Philippine Amusement and Gaming Corporation vs. Philippine Gaming Jurisdiction Incorporated

Section 7(f) of Republic Act No. 7903 does not authorize the ZAMBOECOZONE Authority to operate, license, or regulate games of chance or gambling, the words games and amusements therein having plain meanings distinct from games of chance and gambling and the legislature having omitted the express gambling language used in comparable ecozone statutes.

PAGCOR asserts authority under Presidential Decree No. 1869 to centralize and regulate games of chance. The Zamboanga City Special Economic Zone Authority is the governing body of the Zamboanga City Special Economic Zone created under Republic Act No. 7903, enacted February 23, 1995, with Section 7(f) empowering it respecting tourism-related activities, including games, amusements and recreational and sports facilities. Both entities are under the supervision of the Office of the President.

Republic Act No. 7903, enacted February 23, 1995, created the Zamboanga City Special Economic Zone and the ZAMBOECOZONE Authority. Section 7(f) thereof empowered the Authority to operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including games, amusements and recreational and sports facilities.

Apparently in exercise of that provision, the ZAMBOECOZONE Authority passed Resolution No. 2006-08-03 dated August 19, 2006, approving the application of Philippine E-Gaming Jurisdiction, Inc. to be a Master Licensor/Regulator of on-line, internet and electronic gaming and games of chance. Thereafter PEJI undertook extensive advertising campaigns representing itself as such licensor and regulator to the international business and gaming community.

Because of that licensing and representation, PAGCOR filed the present petition for prohibition assailing the authority of the ZAMBOECOZONE Authority to operate, license, or regulate the operation of games of chance in the ZAMBOECOZONE. No lower-court factual findings are recounted, the matter having been brought directly before the Supreme Court as an original action for prohibition.

• Lack of Statutory Authority: Petitioner argued that Republic Act No. 7903, specifically Section 7(f), does not give power or authority to the ZAMBOECOZONE Authority to operate, license, or regulate the operation of games of chance in the ZAMBOECOZONE.
• In Pari Materia Comparison: Petitioner maintained that three ecozone statutes in pari materia expressly grant gambling authority — Republic Act No. 7227, Republic Act No. 7922, and Republic Act No. 7916 through its ipso facto clause — while Section 7(f) of Republic Act No. 7903 does not categorically do so.
• Meaning of Games and Amusements: Petitioner argued that the words games and amusement in Section 7(f) do not include games of chance.
• Encroachment on PAGCOR Authority: Petitioner maintained that the ZAMBOECOZONE Authority's grant of license to PEJI encroached on its authority under Presidential Decree No. 1869 vis-a-vis the special laws to centralize and regulate all games of chance.
• Executive Construction: Petitioner cited the November 27, 2006 Opinion of the Office of the President through Deputy Executive Secretary for Legal Affairs Manuel B. Gaite that the ZAMBOECOZONE Charter simply allows tourism-related activities including games and amusements without stating any form of gambling activity, and that the ZAMBOECOZONE is not authorized to enter into any gaming activity by itself unless expressly authorized by law.

• Lack of Personality: Respondent ZAMBOECOZONE Authority contended that PAGCOR has no personality to file the petition as it failed to cite a superior law proving its claim of having been granted exclusive right and authority to license and regulate all games of chance within the Philippines.
• Inclusion of Games of Chance: Respondent countered that, contrary to PAGCOR's assertion, the words games and amusements in Section 7(f) of Republic Act No. 7903 include games of chance as was the intention of the lawmakers when they enacted the law.

• Authority Over Games of Chance: Whether Section 7(f) of Republic Act No. 7903 authorizes the ZAMBOECOZONE Authority to operate, license, or regulate games of chance or gambling in the ZAMBOECOZONE.

• Authority Over Games of Chance: No. Section 7(f) authorizes only tourism-related games and amusements in their plain sense and does not vest power to operate, license or regulate games of chance or gambling.

• Authority Over Games of Chance: The plain meaning rule or verba legis was applied, under which clear, plain and unambiguous statutory words must be given literal meaning without attempted interpretation. Game in its ordinary sense is a sport, pastime or contest, while amusement is a pleasurable occupation of the senses, diversion or enjoyment, both clearly different from game of chance, a game in which chance rather than skill determines the outcome, and gambling, making a bet or a play for value against an uncertain event in hope of gaining something of value. Comparison of phraseology showed that Republic Act No. 7227, Republic Act No. 7922 — which expressly listed horse-racing, dog-racing gambling, casinos and others — and Republic Act No. 7916 categorically vested gambling power, while Republic Act No. 7903 did not, although the lawmakers could easily have used games of chance, gambling or casinos as done in Republic Act No. 7922 enacted a day after Republic Act No. 7903. Resort to spirit and reason was rejected because literal construction did not lead to absurdity, contradiction, injustice or defeat of legislative purpose. The Office of the President Opinion distinguishing the explicit and amplified CEZA grant from the merely stated ZAMBOECOZONE grant was given persuasive weight under the doctrine of respect for administrative or practical construction, considering the competence and experience of the supervising agency charged with administration.

