650 SUPREME COURT REPORTS ANNOTATED

Lim vs. Pacquing

Same; Constitution; Article VIII, Section 4(2); Only the Court

En Banc can declare a law unconstitutional under Article VIII,
Section 4(2) of the Constitution.—Neither can it be tenably stated
VOL. 240, JANUARY 27, 1995 649
that the issue of the continued existence of ADC’s franchise by
Lim vs. Pacquing reason of the unconstitutionality of PD No. 771 was settled in
G.R. No. 115044, for the decision of the Court’s First Division in
*
G.R. No. 115044. January 27, 1995. said case, aside from not being final, cannot have the effect of
nullifying PD No. 771 as unconstitutional, since only the Court
HON. ALFREDO S. LIM, in his capacity as Mayor of En Banc has that power under Article VIII, Section 4(2) of the
Manila, petitioner, vs. HON. FELIPE G. PACQUING, as Constitution.
Judge, Branch 40, Regional Trial Court of Manila and Same; Estoppel; The well-settled rule is that the State cannot
ASSOCIATED DEVELOPMENT CORPORATION, be put in estoppel by the mistakes or errors, if any, of its officials or
respondents. agents.—And on the question of whether or not the government is
estopped from contesting ADC’s possession of a valid franchise,
*
G.R. No. 117263. January 27, 1995. the well-settled rule is that the State cannot be put in estoppel by
the mistakes or errors, if any, of its officials or agents (Republic v.
TEOFISTO GUINGONA, JR. and DOMINADOR R. Intermediate Appellate Court, 209 SCRA 90).
CEPEDA, JR., petitioners, vs. HON. VETINO REYES and Same; Intervention; The Republic is intervening in G.R. No.
ASSOCIATED DEVELOPMENT CORPORATION, 115044 in the exercise of its governmental functions to protect
respondents. public morals and promote the general welfare.—Consequently, in
the light of the foregoing expostulation, we conclude that the
Republic (in contra distinction to the City of Manila) may be
Constitutional Law; Validity of Statutes; PD No. 771; All laws
allowed to intervene in G.R. No. 115044. The Republic is
(PD No. 771 included) are presumed valid and constitutional until
intervening in G.R. No. 115044 in the exercise, not of its business
or unless otherwise ruled by the Court.—The time-honored
or proprietary functions, but in the exercise of its governmental
doctrine is that all laws (PD No. 771 included) are presumed valid
functions to protect public morals and promote the general
and constitutional until or unless otherwise ruled by this Court.
welfare.
Not only this; Article XVIII, Section 3 of the Constitution states:
“Section 3. All existing laws, decrees, executive orders, Same; Delegation of Power; Rep. Act No. 409; What Congress
proclamations, letters of instructions and other executive delegated to the City of Manila in Rep. Act No. 409, with respect to
issuances not inconsistent with this Constitution shall remain wagers or betting, was the power to “license, permit, or regulate”
operative until amended, repealed or revoked.” which would not amount to something meaningful unless the
holder of the permit or license was also franchised by the national
Same; Same; Same.—There is nothing on record to show or
government to so operate.—It is clear from the foregoing that
even suggest that PD No. 771 has been repealed, altered or
Congress did not delegate to the City of Manila the power “to
amended by any subsequent law or presidential issuance (when
franchise” wagers or betting, including the jai-alai, but retained
the executive still exercised legislative powers).
for itself such power “to franchise.” What Congress delegated to
the City of Manila in Rep. Act No. 409, with respect to wagers or
_______________ betting. was the power to ‘license, permit. or regulate” which
therefore means that a license or permit issued by the City of
* EN BANC.
Manila to operate a wager or betting activity, such as the jai-alai
where bets are accepted, would not amount to something
650 meaningful UNLESS the holder of the permit or license was also
FRANCHISED by the national government to so operate.
Moreover, even this power to license, permit, or regulate wagers under Section 18 shows that these powers are basically regulatory
or betting on jai-alai was removed in nature. The regulatory nature of these powers finds support
not only in the plain words of the enumerations under Section 18
651 but also in this Court’s ruling in People v. Vera (65 Phil. 56).
Same; Same; Same; A law which gives the Provincial Board
the discretion to determine whether or not a law of general
VOL. 240, JANUARY 27, 1995 651 application

Lim vs. Pacquing 652

from local governments, including the City of Manila, and

transferred to the GAB on 1 January 1951 by Executive Order No.
652 SUPREME COURT REPORTS ANNOTATED
392. The net result is that the authority to grant franchises for
the operation of jaialai frontons is in Congress, while the Lim vs. Pacquing
regulatory function is vested in the GAB.
Same; Same; Same; Legislative Franchise; ADC has no would be operative within the province is unconstitutional for
franchise from Congress to operate the jai-alai.—In relation, being an undue delegation of legislative power.—ln Vera, this
therefore, to the facts of this case, since ADC has no franchise Court declared that a law which gives the Provincial Board the
from Congress to operate the jai-alai, it may not so operate even if discretion to determine whether or not a law of general
it has a license or permit from the City Mayor to operate the jai- application (such as, the Probation Law-Act No. 4221) would or
alai in the City of Manila. would not be operative within the province, is unconstitutional for
Same; Same; Same; Legislative Enactment; Gambling is being an undue delegation of legislative power.
generally prohibited by law, unless another law is enacted by Same; Same; Same.—From the ruling in Vera, it would be
Congress expressly exempting or excluding certain forms of logical to conclude that, if ADC’s arguments were to prevail, this
gambling from the reach of criminal law.—It cannot be Court would likewise declare Section 18(jj) of the Revised Charter
overlooked, in this connection, that the Revised Penal Code of Manila unconstitutional for the power it would delegate to the
punishes gambling and betting under Articles 195 to 199 thereof. Municipal Board of Manila would give the latter the absolute and
Gambling is thus generally prohibited by law, unless another law unlimited discretion to render the penal code provisions on
is enacted by Congress expressly exempting or excluding certain gambling inapplicable or inoperative to persons or entities issued
forms of gambling from the reach of criminal law. Among these permits to operate gambling establishments in the City of Manila.
forms of gambling allowed by special law are the horse races Same; Same; Same; Presumption of Validity; The rule is that
authorized by Republic Acts Nos. 309 and 983 and gambling laws must be presumed valid, constitutional and in harmony with
casinos authorized under Presidential Decree No. 1869. other laws.—We need not go to this extent, however, since the rule
Same; Same; Same; Same.—While jai-alai as a sport is not is that laws must be presumed valid, constitutional and in
illegal per se, the accepting of bets or wagers on the results of jai- harmony with other laws. Thus, the relevant provisions of Rep.
alai games is undoubtedly gambling and, therefore, a criminal Acts Nos. 409 and 954 and Ordinance No. 7065 should be taken
offense punishable under Articles 195–199 of the Revised Penal together and it should then be clear that the legislative powers of
Code, unless it is shown that a later or special law had been the Municipal Board should be understood to be regulatory in
passed allowing it. ADC has not shown any such special law. nature and that Republic Act No. 954 should be understood to
refer to congressional franchises, as a necessity for the operation
Same; Same; Same; Republic Act No. 409 (the Revised
of jai-alais.
Charter of the City of Manila) enacted by Congress on 18 June
1949 gave the Municipal Board powers that are basically Same; Same; Same; Legislative Franchise; Franchises to
regulatory in nature.—Republic Act No. 409 (the Revised Charter operate jai-alais are for the national government (not local
of the City of Manila) which was enacted by Congress on 18 June governments) to consider and approve.—On the other hand, it is
1949 gave the Municipal Board certain delegated legislative noteworthy that while then President Aquino issued Executive
powers under Section 18. A perusal of the powers enumerated Order No. 169 revoking PD No. 810 (which granted a franchise to
a Marcos-crony to operate the jaialai), she did not scrap or repeal Same; Statutory Construction; Validity of Statute;
PD No. 771 which had revoked all franchises to operate jai-alais Requirement that all laws should embrace only one subject which
issued by local governments, thereby reaffirming the government shall be expressed in the title is sufficiently met if the title is
policy that franchises to operate jai-alais are for the national comprehensive enough to include the general object which the
government (not local governments) to consider and approve. statute seeks to effect.—Finally, we do not agree that Section 3 of
Same; Same; Same; Same; Police Power; A gambling PD No. 771 and the requirement of a legislative franchise in
franchise is always subject to the exercise of police power for the Republic Act No. 954 are “riders” to the two (2) laws and are
public welfare.—On the alleged violation of the non-impairment violative of the rule that laws should embrace one subject which
and equal protection clauses of the Constitution, it should be shall be expressed in the title, as argued by ADC. In Cordero v.
remembered that a franchise is not in the strict sense a simple Cabatuando (6 SCRA 418), this Court ruled that the requirement
contract but rather it is, more importantly, a mere privilege under the Constitution that all laws should embrace only one
specially in matters which are within the government’s subject which shall be expressed in the title is sufficiently met if
the title is comprehensive enough reasonably to include the
653 general object which the statute seeks to effect, without
expressing each and every end and means necessary or
convenient for the accomplishing of the objective.

VOL. 240, JANUARY 27, 1995 653 654

Lim vs. Pacquing

654 SUPREME COURT REPORTS ANNOTATED
power to regulate and even prohibit through the exercise of the Lim vs. Pacquing
police power. Thus, a gambling franchise is always subject to the
exercise of police power for the public welfare. DAVIDE, JR., J., Separate Opinion:
Same; Same; PD No. 771; Legislative Franchise; Gambling;
The purpose of PD No. 771 is to give to the national government Remedial Law; Intervention; Pleadings and Practice;
the exclusive power to grant gambling franchises.—As earlier Intervention could not be allowed after the trial had been
noted, ADC has not alleged ever applying for a franchise under concluded or after the trial and decision of the original case.—The
the provisions of PD No. 771. And yet, the purpose of PD No. 771 phrase “at any period of a trial” in Section 1, Rule 13 of the old
is quite clear from its provisions, i.e., to give to the national Rules of Court has been construed to mean the period for the
government the exclusive power to grant gambling franchises. presentation of evidence by both parties. And the phrase “before
Thus, all franchises ‘then existing were revoked but were made or during the trial” in Section 2, Rule 12 of the present Rules of
subject to reissuance by the national government upon compliance Court “simply means anytime before the rendition of the final
by the applicant with government-set qualifications and judgment.” Accordingly, intervention could not be allowed after
requirements. the trial had been concluded or after the trial and decision of the
Same; Same; Same; Same; PD No. 771 did not violate the original case.
equal protection clause since the decree revoked all franchises Same; Same; Same; Fundamentally, intervention is never an
issued by the local governments without qualification or exception. independent action but is ancillary and supplemental to an
—There was no violation by PD No. 771 of the equal protection existing litigation.—Fundamentally then, intervention is never an
clause since the decree revoked all franchises issued by local independent action but is ancillary and supplemental to an
governments without qualification or exception. ADC cannot existing litigation. Its purpose is not to obstruct nor unnecessarily
allege violation of the equal protection clause simply because it delay the placid operation of the machinery of trial, but merely to
was the only one affected by the decree, for as correctly pointed afford one not an original party, yet having a certain right or
out by the government, ADC was not singled out when all jai-alai interest in the pending case, the opportunity to appear and be
franchises were revoked. Besides, it is too late in the day for ADC joined so he could assert or protect such right or interest.
to seek redress for alleged violation of its constitutional rights for
Same; Same; Same; Intervention may be properly filed only
it could have raised these issues as early as 1975, almost twenty
before or during the trial of the case—The grant of an intervention
(20) years ago.
is left to the discretion of the court. Paragraph (b), Section 2, Rule The Government is not without any other recourse to protect any
12 of the Rules of Court provides: (b) Discretion of court.—In right or interest which the decision might have impaired.
allowing or disallowing a motion for intervention, the court, in the Criminal Law; Illegal Gambling; Administrative Law; City
exercise of discretion, shall consider whether or not the Ordinance; Betting an the results of jai-alai games whether within
intervention will unduly delay or prejudice the adjudication of the or offfronton is illegal and the City of Manila cannot, under the
rights of the original parties and whether or not the intervenor’s present state of the law, license such betting.—Pursuant to Section
rights may be fully protected in a separate proceeding. It is thus 2 of P.D. No. 483, which was not repealed by P.D. No. 1602 since
clear that, by its very nature, intervention presupposes an the former is not inconsistent with the latter in that respect,
existing litigation or a pending case, and by the opening betting in jai-alai is illegal unless allowed by law. There was such
paragraph of Section 2, Rule 12 of the Rules of Court, it may be a law, P.D. No. 810, which authorized the Philippine Jai-Alai and
properly filed only before or during the trial of the said case. Even Amusement Corporation. However, as stated in the ponencia, P.D.
if it is filed before or during the trial, it should be denied if it will No. 810 was repealed by E.O. No. 169 issued by then President
unduly delay or prejudice the adjudication of the rights of the Corazon C. Aquino. I am not aware of any other law which
original parties and if the intervenor’s rights may be fully authorizes betting in jai-alai. It follows then that while the
protected in a separate proceeding. private respondent may operate the jai-alai fronton and conduct
Same; Same; Same; The motion to intervene was filed on the jai-alai games, it can do so solely as a sports contest. Betting on
15th day after the First Division had promulgated the decision. the results thereof. whether within or off-fronton, is illegal and
Consequently, intervention herein is impermissible under the the City of Manila cannot, under the present state of the law,
rules.—lt is not disputed that the motion to intervene was filed license such betting. The dismissal of the petition in this case
only on 16 September 1994, or on the fifteenth (15th) day after sustaining the challenged orders of the trial court does not
the First Division had legalize betting, for this Court is not the legislature under our
system of government.
655
KAPUNAN, J., Separate Opinion:

Constitutional Law; Legislative Franchise; Administrative

VOL. 240, JANUARY 27, 1995 655 Law; City Ordinance; While the City of Manila granted a permit to
Lim vs. Pacquing operate under Ordinance No. 7065, this permit or authority was at
best only a

promulgated the decision, and after petitioner Mayor Alfredo Lim 656
complied with or voluntarily satisfied the judgment. The latter act
brought to a definite end or effectively terminated G.R. No.
115044. Consequently, intervention herein is impermissible under
the rules. To grant it would be a capricious exercise of discretion. 656 SUPREME COURT REPORTS ANNOTATED
The decision of this Court in Director of Lands vs. Court of
Lim vs. Pacquing
Appeals cannot be used to sanction such capriciousness for such
decision cannot be expanded further to justify a new doctrine on
intervention. In the first place, the motions to intervene in the local permit to operate and could be exercised by the ADC only
said case were filed before the rendition by this Court of its after it shall have obtained a legislative franchise.—I find no
decision therein. In the second place, there were unusual and incompatibility therefore, between P.D. 771, which revoked all
peculiar circumstances in the said case which this Court took into authority by local governments to issue franchises for gambling
account. Of paramount importance was the fact that the and gaming establishments on one hand, and the municipal
prospective intervenors were indispensable parties. ordinance of the City of Manila, granting a permit or license to
operate subject to compliance with the provisions found therein,
Same; Same; Same.—Considering then that the intervention
on the other hand, a legislative franchise may be required by the
in the case at bar was commenced only after the decision had been
government as a condition for certain gambling operations. After
executed, a suspension of the Rules to accommodate the motion
obtaining such franchise, the franchisee may establish operations
for intervention and the intervention itself would be arbitrary.
in any city or municipality allowed under the terms of the
legislative franchise, subject to local licensing requirements. implications of a grant of a “franchise,” in perpetuity, to the ADC
While the City of Manila granted a permit to operate under militates against its posture that the government’s insistence that
Ordinance No. 7065, this permit or authority was at best only a the ADC first obtain a legislative franchise violates the equal
local permit to operate and could be exercised by the ADC only protection and impairment of contracts clauses of the
after it shall have obtained a legislative franchise. Constitution. By their very nature, franchises are subject to
Same; Same; Constitutional Adjudication; Where a amendment, alteration or revocation by the State whenever
controversy may be settled on a platform other than one involving appropriate. Under the exercise of its police power, the State,
constitutional adjudication, the court should exercise becoming through its requirement for permits, licenses and franchises to
modesty and avoid the constitutional question.—This skirts the operate, undertakes to regulate what would otherwise be an
constitutional issue. Both P.D. 771 and Ordinance 7065 can stand illegal activity punished by existing penal laws. The police power
alongside each other if one looks at the authority granted by the to establish all manner of regulation of otherwise illicit, immoral
charter of the City of Manila together with Ordinance No. 7065 and illegal activities is full, virtually illimitable and plenary.
merely as an authority to “allow” and “permit” the operation of Same; Same; Same; In its exercise of police power, the State
jai-alai facilities within the City of Manila. While the may impose appropriate impositions or restraints upon liberty or
constitutional issue was raised by the respondent corporation in property in order to foster the common good.—ln Edu v. Ericta we
the case at bench, I see no valid reason why we should jump into defined the police power as “the state authority to enact
the fray of constitutional adjudication in this case, or on every legislation that may interfere with personal liberty or property in
other opportunity where a constitutional issue is raised by parties order to promote the general welfare.” In its exercise, the State
before us. It is a settled rule of avoidance, judiciously framed by may impose appropriate impositions or restraints upon liberty or
the United States Supreme Court in Ashwander v. TVA that property in order to foster the common good. Such imposition or
where a controversy may be settled on a platform other than one restraint neither violates the impairment of contracts nor the
involving constitutional adjudication, the court should exercise equal protection clauses of the Constitution if the purpose is
becoming modesty and avoid the constitutional question. ultimately the public good.
Same; Same; Police Power; The State has every legitimate Same; Same; Same; Franchise and licensing regulations
right, under the police power, to regulate gambling operations by aimed at protecting the public from the pernicious effects of
requiring legislative franchises for such operations.—The State gambling are extensions of the police power addressed to a
has every legitimate right, under the police power, to regulate legitimate public need.—Restraints on property are not examined
gambling operations by requiring legislative franchises for such with the same microscopic scrutiny as restrictions on liberty. Such
operations. Gambling, in all its forms, unless specifically restraints, sometimes bordering on outright violations of the
authorized by law and carefully regulated pursuant to such law, impairments of contract principle have been made by this Court
is generally proscribed as offensive to the public morals and the for the general welfare of the people. Justice Holmes in Noble
public good. In maintaining a “state policy” on various forms of State Bank v. Haskel once expansively described the police power
gambling, the political branches of government are best equipped as “extending to all public needs.” Franchise and licensing
to regulate and control such activities and therefore assume regulations aimed at protecting the public from the pernicious
effects of gambling are extensions of the police power addressed to
657 a legitimate public need.
Same; Same; Same; Administrative Law; City Ordinance;
ADC, while possessing a permit to operate pursuant to Ordinance
VOL. 240, JANUARY 27, 1995 657 7065 of the

Lim vs. Pacquing 658

full responsibility to the people for such policy. Parenthetically,

gambling, in all its forms, is generally immoral.
658 SUPREME COURT REPORTS ANNOTATED
Same; Same; Same; The police power to establish all manner
of regulation of otherwise illicit, immoral and illegal activities is Lim vs. Pacquing
full, virtually illimitable and plenary.—The disturbing
City of Manila, still has to obtain a legislative franchise, PD No. Lim vs. Pacquing
771 being valid and constitutional.—In Lim vs. Pacquing, I voted
to sustain the ADC’s position on issues almost purely procedural. Same; Same; PD No. 771; Any law which enlarges, abridges,
A thorough analysis of the new issues raised this time, compels a or in any manner changes the intention of the parties, necessarily
different result since it is plainly obvious that the ADC, while impairs the contract itself.—Any law which enlarges, abridges, or
possessing a permit to operate pursuant to Ordinance 7065 of the in any manner changes the intention of the parties, necessarily
City of Manila, still has to obtain a legislative franchise, P.D. 771 impairs the contract itself (U.S. v. Conde, 42 Phil. 766 [1922];
being valid and constitutional. Clemons v. Nolting, 42 Phil. 702 .[1922]). A franchise constitutes
a contract between the grantor and the grantee. Once granted, it
QUIASON, J., Dissenting Opinion: may not be invoked unless there are valid reasons for doing so
(Papa v. Santiago, 105 Phil. 253 [1959]). A franchise is not
Constitutional Law; Non-Impairment Clause; A law may be revocable at the will of the grantor after contractual or property
voided when it does not relate to a legitimate end and when it rights thereunder have become vested in the grantee, in the
reasonably infringes on contractual and property rights.—Under absence of any provision therefor in the grant or in the general
the “substantive due process” doctrine, a law may be voided when law (Grand Trunk Western R. Co. v. South Bend, 227 U.S. 544).
it does not relate to a legitimate end and when it unreasonably D. The Republic hypothesized that the said Constitutional
infringes on contractual and property rights. The doctrine as guarantees presuppose the existence of a contract or property
enunciated in Allgeyer v. Louisiana, 165 U.S. 578 (1897) can be right in favor of ADC. It claims that Ordinance No. 7065 is not a
easily stated, thus: the government has to employ means franchise nor is it a contract but merely a privilege for the
(legislation) which bear some reasonable relation to a legitimate purpose of regulation.
end (Nowak, Rotunda and Young, Constitutional Law 436, 443
[2d ed]). Ordinance No. 7065 is a franchise that is protected by the
Constitution.—Ordinance No. 7065 is not merely a personal
Same; Same; The grant of franchise to PJAC exposed PD No. privilege that can be withdrawn at any time. It is a franchise that
771 as exercise of arbitrary power to divest ADC of its property is protected by the Constitution.
rights.—The motivation behind its issuance notwithstanding,
Same; Legislative Franchise; A privilege 18 bestowed out of
there can be no constitutional objection to P.D. No. 771 insofar as
pure beneficence on the part of the government. In a franchise,
it removed the power to grant jai-alai franchises from the local
there are certain obligations assumed by the grantee which make
governments. We said so in Basco v. Pagcor, 197 SCRA 52 (1991).
up the valuable consideration for the contract.—The distinction
The constitutional objection arises, however, when P.D. No. 771
between the two is that a privilege is bestowed out of pure
cancelled all the existing franchises. We search in vain to find any
beneficence on the part of the government. There is no obligation
reasonable relation between Section 3 of P.D. No. 771 and any
or burden imposed on the grantee except maybe to pay the
legitimate ends of government intended to be achieved by its
ordinary license and permit fees. In a franchise, there are certain
issuance. Besides, the grant of a franchise to PJAC exposed P.D.
obligations assumed by the grantee which make up the valuable
No. 771 as an exercise of arbitrary power to divest ADC of its
consideration for the contract. That is why the grantee is first
property rights.
required to signify his acceptance of the terms and conditions of
Section 3 of PD No. 771 is violative of Article VIII of the 1973 the grant. Once the grantee accepts the terms and conditions
Constitution.—Section 3 also violated Section 1 of Article VIII of thereof, the grant becomes a binding contract between the grantor
the 1973 Constitution, which provided: “Every bill shall embrace and the grantee.
only one subject which shall be expressed in the title thereof.” The
title of P.D. No. 771 reads as follows: “Revoking all powers and Same; Same; A franchise in which money has been expended
authority of local government to grant franchise, license or permit assumes the character of a vested right.—Another test used to
and regulate wagers or betting by the public on horse and dog distinguish a franchise from a privilege is the big investment
races, jai-alai or basque pelota, and other forms of gaming.” risked by the grantee. In Papa v. Santiago, supra, we held that
this factor should be considered in favor of the grantee. A
659 franchise in which money has been expended assumes the
character of a vested right (Brazosport Savings and Loan
Association v. American Savings and Loan Association, 161 Tex.
VOL. 240, JANUARY 27, 1995 659 543, 342 S.W. 2d. 747).
 660 Same; Same; Same.—In a case where a verified application
for special raffle is filed, the notice to the adverse parties may be
dispensed with but the raffle has to “be conducted by at least two
660 SUPREME COURT REPORTS ANNOTATED judges in a

