Lim v. Pacquing
REITERATIONFacts
The Antecedents: In 1971, the City of Manila enacted Ordinance No. 7065, authorizing its Mayor to permit Associated Development Corporation (ADC) to operate a jai-alai fronton. In 1975, Presidential Decree (P.D.) No. 771 was issued, revoking all gambling franchises granted by local governments. Despite this, a 1988 Regional Trial Court (RTC) decision, which became final and executory, ordered the Manila Mayor to issue a permit to ADC based on the 1971 ordinance. Procedural History: In March 1994, upon ADC's motion for execution, Judge Felipe Pacquing of RTC Manila ordered then-Mayor Alfredo S. Lim to issue the permit. Mayor Lim's refusal led to contempt proceedings, prompting him to file a petition for certiorari with the Supreme Court (G.R. No. 115044), which was initially dismissed by the First Division. Subsequently, Executive Secretary Teofisto Guingona directed the Games and Amusements Board (GAB) to suspend ADC's authority to operate. ADC filed a separate petition with another RTC branch under Judge Vetino Reyes, who issued a Temporary Restraining Order (TRO) and later a writ of preliminary mandatory injunction against Guingona and GAB. The Petition: In G.R. No. 115044, the Republic of the Philippines sought to intervene to question the validity of ADC's franchise. In G.R. No. 117263, Executive Secretary Guingona and the GAB Chairman filed a petition for certiorari, assailing Judge Reyes' orders as having been issued with grave abuse of discretion. They argued that ADC possessed no valid franchise to operate jai-alai because its municipal permit was insufficient under Republic Act (R.A.) No. 954 and was effectively revoked by P.D. No. 771.
Issue(s)
Whether the intervention by the Republic of the Philippines is proper. Whether Associated Development Corporation (ADC) has a valid and subsisting franchise to operate jai-alai. Whether P.D. No. 771 is a valid and constitutional exercise of police power. Whether respondent Judge Reyes committed grave abuse of discretion in issuing the writs of preliminary injunction and preliminary mandatory injunction.
Ruling
WHEREFORE, for the foregoing reasons, judgment is hereby rendered: 1. allowing the Republic of the Philippines to intervene in G.R. No. 115044. 2. declaring Presidential Decree No. 771 valid and constitutional. 3. declaring that respondent Associated Development corporation (ADC) does not possess the required congressional franchise to operate and conduct the jai-alai under Republic Act No. 954 and Presidential Decree No. 771. 4. setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by respondent Judge Vetino Reyes in civil Case No. 94-71656.
Ratio Decidendi
On Issue 1 (Intervention): Yes, the intervention by the Republic is proper. The Court held that procedural rules on intervention may be relaxed to prevent a grave injustice. The Republic's intervention was deemed crucial as it was exercising its governmental function to protect public morals and general welfare by questioning the very existence of a valid franchise for a gambling operation. Citing Director of Lands v. Court of Appeals, the Court prioritized the substantive issues over procedural technicalities. Furthermore, the Court noted that it could treat the related petition in G.R. No. 117263 as one for quo warranto, which falls under its original jurisdiction, to settle all substantive issues once and for all. On Issue 2 (ADC's Franchise): No, ADC does not have a valid and subsisting franchise. The Court clarified that R.A. No. 409 (Manila Charter) only delegated to the City of Manila the power to 'license, permit, or regulate' wagers, not the power 'to franchise.' The term 'legislative franchise' in R.A. No. 954 specifically refers to a franchise granted by Congress itself. Therefore, a municipal permit from Manila was insufficient without a congressional franchise. Moreover, gambling is generally a criminal offense under the Revised Penal Code unless expressly allowed by a special law enacted by Congress, which ADC failed to present. On Issue 3 (Constitutionality of P.D. No. 771): Yes, P.D. No. 771 is a valid and constitutional exercise of police power. The decree's stated purpose—to control and regulate gambling to promote public morals and welfare—is a legitimate state interest. The Court rejected ADC's arguments that the decree violated the non-impairment and equal protection clauses. A gambling franchise is a mere privilege, not a vested property right or contract, and is always subject to the State's overriding police power. The decree did not violate the equal protection clause as it revoked all franchises issued by local governments without singling out ADC. The Court also refused to inquire into the alleged improper motivation behind the decree's issuance, stating that the examination of legislative motivation is generally prohibited. On Issue 4 (Grave Abuse of Discretion): Yes, Judge Reyes committed grave abuse of discretion. For a writ of preliminary injunction to issue, the applicant must demonstrate a clear and unmistakable right. ADC had no such right. Judge Reyes should have taken judicial notice of R.A. No. 954 and P.D. No. 771, which are presumed valid and constitutional until declared otherwise by the Supreme Court En Banc. These laws clearly negate any legal right on the part of ADC to operate jai-alai, making the issuance of the injunctive writs a grave abuse of discretion.
Main Doctrine
The State's police power is the 'least limitable of the inherent powers of the State' and allows it to regulate or prohibit activities deemed hurtful to public morals and welfare, such as gambling. A franchise to operate a gambling facility like jai-alai is not a simple contract protected by the non-impairment clause but a mere privilege. Consequently, such a franchise can be unilaterally revoked by a subsequent law, like Presidential Decree No. 771, which is presumed constitutional and a valid exercise of police power to promote the general welfare.