• Plain meaning rule; verba legis — Where the words of a statute are clear, plain, and free from ambiguity, the statute must be given its literal meaning and applied without attempted interpretation, on the presumption that the legislature knew the meaning of the words, used them advisedly, and expressed its intent by the words found in the statute; from the words of a statute there should be no departure. Applied to hold that games and amusements in Section 7(f) of Republic Act No. 7903 could not be construed to include games of chance or gambling.
• Respect for administrative or practical construction — The interpretation by governmental agencies charged with administration is given controlling weight or persuasive respect in view of their competence, expertness, experience and informed judgment, their frequent role as drafters of the law they interpret, legislative reliance on them for practical working out of the statute, and their unique opportunity to discover deficiencies through practical application. Applied to credit the Office of the President Opinion that the ZAMBOECOZONE Charter, unlike the CEZA Charter, does not authorize gambling activity.

• "It is a well-settled rule in statutory construction that where the words of a statute are clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation." — States the controlling plain meaning rule that anchored the literal construction of games and amusements.
• "Verba legis non est recedendum. From the words of a statute there should be no departure." — Supplies the canonical maxim barring departure from the enacted text where intention is expressed in clear words.
• "The lawmakers could have easily employed the words 'games of chance' and 'gambling' or even 'casinos' if they had intended to grant the power to operate the same to the ZAMBOECOZONE Authority, as what was done in R.A. No. 7922 enacted a day after R.A. No. 7903. But they did not." — Articulates the comparative-textual reason for excluding gambling power from Section 7(f).
• "In fine, Section 7(f) did not grant to the ZAMBOECOZONE Authority the power to operate and/or license games of chance/gambling." — States the ultimate ratio that sustained the grant of prohibition and the cease-and-desist orders.

• National Food Authority (NFA) vs. Masada Security Agency, Inc., G.R. No. 163448, March 8, 2005 — Cited as authority for the plain meaning rule that clear statutory words must be given literal meaning without attempted interpretation.
• Philippine National Bank vs. Garcia, Jr., G.R. No. 141246, September 9, 2002 — Cited alongside National Food Authority vs. Masada Security Agency, Inc. for the verba legis maxim and presumption that the legislature used words advisedly.
• Asturias vs. Commissioner of Customs, G.R. No. L-19337, September 30, 1969 — Cited for the limitation that spirit and reason may be passed upon only where literal meaning would lead to absurdity, contradiction, injustice, or defeat of legislative purpose, and for the factors supporting respect for administrative construction.

• Section 7(f), Republic Act No. 7903 — Empowers the ZAMBOECOZONE Authority to operate on its own, directly or through a subsidiary, or license to others, tourism-related activities including games, amusements and recreational and sports facilities; construed to exclude operation, licensing or regulation of games of chance or gambling.
• Section 13(b)(7), Republic Act No. 7227 — Empowers the Subic Bay Metropolitan Authority to operate or license tourism-related activities including games and amusements, except horse-racing, dog-racing and casino gambling which remain licensed by PAGCOR; used as in pari materia comparison showing express treatment of gambling.
• Section 6(f), Republic Act No. 7922 — Empowers the Cagayan Economic Zone Authority to operate or license tourism-related activities including games, amusements, recreational and sports facilities such as horse-racing, dog-racing gambling, casinos, golf courses, and others; used to show that express gambling language was omitted from Republic Act No. 7903.
• Section 51, Republic Act No. 7916 — Ipso facto clause according to special economic zones under that Act all privileges granted to special economic zones under Republic Act No. 7227; cited by PAGCOR as part of the comparative ecozone framework authorizing casinos and games of chance under PAGCOR license.
• Presidential Decree No. 1869 — Invoked by PAGCOR as basis for its authority to centralize and regulate all games of chance allegedly encroached upon by the ZAMBOECOZONE license to PEJI.

Dante O. Tinga, Presbitero J. Velasco, Jr., Teresita J. Leonardo-De Castro, and Arturo D. Brion, JJ., concurred. No separate concurring opinions with additional reasoning appear in the text.