view on the

matter of the constitutionality of P.D. No. 771 and on the alleged
waiver of the defense of repeal of the ordinance by P.D. No. 771.
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Ordinance No. 7065 of the City of Manila was enacted on 7
September 1971 pursuant to Section 18(jj) of the Revised Charter
of Manila. It authorized the City Mayor "to allow and permit the
Associated Development Corporation to establish, maintain and
operate a jai alai in the City of Manila" under the terms and
conditions therein provided and "such other terms and conditions as
he (the Mayor) may prescribe for good reasons of general interest."
The Ordinance was vetoed by the Mayor on 27 September 1971; it
was later modified and amended by the Municipal Board on 12
October 1971. The amended ordinance was approved by the Mayor
on 13 November 1971. chanroblesvirtualawlibrary chanrobles virtual law library

On 20 August 1975, then President Ferdinand E. Marcos enacted

P.D. No. 771 "revoking all powers and authority of local government
to grant franchise, license or permit and regulate wagers or betting
by the public on horse and dog races, jai alai or basque pelota, and
other forms of gambling." Sections 1 and 3 thereof expressly
provide:

Sec. 1. Any provision of law to the contrary notwithstanding, the

authority of chartered cities and other local governments to issue
license, permit or any form of franchise to operate, maintain and
establish horse and dog race tracks, jai-alai or other forms of
gambling is hereby revoked. chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

Sec. 3. All existing franchises and permits issued by local

government are hereby revoked and may be renewed only in
accordance with the Decree."

On 5 May 1988, the Associated Development Corporation herein

private respondent, sought to enforce its rights under Ordinance No.
7065, but then Mayor Gemeliano C. Lopez denied its request.
Having failed in its motion to reconsider the denial, the private
respondent filed with the Regional Trial Court (RTC) of Manila a
petition for mandamus and specific performance, which was
docketed as Civil Case No. 88-45660 and assigned to Branch 40
thereof.
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In its decision rendered on 9 September 1989 in the aforesaid civil
case, the trial court held that Ordinance No. 7065 created a binding
contract between the City of Manila and the private respondent and
that the City Mayor has no discretion but "to grant the necessary
permit or license allowing it to operate and maintain a jai-alai in the
City of Manila pursuant to Ordinance No. 7065." It then ordered the
City of Manila to immediately issue to the private respondent the
permit/license required under Ordinance No. 7065. chanroblesvirtualawlibrary chanrobles virtual law library

The appeal from the aforesaid decision to the Court of Appeals (CA-
G.R. No. 16477 SP) having been withdrawn, the Court of Appeals
issued its Resolution of 5 May 1989 considering the appeal as
withdrawn. chanroblesvirtualawlibrary chanrobles virtual law library

In 1991, the City of Manila instituted Civil Case No. 91-58913 in the
RTC of Manila to annul the franchise granted to the private
respondent on the grounds that the latter had abandoned its
franchise under Ordinance No. 7065 and that P.D. Nos. 771 and 810
had repealed said Ordinance No. 7065. The court (per Judge Wiliam
Bayhon, Branch 23) dismissed the case because the issue of
abandonment was squarely raised and resolved in Civil Case
No. 88-45660, while the issue of repeal was not raised or pleaded
therein as a defense, hence the City was in estoppel to raise it
considering further that it has been issuing permits pursuant to the
decision in said Civil Case No. 88-45660 and collecting the
corresponding fees. The City of Manila did not appeal from the
dismissal order. chanroblesvirtualawlibrary chanrobles virtual law library

  chanrobles virtual law library

On 28 March 1994, the RTC issued an order in Civil Case No. 88-
45660 granting the private respondent's motion to compel
petitioner Mayor Lim to issue a permit or license pursuant to
Ordinance No. 7065 upon compliance by the private respondent
with all the requirements prescribed therein. A motion to reconsider
the order was denied in the Order of 11 April 1994. On 20 April
1994, the court reiterated the Order of 28 March 1994 and directed
Mayor Lim to immediately issue to the private respondent the
necessary permit or license pursuant to Ordinance No. 7065. chanroblesvirtualawlibrary chanrobles virtual law library
Hence this petition. chanroblesvirtualawlibrary chanrobles virtual law library

