Gonzales v. Philippine Amusement and Gaming Corporation
REITERATIONFacts
The Antecedents: This case concerns a challenge to the constitutionality of the Philippine Amusement and Gaming Corporation (PAGCOR) and its subsequent grant of franchises to various entities for gambling operations. Specifically, the petition assails the creation of PAGCOR and the agreements it entered into with Sports and Games Entertainment Corporation (SAGE) for internet gambling, Best World Gaming and Entertainment Corporation (BEST WORLD) for computerized bingo, and Belle Jai-alai Corporation (BELLE) and Filipinas Gaming Entertainment Totalizator Corporation (FILGAME) for jai-alai operations. Procedural History: The petitioner, Ramon A. Gonzales, filed a special civil action for prohibition. The case has seen several developments, including the Supreme Court's ruling in Del Mar v. Phil. Amusement and Gaming Corp., which enjoined PAGCOR, BELLE, and FILGAME from operating jai-alai games and declared their agreement invalid. Subsequently, BEST WORLD reported its closure due to a presidential memorandum. The original petitioner, Ramon A. Gonzales, passed away, leading to a motion for substitution by his counsel, Attys. Imbong and Imbong, who argued the case was a class suit. The Court considered whether the case survived Gonzales' death and whether it had become moot. The Petition: The petition, filed as a class suit, sought to restrain PAGCOR from continuing its operations and to prohibit PAGCOR and its co-respondents from enforcing the specific agreements for internet gambling, computerized bingo, and jai-alai operations. The core arguments questioned the constitutionality of PAGCOR's charter (P.D. 1869) and the validity of the franchises granted, alleging undue delegation of legislative power. The petition also raised issues regarding the validity of decrees issued during martial law. However, the Court found that the issues concerning the contracts had been resolved in prior cases, and the constitutional challenges to P.D. 1869 were either settled by previous jurisprudence or rendered moot by the restoration of constitutional order and the express provision of the 1987 Constitution.
Issue(s)
Whether the petition should be dismissed for being moot and academic. Whether the petition should be dismissed due to the death of the petitioner, Ramon A. Gonzales, and the alleged extinguishment of the cause of action; and whether the movants, Attys. Imbong and Imbong, can be substituted for the deceased petitioner, Ramon A. Gonzales, in a class suit. Whether the creation of PAGCOR under P.D. 1869 is unconstitutional, considering arguments related to the validity of Proclamation 1081, the 1973 Constitution, and the legislative powers of the President under Martial Law. Whether the contracts entered into by PAGCOR with its co-respondents for jai-alai operations are void. Whether the contracts entered into by PAGCOR with SAGE for sports betting and internet gambling are void for being undue delegations of its franchise.
Ruling
The petition is DISMISSED. The "Grant of Authority and Agreement to Operate Sports Betting and Internet Gaming" executed by PAGCOR in favor of SAGE is declared NULL and VOID. The prayer that PAGCOR be enjoined from continuing its operations is denied.
Ratio Decidendi
On the mootness and academic nature of the petition: The Court found that the issues raised in the petition had already been rendered moot and academic by previous rulings. Specifically, the issue concerning the validity of contracts entered into by PAGCOR with its co-respondents had been resolved in Del Mar v. Phil. Amusement and Gaming Corp., et al., where the Court declared the agreement among PAGCOR, BELLE, and FILGAME to be without force and effect, and reiterated in Jaworski v. Phil. Amusement and Gaming Corp., which declared the agreement between PAGCOR and SAGE null and void. The Court emphasized that SAGE needed a separate legislative franchise and could not "ride on" PAGCOR’s franchise for on-line Internet gambling. The issue regarding the constitutionality of P.D. 1869 and the exercise of legislative powers by then President Ferdinand E. Marcos under Martial Law and the 1973 Constitution was also deemed settled by prior jurisprudence and rendered moot by the 1987 Constitution and the restoration of the separation of powers. The Court stated it could not re-write history and was limited to adjudicating actual controversies and determining grave abuse of discretion. On the survival of the action and substitution of parties: The Court held that the petition should be dismissed due to the death of the petitioner, Ramon A. Gonzales, as the cause of action was personal and non-transferable. The Court cited Bonilla v. Barcena to explain that the survival of an action depends on its nature; if it primarily affects property and property rights, it survives, but if the injury is to the person, it does not. Gonzales' alleged interest as a citizen, taxpayer, and member of the bar was deemed personal and non-transmissible. The Court further ruled that the movants, Attys. Imbong and Imbong, could not be substituted for Gonzales as they were neither legal representatives nor heirs. Their attempt to assert their own individual interests as members of the classes allegedly represented by Gonzales should have been through a Motion for Intervention, not a Motion for Substitution. The Court also noted the untimeliness of the Motion for Substitution, filed almost eight months after Gonzales' death. On the constitutionality of P.D. 1869 and prior decrees: The Court found that the petitioner's arguments assailing the constitutionality of P.D. 1869 and related decrees were based on issues already settled by established jurisprudence concerning the validity of Proclamation 1081, the 1973 Constitution, and the legislative powers of the President under Martial Law. Cases like Javellana v. Executive Secretary and Aquino, Jr. v. Enrile were cited as having settled these matters. The Court reiterated that the 1987 Constitution and the convening of Congress had restored the separation of powers, rendering the issue of the late dictator's exercise of lawmaking powers moot. Furthermore, Section 3, Article XVIII of the Constitution mandates that existing laws and decrees not inconsistent with the Constitution remain operative. Since the petitioner did not demonstrate any inconsistency between P.D. 1869 and the Constitution, the prayer to enjoin PAGCOR's operations was denied. On the validity of PAGCOR's creation and delegation of franchise regarding jai-alai operations: The Court reiterated its previous rulings that PAGCOR has a valid franchise to operate jai-alai by itself, but not in association with other entities. Consequently, agreements for jai-alai operations with other entities were declared void. On the validity of PAGCOR's creation and delegation of franchise regarding sports betting and internet gambling: Regarding the contracts with SAGE for sports betting and internet gambling, the Court declared the "Grant of Authority and Agreement to Operate Sports Betting and Internet Gaming" null and void, stating that while PAGCOR may enter into operator's contracts, it cannot relinquish or share its franchise, nor grant a veritable franchise to another entity. The principle of delegata potestas delegare non potest was invoked, as PAGCOR's charter did not expressly authorize it to delegate its franchise. The Court emphasized that SAGE needed a separate legislative franchise to operate on-line Internet gambling legally.
Main Doctrine
A petition for prohibition assailing the constitutionality of PAGCOR's creation and its grant of franchises to other entities is dismissed for being moot and academic, as prior rulings have already declared certain agreements void and the issues regarding the validity of presidential decrees and the 1973 Constitution have been settled by previous jurisprudence and rendered moot by the 1987 Constitution. Furthermore, a class suit instituted by a deceased petitioner does not survive if the claim is personal and non-transferable, and the purported intervenors failed to properly file a motion for intervention.