Lim vs. Pacquing

661

Same; Statutes; Construction and Interpretation; Republic Act

No. 938 as amended by Republic Act No. 1224 provides that night
clubs, cabarets, pavilions, or other similar places are covered by VOL. 240, JANUARY 27, 1995 661
the 200-lineal meter radius.—The operative law on the siting of
Lim vs. Pacquing
jai-alai establishments is no longer E.O. No. 135 of President
Quirino but R.A. No. 938 as amended by R.A. No. 1224. Under
said law only night clubs, cabarets, pavilions, or other similar multiple-sala station.” The Republic does not claim that
places are covered by the 200-lineal meter radius. In the case of Administrative Circular No. 1 has been violated in the
all other places of amusements except cockpits, the proscribed assignment of the case to respondent Judge. The presumption of
radial distance has been reduced to 50 meters. With respect to regularity of official acts therefore prevails.
cockpits, the determination of the radial distance is left to the Same; Same; Same; Notice; The purpose of notice is to afford
discretion of the municipal council or city board (Sec. 1). the parties a chance to be heard in the assignment of their cases
Remedial Law; Raffle of Cases; Assignment of Cases; and this purpose is deemed accomplished if the parties were
Assignment of cases to the different branches of the trial court need subsequently heard.—Going back to Section 7 of Rule 22, this
not always be by raffle.—At the outset, it should be made clear Court has ruled in Commissioner of Immigration v. Reyes, 12
that Section 7 of Rule 22 of the Revised Rules of Court does not SCRA 728 (1964) that the purpose of the notice is to afford the
require that the assignment of cases to the different branches of a parties a chance to be heard in the assignment of their cases and
trial court should always be by raffle. The Rule talks of this purpose is deemed accomplished if the parties were
assignment “whether by raffle or otherwise.” What it requires is subsequently heard. In the instant case, Executive Secretary
the giving of written notice to counsel or the parties “so that they Guingona and GAB Chairman Cepeda were given a hearing on
may be present therein if they so desire.” Section 7 of Rule 22 the matter of the lack of notice to them of the raffle when the
provides: “Assignment of cases. In the assignment of cases to the court heard on September 23, 1994 their Motion to Recall
different branches of a Court of First Instance, or their transfer Temporary Restraining Order, Urgent Supplemental Motion to
from one branch to another whether by raffle or otherwise, the Recall Temporary Restraining Order and Opposition to Issuance
parties or their counsel shall be given written notice sufficiently of a Writ of Preliminary Issuance of a Writ of Preliminary
in advance so that they may be present therein if they so desire.” Injunction (G.R. No. 117263, Rollo p. 434).

Same; Same; Same; Cases necessitating the issuance of a Same; Restraining Order; Injunction; The purpose of a
temporary restraining order can be allowed through a special temporary restraining order or preliminary injunction is to
raffle.—There may be cases necessitating the issuance of a preserve the status quo ante litem motam or the last actual,
temporary restraining order to prevent irreparable injury on the peaceable, noncontested status.—The purpose of a temporary
petitioner. To await the regular raffle before the court can act on restraining order or preliminary injunction, whether preventive
the motion for temporary restraining order may render the case or mandatory, is merely to prevent a threatened wrong and to
moot and academic. Hence, Administrative Circular No. 1 dated protect the property or rights involved from further injury, until
January 28, 1988 was issued by this Court allowing a special the issues can be determined after the hearing on the merits
raffle. Said Circular provides: “8.3. Special raffles should not be (Ohio Oil Co. v. Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S. Ct.
permitted except on verified application of the interested party 256; Gobbi v. Dilao, 58 Or. 14,111 p. 49, 113, p. 57). What is
who seeks issuance of a provisional remedy and only upon a intended to be preserved is the status quo ante litem motam or the
finding by the Executive Judge that unless a special raffle is last actual, peaceable, noncontested status (Annotation, 15 ALR
conducted irreparable damage shall be suffered by the applicant. 2d 237).
The special raffle shall be conducted by at least two judges in a
multiplesala station.”
 Same; Same; Same; Status quo sought to be maintained was which amount represents the tax that should have been collected
that ADC was operating the jai-alai pursuant to Ordinance No. from bets made in such places. For these reasons, the approval of
7065 of the City of Manila.—In the case at bench, the status quo the bill is earnestly recommended”
which the questioned orders of Judge Reyes sought to maintain Same; Same; Nothing from the Explanatory Note suggests any
was that ADC was operating the jai-alai pursuant to Ordinance intent of the law to revoke the power of the City of Manila to issue
No. 7065 of the City of Manila, the various decisions of the permits to operate jai-alai games within its territorial jurisdiction.
different courts, including the Supreme Court, and the licenses, —As said Explanatory Note is expressive of the purpose of the
permits and provisional authority issued by GAB itself. At times, bill, it gives a reliable keyhole on the scope and coverage of R.A.
it may be necessary for the courts to take some affirmative act No. 954. Nothing from the Explanatory Note remotely suggests
essential to restore the status quo (lowa Natural Resources any intent of the law to revoke the power of the City of Manila to
Council v. Van Zee [Iowa] 158 N.W. 2d. 111). issue permits to operate jaialai games within its territorial
jurisdiction.
662
Same; Same; Legislative debate is a good source to determine
the intent of the law.—The Debates in Congress likewise reject the
662 SUPREME COURT REPORTS ANNOTATED reading of R.A. No. 954 by petitioners. Again, legislative debate is
a good source
Lim vs. Pacquing
663
PUNO, J., Dissenting Opinion:

Constitutional Law; Construction and Interpretation; The title

of a law is a valuable intrinsic aid in determining legislative VOL. 240, JANUARY 27, 1995 663
intent.—The title of R.A. No. 954 does not show that it seeks to
Lim vs. Pacquing
limit the operation of jai-alai only to entities with franchise given
by Congress. What the title trumpets as the sole subject of the law
is the criminalization of certain practices relating to jai-alai to determine the intent of a law.
games. The title of a law is a valuable intrinsic aid in determining Same; Same; Republic Act No. 954; R.A. No. 954 itself does
legislative intent. not intimate that it is repealing any existing law, especially section
Same; Same; The Explanatory Note of House Bill 3204 reveals 18(jj) of R.A. No. 409 otherwise known as the Charter of Manila.—
that the intent of the law is to criminalize the practice of illegal To top it all, the text of R.A. No. 954 itself does not intimate that
bookies and game-fixing in jai-alai.—The Explanatory Note of it is repealing any existing law, especially section 18(jj) of R.A.
House Bill 3204, the precursor of R.A. No. 954, also reveals that No. 409, otherwise known as the Charter of Manila. Indeed, R.A.
the intent of the law is only to criminalize the practice of illegal No. 954 has no repealing provision. The reason is obvious—it
bookies and game-fixing in jaialai. It states: “This bill seeks to simply prohibited certain practices in jai-alai then still
prohibit certain anomalous practice of ‘bookies’ in connection with unregulated by the laws of the land. It did not regulate aspects of
the holding of horse races or ‘basque pelota’ games. The term jai-alai already regulated by existing laws, like the matter of
‘bookie’ as commonly understood refers to a person, who without whether it is the national government alone that should issue
any license therefor, operates outside the compounds of racing franchises to operate jai-alai games.
clubs and accepts bets from the public. They pay dividends to Same; Same; PD No. 771; In clear and certain language, P.D.
winners minus a commission, which is usually 10%. Prosecutions No. 771 recalled the power of local governments to issue jai-alai
of said persons have been instituted under Act No. 4240 which franchises and permits.—The subsequent enactment of P.D. No.
was enacted in 1935. However, in a recent opinion released by the 771 on August 20, 1975 further demolished the submission of
City Fiscal of Manila, he maintains that Act No. 4240 has already petitioners. In clear and certain language, P.D. No. 771 recalled
been repealed, so that the present law regulating ordinary horse the power of local governments to issue jai-alai franchises and
races permits ‘bookies’ to ply their trade, but not on sweepstakes permits. It also revoked existing franchises and permits issued by
races and other races held for charitable purposes. With the local governments. If R.A. No. 954 had already disauthorized local
operation of ‘booking’ places in the City of Manila, the governments from granting franchises and permits, there would
Government has been losing no less than P600,000.00 a year,
be no need to enact P.D. No. 771. No rule of statutory construction innate power to grant franchises as it did to the City of Manila
will consider any law a meaningless redundancy. when it granted its charter on June 18, 1949 thru R.A. No. 409.
Same; Same; Same; If the City of Manila is empowered to Congress can also revoke the delegated power and choose to wield
license the ADC it is because the power was delegated to it by the power itself as it did thru then President Marcos who
Congress.—The passage of P.D. No. 771, also negates petitioners’ exercised legislative powers by enacting P.D. No. 771. In the
insistence that for ADC to continue operating, it must show it has petitions at bench, Congress revoked the power of local
a franchise from Congress, not just a permit from the City of governments to issue franchises and permits which it had priorly
Manila. The suggested dichotomy between a legislative franchise delegated, In doing so and in deciding to wield the power itself to
and city permit does not impress. If the City of Manila is meet the perceived problems of the time, the legislature exercised
empowered to license the ADC it is because the power was its distinct judgment and the other branches of government,
delegated to it by Congress. The acts of the City of Manila in the including this Court, cannot supplant this judgment without
exercise of its delegated power bind Congress as well. Stated running afoul of the principle of separation of powers. To be sure,
otherwise, the permit given by the City to ADC is not any whit this particular legislative method to regulate the problem of
legally inferior to a regular franchise. Through the years, the mushrooming applications for jai-alai franchise cannot be faulted
permit given by the City endows the grantee complete right to as bereft of rationality. In the hearing of the petitions at bench,
operate, Not once, except in these cases, has the national Executive Secretary Guingona established the fact that at the
government questioned the completeness of this right. For this time of the enactment of P.D. No. 771, there were numerous
reason, P.D. No. 771 has to revoke all existing franchises and applications to run jai-alai games in various cities and
permits without making any distinction. It treated permits in the municipalities of the archipelago. To prevent the proliferation of
same class as franchises. these applications and minimize their ill effects, the law
centralized their screening by the national government alone. The
664 law excluded local governments in the process. The revocation of
the delegated power to local governments does not impair any
right. Applicants to franchises have no right to insist that their
664 SUPREME COURT REPORTS ANNOTATED applications be acted upon by local governments. Their right to a
Lim vs. Pacquing franchise is only in posse.

665
Same; Same; Police Power; Tests to determine validity of
police measure.—But while the State is bestowed near boundless
authority to promote public welfare, still the exercise of police VOL. 240, JANUARY 27, 1995 665
power cannot be allowed to run riot in a republic ruled by reason.
Lim vs. Pacquing
Thus, our courts have laid down the test to determine the validity
of a police measure as follows: (1) the interest of the public
generally, as distinguished from those of particular class, requires Same; Same; Same; Section 3 of P.D. No. 771 must be struck
its exercise; and (2) the means employed are reasonably necessary down as constitutionally infirmed.—Truth, however, has its own
for the accomplishment of the purpose and not unduly oppressive time of sprouting out. The truth behind the revocation of ADC’s
upon individuals. Deeper reflexion will reveal that the test franchise revealed itself when former President Marcos
reiterates the essence of our constitutional guarantees of transferred ADC’s franchise to the Philippine Jai-Alai and
substantive due process, equal protection, and nonimpairment of Amusements Corporation then under the control of his brother-in-
property rights. law, Mr. Alfredo “Bejo” Romualdez. The favored treatment was
extended hardly two (2) months after the revocation of ADC’s
Same; Same; Delegation of Power; The revocation of delegated
franchise and it left Philippine Jai-Alai and Amusements
power to local governments does not impair any right. Applicants
Corporation the sole jai-alai operator in the Philippines. The
to franchises have no right to insist that their applications be acted
Court is not informed of any distinction of PJAC that will justify
upon by local governments, Their right to a franchise is only in
its different treatment. The evidence is thus clear and the
posse.—Part of the plenary power of Congress to make laws is the
conclusion is irresistible that section 3 of P D. No. 771 was
right to grant franchises and permits allowing the exercise of
designed with a malignant eye against ADC. In light of the
certain privileges. Congress can delegate the exercise of this
established facts in field, section 3 of P.D. No. 771 must be struck adjusting the moving point of the balance gives government
down as constitutionally infirmed. greater elasticity to meet the needs of the time.
Same; Same; Same; P.D. No. 771 seeks merely to control the
PETITIONS for review of the decisions of the Regional
multiplication by restoring the monopoly of national government
Trial Court of Manila, Br. 40 and Br. 4.
in the dispensation of franchises.—There is no way to treat the
self-interest of a favored entity as identical with the general The facts are stated in the opinion of the Court.
interest of the Filipino people. It will also be repulsive to reason to      Chavez, Laureta & Associates and Cayanga, Zuñiga
entertain the thesis that the revocation of the franchise of ADC is & Angel for private respondent.
reasonably necessary to enable the State to grapple to the ground      Henry L. Domingo for movant-intervenors.
the evil of jai-alai as a form of gambling. Petitioners have not
demonstrated that government lacks alternative options to PADILLA, J.:
succeed in its effort except to cancel the lone franchise of ADC.
Well to stress, it is not the lofty aim of P.D. No. 771 to completely These two (2) cases which are inter-related actually involve
eradicate jai-alai games; it merely seeks to control its simple issues. If these issues have apparently become
multiplication by restoring the monopoly of the national complicated, it is not by reason of their nature but because
government in the dispensation of franchises. of the events and dramatis personae involved.
The petition in G.R. No. 115044 was dismissed by the
Same; Same; Same; Section 3 of P.D. No. 771 offends the
First Division of this Court on 01 September 1994 based on
Constitution which demands faithful compliance with the
a finding that there was “no abuse of discretion, much less
requirements of due process, equal protection of the law, and non-
lack of or excess of jurisdiction, on the part of respondent
impairment of contracts.—Prescinding from these premises, I
judge [Pacquing],” in issuing the questioned orders. Judge
share the scholarly view of Mr. Justice Quiason that Sec. 3 of P.D.
Pacquing had earlier issued in Civil Case No. 88–45660,
No. 771 offends the Constitution which demands faithful
RTC of Manila, Branch 40, the following orders which were
compliance with the requirements of substantive due process,
assailed by the Mayor of the City of Manila, Hon. Alfredo S.
equal protection of the law, and non-impairment of contracts.
Lim, in said G.R. No. 115044:
Capsulizing their essence, substantive due process exacts
fairness; equal protection disallows distinction to the distinctless; a. order dated 28 March 1994 directing Manila Mayor
and the guaranty of non-impairment of contract protects its Alfredo S. Lim to issue the permit/license to operate
integrity unless demanded otherwise by the public good. the jai-alai in favor of Associated Development
Constitutionalism eschews the exercise of unchecked power for Corporation (ADC).
history demonstrates that a meandering, aimless power
b. order dated 11 April 1994 directing Mayor Lim to
ultimately tears apart the social fabric of society. Thus, the grant
explain why he should not be cited for contempt for
of police power to promote public welfare cannot carry with it the
non-compliance with the order dated 28 March
privilege to be oppressive. The Constitution ordained the
1994.
666 c. order dated 20 April 1994 reiterating the previous
order directing Mayor Lim to immediately issue the
permit / license to Associated Development
Corporation (ADC).
666 SUPREME COURT REPORTS ANNOTATED
667
Lim vs. Pacquing

VOL. 240, JANUARY 27, 1995 667

State not just to achieve order or liberty but to attain ordered
liberty, however elusive the balance may be. Cognizant of the Lim vs. Pacquing
truism that in life the only constant is change, the Constitution
did not design that the point that can strike the balance between The order dated 28 March 1994 was in turn issued upon
order and liberty should be static for precisely, the process of motion by ADC for execution of a final judgment rendered
on 9 September 1988 which ordered the Manila Mayor to
immediately issue to ADC the permit I license to operate 668 SUPREME COURT REPORTS ANNOTATED
the jai-alai in Manila, under Manila Ordinance No. 7065. Lim vs. Pacquing
On 13 September 1994, petitioner Guingona (as
executive secretary) issued a directive to then chairman of
the Games and Amusements Board (GAB) Francisco R. tion upon ADC’s2
posting of a bond in the amount of
Sumulong, Jr. to hold in abeyance the grant of authority, or P2,000,000.00.
if any had been issued, to withdraw such grant of Subsequently, also in G.R. No. 115044, the Republic of
authority, to Associated Development Corporation to the Philippines, through the Games and Amusements
operate the jai-alai in the City of Manila, until the Board, filed a “Motion for Intervention; for Leave To File a
following legal questions are properly resolved: Motion For Reconsideration in Intervention; and to Refer
the Case to the Court En Banc” and later a “Motion for
“1. Whether P.D. 771 which revoked all existing Jai- Leave to File Supplemental Motion for Reconsideration-in-
Alai franchises issued by local governments as of 20 Intervention and to Admit Attached Supplemental Motion
August 1975 is unconstitutional. for Reconsideration-in-Intervention.”
2. Assuming that the City of Manila had the power on In an En Banc Resolution dated 20 September 1994, this
7 September 1971 to issue a Jai-Alai franchise to Court referred G.R. No. 115044 to the Court En Banc and
Associated Development Corporation, whether the required the respondents therein to comment on the
franchise granted is valid considering that the aforementioned motions.
franchise has no duration, and appears to be Meanwhile, Judge Reyes on 19 October 1994 issued
granted in perpetuity. another order, this time, granting ADC a writ of
preliminary mandatory injunction against Guingona and
3. Whether the City of Manila had the power to issue
GAB to compel them to issue in favor of ADC the authority
a Jai-Alai franchise to Associated Development
to operate the jai-alai.
Corporation on 7 September 1971 in view of
Guingona, as executive secretary, and Dominador
Executive Order No. 392 dated 1 January 1951
Cepeda, Jr. as the new GAB chairman, then filed the
which transferred from local governments to the
petition in G.R. No. 117263 assailing the abovementioned
Games and Amusements Board the power to
1 orders of respondent Judge Vetino Reyes.
regulate Jai-Alai.”
On 25 October 1994, in G.R. No. 117263, this Court
granted petitioners’ motion for leave to file supplemental
On 15 September 1994, respondent Associated
petition and to admit attached supplemental petition with
Development Corporation (ADC) filed a petition for
urgent prayer for restraining order. The Court further
prohibition, mandamus, injunction and damages with
required respondents to file their comment on the petition
prayer for temporary restraining order and/or writ of
and supplemental petition with urgent prayer for
preliminary injunction in the Regional Trial Court of
restraining order. The Court likewise set the case and all
Manila against petitioner Guingona and then GAB
incidents thereof for hearing on 10 November 1994.
chairman Sumulong, docketed as Civil Case No. 94–71656,
At the hearing on 10 November 1994, the issues to be
seeking to prevent GAB from withdrawing the provisional
resolved were formulated by the Court as follows:
authority that had earlier been granted to ADC. On the
same day, the RTC of Manila, Branch 4, through presiding 1. whether or not intervention by the Republic of the
Judge Vetino Reyes, issued a temporary restraining order Philippines at this stage of the proceedings is
enjoining the GAB from withdrawing ADC’s provisional proper;
authority. This temporary restraining order was converted
2. assuming such intervention is proper, whether or
into a writ of preliminary injunc-
not the Associated Development Corporation has a
valid and subsisting franchise to maintain and
_______________ operate the jai-alai;
1 Annex “D,” Petition in G.R. No. 117263. 3. whether or not there was grave abuse of discretion
committed by respondent Judge Reyes in issuing
668 the aforementioned temporary restraining order
(later, writ of preliminary injunc
_______________ _______________