I. There can be no question that, as written, Sections 1 and 3 of

P.D. No. 771 revoked the authority of chartered cities and other
local governments to issue a license, permit, or any other form of
franchise to operate, establish and maintain jai alai, etc., as well as
all existing franchise and permits issued by local governments.
Indisputably, the decree affected the Charter of the City of Manila
(R.A. No. 409, as amended). It repealed, more specifically,
paragraph (jj) of Section 18 of the said Charter on the authority of
the City of Manila to grant exclusive rights to establish, inter alia, jai
alai, which is the published in the 15 September 1975 issue of the
Official Gazette (71 O.G. No. 37, p. 5946). I agree that insofar as
Ordinance No. 7065 and the franchise granted therein are
concerned, P.D. No. 771 cannot validly revoke them; otherwise, and
to that extent, the decree would be unconstitutional under the non-
impairment of contract clause (Section 10, Article III, 1987
Constitution). The franchise is a contract solemnly entered into
between the City of Manila and the private respondent. In all other
respects, however, the said decree is valid and binding. chanroblesvirtualawlibrary chanrobles virtual law library

II. The failure of the City of Manila to plead as a defense the repeal
of the ordinance by P.D. No. 771 is not fatal. In the first place, the
trial court should have taken judicial notice of P.D. No. 771. Under
Section 1, Rule 129 of the Rules of Court, courts are mandatorily
required to take judicial notice of, among other things, "the official
acts of the legislative, executive and judicial departments of the
Philippines." Besides, even granting for the sake of argument that
P.D. No. 771 validly repealed Ordinance No. 7065, such repeal could
have only meant lack of cause of action  on the part of the private
respondent in the action for mandamus to enforce the ordinance.
Failure to set up the defense of lack of cause of action in a motion
to dismiss or in the answer is not a waiver thereof. Section 2, Rule 9
of the Rules of Court provides that :

Defenses and objections not pleaded either in a motion to dismiss or

in the answer are deemed waived; except the failure to state a
cause of action which may be alleged in a later pleading, if one is
permitted, or by a motion for judgment on the pleadings, or at the
trial on the merits; but in the last instance, the motion shall be
disposed of as provided in Section 5 of Rule 10 in the light of any
evidence which may have been received. Whenever it appears that
the court has no jurisdiction over the subject matter, it shall dismiss
the action. (italics supplied)

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

Separate Opinions

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

I concur in the result. I wish, however, to express my view on the

matter of the constitutionality of P.D. No. 771 and on the alleged
waiver of the defense of repeal of the ordinance by P.D. No. 771.
law library
chanroblesvirtualawlibrary chanrobles virtual

Ordinance No. 7065 of the City of Manila was enacted on 7

September 1971 pursuant to Section 18(jj) of the Revised Charter
of Manila. It authorized the City Mayor "to allow and permit the
Associated Development Corporation to establish, maintain and
operate a jai alai in the City of Manila" under the terms and
conditions therein provided and "such other terms and conditions as
he (the Mayor) may prescribe for good reasons of general interest."
The Ordinance was vetoed by the Mayor on 27 September 1971; it
was later modified and amended by the Municipal Board on 12
October 1971. The amended ordinance was approved by the Mayor
on 13 November 1971. chanroblesvirtualawlibrary chanrobles virtual law library

On 20 August 1975, then President Ferdinand E. Marcos enacted

P.D. No. 771 "revoking all powers and authority of local government
to grant franchise, license or permit and regulate wagers or betting
by the public on horse and dog races, jai alai or basque pelota, and
other forms of gambling." Sections 1 and 3 thereof expressly
provide:

Sec. 1. Any provision of law to the contrary notwithstanding, the

authority of chartered cities and other local governments to issue
license, permit or any form of franchise to operate, maintain and
establish horse and dog race tracks, jai-alai or other forms of
gambling is hereby revoked. chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

Sec. 3. All existing franchises and permits issued by local

government are hereby revoked and may be renewed only in
accordance with the Decree."

On 5 May 1988, the Associated Development Corporation herein

private respondent, sought to enforce its rights under Ordinance No.
7065, but then Mayor Gemeliano C. Lopez denied its request.
Having failed in its motion to reconsider the denial, the private
respondent filed with the Regional Trial Court (RTC) of Manila a
petition for mandamus and specific performance, which was
docketed as Civil Case No. 88-45660 and assigned to Branch 40
thereof.chanroblesvirtualawlibrary chanrobles virtual law library

