Escoto vs. Philippine Amusement and Gaming Corporation

An appeal from a decision of a Regional Trial Court rendered in the exercise of its original jurisdiction that raises only pure questions of law must be filed directly with the Supreme Court through a petition for review on certiorari under Rule 45 of the Rules of Court; an erroneous appeal to the Court of Appeals on such grounds is not subject to transfer and must be dismissed outright.

The petitioner, Antonio Escoto, and the late Edgar Laxamana were promoters for Legend International Resort Limited (LIRL) located within the Subic Bay Freeport Zone. As part of their promotional activities, they organized a tourist-oriented cockfighting derby and secured a permit from the Subic Bay Metropolitan Authority (SBMA). The Philippine Amusement and Gaming Corporation (PAGCOR) intervened, advising LIRL to cancel the event on the grounds that cockfighting was outside its competence as a hotel casino resort, which led to the legal dispute.

• Petitioner Antonio Escoto and Edgar Laxamana, as promoters for Legend International Resort Limited (LIRL), organized a cockfighting derby scheduled for May 8 and 10, 2003, within LIRL's premises inside the Subic Bay Freeport Zone.
• They obtained a permit for the event from the Subic Bay Metropolitan Authority (SBMA).
• Respondent Philippine Amusement and Gaming Corporation (PAGCOR) learned of the event and directed LIRL to desist, asserting that cockfighting was outside LIRL's competence.
• The promoters filed a suit for injunction in the RTC to prevent PAGCOR from stopping the derby.
• The RTC initially issued a 20-day temporary restraining order (TRO) but eventually dismissed the complaint, ruling that the authority to issue cockfighting permits belonged to the local government units, not the SBMA, and that the promoters were not the real parties in interest.
• The RTC also awarded P70,000.00 in attorney's fees to PAGCOR.
• The promoters appealed the RTC's decision to the Court of Appeals.
• The CA, upon motion by PAGCOR, dismissed the appeal on the ground that the assigned errors raised pure questions of law, which are outside the CA's jurisdiction in an ordinary appeal.

• The authority to regulate cockfighting activities within the Subic Bay Freeport Zone lies with the SBMA under Republic Act No. 7227, not with PAGCOR or the local government units.
• The RTC erred in declaring that the SBMA did not have the authority to issue a permit for the cockfighting derby.
• The RTC erred in awarding attorney's fees to the respondent.
• The issues raised on appeal to the CA involved mixed questions of fact and law, specifically concerning the nature of the contract between the promoters and LIRL and the nature of the cockfighting activity.

• The promoters were not the real parties in interest to file the suit for injunction.
• The promoters had no clear legal right to be protected, as cockfighting is a mere privilege, not a right.
• The promoters failed to comply with Presidential Decree No. 449 (Cockfighting Law of 1974), which requires a license from the relevant city or municipality.
• The appeal to the CA should be dismissed because it raised purely legal issues, which must be brought directly to the Supreme Court via a petition for review on certiorari.

• Procedural Issues:
  • Whether the Court of Appeals correctly dismissed the appeal on the ground that it raised only pure questions of law, which is an improper mode of appeal to the CA.
• Substantive Issues:
  • Whether the authority to issue a license for a cockfighting derby within the Subic Bay Freeport Zone belongs to the SBMA or the concerned local government unit.
  • Whether the award of attorney's fees was proper.

• Procedural:
  • Yes, the Court of Appeals correctly dismissed the appeal. The Supreme Court held that the determination of which law governs the issuance of cockfighting permits (R.A. No. 7227 for SBMA vs. P.D. No. 449 for LGUs) is a pure question of law, as it does not require a review or evaluation of evidence. Likewise, the issue of attorney's fees became a question of law because the parties had stipulated on the entitlement and amount, transforming it into liquidated damages that do not require proof. Under Section 2(c), Rule 41 of the Rules of Court, appeals from the RTC raising only questions of law must be filed directly with the Supreme Court. The petitioner's choice of an ordinary appeal to the CA was a procedural error, warranting dismissal under Section 2, Rule 50 of the Rules of Court.
• Substantive:
  • The Supreme Court did not rule on the substantive issues of which entity had the authority to issue the permit or the ultimate propriety of the attorney's fees. The decision was based solely on the procedural defect of the appeal. The Court also refused to consider the petitioner's new argument that factual issues existed, as it was not raised before the CA, in observance of due process.

• Question of Law vs. Question of Fact — A question of law exists when the doubt or difference arises as to what the law is on a certain set of facts, while a question of fact exists when the doubt arises as to the truth or falsehood of alleged facts. The Court applied this distinction to conclude that the petitioner's appeal involved only questions of law because resolving which statute governed cockfighting permits required legal interpretation, not factual review.
• Modes of Appeal (Rule 41, Section 2, Rules of Court) — This rule specifies the three modes of appeal from an RTC judgment. The Court emphasized that subsection (c) exclusively reserves for the Supreme Court appeals that raise only questions of law, which must be done through a petition for review on certiorari under Rule 45. The petitioner's failure to adhere to this rule was fatal to his appeal.
• Dismissal of Improper Appeal (Rule 50, Section 2, Rules of Court) — This rule mandates that an appeal under Rule 41 taken to the Court of Appeals raising only questions of law shall be dismissed outright. The Supreme Court affirmed the CA's application of this rule as the necessary and unavoidable consequence of the petitioner's procedural error.
• Bar on Raising New Issues on Appeal — This principle dictates that points of law, theories, issues, and arguments not brought to the attention of the appellate court cannot be raised for the first time at a later stage, such as before the Supreme Court. The Court invoked this doctrine to disregard the petitioner's belated claim that his appeal involved factual matters, as this was never argued before the CA.

• "An appeal of the decision of a trial court upon a question of law must be by petition for review on certiorari to be filed in this Court."

• First Bancorp, Inc. v. Court of Appeals — Cited to establish that the CA's determination of whether an appeal involves questions of law or fact is a matter of its discretion and should be respected unless a clear error or grave abuse of discretion is shown.
• Tamondong v. Court of Appeals — Referenced for the established definition distinguishing a "question of law" from a "question of fact."
• Ortiz v. San Miguel Corporation — Used to support the test for determining a question of law: whether the appellate court can resolve the issue without reviewing or evaluating the evidence.
• Del Rosario v. Bonga — Cited as the basis for the rule that issues not raised before the CA cannot be raised for the first time before the Supreme Court, as doing so would violate the principles of due process.

• Rules of Court, Rule 41, Section 2 (Modes of appeal) — This provision was the cornerstone of the ruling, as it dictates the proper appellate procedure from the RTC. The Court found that petitioner violated this rule by appealing questions of law to the CA instead of the Supreme Court.
• Rules of Court, Rule 50, Section 2 (Dismissal of improper appeal to the Court of Appeals) — This section provided the legal basis for the CA's dismissal of the petitioner's procedurally flawed appeal and was affirmed by the Supreme Court.
• Republic Act No. 7227 (The Bases Conversion and Development Act of 1992) — The interpretation of this law, which petitioner claimed granted authority to the SBMA, was identified as a pure question of law.
• Presidential Decree No. 449 (Cockfighting Law of 1974) — The interpretation of this law, which respondent claimed granted authority to local government units, was also identified as a pure question of law central to the dismissed appeal.