2 Annex “C,” Petition in G.R. No. 117263. 3“Sec. 5. The Supreme Court shall have the following powers: (1)
Exercise original jurisdiction x x x over petitions for certiorari, prohibition,
669
mandamus, quo warranto, and habeas corpus. x x x”

670
VOL. 240, JANUARY 27, 1995 669
Lim vs. Pacquing
670 SUPREME COURT REPORTS ANNOTATED

tion); and Lim vs. Pacquing

4. whether or not there was grave abuse of discretion
committed by respondent Judge Reyes in issuing that Manila Ordinance No. 7065 which purported to grant
the aforementioned writ of preliminary mandatory to ADC a franchise to conduct jai-alai operations is void
injunction. and ultra vires since Republic Act No. 954, approved on 20
June 1953, or very much earlier than said Ordinance No.
On the issue of the propriety of the intervention by the 7065, the latter approved 7 September 1971, in Section 4
Republic of the Philippines, a question was raised during thereof, requires a legislative franchise, not a municipal
the hearing on 10 November 1994 as to whether franchise, for the operation of jai-alai, Additionally, the
intervention in G.R. No. 115044 was the proper remedy for national government argues that even assuming, arguendo,
the national government to take in questioning the that the abovementioned ordinance is valid, ADC’s
existence of a valid ADC franchise to operate the jai-alai or franchise was nonetheless effectively revoked by
whether a separate action for quo warranto under Section Presidential Decree No. 771, issued on 20 August 1975,
2, Rule 66 of the Rules of Court was the proper remedy. Sec. 3 of which expressly revoked all existing franchises
We need not belabor this issue since counsel for and permits to operate all forms of gambling facilities
respondent ADC agreed to the suggestion that this Court (including the jai-alai) issued by local governments.
once and for all settle all substantive issues raised by the On the other hand, ADC’s position is that Ordinance No.
parties in these cases. Moreover, this Court can consider 7065 was validly enacted by the City of Manila pursuant to
the petition filed in G.R. No. 117263 as one for quo its delegated powers under its charter, Republic Act No.
warranto which is within the original jurisdiction of the 409. ADC also squarely assails the constitutionality of PD
3
Court under Section 5(1), Article VIII of the Constitution, No. 771 as violative of the equal protection and non-
On the propriety of intervention by the Republic, impairment clauses of the Constitution. In ‘this connection,
however, it will be recalled that this Court in Director of counsel for ADC contends that this Court should really rule
Lands v. Court of Appeals (93 SCRA 238) allowed on the validity of PD No. 771 to be able to determine
intervention even beyond the period prescribed in Section 2 whether ADC continues to possess a valid franchise.
Rule 12 of the Rules of Court. The Court ruled in said case It will undoubtedly be a grave injustice to both parties in
that a denial of the motions for intervention would “lead this case if this Court were to shirk from ruling on the
the Court to commit an act of injustice to the movants, to issue of constitutionality of PD No. 771. Such issue has, in
their successor-in-interest and to all purchasers for value our view, “become the very lis mota in resolving the present
and in good faith and thereby open the door to fraud, controversy, in view of ADC’s insistence that it was granted
falsehood and misrepresentation, should intervenors’ claim a valid and legal franchise by Ordinance No. 7065 to
be proven to be true.” operate the jai-alai.
In the present case, the resulting injustice and injury, The time-honored doctrine is that all laws (PD No. 771
should the national government’s allegations be proven included) are presumed valid and constitutional until or
correct, are manifest, since the latter has squarely unless otherwise ruled by this Court. Not only this; Article
questioned the very existence of a valid franchise to XVIII, Section 3 of the Constitution states:
maintain and operate the jai-alai (which is a gambling
“Sec. 3. All existing laws, decrees, executive orders,
operation) in favor of ADC. As will be more extensively
proclamations, letters of instructions and other executive
discussed later, the national government contends
issuances not inconsistent with this Constitution shall remain _______________
operative until amended, repealed or revoked.”
4”Sec. 4. x x x

There is nothing on record to show or even suggest that PD (2) All cases involving the constitutionality of a treaty, international or executive
No. 771 has been repealed, altered or amended by any agreement, or law, which shall be heard by the Supreme Court en banc x x x shall be
subsequent law or presidential issuance (when the decided with the concurrence of a majority of the Members who actually took part in the
executive still deliberations on the issues in the case and voted thereon.

671
672

VOL. 240, JANUARY 27, 1995 671 672 SUPREME COURT REPORTS ANNOTATED
Lim vs. Pacquing Lim vs. Pacquing

exercised legislative powers). xxx

Neither can it be tenably stated that the issue of the (jj) To tax, license, permit and regulate wagers or betting by the public
continued existence of ADC’s franchise by reason of the on boxing, sipa, bowling, billiards, pools, horse and dog races, cockpits,
unconstitutionality of PD No. 771 was settled in G.R. No. jai-alai, roller or ice-skating on any sporting or athletic contests, as well
115044, for the decision of the Court’s First Division in said as grant exclusive rights to establishments for this purpose,
case, aside from not being final, cannot have the effect of notwithstanding any existing law to the contrary.”
nullifying PD No. 771 as unconstitutional, since only the
Court En Banc has that4 power under Article VIII, Section 2. On 1 January 1951, Executive Order No. 392 was
4(2) of the Constitution. issued transferring the authority to regulate jai-
And on the question of whether or not the government is alais from local govern-ments to the Games and
estopped from contesting ADC’s possession of a valid Amusements Board (GAB).
franchise, the well-settled rule is that the State cannot be 3. On 20 June 1953, Congress enacted Republic Act
put in estoppel by the mistakes or errors, if any, of its No. 954, entitled “An Act To Prohibit Certain
officials or agents (Republic v. Intermediate Appellate Activities In Connection With Horse Races and
Court, 209 SCRA 90). Basque Pelota Games (Jai-Alai), And To Prescribe
Consequently, in the light of the foregoing expostulation, Penalties For Its Violation,” The provisions of
we conclude that the Republic (in contra distinction to the Republic Act No. 954 relating to jai-alai are as
City of Manila) may be allowed to intervene in G.R. No. follows:
115044. The Republic is intervening in G.R. No. 115044 in
the exercise, not of its business or proprietary functions, “Sec. 4. No person, or group of persons other than the operator or
but in the exercise of its governmental functions to protect maintainer of a fronton with legislative franchise to conduct
public morals and promote the general welfare. basque pelota games (Jai-Alai), shall offer,take or arrange bets on
any basque pelota game or event, or maintain or use a totalizator
II or other device, method or system to bet or gamble on any basque
pelota game or event. (italics supplied).
Anent the question of whether ADC has a valid franchise to
Sec. 5. No person, operator or maintainer of a fronton with
“operate the Jai-Alai de Manila, a statement of the
legislative franchise to conduct basque pelota games shall offer,
pertinent laws is in order.
take, or arrange bets on any basque pelota game or event, or
maintain or use a totalizator or other device, method or system to
1. The Charter of the City of Manila was enacted by
bet or gamble on any basque pelota game or event outside the
Congress on 18 June 1949. Section 18 thereof
place, enclosure, or fronton where the basque pelota game is held,”
provides:
(Italics supplied).
“Section 18. Legislative Powers.—The Municipal Board shall have
4. On 07 September 1971, however, the Municipal
the following legislative powers:
Board of Manila nonetheless passed Ordinance No.
 7065 entitled “An Ordinance Authorizing the Mayor Board under Section 18(jj) of Republic Act No. 409 and
To Allow And Permit The Associated Development consequently it was within the power of the City of Manila
Corporation To Establish, Maintain And Operate A to allow ADC to operate the jai-alai in the City of Manila.
Jai-Alai In The City Of Manila, Under Certain On this point, the government counter-argues that the
Terms And Conditions And For Other Purposes.” term “legislative powers” is used in Rep. Act No. 409
5. On 20 August 1975; Presidential Decree No. 771 merely to distinguish the powers under Section 18 of the
law from the other powers of the Municipal Board, but that
was issued by then President Marcos. The decree,
the term “legislative powers” is used in Rep. Act No. 409
entitled “Revoking All Powers and Authority of
merely to distinguish the powers under Section 18 of the
Local Government(s) To Grant Franchise, License
law from the other powers of the Municipal Board, but that
or Permit And Regulate Wagers Or Betting By The
the term “legislative franchise” in Rep. Act No. 954 refers
Public On Horse And Dog Races, Jai-Alai Or
to a franchise granted solely by Congress.
Basque Pelota, And Other Forms Of Gambling.” in
Further, the government argues that Executive Order
Section 3 thereof, expressly revoked all existing
No. 392 dated 01 January 1951 transferred even the power
franchises and permits issued by
to regulate Jai-Alai from the local governments to the
673
Games and Amusements Board (GAB), a national
government agency.
It is worthy of note that neither of the authorities relied
VOL. 240, JANUARY 27, 1995 673 upon by ADC to support its alleged possession of a valid
Lim vs. Pacquing franchise,
674
local governments.
6. On 16 October 1975, Presidential Decree No. 810,
674 SUPREME COURT REPORTS ANNOTATED
entitled “An Act Granting The Philippine Jai-Alai
And Amusement Corporation A Franchise To Lim vs. Pacquing
Operate, Construct And Maintain A Fronton For
Basque Pelota And Similar Games Of Skill In The namely, the Charter of the City of Manila (Rep. Act No.
Greater Manila Area,” was promulgated. 409) and Manila Ordinance No. 7065 uses the word
7. On 08 May 1987, then President Aquino, by virtue “franchise.” Rep. Act No. 409 empowers the Municipal
of Article XVIII, Section 6, of the Constitution, Board of Manila to “tax, ‘license, permit and regulate
which allowed the incumbent President to continue wagers or betting” and to “grant exclusive rights to
exercising legislative powers until the first establishments,” while Ordinance No. 7065 authorized the
Congress was convened, issued Executive Order No. Manila City Mayor to “allow and permit” ADC to operate
169 expressly repealing PD 810 and revoking and jaialai facilities in the City of Manila.
cancelling the franchise granted to the Philippine It is clear from the foregoing that Congress did not
Jai-Alai and Amusements Corporation. delegate to the City of Manila the power “to franchise”
wagers or betting, including the jai-alai, but retained for
Petitioners in G.R. No. 117263 argue that Republic Act No. itself such power “to franchise.” What Congress delegated
954 effectively removed the power of .the Municipal Board to the City of Manila in Rep. Act No. 409, with respect to
of Manila to grant franchises for gambling operations. It is wagers or betting, was the power to “license, permit, or
argued that the term “legislative franchise” in Rep. Act No. regulate” which therefore means that a license or permit
954 is used to refer to franchises issued by Congress. issued by the City of Manila to operate a wager or betting
On the other hand, ADC contends that Republic Act No. activity, such as the jai-alai where bets are accepted, would
409 (Manila Charter) gives legislative powers to the not amount to something meaningful UNLESS the holder
Municipal Board to grant franchises, and since Republic of the permit or license was also FRANCHISED by the
Act No. 954 does not specifically qualify the word national government to so operate. Moreover, even this
“legislative” as referring exclusively to Congress, then Rep. power to license, permit, or regulate wagers or betting on
Act No. 954 did not remove the power of the Municipal jai-alai was removed from local governments, including the
City of Manila, and transferred to the GAB on 1 January From the ruling in Vera, it would be logical to conclude
1951 by Executive Order No. 392. The net result is that the that, if ADC’s arguments were to prevail, this Court would
authority to grant franchises for the operation of jai-alai likewise declare Section 18(jj) of the Revised Charter of
frontons is in Congress, while the regulatory function is Manila unconstitutional for the power it would delegate to
vested in the GAB. the Municipal Board of Manila would give the latter the
In relation, therefore, to the facts of this case, since ADC absolute and unlimited discretion to render the penal code
has no franchise from Congress to operate the jai-alai, it provisions on gambling inapplicable or inoperative to
may not so operate even if it has a license or permit from persons or entities issued permits to operate gambling
the City Mayor to operate the jai-alai in the City of Manila. establishments in the City of Manila.
It cannot be overlooked, in this connection, that the We need not go to this extent, however, since the rule is
Revised Penal Code punishes gambling and betting under that laws must be presumed valid, constitutional and in
Articles 195 to 199 thereof. Gambling is thus generally harmony with other laws. Thus, the relevant provisions of
prohibited by law, unless another law is enacted by Rep. Acts Nos. 409 and 954 and Ordinance No. 7065 should
Congress expressly exempting or excluding certain forms of be taken together and it should then be clear that the
gambling from the reach of criminal law. Among these legislative powers of the Municipal Board should be
forms of gambling allowed by special law are the horse understood to be regulatory in nature and that Republic
races authorized by Republic Acts Nos. 309 and 983 and Act No. 954 should be understood to refer to congressional
gambling casinos authorized under Presidential Decree No. franchises, as a necessity for the operation of jaialais.
1869. We need not, however, again belabor this issue further
While jai-alai as a sport is not illegal per se, the since the task at hand which will ultimately, and with
accepting of bets or wagers on the results of jai-alai games finality, decide
is undoubtedly gambling and, therefore, a criminal offense
punishable under ______________

675 5 It will be noted that under Executive Order No. 392, issued on 1
January 1951, even the power to regulate jai-alais was transferred from

VOL. 240, JANUARY 27, 1995 675 the local governments to the Games and Amusement Board (GAB).

Lim vs. Pacquing 676

Articles 195–199 of the Revised Penal Code, unless it is 676 SUPREME COURT REPORTS ANNOTATED
shown that a later or special law had been passed allowing
it. ADC has not shown any such special law. Lim vs. Pacquing
Republic Act No. 409 (the Revised Charter of the City of
Manila) which was enacted by Congress on 18 June 1949 the issues in this case is to determine whether PD No. 771
gave the Municipal Board certain delegated legislative validly revoked ADC’s franchise to operate the jai-alai,
powers under Section 18. A perusal of the powers assuming (without conceding) that it indeed possessed such
enumerated under Section 18 shows5
that these powers are franchise under Ordinance No. 7065.
basically regulatory in nature. The regulatory nature of ADC argues that PD No. 771 is unconstitutional for
these powers finds support not only in the plain words of being violative of the equal protection and non-impairment
the enumerations under Section 18 but also in this Court’s provisions of the Constitution. On the other hand, the
ruling in People v. Vera (65 Phil. 56). government contends that PD No. 771 is a valid exercise of
In Vera, this Court declared that a law which gives the the inherent police power of the State.
Provincial Board the discretion to determine whether or The police power has been described as the least
not a law of general application (such as, the Probation limitable of the inherent powers of the State. It is based on
Law-Act No. 4221) would or would not be operative within the ancient doctrine—salus populi est suprema lex (the
the province, is unconstitutional for being an undue welfare of the people is the supreme law.) In the early case
delegation of legislative power. of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this
Court through Mr. Justice George A. Malcolm stated thus:
“The police power of the State x x x is a power coextensive with prohibited jueteng and monte but permits lotteries, cockfighting
self-protection, and is not inaptly termed the ‘law of overruling and horse-racing. In making such choices, Congress has consulted
necessity.’ It may be said to be that inherent and plenary power in its own wisdom, which this Court has no authority to review,
the State which enables it to prohibit all things hurtful to the much less reverse. Well, has it been said that courts do not sit to
comfort, safety and welfare of society. Carried onward by the resolve the merits of conflicting theories. That is the prerogative
current of legislation, the judiciary rarely attempts to dam the of the political departments. It is settled that questions regarding
onrushing power of legislative discretion, provided the purposes of wisdom, morality and practicability of statutes are not addressed
the law do not go beyond the great principles that mean security to the judiciary but may be resolved only by the executive and
for the public welfare or do not arbitrarily , interfere with the legislative departments, to which the function belongs in our
right of the individual.” scheme of government.” (Italics supplied)

In the matter of PD No. 771, the purpose of the law is - Talks regarding the supposed vanishing line between
clearly stated in the “whereas clauses” as follows: right and privilege in American constitutional law has no
relevance in the context of these cases since the reference
“WHEREAS, it has been reported that in spite of the current there is to economic regulations. On the other hand, jai-alai
drive of our law enforcement agencies against vices and illegal is not a mere economic activity which the law seeks to
gambling, these social ills are still prevalent in many areas of the regulate. It is essentially gambling and whether it should
country; be permitted and, if so, under what conditions are
‘WHEREAS, there is need to consolidate all the efforts of the questions primarily for the lawmaking authority to
government to eradicate and minimize vices and other forms of determine, taking into account national and local interests.
social ills in pursuance of the social and economic development Here, it is the police power of the State that is paramount,
program under the new society; ADC questions the motive for the issuance of PD No.
‘WHEREAS, in order to effectively control and regulate wagers 771. Clearly, however, this Court cannot look into
or betting by the public on horse and dog races, jai-alai and other allegations that PD No. 771 was enacted to benefit a select
forms of gambling there is a necessity to transfer the issuance of group which was later given authority to operate the jai-
permit and/ or franchise from local government to the National alai under PD No. 810. The examination of legislative
Government.” motivation is generally prohibited. (Palmer v. Thompson,
677
403 U.S. 217, 29 L. Ed. 2d 438 [1971], per Black, J.) There
is, in the first place, absolute lack of evidence to
678
VOL. 240, JANUARY 27, 1995 677
Lim vs. Pacquing
678 SUPREME COURT REPORTS ANNOTATED
It cannot be argued that the control and regulation of Lim vs. Pacquing
gambling do not promote public morals and welfare.
Gambling is essentially antagonistic to the objectives of support ADC’s allegation of improper motivation in the
national productivity and self-reliance. It breeds indolence issuance of PD No. 771. In the second place, as already
and erodes the value of good, honest and hard work. It is, averred, this Court cannot go behind the expressed and
as very aptly stated by PD No. 771, a vice and a social ill proclaimed purposes of PD No. 771, which are reasonable
which government must minimize (if not eradicate) in and even laudable.
pursuit of social and economic development. It should also be remembered that PD No. 771 provides
In Magtajas v. Pryce Properties Corporation (20 July that the national government can subsequently grant fr
1994, G.R. No. 111097), this Court stated thru Mr. Justice anchises “upon proper application and verification of the
Isagani A. Cruz: qualifications of the applicant” ADC has not alleged that it
filed an application for a franchise with the national
“In the exercise of its own discretion, the legislative power may
government subsequent to the enactment of PD No. 771;
prohibit gambling altogether or allow it without limitation or it
thus, the allegations abovementioned (of preference to a
may prohibit some forms of gambling and allow others for
select group) are based on conjectures, speculations and
whatever reasons it may consider sufficient. Thus, it has
imagined biases which do not warrant the consideration of by the national government upon compliance by the
this Court. applicant with governmentset qualifications and
On the other hand, it is noteworthy that while then requirements.
President Aquino issued Executive Order No. 169 revoking There was no violation by PD No. 771 of the equal
PD No. 810 (which granted a franchise to a Marcos-crony to protection clause since the decree revoked all franchises
operate the jaialai), she did not scrap or repeal PD No. 771 issued by local governments without qualification or
which had revoked all franchises to operate jai-alais issued exception. ADC cannot allege violation of the equal
by local governments, thereby re-affirming the government protection clause simply because it was the only one
policy that franchises to operate jai-alais are for the affected by the decree, for as correctly pointed out by the
national government (not local governments) to consider government, ADC was not singled out when all jai-alai
and approve. franchises were revoked. Besides, it is too late in the day
On the alleged violation of the non-impairment and for ADC to seek redress for alleged violation of its
equal protection clauses of the Constitution, it should be constitutional rights for it could have raised these issues as
remembered that a franchise is not in the strict sense a early as 1975, almost twenty (20) years ago.
simple contract but rather it is, more importantly, a mere Finally, we do not agree that Section 3 of PD No. 771
privilege specially in matters which are within the and the requirement of a legislative franchise in Republic
government’s power to regulate and even prohibit through Act No. 954 are “riders” to the two (2) laws and are
the exercise of the police power. Thus, a gambling franchise violative of the rule that laws should embrace one subject
is always subject to the exercise of police power for the which shall be expressed in the title, as argued by ADC. In
public welfare, Cordero v. Cabatuando (6 SCRA 418), this Court ruled that
In RCPI v. NTC (150 SCRA 450), we held that: the requirement under the Constitution that all laws
should embrace only one subject which shall be expressed
“A franchise started out as a ‘royal privilege or (a) branch of the in the title is sufficiently met if the title is comprehensive
King’s prerogative, subsisting in the hands of a subject.’ This enough reasonably to include the general object which the
definition was given by Finch, adopted by Blackstone, and statute seeks to effect, without expressing each and every
accepted by every authority since x x x Today, a franchise, being end and means necessary or convenient for the
merely a privilege emanating from the sovereign power of the accomplishing of the objective.
state and owing its existence to a grant, is subject to regulation by
the state itself by virtue of its police power through its III
administrative agencies.”
On the issue of whether or not there was grave abuse of
679 discretion committed by respondent Judge Reyes in issuing
the temporary restraining order (later converted to a writ
VOL. 240, JANUARY 27, 1995 679 of prelimi-