In its decision rendered on 9 September 1989 in the aforesaid civil

case, the trial court held that Ordinance No. 7065 created a binding
contract between the City of Manila and the private respondent and
that the City Mayor has no discretion but "to grant the necessary
permit or license allowing it to operate and maintain a jai-alai in the
City of Manila pursuant to Ordinance No. 7065." It then ordered the
City of Manila to immediately issue to the private respondent the
permit/license required under Ordinance No. 7065. chanroblesvirtualawlibrary chanrobles virtual law library

The appeal from the aforesaid decision to the Court of Appeals (CA-
G.R. No. 16477 SP) having been withdrawn, the Court of Appeals
issued its Resolution of 5 May 1989 considering the appeal as
withdrawn. chanroblesvirtualawlibrary chanrobles virtual law library

In 1991, the City of Manila instituted Civil Case No. 91-58913 in the
RTC of Manila to annul the franchise granted to the private
respondent on the grounds that the latter had abandoned its
franchise under Ordinance No. 7065 and that P.D. Nos. 771 and 810
had repealed said Ordinance No. 7065. The court (per Judge Wiliam
Bayhon, Branch 23) dismissed the case because the issue of
abandonment was squarely raised and resolved in Civil Case
No. 88-45660, while the issue of repeal was not raised or pleaded
therein as a defense, hence the City was in estoppel to raise it
considering further that it has been issuing permits pursuant to the
decision in said Civil Case No. 88-45660 and collecting the
corresponding fees. The City of Manila did not appeal from the
dismissal order. chanroblesvirtualawlibrary chanrobles virtual law library

  chanrobles virtual law library

On 28 March 1994, the RTC issued an order in Civil Case No. 88-
45660 granting the private respondent's motion to compel
petitioner Mayor Lim to issue a permit or license pursuant to
Ordinance No. 7065 upon compliance by the private respondent
with all the requirements prescribed therein. A motion to reconsider
the order was denied in the Order of 11 April 1994. On 20 April
1994, the court reiterated the Order of 28 March 1994 and directed
Mayor Lim to immediately issue to the private respondent the
necessary permit or license pursuant to Ordinance No. 7065. chanroblesvirtualawlibrary chanrobles virtual law library

Hence this petition. chanroblesvirtualawlibrary chanrobles virtual law library

I. There can be no question that, as written, Sections 1 and 3 of

P.D. No. 771 revoked the authority of chartered cities and other
local governments to issue a license, permit, or any other form of
franchise to operate, establish and maintain jai alai, etc., as well as
all existing franchise and permits issued by local governments.
Indisputably, the decree affected the Charter of the City of Manila
(R.A. No. 409, as amended). It repealed, more specifically,
paragraph (jj) of Section 18 of the said Charter on the authority of
the City of Manila to grant exclusive rights to establish, inter alia, jai
alai, which is the published in the 15 September 1975 issue of the
Official Gazette (71 O.G. No. 37, p. 5946). I agree that insofar as
Ordinance No. 7065 and the franchise granted therein are
concerned, P.D. No. 771 cannot validly revoke them; otherwise, and
to that extent, the decree would be unconstitutional under the non-
impairment of contract clause (Section 10, Article III, 1987
Constitution). The franchise is a contract solemnly entered into
between the City of Manila and the private respondent. In all other
respects, however, the said decree is valid and binding. chanroblesvirtualawlibrary chanrobles virtual law library
II. The failure of the City of Manila to plead as a defense the repeal
of the ordinance by P.D. No. 771 is not fatal. In the first place, the
trial court should have taken judicial notice of P.D. No. 771. Under
Section 1, Rule 129 of the Rules of Court, courts are mandatorily
required to take judicial notice of, among other things, "the official
acts of the legislative, executive and judicial departments of the
Philippines." Besides, even granting for the sake of argument that
P.D. No. 771 validly repealed Ordinance No. 7065, such repeal could
have only meant lack of cause of action  on the part of the private
respondent in the action for mandamus to enforce the ordinance.
Failure to set up the defense of lack of cause of action in a motion
to dismiss or in the answer is not a waiver thereof. Section 2, Rule 9
of the Rules of Court provides that :

Defenses and objections not pleaded either in a motion to dismiss or

in the answer are deemed waived; except the failure to state a
cause of action which may be alleged in a later pleading, if one is
permitted, or by a motion for judgment on the pleadings, or at the
trial on the merits; but in the last instance, the motion shall be
disposed of as provided in Section 5 of Rule 10 in the light of any
evidence which may have been received. Whenever it appears that
the court has no jurisdiction over the subject matter, it shall dismiss
the action. (italics supplied)

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