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Updated 21st February 2025
Del Mar vs. Philippine Amusement and Gaming Corporation
The Supreme Court ruled that PAGCOR’s legislative franchise under Presidential Decree No. 1869 does not include the authority to operate jai-alai games. Petitioners, as legislators and taxpayers, challenged PAGCOR’s jai-alai operations, arguing it lacked a valid franchise. The Court granted the petitions, enjoining PAGCOR and its partners from managing jai-alai.

Primary Holding

PAGCOR’s franchise under PD 1869 only covers gambling casinos, not jai-alai. Its operation of jai-alai without a legislative franchise is illegal.

Background

PAGCOR began operating jai-alai in 1999 based on legal opinions from the DOJ, OSG, and OGCC. Petitioners contested this, alleging PAGCOR exceeded its franchise. The cases were consolidated due to overlapping constitutional and statutory issues.

History

  • May 6, 1999: Del Mar files G.R. No. 138298.

  • June 17, 1999: PAGCOR partners with Belle Jai-Alai Corp. and FILGAME.

  • July 1, 1999: Sandoval II and Defensor file G.R. No. 138982.

  • August 10, 1999: Del Mar files a supplemental petition.

  • September 24, 1999: Zubiri intervenes in G.R. No. 138982.

  • November 29, 2000: Supreme Court decides consolidated cases.

Facts

  • 1. PAGCOR operated jai-alai under an agreement with private companies (BELLE and FILGAME) based on legal opinions. Petitioners, as lawmakers and taxpayers, argued PAGCOR’s actions violated its charter and usurped Congress’s franchise-granting power.

Arguments of the Petitioners

  • 1. PAGCOR has no legislative franchise for jai-alai under PD 1869.
  • 2. The 1999 agreement with BELLE/FILGAME was illegal, lacked public bidding, and violated anti-graft laws.
  • 3. Jai-alai is a prohibited game under PD 1602 (Anti-Gambling Law) and not a “game of chance” under PAGCOR’s charter.
  • 4. Taxpayer standing justified due to public funds and legislative prerogatives.

Arguments of the Respondents

  • 1. PD 1869’s broad language (“sports, gaming pools, etc.”) includes jai-alai.
  • 2. No public funds were involved (BELLE/FILGAME funded operations).
  • 3. Petitioners lacked standing; the case was an improper taxpayer suit.
  • 4. The agreement was valid and exempt from public bidding under PD 1869.

Issues

  • 1. Does PAGCOR’s franchise include jai-alai?
  • 2. Did the agreement with BELLE/FILGAME violate procurement laws?
  • 3. Did petitioners have legal standing?

Ruling

  • 1. Franchise Issue: PD 1869’s history and text show it covers only casinos. Jai-alai requires a separate legislative franchise (not granted).
  • 2. Agreement: Void for exceeding PAGCOR’s authority.
  • 3. Standing: Petitioners had standing as legislators defending Congress’s exclusive franchise power.

Rationale

  • 1. Party Autonomy: Arbitration procedures are governed by parties’ agreed rules (CIAC Rules).
  • 2. Finality of Arbitral Awards: Awards are binding and not appealable on merits.
  • 3. COA’s Primary Jurisdiction: Monetary claims against the government must be settled by COA.

Doctrines

  • 1. Strict Construction of Gambling Franchises: Gambling franchises are narrowly interpreted against the grantee.
  • 2. Legislative Franchise Requirement: Only Congress can grant franchises for public utilities/gambling.
  • 3. Taxpayer Standing in Public Interest: Permitted for issues of transcendental importance.

Key Excerpts

  • 1. “A statute legalizing gambling must be strictly construed; every reasonable doubt must resolve against the grant.”
  • 2. “PAGCOR’s silence for 22 years belies its claim of a jai-alai franchise.”

Precedents Cited

  • 1. Stone v. Mississippi (101 U.S. 814): Legislative franchises cannot bargain away police power over public morals.
  • 2. Aicardi v. Alabama (22 L.Ed. 215): Gambling laws strictly construed against grantees.

Statutory and Constitutional Provisions

  • 1. PD 1869 (PAGCOR Charter): Sections 1, 10, 11 (franchise limited to casinos).
  • 2. PD 810 (1975): Prior jai-alai franchise (repealed by EO 169).
  • 3. EO 135 (1948): Regulatory framework for jai-alai.
  • 4. PD 1602: Anti-Gambling Law penalties.