Lim vs. Pacquing 680

There is a stronger reason for holding ADC’s permit to be a 680 SUPREME COURT REPORTS ANNOTATED
mere privilege because jai-alai, when played for bets, is
Lim vs. Pacquing
pure and simple gambling. To analogize a gambling
franchise to a franchise for the operation of a public utility,
such as public transportation company, is to trivialize the nary injunction) and the writ of preliminary mandatory
great historic origin of this branch of royal privilege. injunc-tion, we hold and rule there was.
As earlier noted, ADC has not alleged ever applying for Section 3, Rule 58 of the Rules of Court provides for the
a franchise under the provisions of PD No. 771. And yet, grounds for the issuance of a preliminary injunction. While
the purpose of PD No. 771 is quite clear from its provisions, ADC could allege these grounds, respondent judge should
i.e., to give to the national government the exclusive power have taken judicial notice of Republic Act No. 954 and PD
to grant gambling franchises. Thus, all franchises then 771, under Section 1 Rule 129 of the Rules of Court. These
existing were revoked but were made subject to reissuance laws negate the existence of any legal right on the part of
ADC to the reliefs it sought so as to justify the issuance of a The core issues submitted for the Court’s resolution are: (1)
writ of preliminary injunction. Since PD No. 771 and in G.R. No. 115044, whether intervention by the Republic
Republic Act No. 954 are presumed valid and constitutional of the Philippines is proper, and (2) in G.R. No. 117263,
until ruled otherwise by the Supreme Court after due whether public respondent Judge Vetino Reyes acted with
hearing, ADC was not entitled to the writs issued and grave abuse of discretion in issuing the temporary
consequently there was grave abuse of discretion in issuing restraining order and subsequently the writ of preliminary
them. mandatory injunction in Civil Case No. 94–71656.
WHEREFORE, for the foregoing reasons, judgment is
hereby rendered: I

1. allowing the Republic of the Philippines to As to the first issue, I submit that unless we either amend
intervene in G.R. No. 115044. the rule on intervention or suspend it, the motion to
2. declaring Presidential Decree No. 771 valid and intervene must be denied. Under Section 2, Rule 12 of the
constitutional. Rules of Court, such motion may be allowed only before or
during a trial. Said section reads:
3. declaring that respondent Associated Development
Corporation (ADC) does not possess the required SEC. 2. Intervention.—A person may, before or during a trial, be
congressional franchise to operate and conduct the permitted by the court. in its discretion. to intervene in an action,
jai-alai under Republic Act No. 954 and if he has legal interest in the matter in litigation, or in the success
Presidential Decree No. 771. of either of the parties, or an interest against both, or when he is
4. setting aside the writs of preliminary injunction so “situated as to be adversely affected by a distribution or other
and preliminary mandatory injunction issued by disposition of property in the custody of the court or of an officer
respondent Judge Vetino Reyes in Civil Case No. thereof.
94–71656.
This provision was taken from Section 1, Rule 13 of the old
SO ORDERED. Rules of Court with the modification that the phrase “at
any period of a1trial” in the latter was changed to “before or
          Feliciano, Bidin, Regalado, Romero, Vitug and during a trial.”
Mendoza, JJ., concur. Section 1, Rule 13 of the old Rules of Court was based on
     Narvasa (C.J.), No part; Personal reasons. Section 121 of the Code of Civil Procedure which, in turn,
     Davide, Jr. and Kapunan, JJ., Please see separate was taken from 2
Section 387 of the Code of Civil Procedure
opinion. of California.
          Bellosillo and Melo, JJ., I join in the dissents of The phrase “at any period of a trial” in Section 1, Rule
Justices Quiason and Puno. 13 of the old Rules of Court has been construed to mean the
     Quiason and Puno, JJ., See dissenting opinion. period for the
     Francisco, J., No part; Conflict of interests.
______________
681
1 1 VICENTE J. FRANCISCO, The Revised Rules of Court in the
Philippines 718 (1973 ed.).
VOL. 240, JANUARY 27, 1995 681
2 Garcia vs. David, 67 Phil. 279, 283 [1939].
Lim vs. Pacquing
682

682 SUPREME COURT REPORTS ANNOTATED

SEPARATE OPINION
Lim vs. Pacquing

DAVIDE, JR., J.: 3

presentation of evidence by both parties. And the phrase
"before or during the trial" in Section 2, Rule 12 of the
present Rules of Court "simply 4means anytime before the unduly delay or prejudice the adjudication of the rights of
rendition of the final judgment." Accordingly, intervention
5
the original parties and if the intervenor’s
9
rights may be
could not be allowed after the trial had been concluded
6
or fully protected in a separate proceeding.
after the trial and decision of the original case. It is not disputed that the motion to intervene was filed
Fundamentally then, intervention is never an only on 16 September 1994, or on the fifteenth (15th) day
independent action but is ancillary and supplemental to an after the First Division had promulgated the decision, and
existing litigation. Its purpose is not to obstruct nor after petitioner Mayor Alfredo Lim complied with or
unnecessarily delay the placid operation of the machinery voluntarily satisfied the judgment. The latter act brought
of trial, but merely to afford one not an original party, yet to a definite end or effectively terminated G.R. No. 115044.
having a certain right or interest in the pending case, the Consequently, intervention herein is impermissible under
opportunity to appear and be7 joined so he could assert or the rules. To grant it would be a capricious exercise of
protect such right or interest. discretion. The decision10
of this Court in Director of Lands
The grant of an intervention is left to the discretion of vs. Court of Appeals cannot be used to sanction such
the court. Paragraph (b), Section 2, Rule 12 of the Rules of capriciousness for such decision cannot be expanded
Court provides: further to justify a new doctrine on intervention. In the
first place, the motions to intervene in the said case were
(b) Discretion of court.—In allowing or disallowing a motion for filed before the rendition by this Court of its decision
intervention, the court, in the exercise of discretion, shall consider therein. In the second place, there were unusual and
whether or not the intervention will unduly delay or prejudice the peculiar circumstances in the said case which this Court
adjudication of the rights of the original parties and whether or took into account. Of paramount importance was the fact
not the intervenor's rights may be fully protected in a separate that the prospective intervenors were indispensable
proceeding. parties, and so this Court stated therein:
It is thus clear that, by its very nature, intervention 8 But over and above these considerations and circumstances which
presupposes an existing litigation or a pending case, and We have pointed out, there is the basic and fundamental
by the opening paragraph of Section 2, Rule 12 of the Rules requirement under the Rules of Court/ Section 7, Rule 3, that
of Court, it may be properly filed only before or during the “Parties in interest without whom no final determination can be
trial of the said case. Even if it is filed before or during the had of an action shall be joined either as plaintiff or defendants.”
trial, it should be denied if it will The joinder of indispensable parties is compulsory under any and
all conditions, their presence being a sine qua non of the exercise
_______________ of judicial power. [Borlasa vs. Polistico, 47 Phil. 345, 348].
the herein movants, Greenfield Development Corporation,
3 Trazo vs. Manila Pencil Co., 1 SCRA 403 [1961], citing Felismino vs.
Alabang Development Corporation, Ramon D. Bagatsing, and all
Gloria, supra note 2; Bool vs. Mendoza, G.R. No. L-5339, 17 April 1953.
buyers from them, at least those with ostensible proprietary
4 Lichauco vs. Court of Appeals, 63 SCRA 123 [1975]. interests as the MERALCO, Alabang Hills Subdivision, Cielito
5 Trazo vs. Manila Pencil Co., supra note 3, citing Lim Tek Goan vs. Homes Subdivision, Tahanan Village, the Ministry of Highways
Azores, 76 Phil. 363 [1946]; El Hogar Filipino vs. National Bank, 64 Phil. insofar as the South Super Highway is affected, are indispensable
582 [1937]. parties to these proceedings as it has been shown affirmatively
6 Rizal Surety and Insurance Co. vs. Tan, 83 Phil. 732 [1949]. that; they have such an interest in the controversy or subject
7 Garcia vs. David, supra note 2 at 282; 59 Am Jur 2d 575; 67 C.J.S. matter that a final adjudication cannot be made,
975; Clareza vs. Rosales, G.R. No. L-15364, 31 May 1961, 59 O.G. No. 23,
3605.
______________
8 Garcia vs. David, supra note 2.
9 Batama Farmers’ Cooperative Marketing Association, Inc. vs. Rosal,
683
42 SCRA 408 [1971].
10 93 SCRA 238 [1979].
VOL. 240, JANUARY 27, 1995 683
684
Lim vs. Pacquing
684 SUPREME COURT REPORTS ANNOTATED 685

Lim vs. Pacquing

VOL. 240, JANUARY 27, 1995 685
in their absence, without injuring or affecting such interest. The Lim vs. Pacquing
joinder must be ordered in order to prevent multiplicity of suits,
so that the whole matter in dispute may be determined once and
Considering then that the intervention in the case at bar
for all in one litigation.
was commenced only after the decision had been executed,
And, squarely on the aspect of intervention, it found that a suspension of the Rules to accommodate the motion for
the denial thereof intervention and the intervention itself would be arbitrary.
The Government is not without any other recourse to
will lead the Court to commit an act of injustice to the movants, to protect any right or interest which the decision might have
their successors-in-interest and to all purchasers for value and in impaired.
good faith and thereby open the door to fraud, falsehood and May the motion to intervene and intervention proper be,
misrepresentation, should intervenors’ claims be proven to be nevertheless, treated as a petition for quo warranto? The
true. For it cannot be gainsaid that if the petition for majority opinion answers it in the affirmative because all
reconstitution is finally granted, the chaos and confusion arising the essential requisites for a petition for quo warranto are
from a situation where the certificates of title of the movants present in said pleadings. I am almost tempted to agree
covering large areas of land overlap or encroach on properties the with that opinion if not for the fact that there is pending
title to which is being sought to be reconstituted by private before the Regional Trial Court of Manila Civil Case No.
respondent, who herself indicates in her Opposition that, 94–71656 which is a petition for prohibition, mandamus,
according to the Director of Lands, the overlapping embraces injunction, and damages filed by the Associated
some 87 hectares only, is certain and inevitable. Development Corporation against Executive Secretary
Guingona and then Games and Amusement Board (GAB)
Then too, it may be stressed that said case originated from Chairman Sumulong. That is the more appropriate forum
a proceeding to reconstitute a certificate of title filed by where the Government and petitioner Guingona may
private respondent. After trial, the Court of First Instance challenge the validity of ADC’s franchise. Its filing was
issued an order denying the petition for insufficiency of provoked by the withdrawal by the GAB of the provisional
evidence. After a motion for new trial was granted and a authority it granted to ADC in view of the 13 September
hearing to receive the newly discovered evidence was 1994 directive of Executive Secretary Guingona informing
completed, the court issued an order again denying the the GAB of sufficient bases to hold in abeyance the
reconstitution sought for as it still doubted the authenticity operation of the jai-alai until the legal questions stated
and genuineness of the Transfer Certificate of Title sought therein are properly resolved. Said legal questions go into
to be reconstituted. The private respondent appealed the the validity of the franchise issued to ADC. Consequently,
order to the Court of Appeals which thereafter promulgated it is to be logically presumed that for its affirmative
a decision reversing the aforesaid orders of the trial court. defenses in Civil Case No. 94–71656 the Government would
The Director of Lands, which was the remaining oppositor, raise the same issues raised in the intervention in G.R. No.
filed a motion for a new period to file a motion for 117263.
reconsideration of the decision alleging excusable Accordingly, I vote to deny the motion for intervention in
negligence. Private respondent filed an opposition thereto. G.R. No. 115044.
Without waiting for the resolution of the motion, the
Director filed a motion to admit the motion for II
reconsideration attaching thereto said motion for
reconsideration. The Court of Appeals issued a resolution However, I vote to partially grant the petition in G.R. No.
denying both motions on the ground that the decision had 117263 insofar as wagering or betting on the results of jai-
already become final This was the resolution which the alai is concerned. The temporary restraining order and the
Director assailed in his petition for review filed with this preliminary mandatory injunction issued by respondent
Court. Judge cannot legally and validly allow such wagering and
betting. It was precisely for this reason that I earlier voted
to grant a temporary restraining order in G.R. No. 115044 Manila/ under the five conditions enumerated in subparagraphs ‘a’ to ‘e’
and G.R. No. 117263 to restrain wager- of Section 1 of the Ordinance. By a simple reading of these ‘terms and
conditions’ patently shows that subparagraphs ‘b’ to ‘e’ are clearly
686
conditions that will only come into play after the jai-alai has been put up
or established; while the condition under subparagraph ‘a’
686 SUPREME COURT REPORTS ANNOTATED
687
Lim vs. Pacquing

VOL. 240, JANUARY 27, 1995 687

ing or betting. I wish to reiterate here what I stated in my
supplemental concurring opinion in G.R. No. 115044: Lim vs. Pacquing

Secondly, to make my position clear that the dismissal of the appears to have been complied with satisfactorily by the petitioner, since
petition should not be construed as compelling the City of Manila no objection at all has been made by respondents to the proposed site for
to authorize gambling by allowing betting on the results of jai- jai-alai fronton, that is, the 25,000 sq. m. land area behind the present
alai. The decision merely dismissed the petition because the Harrison Plaza Complex located at Ermita, Manila.”
Court found “no abuse of discretion, much less lack or excess of
jurisdiction, on the part of the respondent judge” in issuing the Consequently, the Mayor’s Permit sought to be renewed or the
challenged order directing the petitioner to issue a permit or motion before the lower court to compel the Mayor to renew it,
license in favor of the private respondent pursuant to Ordinance has reference only to subparagraph (a), Section 1 of Ordinance
No. 7065. That order was to enforce the final and executory No. 7065. The renewal of the permit can by no stretch of the
decision of the Regional Trial Court of 9 September 1988 in Civil imagination be taken as a final contract between the private
Case No. 88–45660, the appeal therefrom to the Court of Appeals respondent and the City of Manila for otherwise it would remove
by the City of Manila having been withdrawn by it on 9 February the power and authority of the Mayor under the ordinance to
1989. That decision ordered the City of Manila to immediately impose “other terms and conditions as he may prescribe for good
issue to the private respondent “the permit/license required under reasons of general interest.”
Ordinance No. 7065.” The City of Manila did in fact issue the It follows then that the Mayor’s Permit ordered by the trial
required permit or license to the private respondent for the court to be issued to the private respondent is not a license or
operation of the jai-alai in Manila for the years 1988 to 1992. authority to allow betting or wagering on the results of the jai-
Nevertheless, when the jai-alai complex was almost completed, alai games. Jai-alai is a sport based on skill. Under Article 197 of
the City Mayor refused to renew the Mayor’s Permit. the Revised Penal Code, before it was amended by P.D. No. 1602,
There is a clear distinction between the initial duty of the City betting upon the result of any boxing or other sports contests was
Mayor under Ordinance No. 7065 to issue the necessary license or penalized with arresto menor or a fine not exceeding P200.00, or
permit to establish the jai-alai fronton and to maintain and both. Article 2019 of the Civil Code provides that “[b]etting on the
operate the jai-alai, and his subsequent discretion to impose other results of sports, athletic competitions, or games of skill may be
terms and conditions for the final contract relative to such prohibited by local ordinances.”
operation. The trial court specifically said so in its decision of 9 P.D. No. 483, enacted on 13 June 1974, penalizes betting, game
September 1989. Thus: fixing or point shaving and machinations in sports contests,
including jai-alai. Section 2 thereof expressly provides:
“A suggestion has been made in the Answer that a writ of mandamus will
not lie against respondents, particularly the Mayor, because ‘the “
availment of the franchise ... is subject to the terms and conditions which SECTION 2. Betting, game fixing, point shaving or game machinations
the respondent Mayor may impose.’ unlawful.—Game fixing, point shaving, machination, as defined in the
A careful reading, however, of Ordinance 7065 will readily show that preceding Section, in connection with the games of basketball, volleyball,
the discretion, if any, allowed respondent Mayor, under the ordinance, softball, baseball, chess, boxing bouts, ‘jai-alai,’ ‘sipa,’ ‘pelota’ and all
will be exercisable only after the permit, which he is mandated to issue, other sports contests, games or races; as well as betting therein except as
had been issued and the jai-alai fronton is -already operational. The may be authorized by law, is hereby declared unlawful.”
ordinance stipulates that the Mayor is authorized ‘to allow and permit
petitioner to establish, maintain and operate a jai-alai in the City of
The ucceeding Section 3 provides for the penalties.
 On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15, 3270), off-fronton, is illegal and the City of Manila cannot, under the
Prescribing Stiffer Penalties on Illegal Gambling, was enacted to present state of the law, license such betting, The dismissal of the
increase the penalties provided in various “Philippine Gambling petition in this case sustaining the challenged orders of the trial
Laws such as Articles 195–199 of the Revised Penal Code (Forms court does not legalize betting, for this Court is not the legislature
of Gambling and Betting), R.A. No. 3063 (Horse Racing Bookies), under our system of government.
P.D. No. 449 (Cockfighting), P.D. No. 483 (Game Fixing), P.D. No.
510 (Slot Machines) in relation to Opinion Nos. 33 and 97 of the Accordingly, I vote to grant the petition in G.R. No. 117263
Ministry of Justice, P.D. No. 1306 (Jai-alai Bookies), and other and to set aside the questioned temporary restraining order
City and Municipal Ordinances on gambling all over the country.” mid the writ of preliminary mandatory injunction but only
Section 1 thereof reads: to the extent that they allow wagering or betting on the
results of jaialai.
688
689

688 SUPREME COURT REPORTS ANNOTATED

VOL. 240, JANUARY 27, 1995 689
Lim vs. Pacquing
Lim vs. Pacquing
xxx
Both P.D. No. 483 and P.D. No. 1602 were promulgated in the
exercise of the police power of the State, ; SEPARATE OPINION
Pursuant to Section 2 of P.D. No. 483, which was not repealed
by P.D. No. 1602 since the former is not inconsistent with the
latter in that respect, betting in jai-alai is illegal unless allowed KAPUNAN, J.:
by law. There was such a law, P.D. No. 810, which authorized the
Philippine Jai-Alai and Amusement Corporation as follows: Government encroachments oachments on private property
however valid, are always subject to limitations imposed by
“SECTION 2. The grantee or its duly authorized agent may offer, take or the due process and impairment of contracts clauses of the
arrange bets within or outside the place, enclosure or court where the Constitution. The government challenge in the case at
Basque pelota games are held: Provided, That bets offered, taken or bench, ostensibly involving a franchise granted pursuant to
arranged outside the place, enclosure or court where the games are held, legitimate local legislative authority, on the surface
shall be offered, taken or arranged only in places duly licensed by the appears to be an easy one; clothed, as it were in the State’s
corporation. Provided, however, That the same shall be subject to the inherent and almost illimitable prerogative to promote the
supervision of the Board, No person other than the grantee or its duly general welfare and the common good. As the challenge
authorized agents shall take or arrange bets on any pelotari or on the involves a facile conflict between good and evil, between a
game, or maintain or use a totalizator or other device, method or system universally recognized vice and the State’s virtuous
to bet on any pelotari or on the game within or without the place, posture, the instant case lends itself to easy adjudication.
enclosure or court where the games are held by the grantee. Any Not necessarily. Economic realities have blurred
violation of this section shall be punished by a fine of not more than two distinctions. The State itself, though in virtuous garb, has
thousand pesos or by imprisonment of not more than six months, or both at various times allowed a relaxation of existing rules
in the discretion of the Court. If the offender is a partnership, corporation proscribing gambling and devised a system of regulations,
or association, the criminal liability shall devolve upon its president, local and national, through which gambling and otherwise
directors or any officials responsible for the violation.” illicit gaming operations may be maintained by those
licensed to do so; As the system has never been perfect,
However, as stated in the ponencia, P.D. No. 810 was repealed conflict, such as that which exists in the case at bench,
by E.O. No. 169 issued by then President Corazon C. Aquino. I am occasionally arises.
not aware of any other law which authorizes betting in jai-alai. It The constitutionality of P.D. 771 was not in issue in Lim
follows then that while the private respondent may operate the vs. Pacquing, promulgated by the Court’s First Division
jai-alai fronton and conduct jai-alai games, it can do so solely as a last September, 1994, where this court sustained an order
sports contest. Betting on the results thereof, whether within or by Judge Pacquing issued in Civil Case No. 88–45660
compelling Manila Mayor Alfredo S. Lim to issue a permit reference of the case to the Court en banc in G.R. No.
to operate a jai-alai fronton in favor of the Associated 115044. Acting on this motion, the First Division referred
Development; Corporation (ADC) pursuant to Manila City the case to the Court en banc, which, in a resolution dated
Ordinance No. 7065. 2.0 September 1994, accepted the same and required the
After the City of Manila subsequently granted ADC a respondents therein to comment.
permit to operate the jai-alai fronton, Chairman Francisco On October 11, 1994 the Executive Secretary and the
Sumulong, Jr. of the Games and Amusements Board issued new GAB Chairman Domingo Cepeda, Jr. filed with this
on September 9, 1994 a provisional authority to open the Court a petition for certiorari, prohibition and mandamus
fronton subject to certain conditions imposed therein. In assailing Judge Vetino Reyes’ earlier orders.
relation to this, the GAB likewise issued to the ADC, on 12 On October 19,1994, Judge Reyes issued another order
September 1994, License No. 94–008 upon payment of the granting the ADC’s motion for a writ of preliminary
corresponding fees. mandatory injunction against the Executive Secretary and
On September 13, 1994, Executive Secretary Teofisto the GAB Chairman and to compel them to issue the
Guingona directed GAB Chairman Sumulong “to hold in necessary authority, licenses and working permits to the
abeyance the grant of authority or if any has been issued, ADC, its personnel and players.
to withdraw such The government sought leave to file a supplemental
petition (and to admit attached supplemental petition) with
690
urgent prayer

690 SUPREME COURT REPORTS ANNOTATED ______________

Lim vs. Pacquing 1 G.R. No. 117263, Rollo, pp. 7–8,
1
grant of authority” to the ADC. Consequently, on 691
September 14, 1994, the GAB Chairman revoked the
provisional authority issued by his office, until the legal VOL. 240, JANUARY 27, 1995 691
issues raised in the September 13 directive of the Executive
Secretary are resolved in the proper court. Said directive Lim vs. Pacquing
identified the legal issues as centering on 1) the
constitutionality of P.D. 771; 2) the validity of the apparent for a restraining order assailing the October 19, 1994 Order
grant in perpetuity of a municipal franchise to maintain of Judge Reyes. We granted leave to file said supplemental
jai-alai operations; and, 3) the power of the City of Manila petition and to admit supplemental petition and required
to issue a jaialai franchise in view of Executive Order 392 respondents therein to file their comment on October 25,
which transferred from local governments to the GAB the 1994.
power to regulate jai-alai. The ADC maintains its original position that Ordinance
Reacting to the cancellation of its provisional authority No. 7065, enacted pursuant to the Charter of the City of
to maintain jai-alai operations, ADC, on September 15, Manila under Republic Act No. 409 granted a valid and
1994 filed a petition for prohibition, mandamus, injunction subsisting municipal franchise for the operation of the
and damages with prayer for temporary restraining order Basque pelota game jai alai. In response to the
and writ of preliminary injunction in the Manila Regional government’s vehement objections
2
against ADC’s operation
Trial Court against Executive Secretary Guingona and of its gambling operations the ADC for the first time
Chairman Sumulong. The Regional Trial Court of Manila, challenged the constitutional validity of P.D. No. 771
Branch 4, through Judge Vetino Reyes on the same day insofar as it revoked the authority granted to it by
issued an order enjoining the Executive Secretary and the Ordinance No. 7065 as violative of the non-impairment of
GAB Chairman from implementing their directive and contracts and equal protection clauses of the constitution.
memorandum, respectively. Ordinance 7065 reads:
On September 16, 1994 GAB, representing the Republic
Section 1. The Mayor is authorized, as he is hereby authorized to
of the Philippines, filed a motion for intervention, for leave
allow and permit the Associated Development Corporation to
to file a motion for reconsideration-in-intervention and for
establish, maintain and operate a jai-alai in the City of Manila authority granted could best be viewed as a grant of a
under the following terms and conditions and such other terms license or a permit, not a franchise Nowhere is it pretended
and conditions as he (the Mayor) may prescribe for good reasons that Ordinance 7065 is a franchise enacted pursuant to the
of general interest: legislative powers of the Municipal Board of the City of
Manila under Section 18(jj) thereof.
a. That the construction, establishment, and maintenance of The absence of authority of the Manila Municipal Board
the jai-alai shall be at a place permissible under existing to issue a franchise, notwithstanding its legislative powers,
zoning ordinances of Manila; is furthermore evident in the above-cited Charter provision
b. That the games to be played daily shall commence not regulating gambling and other gaming establishments
earlier than 5:00 o’clock (sic) in the afternoon; which enumerates the following powers:
c. That the City of Manila will recieve a share of 2 1/2% of
(jj) To tax, license, permit and regulate wagers or betting by the
the annual gross receipts of all wagers or bets 1/2% of
public on boxing. . , cockpits, jai-alai...as well as grant exclusive
which will accrue to the Games and Amusements Board as
rights to establishments for this purpose, notwithstanding any
now provided by law;
existing law to the contrary.

______________ Clearly then, if Ordinance 7065 merely grants a permit or a

license to operate the jai-alai fronton, I see no conflict with
2 The government contends that 1) Republic Act No. 954 approved on a national law, duly enacted pursuant to legitimate
June 20, 1953 requires a legislative not a municipal franchise and that 2) legislative authority, requiring a legislative franchise to
Sec. 3 of P.D. issued on 20 August 1975 expressly revoked all existing operate certain gambling and gaming operations, generally
franchises and permits issued by local governments to operate all forms of viewed as deleterious to the public welfare and morals, for
gambling facilities. In G.R. No. 117263 the government contends that the the purpose of regulating the same and raising revenue. In
ADC his rid right to the issuance of a preliminary mandatory injunction other words, the national government may well validly
because the ADC had no legislative franchise and that mandamus was not require operators of such establishments to first secure a
available to compel performance of a discretionary function. ; legislative franchise before starting their operations. After
692
securing the proper legislative franchise, they may then
exercise whatever authority granted to them by local

692 SUPREME COURT REPORTS ANNOTATED 693

Lim vs. Pacquing

VOL. 240, JANUARY 27, 1995 693
d. That the corporation will in addition pay to the City an Lim vs. Pacquing  
annual license fee of P3,000.00 and a daily permit fee of
P200.00; legislative bodies pursuant to the permits or licenses
e. That the corporation will to insure its faithful compliance granted by these bodies. This is essentially the spirit
of all the terms and conditions under this ordinance, put ordained by at least two legislative issuances relating to
up a performance bond from a surety acceptable to the jai-alai and other gambling operations passed before and
City, in the amount of at least P30,000.00 after the Manila City Council issued the ADC’s permit to
operate.
xxx In June of 1952, Congress enacted R.A. 392 which
SEC. 3. This ordinance shall take effect upon its approval. forbade the taking or arranging of bets on any basque
pelota game by any person or entity other than one with a
The above-quoted ordinance is notable in two respects: 1) 3
legislative franchise. After the ADC was issued its permit
the absence of a period of expiration suggests that the
by the City of Manila in 1971, President Marcos issued
grant of authority to operate the Basque pelota game jai-
P.D. 771 pursuant to his legislative powers during Martial
alai seems to have been granted in perpetuity and 2) while
Law, which revoked local authority to grant franchises to
the grant of authority under the Ordinance was made
certain gambling operations including jaialai. Section 3
pursuant to R.A. 409, the City Charter of Manila, the
thereof expressly revoked existing gambling franchises The State has every legitimate right, under
5
the police
issued by the local governments. When President Corazon power, to regulate gambling operations by requiring
Aquino cancelled the franchise granted to the Philippine legislative franchises for such operations. Gambling, in all
Jai-alai and Amusement Corporation in 1987, she kept its forms, unless specifically authorized by law and
P.D. 771 intact. carefully regulated pursuant to such law, is generally
I find no incompatibility therefore, between P.D. 771, proscribed as offensive to the public morals and the public
which revoked all authority by local governments to issue good. In maintaining a “state policy” on various forms of
franchises for gambling and gaming establishments on one gambling, the political branches of government are best
hand, and the municipal ordinance of the City of Manila, equipped to regulate and control such activities and
granting a permit or license to operate subject to therefore
6
assume full responsibility to the people for such
compliance with the provisions found therein, on the other policy. Parenthetically, gambling, in all its forms, is
hand, a legislative franchise may be required by the generally immoral.
government as a condition for certain gambling operations. The disturbing implications of a grant of a “franchise,”
After obtaining such franchise, the franchisee may in perpetuity, to the ADC militates against its posture that
establish operations in any city or municipality allowed the government’s insistence that the ADC first obtain a
under the terms of the legislative franchise, subject to local legislative franchise violates the equal protection and
licensing requirements. While the City of Manila granted a impairment of contracts clauses of the Constitution. By
permit to operate under Ordinance No. 7065, this permit or their very nature, franchises are subject to amendment,
authority was at best only a local permit to operate and alteration or revocation by the State whenever appropriate.
could be exercised by the ADC only after it shall have Under the exercise of its police power, the State, through
obtained a legislative franchise. its requirement for permits, licenses and franchises to
This skirts the constitutional issue. Both P.D. 771 and operate, undertakes to regulate what would otherwise be
Ordinance 7065 can stand alongside each other if one looks an illegal activity punished by existing penal laws. The
at the authority granted by the charter of the City of police power to establish all manner of regulation of
Manila together with Ordinance No. 7065 merely as an otherwise illicit, immoral and 7 illegal activities is full,
authority to “allow” and “permit” the operation of jai-alai virtually illimitable and plenary.
facilities within the City of Manila. While the
constitutional issue was raised by the respondent ______________
corporation in the case at bench, I see no valid reason why
4 It is a cardinal principle that this court will first ascertain whether a
construction of a statute is fairly possible by which the constitutional
_______________
question may be avoided. 20 SA 288 (1936).
3 R.A. No. 954, sec. 4 and 5, 5 Basco vs. Pagcor, 197 SCRA 52 (1991).
6 Id.
694 7“It has almost become impossible to limit its sweep.” Barbier vs.
Connoly, 113 U.S. 27 (1884) “It may be said to be that inherent and
694 SUPREME COURT REPORTS ANNOTATED plenary power in the State which enables it to prohibit all things

Lim vs. Pacquing 695

we should jump into the fray of constitutional adjudication

VOL. 240, JANUARY 27, 1995 695
in this case, or on every other opportunity where a
constitutional issue is raised by parties before us. It is a Lim vs. Pacquing
settled rule of avoidance, judiciously framed by the United
States Supreme Court in Ashwander v. TVA4 that where a In Edu v. Ericta8 we defined the police power as “the state
controversy may be settled on a platform other than one authority to enact legislation that may interfere with
involving constitutional adjudication, the court should personal liberty or property in order to promote the general
exercise becoming modesty and avoid the constitutional welfare.” In its exercise, the State may impose appropriate
question. impositions or restraints upon liberty or property in order
9
 9
to foster the common good. Such imposition or restraint warranto.
neither violates the impairment of contracts nor the equal WHEREFORE, on the basis of the foregoing premises,
protection clauses of the 10Constitution if the purpose is judgment is hereby rendered:
ultimately the public good.
Restraints on property are not examined with the same 1. Allowing the Republic to intervene in G.R. No.
11
microscopic scrutiny as restrictions on liberty. Such 115044
restraints, sometimes bordering on outright violations of 2. Declaring that P.D. 771 is a valid and subsisting
the impairments of contract principle have been made by law.
this Court for the general welfare of the12
people. Justice 3. Declaring that the ADC does not possess the
Holmes in Noble State Bank v. Haskel once expansively required legislative franchise to operate the jai-alai
described the police power as “extending to all public under R.A. 954 and P.D. 771.
needs.” Franchise and licensing regulations aimed at
4. Setting aside the writs of preliminary injunction
protecting the public from the pernicious effects of
and preliminary mandatory injunction issued by
gambling are extensions of the police power addressed to a
Judge Vetino Reyes.
legitimate public need.
In Lim vs. Pacquing, I voted to sustain the ADC’s
QUIASON, J., Dissenting Opinion:
position on issues almost purely procedural. A thorough
analysis of the new issues raised this time, compels a I vote: (1) to deny the motion to intervene and motion for
different result since it is plainly obvious that the ADC, reconsideration qua petition for quo warranto in G.R. No.
while possessing a permit to operate pursuant to 115044, and (2) to dismiss the petition for certiorari in G.R.
Ordinance 7065 of the City of Manila, still has to obtain a No. 117263. I shall set forth the reason why
legislative franchise, P.D. 771 being valid and
constitutional. I
On the question of the propriety of the Republic of the
Following the decision of the First Division of this Court on
Philippines’ intervention late in the proceedings in G.R.
September 1,1994 in G.R. No. 115044, the City of Manila
No. 117263, the ADC counsel’s agreeing to have all the
issued on September 7, 1994 the Mayor’s permit and
issues raised by the
Municipal license to Associated Development Corporation
(ADC) upon the latter’s payment of the required fees (G.R.
_______________ No. 115044, Rollo, pp. 253–254, 301).
hurtful to the comfort, safety and welfare of society.” Lake View vs. In his letter dated September 8, 1944 to President Fidel
Rose Hill Cemetery Co. 70 Ill. 191 (1873) See also, U.S. v. Toribio, 15 Phil. V. Ramos, Chairman Francisco Sumulong, Jr. of the Games
85; U.S. vs. Gomez Jesus, 31 Phil. 218; U.S. vs. Pompeya, 31 Phil. 245;
and Amusements Board (GAB) said that he would not
Rubi vs. Provincial Board, 39 Phil. 660, and Edu vs. Ericta, infra, note 6.
authorize the opening of ADC’s jai-alai unless he was given
8 35 SCRA 481, 487.
a clearance from the President and until after ADC had
9 ENRIQUE M. FERNANDO, THE CONSTITUTION OF THE
complied with “all the requirements of the law, such as, the
PHILIPPINES, 515 (1987).
distribution of wager funds, [and] licensing of Pelotaris and
10 Supra, note 5.
other personnel” (Exh. F, Civil Case No. 94–71656, RTC,
11 Supra, note 7, at 518.
Br. 4, Manila; G.R. No. 117263, Rollo, p. 304). ;
12 219 U.S. 104(1911).
In the position paper annexed to the letter, the GAB
Chairman recommended the reopening and operation of
696 the jai-alai, stating in pertinent part:

697
696 SUPREME COURT REPORTS ANNOTATED
Lim vs. Pacquing VOL. 240, JANUARY 27, 1995 697
Lim vs. Pacquing
parties in the case at bench paves the way for us to
consider the petition filed in G.R. No. 117263 as one for quo
‘There are several reasons to justify the operation of Jai-Alai, first “Under and by virtue of the provisions of Section 7 of Executive
and: foremost of which is the generation of much needed revenues Order No. 392, series of 1950, in conjunction with Executive
for the national and local governments, Other significant Order No. 824, series of 1982, this Board has this date granted
justifications are its tourism potential, the provision for ADC represented by Gen. Alfredo B. Yson permit to hold or
employment, and the development of Basque Pelota as an conduct a [sic] jai alai contests/exhibitions on September 12 to
amateur and professional sport. 14,1994, at the Harrison Plaza Complex, located in Harrison
“Specifically, the establishment, maintenance and operation of Plaza, Malate, Manila.
a Jai-Alai fronton in Metro Manila shall be by virtue of the
original and still legally existing franchise granted to the 698

Associated Development Corporation (ADC) by the City

Government of Manila in 1971” (G.R. No. 115044, Rollo, p. 350; 698 SUPREME COURT REPORTS ANNOTATED
Italics supplied).
Lim vs. Pacquing
On September 9, 1994, Chairman Sumulong granted ADC
provisional authority to open, subject to the following “This permit is issued subject to the condition that the Promoter
conditions: shall comply with the provisions of Executive Order No. 824, S.
1982, the rules and regulations, orders and/or policies adopted or
“1. We prohibit you from offering to the public ‘Pick 6’ which may hereafter be adopted by the Board, and with the
and Winner Take All’ betting events until such time conditions set forth in the application for which this permit has
as this Board shall have approved the rules and been granted; and failure on the part of the promoter to comply
regulations prepared by management governing the with any of which shall be deemed sufficient cause for the
mechanics of these events. revocation thereof” (G.R. No. 117263, Rollo, pp. 50, 238, 289).
“2. Licensing of officials and employees whose duties
are connected directly or indirectly with the In compliance with GAB Rules and Regulations, ADC
supervision and operation of jaialai games, as submitted its programs of jai-alai events for approval
mandated by Executive Order 141 dated February (Exhs. O, P and Q, Civil Case No. 94–71656, RTC, Br. 4,
25, 1965, shall be fully complied with by you within Manila; G.R. No. 117263, Rollo, pp. 290–292).
thirty (30) days from date hereof. It appears that as early as May 23, 1994, Jai-Alai de
“3. Any other deficiencies we may discover will be Manila (the business name of ADC’s fronton) had inquired
accordingly rectified by management as directed by from GAB about the laws and rules governing its jai-alai
the Board. operation. In reply, Chairman Sumulong furnished Jai-Alai
de Manila with copies of E.O. Nos. 392 and 824 and the
“4. Failure to comply with any of the rules and
Revised Rules and Regulations for Basque Pelota Games
regulations prescribed by existing laws and lawful
(Exhs. K and L, Civil Case No. 94–71656, RTC, Br. 4,
orders of the Board, may justify
Manila; G.R. No. 117263, Rollo, pp. 301–302).
withdrawal/revocation of this provisional authority
On September 13, 1994, Executive Secretary Teofisto
without prejudice to such administrative sanctions
Guingona, Jr. issued the following Directive to GAB
that the Board may deem proper to impose under
Chairman Sumulong:
the circumstances.
“5. By accepting this provisional authority, Associated “In reply to your letter dated 9 September 1994 requesting for the
Development Corporation (ADC) is deemed to have President’s approval to re-open the Jai-Alai in Manila, please be
agreed to the conditions above provided” (G.R. No. informed that after a review and study of existing laws, there is
117263, Rollo, pp. 8–9, 49, 238, 288). sufficient basis to hold in abeyance the operation of the Jai-Alai
until the following legal questions are properly resolved:
On September 12, 1994, the GAB issued to ADC jai-alai
1. Whether P.D. 771 which revoked all existing Jai-Alai
License No. 94–008 upon payment of the corresponding
franchises issued by local government as of 20 August
permit fee. The license reads as follows:
1975 is unconstitutional.
 2. Assuming that the City of Manila had the power on 7 their respective Directive and Memorandum (G.R. No.
September 1971 to issue a Jai-Alai franchise to Associated 117263, Rollo, pp. 2,10, 44).
Development Corporation, whether the franchise granted On September 16, 1994, Executive Secretary Guingona
is valid considering that the franchise has no duration, and Chairman Sumulong filed an urgent motion to recall
and appears to be granted in perpetuity. the temporary restraining order, with opposition to the
3. Whether the City of Manila had the power to issue a Jai- motion for issuance of a writ of preliminary injunction. The
Alai franchise to Associated Development Corporation on said motion was reiterated in the supplemental motion
7 September 1971 in view of Executive Order No. 392 filed on September 20, 1994 (G.R. No. 117263, Rollo, pp.
dated 1 January 1951 which transferred from local 66–75, 76–86).
governm Games and Amusements Board the power to Meanwhile, on September 16,1994, the Republic of the
regulate Jai-Alai. Philippines, represented by GAB, filed in G.R. No. 115044
a motion for intervention; for leave to file a motion for
699 reconsideration-in-intervention; to admit the attached
motion for reconsiderationin-intervention; and to refer the
case to the Court en banc (Rollo, pp. 219–249). ,
VOL. 240, JANUARY 27, 1995 699
Lim vs. Pacquing 700

“This Office has directed the Solicitor General to bring before the 700 SUPREME COURT REPORTS ANNOTATED
proper court the foregoing issues for resolution. Pending such
Lim vs. Pacquing
resolution, you are directed to hold in abeyance the grant of
authority, or if has been issued, to withdraw such grant of
authority, to Associated Development Corporation to operate the Subsequently, and on the different dates, the Republic filed
Jai-Alai in the City of Manila” (G.R. No. 117263, Rollo, pp. 7–8, in G.R. No. 115044 the following pleadings: “Motion for
48, 1939; Italics supplied). Leave to File Supplemental Motion for Reconsideration-In-
Intervention and to Admit Attached Supplemental Motion
On September 14,1994, Chairman Sumulong issued a For Reconsideration-In-Intervention” (Rollo, pp. 262–265);
Memorandum to ADC stating that: “Supplemental Motion for Reconsideration-In-Intervention”
(Rollo, pp. 266–280); “Motion for Leave to File Second
“ln view of the directive from the Office of the President dated 13 Supplemental Motion for Reconsideration-In-Intervention
September 1994, Associated Development Corporation is hereby and to Admit Attached Second Supplemental Motion For
ordered to cease and desist from operating the Jai-Alai until the Reconsideration-In-Intervention” (Rollo, pp. 380–382); and
legal issues raised in the said directive are resolved by the proper “Second Supplemental Motion for Reconsideration-In-
court. The provisional authority issued pending further scrutiny Intervention” (Rollo, pp. 383–400).
and evaluation to ADC on 9 September 1994 is hereby withdrawn” Acting on the motion of the Republic dated September
(G.R. No. 117263, Rollo, pp. 51, 194; Italics supplied). 16, 1994, the First Division referred, in its Resolution
dated September 19,1994, Case G.R. No. 115044 to the
On September 15, 1994, ADC filed with the Regional Trial Court en banc, and the latter accepted the same in its
Court, Branch 4, Manila a petition for prohibition, Resolution dated September 20, 1994 (Rollo, p. 255).
mandamus, injunction and damages with prayer for In the meantime, Chairman Sumulong resigned and
temporary restraining order or writ of preliminary Dominador R. Cepeda, Jr. was appointed as his successor.
injunction (Case No. 94–71656) against Executive On September 30, 1994, Judge Reyes issued a writ of
Secretary Guingona and Chairman Sumulong assailing the preliminary injunction (G.R. No. 117263, Rollo, pp. 2, 47).
former’s Directive and the latter’s Memorandum (G.R. No. On October 11,1994, Executive Secretary Guingona and
117263, Rollo, pp. 3, 20–21, 53–75, 167–168). GAB Chairman Cepeda, Jr. filed with this Court a petition
On the same day, Judge Vetino Reyes issued a for certiorari, prohibition and mandamus (G.R. No. 117263,
temporary restraining order enjoining Executive Secretary Rollo, pp. 1–151) and on October 24,1994, a supplemental
Guingona and Chairman Sumulong from implementing petition (G.R. No. 117263, Rollo, pp. 161–165, 166–306).
Petitioners assailed the following issuances of Judge Reyes clear right to the issuance of the preliminary mandatory
in Civil Case No. 94–71656: injunction because:

(1) Temporary Restraining Order dated September 15, (1) ADC had no legislative franchise;
1994 directing Executive Secretary Guingona and (2) ADC admitted in G.R. No. 115044 that GAB had no
Chairman Sumulong to desist from enforcing the authority to issue the license or permit subject of
Directive dated September 13, 1994 and the the order in question; and
Memorandum dated September 15, 1994 (Rollo, p.
(3) Mandamus was not available to compel the
44);
performance of a discretionary function (G.R. No.
(2) Order dated September 25, 1994 denying the 117263, Rollo, pp. 182–189).
Urgent Motion to Recall Temporary Restraining
Order and the Urgent Supplemental Motion to On November 2, 1994, ADC and Judge Reyes filed their
Recall Temporary Restraining Order (Rollo, p. 46); Consolidated Comment to the petition and supplemental
(3) Order dated September 30, 1994 directing the petition (G.R. No. 117263, Rollo, pp, 230–305).
issuance of a Writ of Preliminary Injunction On November 25, 1994, the Republic, Executive
directed against the aforesaid Directive and Secretary Guingona and GAB Chairman Cepeda moved for
Memorandum (Rollo, p. 47); the issuance of a restraining order enjoining Judge
(4) Order dated October 19, 1994 granting ADC’s Pacquing and Judge Reyes from enforcing their questioned
Motion to Amend the Petition to Conform to the orders and ADC from operating the jai-alai fronton (G.R.
Evidence and directing the issuance of a writ of No. 117263, Rollo, pp. 629–635). Action on the motion was
preliminary mandatory injunction “directing deferred.
(Executive Secretary and the GAB Chairman), their
successors, repre II

701 G.R. No. 115044

Motion for Intervention
VOL. 240, JANUARY 27, 1995 701 The Republic of the Philippines (Republic) represented by
Lim vs. Pacquing GAB justifies its belated intervention in G.R. No. 115044
on the grounds that “it has an interest involved in this case
and will be
sentatives and any government office/agency acting
for and in their behalf or in implementation of their 702
orders earlier enjoined by a writ of preliminary
injunction issued by this Court on September 30,
702 SUPREME COURT REPORTS ANNOTATED
1994, to issue the necessary authority, licenses and
working permits to x x x Associated Development Lim vs. Pacquing
Corporation, and its personnel and players (Rollo,
pp. 216–217). affected by the Decision dated September 1, 1994” (G.R.
No. 115044, Rollo, p. 225).
They prayed that the trial court be enjoined from The purpose of its intervention is to nullify the decision
conducting further proceedings in Civil Case No. 94–71656 of Judge Augusto E. Villarin of the Regional Trial Court,
and that said case be dismissed. They also filed a motion Branch 40, Manila, dated September 9,1989 in Civil Case
for consolidation of G.R. No. 117263 with G.R. No. 115044 No. 88–45660, which upheld the validity of Ordinance No.
(G.R. No. 117263, Rollo, pp. 152–160). As prayed for, we 7065 of the City of Manila granting ADC a franchise to
considered the two cases together. operate a jai-alai fronton. Mayor Gemiliano Lopez appealed
In their petition in G.R. No. 117263, Executive Secretary said decision to the Court of Appeals, but on February 9,
Guingona and Chairman Cepeda claimed that ADC had no 1989, he filed a Withdrawal of Appeal. The Court of
Appeals approved the withdrawal in a resolution dated
May 5, 1989. An entry of judgment was made by the Court In resolving the first issue, the First Division of this Court
of Appeals on May 26,1989 and by the Regional Trial explained that there was no way to declare the Villarin
Court, Branch 40, Manila, on October 27, 1992, decision null and void because the trial court had
In 1991, the City of Manila filed an action to annul the jurisdiction over the subject matter of the action and if it
franchise of ADC with the Regional Trial Court, Branch 23, failed to rule that Ordinance No. 7065 was nullified by P.D.
Manila (Civil Case No. 91–58913). The complaint was No. 771, that was only an error of judgment. The First
dismissed on December 21, 1991. No appeal was taken Division noted the distinction between a void and an
from said dismissal of the case. erroneous judgment and between jurisdiction and the
The City of Manila filed with this Court a petition for exercise of jurisdiction.
declaratory judgment to nullify the franchise of ADC (G.R. In Tan v. Intermediate Appellate Court, 163 SCRA 752
No. 101768). The petition was dismissed in a resolution (1988), the Court held:
dated October 3, 1991 “for lack of jurisdiction.’ ”
Three members of the Sangguniang Panglunsod of “It is settled jurisprudence that except in the case of judgments
Manila also filed with the Regional Trial Court, Branch 37, which are void ab initio or null and void per se for lack of
Manila, a petition to compel Mayor Lopez to cancel the jurisdiction which can be questioned at any time—and the
permit and license he issued in favor of ADC pursuant to decision here is not of this character—once a decision becomes
Ordinance No. 7065 (Civil Case No. 91–58930). The final, even the court which has rendered it can no longer alter or
petition was dismissed on June 4,1992. No appeal was modify it, except to correct clerical errors or mistakes. Otherwise,
taken from said dismissal of the case. there would be no end to litigation, thus setting to naught the
In the Motion for Reconsideration-in-Intervention, main role of courts of justice, which is, to assist in the
Supplemental Motion for Reconsideration-in-Intervention enforcement of the rule of law and the maintenance of peace and
and Second Supplemental Motion for Reconsideration-in- order, by settling justifiable controversies with finality.” (See also
Intervention, the Republic merely claimed that Ordinance Fabular v. Court of Appeals, 119 SCRA 329 [1982]; Fariscal Vda.
No. 7065 had been repealed by P.D. No. 771 (Rollo, pp. de Emnas v. Emnas, 95 SCRA 470 [1980]; Ocampo v. Caluag, 19
228–248), that the authority to issue permits and licenses SCRA 971 [1967]).
for the operation of jai-alai had been transferred to GAB by
As to the second issue, the First Division held that the
E.O. No. 392 of President Quirino effective July 1, 1951
fiveyear period for executing a judgment by simple motion
and that ADC was never issued a franchise by Congress
under Section 6 of Rule 39 of the Revised Rules of Court
(Rollo, pp. 383–390). Nowhere in its pleadings did the
should be counted from the finality of the judgment and not
Republic point out where the First Division erred in
from the date of its promulgation as was done by Mayor
resolving the two grounds of the petition for certiorari in
Lim and the City of Manila. Inasmuch as the Villarin
G.R. No. 115044, which were:
decision was appealed to the Court of Appeals and the
703 authority to withdraw the appeal was approved by the
Court of Appeals only on May 26,1989, the fiveyear period
should be counted, at the earliest, from May 26,1989;
VOL. 240, JANUARY 27, 1995 703 Reckoning the five-year period from said date, the motion
Lim vs. Pacquing for execution of the Villarin decision was filed timely on
March 14,
(1) The decision of Judge Villarin dated September 704
9,1988 in Civil Case No. 88–45660 is null and void
for failure to rule that P.D. No. 771 had revoked
Ordinance No. 7065; and 704 SUPREME COURT REPORTS ANNOTATED
(2) The decision of Judge Villarin could not be executed Lim vs. Pacquing
by a mere motion filed on March 14,1994, or more
than five years and six months after its 1994.
promulgation. Intervention as contemplated by Section 9, Rule 12 of
the Revised Rules of Court is a proceeding whereby a third
person is permitted by the court “before or during a trial” to executory (Trazo v. Manila Pencil Co., 77 SCRA 181
make himself a party by joining plaintiff or uniting with [1977]).
defendant or taking a position adverse to both of them The case of Suson v. Court of Appeals, 172 SCRA 70
(Gutierrez v. Villegas, 5 SCRA 313 [1962]). The term “trial” (1989) invoked by the Republic (G.R. No. 117263, Rollo, pp.
is used in its restrictive sense and means the period for the 517–518) is inappropriate because the intervention therein
introduction of evidence by both parties (Bool v. Mendoza, was before the trial court, not in this Court.
92 Phil. 892 [1953]; Provincial Government of Sorsogon v. In its Reply, the Republic admitted that the First
Stamatelaky, 65 Phil. 206 [1937]). The period of trial Division only ruled on the procedural issues raised in the
terminates when the period of judgment begins (El Hogar petition and not on the constitutionality of P.D. No. 771. It
Filipino v. Philippine National Bank, 64 Phil. 582 [1937]). even urged that GAB was not a party to the case and
Intervention as an action is not compulsory. As deduced therefore was not bound by the Villarin decision because
from the permissive word “may” in the Rule, the availment under Section 49 of Rule 39, a judgment is conclusive only
of the remedy is discretionary on the courts (Garcia v. “between the parties and their successors-in-interest by
David, 67 Phil. 279 [1939]). An important factor taken into title subsequent to the commencement of the action or
consideration by the courts in exercising their discretion is special proceeding, litigating for the same thing and under
whether the intervenor’s rights may be fully protected in a the same title and in the same capacity” (Rollo, pp. 228–
separate proceeding (Peyer v. Martinez, 88 Phil. 72 [1951]). 234, 431).
The case of Director of Lands v. Court of Appeals, 93 With more reason then that the Republic should have
SCRA 238 (1979), can not serve as authority in support of ventilated its claim against ADC in a separate proceeding.
the Republic’s intervention at this late stage, While said Lastly, an intervenor should not be permitted to just sit
case involved an intervention for the first time in the idly and watch the passing scene as an uninterested
Supreme Court, the motion to be allowed to intervene was overlooker before he wakes up to seek judicial relief
filed before the appeal could be decided on the merits. The (Pacursa v. Del Rosario, 24 SCRA 125 [1968]).
intervention allowed in Republic v. Sandiganbayan, G.R. The Office of the President was aware of the plans of
No. 96073, Resolution, March 3, 1992, was also made ADC to start operation as early as 1988. On May 5, 1988,
before the decision on the merits by this Court. In contrast, ADC informed said Office of its intention to operate under
the intervention of the Republic was sought after this Ordinance No. 7065. The said Office perfunctorily referred
Court had decided the petition in G.R. No. 115044 and the letter of ADC to the Manila mayor, implying that the
petitioners had complied with and satisfied the judgment. matter was not the concern of the National Government.
While the intervention in Director of Lands was in a case
that was timely appealed from the Regional Trial Court to Motion qua
the Court of Appeals and from the Court of Appeals to the Quo Warranto petition
Supreme Court, the intervention of the Republic was in a Be that as it may, the Court may consider the motion to
case that had become final and executory more than five intervene, motion for reconsideration-in-intervention,
years prior to the filing of the motion to intervene. supplemental motion for reconsideration-in-intervention
As of September 16,1994, therefore, when the Republic and second supplemental motion-in-intervention as a
moved to intervene, there was no longer any pending petition for quo warranto under Rule 66 of the Revised
litigation between the parties in G.R. No. 115044. Rules of Court. In the liberal construction of the Rules in
Intervention is an auxiliary and supplemental remedy to order to attain substantial justice, the Court has treated
an existing, not a settled litigation (cf. petitions filed under one Rule as
705 706

VOL. 240, JANUARY 27, 1995 705 706 SUPREME COURT REPORTS ANNOTATED
Lim vs. Pacquing Lim vs. Pacquing

Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention petitions filed under the more appropriate Rule (Davao
was disallowed in a case which has become final and Fruits Corporation v. Associated Labor Union, 225 SCRA
562 [1993]). a. That the construction, establishment and maintenance of
In quo warranto, the government can require a the jai-alai shall be at a place permissible under existing
corporation to show cause by what right it exercises a zoning ordinances of Manila;
privilege, which ordinarily can not legally be exercised b. That the games to be played daily shall commence not
except by virtue of a grant from the state. It is a proceeding earlier than 5:00 o’clock (sic) in the afternoon;
to determine the right to the use of a franchise or exercise c. That the City of Manila will receive a share of 2 1/2% on
of an office and to oust the holder from its enjoyment if his the annual gross receipts on all wagers or bets, 1/2% of
claim is not well-founded (Castro v. Del Rosario, 19 SCRA which will accrue to the Games and Amusements Board as
196 [1967]). now provided by law;
All the essential requisites for a petition for quo
d. That the corporation will, in addition, pay to the city an
warranto are compresent. The motions were filed by the
annual license fee of P3,000.00 and a daily permit fee of
Solicitor General for the Republic of the Philippines,
P200.00;
represented by GAB, to question the right of ADC to
operate and maintain the jai-alai. e. That the corporation will, to insure its faithful compliance
The motions qua petition for quo warranto assert that of all the terms and conditions under this ordinance, put
the authority of the City of Manila to issue to ADC a jai- up a performance bond from a surety acceptable to the
alai franchise in 1971 had been withdrawn by E.O. No. 392 city, in the amount of at least P30,000.00.
in 1951 and by R.A. No. 954 in 1954 and that assuming the
“SEC. 2. The Mayor and the City Treasurer or their duly
issuance of the franchise to ADC in 1971 under Ordinance
authorized representatives are hereby empowered to inspect at all
No. 7065 was valid, such franchise, together with whatever
times during regular business hours the books, records and
authority of the City of Manila to grant the same, was
accounts of the establishment, as well as to prescribe the manner
voided by P.D. No. 771 in 1975.
in which the books and financial statement of the entrepreneur
In the case of Stone v. State of Mississippi, 101 U.S. 814,
shall be kept.
cited by the Republic, the State Attorney General resorted
“SEC. 3. This ordinance shall take effect upon its approval.
to a quo warranto proceeding to question the authority of
“Enacted originally by the Municipal Board on September 7,
petitioner therein to operate and maintain a gambling
1971; vetoed by the Mayor on September 27, 1971; modified and
establishment.
amended by the Municipal Board at its regular session today,
The franchise of ADC granted by the City of Manila
October 12, 1971.
under Ordinance No. 7065 reads as follows:
“Approved by His Honor, the Mayor on 13 November 1971.”
“AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW
AND PERMIT THE ASSOCIATED DEVELOPMENT The said Ordinance was enacted pursuant to Section 18(jj),
CORPORATION TO ESTABLISH, MAINTAIN AND OPERATE the Charter of the City of Manila (R. A. No. 409), which
A JAI-ALAI IN THE CITY OF MANILA, UNDER CERTAIN took effect in 1949. The charters of two other cities—
TERMS AND CONDITIONS AND FOR OTHER PURPOSES. Quezon City and Cebu City—contained a similar
“Be it ordained by the Municipal Board of the City of Manila, delegation of authority to grant jai-alai franchises.
that: Said Section 18(jj) provides:
SECTION 1. The Mayor is authorized, as he is hereby “Legislative powers.—The Municipal Board shall have the
authorized to allow and permit the Associated Development following legislative powers:
Corporation to establish, maintain and operate a jai-alai in the xxx      xxx      xxx
City of Manila, under the following terms and conditions and such (jj) To tax, license, permit and regulate wagers or betting by
other terms and conditions as he (the Mayor) may prescribe for the public on boxing, sipa, bowling, billiards, pools, horse or dog
good reasons of general interest: races, cockpits, jai-alai, roller or ice-skating or any sporting or
athletic contests, as well as grant exclusive rights to
707
establishments for this purpose, notwithstanding any existing law
to the contrary.”
VOL. 240, JANUARY 27, 1995 707
708
Lim vs. Pacquing
708 SUPREME COURT REPORTS ANNOTATED
Lim vs. Pacquing “No person, or group of persons, other than the operator or
maintainer of a fronton with legislative franchise to conduct
basque pelota (jai-alai), shall offer, take or arrange bets on any
A. It is the posture of the Republic that the power of local
basque pelota game or event, or maintain or use a totalizer or
governments to issue franchises for the operation of jai-alai
other device, method or system to bet or gamble or any basque
was “consolidated and transferred” to the GAB under E.O.
pelota game or event.” .
No. 392. In its Supplemental Motion for Reconsideration-
In-Intervention filed on September 27, 1994, the Republic Republic Act No. 954 did not expressly repeal Section 18(jj).
averred: In such a case, if there is any repeal of the prior law by the
“12. As early as 1951, the power of the local governments to issue later law, it can only be by implication. Such kind of
licenses and permits for the operation of jai-alai was “consolidated repeals is not favored. There is even a presumption against
and transferred” to the Games and Amusements Board under repeal by implication (The Philippine American
E.O. No. 392 issued by then President Elpidio Quirino (sic) took Management Co. Inc. v. The Philippine American
effect on January 1, 1951. Thus, in 1971, the City of Manila was Management Employees Association, 49 SCRA 194 [1973]).
without authority to enact an ordinance authorizing the City In the absence of an express repeal, a subsequent law
Mayor to issue a license/permit to private respondent for the can not be construed as repealing a prior law unless an
operation of jai-alai in Manila” (Rollo, pp. 271–272). , irreconcilable inconsistency and repugnancy exist in the
terms of the new and old law (Iloilo Palay and Corn
Furthermore, the Republic alleged: Planters Association, Inc. v. Feliciano, 13 SCRA 377
[1965]).
“13. Such consolidation and transfer of power manifest the policy But more importantly, the rule in legal hermeneutics is
of the Government to centralize the regulation, through that a special law, like the Charter of the City of Manila, is
appropriate institutions, of all games of chance authorized by not deemed repealed by a general law, like R.A. No. 954
existing franchises or permitted by law. x x x” (Rollo, p. 272). (Commissioner of Internal Revenue v. Court of Appeals,
207 SCRA 487 [1992]),
There is no need to dwell upon this argument for
In a way also, Ordinance No. 7065 can be considered a
surprisingly it was the Republic itself that repudiated it
“legislative franchise” within the purview of R.A. No. 954,
albeit after wrongfully attributing the argument to ADC.
having been enacted by the Municipal Board of the City of
In its Reply filed on November 9, 1994, the Republic
Manila pursuant to the powers delegated to it by the
stated that: “Contrary to respondent ADC’s claim, it is not
legislature. A grant, under a delegated authority, binds the
the position of the GAB that it is the body which grants
public and is considered the act of the state. “The franchise
franchises for the jaialai either under E.O. No. 392 or
[granted by the delegate] is a legislative grant, whether
under P.D. No. 771 x x x” (Rollo, p. 420).
made directly by the legislature itself or by any one of its
For certain, E.O. No. 392 merely reorganized the
properly constituted instrumentalities” (36 Am Jur 2d.
different departments, bureaus, offices and agencies of the
734).
government. There is absolutely nothing in the executive
As held in Wright v. Nagle, 101 U.S. 921, the grant of a
issuance which vests on GAB the power to grant, much less
franchise by the legislature may be done in two ways:
revoke, franchises to operate jai-alais.
B. After its volte-face, the Republic next claims that R.A. “lt may exercise this authority by direct legislation, or through
No. 954 had repealed Section 18(jj) and that after the agencies duly established having power for that purpose. This
effectivity of said law, only Congress could grant franchises grant when made binds the public, and is, directly or indirectly,
to operate jaialais. the Act of the State. The easement is a legislative grant, whether
Section 4 of R.A. No. 954 provides: made directly by the legislature itself, or by any one of its properly
constituted instrumentalities” (Justice of Pike Co. v. Plank Road,
709
11 Ga. 246; Italics supplied).

VOL. 240, JANUARY 27, 1995 709 710

Lim vs. Pacquing

710 SUPREME COURT REPORTS ANNOTATED VOL. 240, JANUARY 27, 1995 711
Lim vs. Pacquing Lim us. Pacquing

If the intention of Congress in enacting R.A. No. 954 was to basis for classification of the first and the second grantees.
repeal Section 18(jj), it could have used explicit language to The only basis for distinction we can think of is that the
that effect in order not to leave room for interpretation. second grantee was Benjamin Romualdez, a brother-in-law
If R.A. No. 954 repealed Section 18(jj), why did of President Marcos.
President Marcos still;issue P.D. No. 771, expressly Section 3 violated the due process clause of the
revoking the authority of the local governments to issue jai- Constitution, both in its procedural and substantive
alai franchises? It can never be presumed that the aspects. The right to due process is guaranteed by the same
President deliberately performed useless acts. Section 1 of Article IV of the 1973 Constitution.
C. The claim of the Republic that P.D. No. 771 had Ordinance No. 7065, like any franchise, is a valuable
removed the power of local governments to grant franchises property by itself. The concept of “property” protected by
for the maintenance and operation of jai-alai is a non-issue. the due process clause has been expanded to include
The issue raised by ADC is whether Section 3 of P.D. No. economic interests and investments. The rudiments of fair
771 validly cancelled Ordinance No. 7065, an issue entirely play under the “procedural due process” doctrine require
different from the claim of the Republic that P.D. No. 771 that ADC should at least have been given an opportunity to
had. revoked the power of the City of Manila to grant jai- be heard in its behalf before its franchise was cancelled,
alai franchises. more so when the same franchise was given to another
Insofar as it is applied to Ordinance No. 7065, Section 3 company.
of P.D. No. 771 suffers from constitutional infirmities and Under the “substantive due process” doctrine, a law may
transgresses several constitutional provisions, Said Section be voided when it does not relate to a legitimate end and
3 provides: when it unreasonably infringes on contractual and property
rights. The doctrine as enunciated in Allgeyer v. Louisiana,
“All existing franchises and permits issued by local governments 165 U.S. 578 (1897) can be easily stated, thus: the
are Hereby revoked and may be renewed only in accordance with government has to employ means (legislation) which bear
this Decree.” some reasonable relation to a legitimate end (Nowak,
Rotunda and Young, Constitutional Law 436, 443 [2d ed]).
Section 3 violated the equal protection clause (Section 1 of
When President Marcos issued P.D. No. 771, he did not
Article IV) of the 1973 Constitution, which provided:
have public interest in mind; otherwise, he would have
“No person shall be deprived of life, liberty, or property without simply outlawed jai-alai as something pernicious to the
due process of law, nor shall any person be denied the equal public. Rather, all what he wanted to accomplish was to
protection of the laws” monopolize the grant of jaialai franchises.
The motivation behind its issuance notwithstanding,
Less than two months after the promulgation of P.D. No. there can be no constitutional objection to P.D. No. 771
771, President Marcos issued P.D. No. 810, granting the insofar as it removed the power to grant jai-alai franchises
Philippine Jai-Alai and Amusement Corporation (PJAC) a from the local governments. We said so in Basco v. Pagcor,
franchise to operate jai-alai within the Greater Manila 197 SCRA 52 (1991), The constitutional objection arises,
Area. It is obvious that P.D. No. 771 was decreed to cancel however, when P.D. No. 771 cancelled all the existing
the franchise of ADC so that the same could be given to franchises. We search in vain to find any reasonable
another entity under P.D. No. 810. relation between Section 3 of P.D. No. 771 and any
A facially neutral statute (P.D. No. 771) may become legitimate ends of government intended to be achieved by
discriminatory by the enactment of another statute (P.D. its issuance. Besides, the grant of a franchise to PJAC
No. 810) which allocates to a favored individual benefits exposed P.D. No. 771 as an exercise of arbitrary power to
withdrawn under the first statute (Ordinance No. 7065), divest ADC of its property rights.
and when there is no valid
712
711
712 SUPREME COURT REPORTS ANNOTATED VOL. 240, JANUARY 27, 1995 713
Lim vs. Pacquing Lim vs. Pacquing

Section 3 also violated Section 1 of Article VIII of the 1973 D. The Republic hypothesized that the said Constitutional
Constitution, which provided: guarantees presuppose the existence of a contract or
“Every bill shall embrace only one subject which shall be
property right in favor of ADC. It claims that Ordinance
expressed in the title thereof.”
No. 7065 is not a franchise nor is it a contract but merely a
privilege for the purpose of regulation.
The title of P P.D. No. 771 reads as follows: Ordinance No. 7065 is not merely a personal privilege
that can be withdrawn at any time. It is a franchise that is
“REVOKING ALL POWERS AND AUTHORITY OF LOCAL protected by the Constitution.
GOVERNMENT TO GRANT FRANCHISE, LICENSE OR The distinction between the two is that a privilege is
PERMIT AND REGULATE WAGERS OR BETTING BY THE bestowed out of pure beneficence on the part of the
PUBLIC ON HORSE AND DOG RACES, JAI-ALAI OR BASQUE government, There is no obligation or burden imposed on
PELOTA, AND OTHER FORMS OF GAMING.” the grantee except maybe to pay the ordinary license and
permit fees. In a franchise, there are certain obligations
The title of P.D. No. 771 refers only to the revocation of the
assumed by the grantee which make up the valuable
power of local governments to grant jai-alai franchises. It
consideration for the contract. That is why the grantee is
does not embrace nor even intimate the revocation of
first required to signify his acceptance of the terms and
existing franchises.
conditions of the grant. Once the grantee accepts the terms
Lastly, Section 3 impaired the obligation of contracts
and conditions thereof, the grant becomes a binding
prohibIted by Section 11 of Article IV of the 1973
contract between the grantor and the grantee.
Constitution.
Another test used to distinguish a franchise from a
As authorized by Section 18(jj), Ordinance No. 7065
privilege is the big investment risked by the grantee. In
grants ADC a permit “to establish, maintain and operate a
Papa v. Santiago, supra, we held that this factor should be
jai-alai in the City of Manila, under the following terms
considered in favor of the grantee. A franchise in which
and conditions and such other terms and conditions as he
money has been expended assumes the character of a
[the Mayor] may prescribe for good reasons of general
vested right (Brazosport Savings and Loan Association v.
interest.” (Rollo, p. 24).
American Savings and Loan Association, 161 Tex. 543, 342
Section 11 of Article IV of the 1973 Constitution
S.W. 2d. 747).
provided:
The cases cited by the Republic to the effect that
“No law impairing the obligation of contracts shall be passed.” gambling permits or licenses issued by municipalities can
be revoked when public interest so requires, have never
Any law which enlarges, abridges, or in any manner addressed this issue, obviously because there were no
changes the intention of the parties, necessarily impairs significant financial investments involved in the operation
the contract itself (U.S. v. Conde, 42 Phil. 766 [1922]; of the permits or licenses.
Clemons v. Nolting, 42 Phil. 702 [1922]). A franchise But assuming that Ordinance No. 7065 is a mere
constitutes a contract between the grantor :and the privilege, still. over the years, the concept of a privilege has
grantee. Once granted, it may not be invoked unless there changed. Under the traditional form of property ownership,
are valid reasons for doing so (Papa v. Santiago, 105 Phil. recipients of privileges, benefits or largesse from the
253 [1959]). A franchise is not revocable at the will of the government may be said to have no property rights because
grantor after contractual or property rights thereunder they have no traditionally recognized proprietary interest
have become vested in the grantee, in the absence of any therein. The cases of Vinco v. Municipality of Hinigaran, 41
provision therefor in the grant or in the general law (Grand Phil. 790 (1917) and Pedro v. Provincial Board of Rizal, 56
Trunk Western R. Co. v. South Bend, 227 U.S. 544). Phil. 123 (1931), holding that a license to operate cockpits
is a mere privilege, belong to this vintage. However, the
713
right-privilege dichotomy has come to an
 714 places mentioned in the certificate submitted by the
Republic is within the 200-meter radial distance, “center to
center” from the ADC’s jaialai building (Rollo, p. 260). How
714 SUPREME COURT REPORTS ANNOTATED
this variance in measurement came about is a matter that
Lim vs. Pacquing should have been submitted before

715
end when the courts have realized that individuals should
not be subjected to the unfettered whims of government
officials to withhold privileges previously given them (Van VOL. 240, JANUARY 27, 1995 715
Alstyne, The Demise of the Right—Privilege Distinction in
Lim vs. Pacquing
Constitutional Law, 81 Harvard L.R. 1439 [1968]). To
perpetuate such distinction would leave many individuals
at the mercy of government officials and threaten the the trial court for determination.
liberties protected by the Bill of Rights (Nowak, Rotunda However, the operative law on the siting of jai-alai
and Young, Constitutional Law 546 [2nd ed]). establishments is no longer E.O. No. 135 of President
That a franchise is subject to regulation by the state by Quirino but R.A. No. 938 as amended by R.A. No. 1224.
virtue of its police power is conceded. What is not Under said law only night clubs, cabarets, pavilions, or
acceptable is the Republic’s proposition that the power to other similar places are covered by the 200-lineal meter
regulate and supervise includes the power to cancel the radius. In the case of all other places of amusements except
franchise altogether. cockpits, the proscribed radial distance has been reduced to
The stance of the Republic that the gambling franchises 50 meters. With respect to cockpits, the determination of
it issues are not covered by the constitutional mantle the radial distance is left to the discretion of the municipal
protecting property rights is ill-advised considering that it council or city board (Sec. 1).
is planning to operate gambling establishments involving F. The Republic also questions the lack of the period of
substantial foreign investments in putting up the facilities the grant under Ordinance No. 7065, thus making it
thereof. indeterminate (G.R. No. 117263, Rollo, pp. 500–505). The
The belabored arguments of the Republic on the evils of ordinance leaves it to the Mayor of the City of Manila to lay
gambling fall to the ground upon a showing that ADC is down other terms and conditions of the grant in addition to
operating under an existing and valid franchise (Rollo, pp. those specified therein. It is up to the parties to agree on
422–423). the life or term of the grant. In case the parties fail to reach
E. The Republic questioned the siting of the ADC’s an agreement on the term, the same can be fixed by the
fronton as violative of E.O. No. 135 of President Quirino. courts under Article 1197 of the Civil Code of the
Under said executive issuance, no pelota fronton can be Philippines, which provides as follows:
maintained and operated “within a radius of 200 lineal “If the obligation does not fix a period, but from its nature and the
meters from any city hall or municipal building, provincial circumstances it can be inferred that a period was intended, the
capital building, national capital building, public plaza or courts may fix the duration thereof.
park, public school, church, hospital, athletic stadium, or “The courts shall also fix the duration of the period when it
any institution of learning or charity.” depends upon the will of the debtor.
According to the certificate issued by the National “ln every case, the courts shall determine such period as may
Mapping Information Authority, the ADC fronton is within under the circumstances have been probably contemplated by the
the proscribed radius from the Central Bank of the parties. Once fixed by the courts, the period cannot be changed by
Philippines, the Rizal Stadium, the Manila Zoo, the public them.”
park or plaza in front of the zoo, the Ospital ng Maynila, a
police precinct and a church (G.R. No. 115044, Rollo, pp. III
424–427).
On the other hand, a certificate issued by the Officer-
inCharge of the Office of the City Engineer of the City of G.R. No. 117263
Manila attests to the fact that not one of the buildings or
The petition in G.R. No. 117263 seeks to nullify the To await the regular raffle before the court can act on
following orders of respondent Judge Reyes: the motion for temporary restraining order may render the
case moot and academic. Hence, Administrative Circular
(1) the Temporary Restraining Order dated September No. 1 dated January 28, 1988 was Issued by this Court
15, 1994; allowing a special raffle. Said Circular provides:
(2) the Order dated September 25, 1994; and
“8.3. Special raffles should not be permitted except on verified
(3) the Writ of Preliminary Injunction dated September
application of the interested party who seeks issuance of a
30, 1994 (Rollo, pp. 1–2).
provisional remedy and only upon a; finding by the Executive
Judge that unless a special raffle is conducted irreparable damage
716
shall be suffered by the

716 SUPREME COURT REPORTS ANNOTATED 717

Lim vs. Pacquing

VOL. 240, JANUARY 27, 1995 717
The supplemental petition in said case seeks to nullify the Lim vs. Pacquing
Order dated October 19, 1994 (Rollo, pp. 166–225).
According to Executive Secretary Guingona and GAB applicant, The special raffle shall be conducted by at least two
Chairman Cepeda, respondent Judge Reyes acted without judges in a multiple-sala station.”
jurisdiction and with grave abuse of discretion in issuing
said orders and writ of preliminary injunction because: (1) In a case where a verified application for special raffle is
Civil Case No. 94–71656 was not properly assigned to him filed, the notice to the adverse parties may be dispensed
in accordance with Section 7, Rule 22 of the Revised Rules with but the raffle has to “be conducted by at least two
of Court; (2) the enforcement of the Directive and judges in a multiplesala station.”
Memorandum sought to be enjoined had already been The Republic does not claim that Administrative
performed or were already fait accompli; and (3) Circular No. 1 has been violated in the assignment of the
respondent judge pre-empted this Court in resolving the case to respondent Judge. The presumption of regularity of
basic issues raised in G.R. No. 115044 when he took official acts therefore prevails.
cognizance of Civil Case No. 94–71656. Going back to Section 7 of Rule 22, this Court has ruled
A. At the outset, it should be made clear that Section 7 in Commissioner of lmmigration v. Reyes, 12 SCRA 728
of Rule 22 of the Revised Rules of Court does not require (1964) that the purpose of the notice is to afford the parties
that the assignment of cases to the different branches of a a chance to be heard in the assignment of their cases and
trial court should always be by raffle. The Rule talks of this purpose is deemed accomplished if the parties were
assignment “whether by raffle or otherwise.” What it subsequently heard. In the instant case, Executive
requires is the giving of written notice to counsel or the Secretary Guingona and GAB Chairman Cepeda were
parties “so that they may be present therein if they so given a hearing on the matter of the lack of notice to them
desire.” of the raffle when the court heard on September 23, 1994
Section 7 of Rule 22 provides: their Motion to Recall Temporary Restraining Order,
Urgent Supplemental Motion to Recall Temporary
“Assignment of cases.—In the assignment of cases to the different Restraining Order and Opposition to Issuance of a Writ of
branches of a Court of First Instance, or their transfer from one Preliminary Issuance of a Writ of Preliminary Injunction
branch to another whether by raffle or otherwise, the parties or (G.R. No. 117263, Rollo p. 434).
their counsel shall be given written notice sufficiently in advance Petitioners in G.R. No. 117263 failed to show any
so that they may be present therein if they so desire.” irregularity attendant to the raffle or any prejudice which
befell them as a result of the lack of notice of the raffle of
However, there may be cases necessitating the issuance of
Civil Case No. 94–71656.
a temporary restraining order to prevent irreparable injury
On the other hand, petitioners never asked for a re-
on the petitioner.
raffle of the case or for any affirmative relief from the trial
court and proceeded with the presentation of evidence of The orders of Judge Reyes are provisional in nature and
ADC in connection with the motion for preliminary do not touch on the merits of the case. The issues raised in
injunction. Civil Case No. 94–71656 are the validity of the Directive
B. The purpose of a temporary restraining order or and Memorandum, which were issued after the decision of
preliminary injunction, whether preventive or mandatory, this Court in G.R. No. 115044. The respondents in the civil
is merely to prevent a threatened wrong and to protect the case before the trial court are not even parties in G.R. No.
property or rights involved from further injury, until the 115044.
issues can be determined after the hearing on the merits
(Ohio Oil Co. v. Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S.
DISSENTING OPINION
Ct. 256; Gobbi v. Dilao, 58 Or. 14,111 p. 49, 113, p. 57).
What is intended to be preserved is the status quo ante
litem motam or the last actual, peaceable, noncontested PUNO, J.:
status (Annotation, 15 ALR 2d 237).
The petitions at bench involve great principles of law in
718
tension. On balance at one end is the high prerogative of
the
718 SUPREME COURT REPORTS ANNOTATED
719
Lim vs. Pacquing

VOL. 240, JANUARY 27, 1995 719

In the case at bench, the status quo which the questioned
orders of Judge Reyes sought to maintain was that ADC Lim vs. Pacquing
was operating the jai-alai pursuant to Ordinance No. 7065
of the City of Manila, the various decisions of the different State to promote the general welfare of the people thru the
courts, including the Supreme Court, and the licenses, use of police power; on the opposite end is the right of an
permits and provisional authority issued by GAB itself. entity to have its property protected against unreasonable
At times, it may be necessary for the courts to take some impairment by the State. Courts accord the State wide
affirmative act essential to restore the status quo (lowa latitude in the exercise of its police power to bring about
Natural Resources Council v. Van Zee [lowa] 158 N.W. 2d. the greatest good of the greatest number. But when its
111). purpose is putrefied by private interest, the use of police
The right to conduct a business or to pursue one’s power becomes a farce and must be struck down just as
business or trade without wrongful interference by others every arbitrary exercise of government power should be
is a property right which equity will, in proper cases, stamped out.
protect by injunction, provided of course, that such I will confine myself to the jugular issue of whether or
occupation or vocation is legal and not prohibited by law not Associated Development Corporation (ADC) still
(Rance v. Sperry & Hutchinson Co., 410 P. 2d. 859). possesses a valid franchise to operate jai-alai in Manila.
Had not the Directive to close the operation of ADC’s jai- The issue is multidimensional considering its
alai and the implementing Memorandum been issued, constitutional complexion.
there would have been no need for the issuance of the First, the matrix of facts. On June 18,1949, Congress
orders of the Regional Trial Court. The need for said enacted Republic Act No. 409, otherwise known as the
equitable reliefs becomes more evident if we consider that Charter of Manila. Section 18 (jj) gave to the Municipal
the Executive Secretary himself had entertained doubts as Board (now City Council) the following power:
to the legality of his action because in the same Directive
xxx
he instructed the Solicitor General to obtain a judicial
(jj) To tax, license, permit and regulate wagers or betting by
ruling on the legal issues raised.
the public on boxing, sipa, bowling, billiards, pools, horse or dog
C. Respondent Judge Reyes did not pre-empt this Court
races, cockpits, jai-alai, roller or ice skating or any sporting or
in deciding the basic issues raised in G.R. No. 115044 when
athletic contest, as well as grant exclusive rights to
it assumed jurisdiction over Civil Case No. 94–71656 and
issued the orders questioned in G.R. No. 117263.
establishments for this purpose, notwithstanding any existing law and establish horse and dog race tracks, jai-alai or other forms of
to the contrary. gambling is hereby revoked.
Sec. 2. Hereafter all permit or franchise to operate, maintain
On June 20, 1953, Congress passed Republic Act No. 954 and establish horse and dog race tracks, jai-alai and other forms
entitled “An Act to Prohibit Certain Activities in of gambling shall be issued by the national government upon
Connection with Horse Races and Basque Pelota Games proper application and verification of the qualifications of the
(Jai-Alai) and to Prescribe Penalties for its Violation.” applicant: Provided, That local governments may, upon clearance
Sections 4 and 5 of the law provide: from the Chief of Constabulary and during town fiestas and
holidays, continue to issue permits for minor games which are
“x x x
usually enjoyed by the people during such celebrations.
“Sec. 4. No person, or group of persons, other than the operator
Sec. 3. All existing franchises and permits issued by local
or maintainer of a fronton with legislative franchise to conduct
government are hereby revoked and may be renewed only in
basque pelota games (Jai-Alai), shall offer, take or arrange bets
accordance with this Decree.”
on any basque pelota game or event, or maintain or use a totalizer
or other device, method or system to bet or gamble on any basque P.D. No. 771 was enacted on August 20. 1975 and
pelota game or event. purportedly revoked the permit of ADC to operate. Before
Sec. 5. No person, operator, or maintainer of a fronton with two (2) months could elapse or on October 16, 1975, then
legislative franchise to conduct basque pelota games shall offer, President Marcos issued P.D. No. 810 granting a franchise
take, or arrange bets on any basque pelota game or event, or to Philippine Jai-Alai and Amusements Corporation to
maintain or use a totalizator or other device, method or system to conduct jai-alai games in Manila. It is not disputed that his
bet or gamble on any basque pelota game or event outside the brother-in-law, Mr. Alfredo “Bejo” Romualdez, held the
place, enclosure, or fronton where the basque pelota game is controlling interest in Philippine Jai-Alai and Amusements
held.” Corporation. Apparently, the favored treatment given to
720
Mr. Romualdez and company did not sit well with former
President Corazon C. Aquino. On May 8, 1987, she issued
721
720 SUPREME COURT REPORTS ANNOTATED
Lim vs. Pacquing
VOL. 240, JANUARY 27, 1995 721
On September 7, 1971, the Municipal Board of Manila Lim vs. Pacquing
approved Ordinance No. 7065 “Authorizing the Mayor to
Allow and Permit the Associated Development Corporation Executive Order No. 169 repealing P.D. No. 810.
to Establish, Maintain and Operate a Jai-Alai in the City of Nevertheless, she allowed P.D. No. 771 to stay in our
Manila, Under Certain Terms and Conditions And For statutes book.
Other Purposes.” ADC thought it could resume its jai-alai operation. On
On September 21, 1972, martial law was declared by May 5, 1988, it sought from then Mayor Gemiliano C.
then President Ferdinand E. Marcos. The 1971 Lopez, Jr., of Manila a permit to operate on the strength of
Constitution, as amended, authorized the former President Ordinance No.1 7065. The request was refused and this
to exercise legislative powers. Among the laws he decreed spawned suits all won by ADC. In Civil Case No. 88–
is P.D. No. 771, “Revoking All Powers And Authority Of 45660, filed in Br. 40, RTC, Manila, Judge Augusto E.
Local Government(s) To Grant Franchise, License Or Villarin ruled that Ordinance No. 7065 created a binding
Permit And Regulate Wagers Or Betting By The Public On contract between the City of Manila and ADC, and hence,
Horse And Dog Races, Jai-Alai, Or Basque Pelota And the City Mayor had no discretion to deny ADC’s permit.
Other Forms of Gambling.” Its text states: The ruling was appealed to the Court of Appeals where it
was docketed as CA-G.R. SP No. 16477. On February 9,
“x x x
1989, however, Mayor Lopez withdrew the city’s appeal.
“Sec. 1. Any provision of law to the contrary notwithstanding,
Still, the legal problems of ADC did not disappear. Manila
the authority of Chartered Cities and other local governments to
Mayor Alfredo Lim who succeeded Mayor Lopez again
issue license, permit or any form of franchise to operate, maintain
refused to issue ADC’s
2
permit despite orders of Judge justifiable cause is intolerable in any system where the Rule of
Felipe G. Pacquing. Threatened with contempt, Mayor Lim Law prevails (Posas v. Toledo Transportation Co., 62 Phil. 297
filed with this Court G.R. No. 115044, a petition for [1935]; Manila Electric Co., v. Public Utility Commissioners, 30
certiorari. He alleged that he could not be compelled to Phil. 387 [1915].”
enforce the Decision in Civil Case No. 88–45660 as the
same is null and void for want of jurisdiction of the court Upon its receipt, Mayor Lim manifested he would comply
that rendered it. He likewise contended that Ordinance No. with the Decision. He did not file a motion for
7065 had been revoked by P.D. No. 771. On September 1, reconsideration. It was then that the Republic started its
1994, the. First Division of this Court, speaking thru Mr. own legal battle against ADC. It intervened in G.R. No.
Justice Camilo Quiason, dismissed Mayor Lim’s petition. It 115044, raising several issues, especially ADC’s lack of a
held: valid legislative franchise to operate jai-alai. No less than
Executive Secretary Teofisto Guingona directed the Games
x x x      x x x      x x x and Amusement Board, then headed by Mr. Francisco R.
“Petitioners failed to appreciate the distinction between a void Sumulong, Jr., to hold in abeyance the grant of authority,
and an erroneous judgment and between jurisdiction and the or if any had been issued, to withdraw such grant of
exercise of jurisdiction. authority in favor of ADC. The GAB dutifully ordered ADC
.... to cease and desist from operating the Manila jai-alai. ADC
Having jurisdiction over the civil case, whatever error may be again rushed to the RTC of Manila and filed Civil Case No.
attributed to the trial court, is simply one of judgment, not of 94–71656 which was raffled to Br. IV, presided by
jurisdiction. An error of judgment cannot be corrected by respondent Judge Vetino Reyes. Acting with dispatch,
certiorari but by appeal (Robles v. House of Representatives respondent judge temporarily restrained the GAB from
Electoral Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta withdrawing the provisional authority of ADC to operate.
Motor Sales Corporation, 57 SCRA 344 [1974]; Galang v. After hearing, the temporary restraining order was
Endencia, 73 Phil. 399 [1941]. converted into writs of preliminary injunction and
preliminary mandatory injunction upon posting by ADC of
_______________ a P2 million bond. These writs are challenged in these
consolidated petitions as having been issued in grave abuse
1 Civil Case No. 88–45660; Civil Case No. 91–58913; Civil Case No. 91– of discretion amounting to lack of jurisdiction.
58930; G.R. No. 101763. While the petitions at bench are checkered with
2 He succeeded Judge Villarin as Presiding Judge of Br. 40, RTC, significant substantive and procedural issues, I will only
Manila. address the contention that ADC has no existing legislative
franchise. The contention is anchored on two (2)
722
submissions: first, ADC has no legislative franchise as
required by R.A. No. 954, and second, even if the City of
722 SUPREME COURT REPORTS ANNOTATED Manila licensed ADC to operate jai-alai, its authority was
Lim vs. Pacquing
nevertheless revoked by section 3 of P.D. No. 771.

723
The issue on the cancellation of Ordinance No. 7065 by President
Marcos could have been raised as a special defense in Civil Case
VOL. 240, JANUARY 27, 1995 723
No. 88–54660 but was not...
The City of Manila should have pursued in the appellate courts Lim vs. Pacquing
its appeal questioning the dismissal of Civil Case No. 91–58913,
where the trial court ruled that Mayor Lopez and the city could no I find as completely baseless petitioners’ submission that
longer claim that Ordinance No. 7065 had been cancelled by R.A. No. 954 requires a legislative franchise to operate a
President Marcos because they failed to raise this issue in Civil jai-alai, in effect, revoking the power of the City of Manila
Case No. 88–54660. to issue permits for the same purpose as granted by its
At any rate, the unilateral cancellation of the franchise, which Charter. A 20–20 visual reading of R.A. No. 954 will not
has-the status of a contract, without notice, hearing and yield the suggested interpretation by petitioners. The title
of R.A. No. 954 will immediately reveal that the law was person, who without any license therefor, operates outside the
enacted to achieve a special purpose. It states: “An Act To compounds of racing clubs and accepts bets from the public. They
Prohibit Certain Activities In Connection With Horse Races pay dividends to winners minus a commission, which is usually
And Basque Pelota Games (Jai-AIai), And To Prescribe 10%. Prosecutions of said persons have been instituted under Act
Penalties For Its Violation.” The prohibited activities No. 4240 which was enacted in 1935. However, in a recent opinion
related to jai-alai games are specified in sections 4 to 6, viz: released by the City Fiscal of Manila, he maintains that Act No.
4240 has already been repealed, so that the present law
“SEC. 4. No person, or group of persons, other than the operator regulating ordinary horse races permits ‘bookies’ to ply their
or maintainer of a fronton with legislative franchise to conduct trade, but not on sweepstakes races and other races held for
basque pelota games (Jai-Alai), shall offer, take or arrange bets on charitable purposes. With the operation of ‘booking’ places in the
any basque pelota game or event, or maintain or use a totalizator City of Manila, the Government has been losing no less than
or other device, method or system to bet or gamble on any basque P600,000.00 a year, which amount represents the tax that should
pelota game or event. have been collected from bets made in such places. For these
SEC. 5. No person, operator, or maintainer of a fronton with reasons, the approval of the bill is earnestly recommended.”
legislative franchise to conduct basque pelota games shall offer,
take or arrange bets on any basque pelota game or event, or As said Explanatory Note is expressive of the purpose of
maintain or use a totalizator or other device, method or system to the bill, it gives a reliable
5
keyhole on the scope and
bet or gamble on any basque pelota game or event outside the coverage of R.A. No. 954. Nothing from the Explanatory
place, enclosure, or fronton where the basque pelota game is held. Note remotely suggests any intent of the law to revoke the
SEC. 6. No person or group of persons shall fix a basque pelota power of the City of Manila to issue permits to operate jai-
game for the purpose of insuring the winning of certain alai games within
6
its territorial jurisdiction.
determined pelotari or pelotaris.” The Debates in Congress likewise reject the reading of
R.A. No. 954 by petitioners, thus:
The title of R.A. No. 954 does not show that it seeks to limit
the operation of jai-alai only to entities with franchise “x x x
given by Congress. What the title trumpets as the sole
subject of the law is the criminalization of certain practices RESUMPTION OF SESSION
relating to jai-alai games. The title of a law 3is a valuable
intrinsic aid in determining legislative intent. ; THE SPEAKER. The session is resumed.
4
The Explanatory Note of House Bill 3204, the precursor MR. CINCO. Mr. Speaker, I withdraw my motion for
of R.A. No. 954, also reveals that the intent of the law is postponement.
only to criminalize the practice of illegal bookies and game- MR. CALO. Mr. Speaker, will the gentleman from Cebu
fixing in jaialai. It states: yield?
THE SPEAKER. The gentleman may yield, if he so desires.
MR. ZOSA Willingly.
_______________
MR. CALO. What is the national import of this bill?
3 Agpalo, Statutory Construction, 1986 ed., p. 12 citing Government v. MR. ZOSA. Mr. Speaker, this bill prohibits certain
Municipality of Binalonan, 32 Phil. 634 [1915]. activities in connection with horse races and Jai-Alai
4 See Memorandum of Respondents, p. 15. games which are

724
_______________

5 Agpalo, op. cit., pp. 70–71 citing Baga v. PNB, 99 Phil. 889 [1956];
724 SUPREME COURT REPORTS ANNOTATED
Nepomuceno v. Ocampo, 95 Phil. 292 [1954].
Lim vs. Pacquing 6 Congressional Record, Proceedings and Debates, Vol. III, Part II, No.
8, July 1, 1952 cited in Reply Memorandum of Respondents, p. 7.
“This bill seeks to prohibit certain anomalous practice of ‘bookies’
725
in connection with the holding of horse races or ‘basque pelota’
games. The term ‘bookie’ as commonly understood refers to a
 VOL. 240, JANUARY 27, 1995 725 7 Agpalo, op. cit., pp. 71–72 citing Arenas v. City of San Carlos, 82
SCRA 318 [1978]; People v. Olarte, 108 Phil. 756 [1960].
Lim vs. Pacquing
726
licensed by the government. At present, there are many
practices in connection with the holding of these games
726 SUPREME COURT REPORTS ANNOTATED
which deprive the government of income that should
legally go into the government coffers as taxes. Lim vs. Pacquing
MR. CALO. Is not this matter of national importance
because Jai-Alai games and horse races are held only in ered to license the ADC it is because the power was
Manila? delegated to it by Congress. The acts of the City of Manila
MR. ZOSA. Precisely, Mr. Speaker, they are played on a big in the exercise of its delegated power bind Congress as
scale, and there are many practices which deprive the well. Stated otherwise, the permit given by the City to ADC
government of income to which it is entitled. I think the is not any whit legally inferior to a regular franchise.
gentleman from Agusan is a member of the Committee Through the years, the permit given by the City endows
on Appropriations. The government will have more the grantee complete right to operate, Not once, except in
revenues, if we shall approve this bill.” these cases, has the national government questioned the
completeness of this right. For this reason, P.D. No. 771
Again, legislative
7
debate is a good source to determine the has to revoke all existing franchises and permits without
intent of a law. making any distinction. It treated permits in the same
To top it all, the text of R. A No. 954 itself does not class as franchises.
intimate that it is repealing any existing law, especially Petitioners’ second line of argument urges that in any
section 18(jj) of R.A. No. 409, otherwise known as the event, section 3 of P.D. No. 771 expressly revoked all
Charter of Manila. Indeed, R.A. No. 954 has no repealing existing franchises and permits to operate jai-alai games
provision. The reason is obvious—it simply prohibited granted by local governments, including the permit issued
certain practices in jai-alai then still unregulated by the to ADC by the City of Manila through Ordinance No. 7065.
laws of the land. It did not regulate aspects of jai-alai For its resolution, petitioners’ argument requires a re-
already regulated by existing laws, like the matter of statement of the requirements for the valid exercise of
whether it is the national government alone that should police power.
issue franchises to operate jai-alai games. It was the legendary Chief Justice Marshall who first
The subsequent enactment of P.D. No. 771 on August 8
used the phrase police power in 1824. Early attempts to fix9
20, 1975 further demolished the submission of petitioners. the metes and bounds of police power were unsuccessful.
In clear and certain language, P.D. No. 771 recalled the For of all the inherent powers of the State, police power is
power of local governments to issue jai-alai franchises and 10
indubitably the11most pervasive, the most insistent and the
permits. lt also revoked existing franchises and permits least limitable. Rooted on the Latin maxims, salus populi
issued by local governments. If R.A. No. 954 had already suprema est lex (the welfare of the people is the supreme
disauthorized local governments from granting franchises law) and sic utere tuo ut alienum non laedas (so use your
and permits,,there would be no need to enact P.D. No. 771. property as not to injure the property of others), it was not
No rule of statutory construction will consider any law a without reason for Justice Holmes to stress that its reach
meaningless redundancy, 12
extends “to all the great public needs.” A similar
The passage of P.D. No. 771, also negates petitioners’ sentiment was echoed by our own Justice Laurel in
insistence that for ADC to continue operating, it must show 13
Calalang v. Williams who defined police power as the
it has a franchise from Congress, not just a permit from the “state authority to enact legislation that may interfere with
City of Manila. The suggested dichotomy between a personal liberty or property in order to promote the general
legislative franchise and city permit does not impress. If welfare.” Over the years, courts recognized the power of
the City of Manila is empow- legislature to enact police

_______________ _______________
 8 Tribe, American Constitutional Law, Foundation Press, Inc., 1978 ed., I concede that the first method is invulnerable even to
p. 323; Gibbons v. Ogden, 22 UF (9 Wheat) 1, 208 [1824]. the strongest of constitutional attack. Part of the plenary
9 Stone v. Mississippi, 101 US 814. power of Congress to make laws is the right to grant
10 Cruz, Isagani, Constitutional Law, 1991 ed., p. 39. franchises and permits allowing the exercise of certain
11 Smith, Bell and Co. v. Natividad, 40 Phil. 136 [1919]. privileges. Congress can delegate the exercise of this innate
12 Noble State Bank v. Haskell, 219 US 112 [1911]. power to grant franchises as it
13 70 Phil. 726 [1940]

_______________
727
14 Black, Henry Campbell, Handbook on Constitutional Law, 2nd ed.,

VOL. 240, JANUARY 27, 1995 727 1985 ed., p. 342.

15 Cruz, op. cit., p. 48 citing US v. Toribio, 15 Phil. 85 [1910]; Fabie v.
Lim vs. Pacquing City of Manila, 21 Phil. 486[1912]; Case v. Board of Health, 24 Phil. 250
[1913].
regulations on broad areas of state concern: (a) the
preservation of the state itself and the unhindered 728
execution of its legitimate functions; (b) the prevention and
punishment of crime; (c) the preservation of the public 728 SUPREME COURT REPORTS ANNOTATED
peace and order; (d) the preservation of the public safety;
(e) the purity and preservation of the public morals; (f) the Lim vs. Pacquing
protection and promotion of the public health; (g) the
regulation of business, trades, or professions the conduct of did to the City of Manila when it granted its charter on
which may affect one or other of the objects just June 18, 1949 thru R.A. No. 409. Congress can also revoke
enumerated; (h) the regulation of property and rights of the delegated power and choose to wield the power itself as
property so far as to prevent its being used in a manner it did thru then President Marcos who exercised legislative
dangerous or detrimental to others; (i) the prevention of powers by enacting P.D. No. 771. In the petitions at bench,
fraud, extortion, and oppression; (j) roads and streets, and Congress revoked the power of local governments to issue
their preservation and repair; and (k) the preservation of franchises and permits which it had priorly delegated. In
14
game and fish. doing so and in deciding to wield the power itself to meet
But while the State is bestowed near boundless the perceived problems of the time, the legislature
authority to promote public welfare, still the exercise of exercised its distinct judgment and.the- other branches of
police power cannot be allowed to run riot in a republic government, including this Court, cannot supplant this
ruled by reason. Thus, our courts have laid down the test to judgment without running afoul of the principle of
determine the validity of a police measure as follows: (1) separation of powers. To be sure, this particular legislative
the interest of the public generally, as distinguished from method to regulate the problem of mushrooming
those of particular class, requires its exercise; and (2) the applications for jai-alai franchise cannot be faulted as
means employed are reasonably necessary for the bereft of rationality. In the hearing of the petitions at
accomplishment of15 the purpose and not unduly oppressive bench, Executive Secretary Guingona established the fact
upon individuals. Deeper reflexion will reveal that the that at the time of the enactment of P.D. No. 771, there
test reiterates the essence of our constitutional guarantees were numerous applications to run jai-alai games in
of substantive due process, equal protection, and non- various cities and municipalities of the archipelago. To
impairment of property rights. prevent the proliferation of these applications and
We now apply this lucidly-lined test to the petitions at minimize their ill effects, the law centralized their
bench. To reiterate, P.D. No. 771 Utilized two methods to screening by the national government alone. The law
regulate jaialai: first, it reverted the power to issue excluded local governments in the process. The revocation
franchise and permit to the national government, and of the delegated power to local governments does not
second, it revoked all existing franchise and permit issued impair any right. Applicants to franchises have no right to
by Iocal governments. insist that their applications be acted upon by local
governments. Their right to a franchise is only in posse.
 The second method adopted by section 3 of P.D. No. 771 P.D. No. 771 to completely eradicate jai-alai games; it
which revoked all existing franchises and permits is, merely seeks to control its multiplication by restoring the
however, constitutionally impermissible. On its face, monopoly of the national government in the dispensation of
section 3 purports to revoke all existing franchises and franchises.
permits. During the oral argument of the petitions at Prescinding from these premises, I share the scholarly
bench, however, it was admitted that at the time P.D. No. 16
view of Mr. Justice Quiason that Sec. 3 of P.D. No. 771
771 was enacted, only ADC is actually operating a jaialai. offends the Constitution which demands faithful
The purported revocation of all franchises and permits compliance with the requirements of substantive due
when there was only one existing permit at that time is an process, equal protection of the law, and non-impairment of
unmistakable attempt to mask the. law with impartiality. contracts. Capsulizing their essence, substantive due
No other permit was affected by said sec. 3 except ADC. process exacts fairness; equal protection disallows
Truth, however, has its own time of sprouting out. The distinction to the distinctless; and the guaranty of
truth behind the revocation of ADC’s franchise revealed nonimpairment of contract protects its integrity unless
itself when demanded otherwise by the public good. Constitutionalism
eschews the exercise of unchecked power for history
_______________ demonstrates that a meandering, aimless power ultimately
tears apart the social fabric of society. Thus, the grant of
16 Hearing on November 10, 1994, TSN, pp. 8–9. police power to promote public welfare cannot carry with it
the privilege to be oppressive. The Constitution ordained
729
the State not just to achieve order or liberty but to attain
ordered liberty, however elusive the balance
VOL. 240,; JANUARY 27, 1995 729
730
Lim vs. Pacquing

730 SUPREME. COURT REPORTS ANNOTATED

former President Marcos transferred ADC’s franchise to
the Philippine Jai-Alai and Amusements Corporation then Lim us. Pacquing
under the control of his brother-in-law, Mr. Alfredo “Bejo”
Romualdez. The favored treatment was extended hardly may be. Cognizant of the truism that in life the only
two (2) months after the revocation of ADC’s franchise and constant is change, the Constitution did not design that the
it left Philippine Jai-Alai and Amusements Corporation the point that can strike the balance between order and liberty
sole jai-alai operator in the Philippines. The Court is not should be static for precisely, the process of adjusting the
informed of any distinction of PJAC that will justify its moving point of the balance gives government greater
different treatment. The evidence is thus clear and the elasticity to meet the needs of the time.
conclusion is irresistible that section 3 of P.D. No. 771 was It is also my respectful submission that the
designed with a malignant eye against ADC. unconstitutionality of section 3 of P.D. No. 771 was not
In light of the established facts in field, section 3 of P.D. cured when former President Aquino used it-in revoking
No. 771 must be struck down as constitutionally infirmed. P.D. No. 810 which granted Philippine Jai-Alai and
Despite its cosmetics, section 3 cannot be unblushingly Amusements Corporation a franchise to operate jai-alai in
foisted as a measure that will promote the public welfare. Manila. The subsequent use of said section should not
There is no way to treat the self-interest of a favored entity obfuscate the fact that the law was enacted in the wrongful
as identical with the general interest of the Filipino people. exercise of the police power of the State. There is no
It will also be repulsive to reason to entertain the thesis sidestepping the truth that its enactment inflicted undue
that the revocation of the franchise of ADC is reasonably injury on the rights of ADC and there can be no reparation
necessary to enable the State to grapple to the ground of these rights until and unless its permit to continue
the,evil of jai-alai as a form of gambling. Petitioners have operating jai-alai in Manila is restored. Cancelling the
not demonstrated that government lacks alternative franchise of Philippine JaiAlai and Amusements
options to succeed in its effort except to cancel the lone Corporation is an act of justice but not justice to ADC if its
franchise of ADC. Well to stress, it is not the lofty aim of franchise would be left unrecognized. Since the
unconstitutionality of section 3 is congenital, it is beyond gambling franchise is to put too much primacy on property
redemption. rights. We then stand in danger of reviving the 18
Iong
But while I wholeheartedly subscribe to the many lamented 1905 ruling in Lochner v. New York which
impeccable theses of Mr. Justice Quiason, it is with regret unwisely struck down government interference in
that I cannot join his submittal that sec. 3 of P.D. No. 771 contractual liberty. The spirit of liberalism which provides
violates procedural due process. We are dealing with the the main driving force of social justice rebels against the
plenary power of the legislature to make and amend laws. resuscitation of the ruling in Lochner from its sarcophagus.
Congress has previously delegated to the City of Manila the We should not be seduced by any judicial
19
activism unduly
power to grant permits to operate jai-alai within its favoring private economic interest at the expense of the
territorial jurisdiction and ADC was given its permit thru public good.
Ordinance No. 7065. ADC’s permit could have been validly I also support the stance of Mr. Justice Quiason which
revoked by law if it were demonstrated that its revocation resisted the stance that the Court should close its eyes to
was called for by the public good and is not capricious. In allegations that Section 3 of P.D. No. 771 was conceived
ascertaining the public good for the purpose of enacting a and effected to give naked preference to a favored entity
remedial law, it is not indispensable, albeit sometimes due to pedigree. I reiterate
desirable, to give notice and hearing to an affected party.
The data the legislature seeks when engaged in lawmaking ______________
does not focus on the liability of a person or entity which
would require fair hearing of the latter’s side. In fine, the 17 Article II, section 13 on State Policies.
legislature while making laws is not involved in 18198 US 25 SCT 539, 49 L ed 937 [1905], where Justice Holmes
establishing evidence that will convict, but in unearthing vigorously dissented, stating among others that “the Fourteenth
neutral data that will direct its discretion in determining Amendment does not enact Mr. Herbert Spencer’s Social Statics . . . .” and
the general good. “general propositions do not decide concrete cases.”
The suggested notice and hearing before a franchise can 19 The Lochner ruling was junked in 1937 but recent writings on
be possible revival of economic activism include: Esptein, Richard, Takings.
Private Property and the Power of Emminent Domain [1985]; Sunstein,
731 Cass Interest Groups in American Public Law, 38 Stan L. Reo. 29, 68–85
[1985]; Mashaw, Jerry, Constitutional Deregulation: Notes Toward a
VOL. 240, JANUARY 27, 1995 731 Public, Public Law, 54 Tnl. L. Rev. 848 [1980],

Lim vs. Pacquing 732

cancelled has another undesirable dimension. It does not 732 SUPREME COURT REPORTS ANNOTATED
only unduly cramp the legislature in its method of data-
gathering, it also burdens the legislature with too much Lim us. Pacquing
encumbrance in the exercise of its police power to regulate
gambling. However heavily laden with property rights a the view that section 1, Article VIII of the Constitution
franchise to operate jai-alai maybe, it is still a contract expanding the jurisdiction of this Court, to determine
which under appropriate circumstances can be revoked to whether or not there has been a grave abuse of discretion
enhance public interest. Jai-alai may be a game of a amounting to lack or excess of jurisdiction on the part of
thousand thrills but its true thrill comes from the gambling any branch or agency of government is not a pointless
on its indeterminate result. Beyond debate, gambling is an postulate. Without the grant of this new power, it would be
evil even if its advocates bleach its nefariousness by difficult, if not impossible, to pierce through the pretentious
upgrading it as a necessary.evil. In a country where it is a purposes of P.D. No. 771. P.D. No. 771 has no right to a
policy to promote the youth’s physical,
17
moral, spiritual, reverential treatment for it is not a real law as it is not the
intellectual, and social wellbeing, there is no right to product of an authentic deliberative legislature. Rather, it
gamble, neither a right to promote gambling for gambling is the dictate of a public official who then had a monopoly
is contra bonos mores. To require the legislature to strictly of executive and legislative powers. As it was not
observe procedural due process before it can revoke a infrequently done at that time, the whereas clauses of laws
 were used to camouflage a private purpose by the
invocation of public welfare. The tragedy is that the bogus
invocation of public welfare succeeded partly due to the
indefensible deference given to official acts of government.
The new Constitution now calls for a heightened judicial
scrutiny of official acts. For this purpose, it has extirpated
even the colonial roots of our impotence. It is time to
respond to this call with neither a pause nor a half-pause.
I therefore vote to declare Section 3 of P.D. No. 771
unconstitutional and to dismiss the petitions.
Presidential Decree No. 771 valid and constitutional.
Respondent Associated Development Corporation (ADC)
declared as not possessing congressional franchise to
operate and conduct jaialai.

Notes.—The policy of the courts is to avoid ruling on

constitutional questions and to presume that the acts of the
political departments are valid in the absence of a clear
and unmistakable showing to the contrary. (Macasiano vs.
National Housing Authority, 224 SCRA 236 [1993])
It is a rule that the constitutionality of an act of the
legislature will not be determined by the courts unless that
question is properly raised and presented in appropriate
cases and is necessary to a determination of the case.
(Macasiano vs. National Housing Authority, 224 SCRA 236
[1993])

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