G.R. No.

115044 January 27, 1995

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila, petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila and ASSOCIATED CORPORATION,
respondents.

G.R. No. 117263 January 27, 1995

TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners,

PADILLA, J.:

These two (2) cases which are inter-related actually involve simple issues. if these issues have apparently become
complicated, it is not by reason of their nature because of the events and dramatis personae involved.

The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01 September 1994 based on a
finding that there was "no abuse of discretion, much less lack of or excess of jurisdiction, on the part of respondent
judge [Pacquing]", in issuing the questioned orders. Judge Pacquing had earlier issued in Civil Case No. 88-45660,
RTC of Manila, Branch 40, the following orders which were assailed by the Mayor of the City of Manila, Hon.
Alfredo S. Lim, in said G.R. No. 115044:

a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue the permit/license to operate
the jai-alai in favor of Associated Development Corporation (ADC).

b. order dated 11 April 1994 directing mayor Lim to explain why he should not be cited for contempt for
non-compliance with the order dated 28 March 1994.

c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to immediately issue the
permit/license to Associated Development Corporation (ADC).

The order dated 28 march 1994 was in turn issued upon motion by ADC for execution of a final judgment rendered
on 9 September 1988 which ordered the Manila Mayor to immediately issue to ADC the permit/license to operate
the jai-alai in Manila, under Manila Ordinance No. 7065.

On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then chairman of the
Games and Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in abeyance the grant of authority, or if
any had been issued, to withdraw such grant of authority, to Associated Development Corporation to operate the
jai-alai in the City of Manila, until the following legal questions are properly resolved:

1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by local governments as of 20
August 1975 is unconstitutional.

2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai franchise to
Associated Development Corporation, whether the franchise granted is valied considering that the franchise has
no duration, and appears to be granted in perpetuity.

3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated Development
Corporation on 7 September 1971 in view of executive Order No. 392 dated 1 January 1951 which transferred from
local governments to the Games and Amusements Board the power to regulate Jai-Alai.1

On 15 September 1994, respondent Associated Development Corporation (ADC) filed a petition for prohibition,
mandamus, injunction and damages with prayer for temporary restraining order and/or writ of preliminary
injunction in the Regional Trial Court of Manila against petitioner Guingona and then GAB chairman Sumulong,
docketed as Civil Case No. 94-71656, seeking to prevent GAB from withdrawing the provisional authority that had
earlier been granted to ADC. On the same day, the RTC of Manila, Branch 4, through presiding Judge Vetino Reyes,
issued a temporary restraining order enjoining the GAB from withdrawing ADC's provisional authority. This
temporary restraining order was converted into a writ of preliminary injunction upon ADC's posting of a bond in
the amount of P2,000,000.00.2
Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the Games and Amusements
Board, filed a "Motion for Intervention; for Leave to File a Motion for reconsideration in Intervention; and to Refer
the case to the Court En Banc" and later a "Motion for Leave to File Supplemental Motion for Reconsideration-in-
Intervention and to Admit Attached Supplemental Motion for Reconsideration-in-Intervention".

In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No. 115044 to the Court En Banc and
required the respondents therein to comment on the aforementioned motions.

Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting ADC a writ of preliminary
mandatory injunction against Guingona and GAB to compel them to issue in favor of ADC the authority to operate
jai-alai.

Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB chairman, then filed the petition in
G.R. No. 117263 assailing the abovementioned orders of respondent Judge Vetino Reyes.

On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion for leave to file supplemental
petition and to admit attached supplemental petition with urgent prayer for restraining order. The Court further
required respondents to file their comment on the petition and supplemental petition with urgent prayer for
restraining order. The Court likewise set the case and all incidents thereof for hearing on 10 November 1994.

At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court as follows:

1. whether or not intervention by the Republic of the Philippines at this stage of the proceedings is proper;

2. assuming such intervention is proper, whether or not the Associated Development Corporation has a valid
and subsisting franchise to maintain and operate the jai-alai;

3. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the
aforementioned temporary restraining order (later writ of preliminary injunction); and

4. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the
aforementioned writ of preliminary mandatory injunction.

On the issue of the propriety of the intervention by the Republic of the Philippines, a question was raised during
the hearing on 10 November 1994 as to whether intervention in G.R. No. 115044 was the proper remedy for the
national government to take in questioning the existence of a valid ADC franchise to operate the jai-alai or
whether a separate action for quo warranto under Section 2, Rule 66 of the Rules of Court was the proper remedy.

We need not belabor this issue since counsel for respondent ADC agreed to the suggestion that this Court once
and for all settle all substantive issues raised by the parties in these cases. Moreover, this Court can consider the
petition filed in G.R. No. 117263 as one for quo warranto which is within the original jurisdiction of the Court under
section 5(1), Article VIII of the Constitution. 3

On the propriety of intervention by the Republic, however, it will be recalled that this Court in Director of Lands v.
Court of Appeals (93 SCRA 238) allowed intervention even beyond the period prescribed in Section 2 Rule 12 of the
Rules of Court. The Court ruled in said case that a denial of the motions for intervention would "lead the Court to
commit an act of injustice to the movants, to their successor-in-interest and to all purchasers for value and in good
faith and thereby open the door to fraud, falsehood and misrepresentation, should intervenors' claim be proven to
be true."

In the present case, the resulting injustice and injury, should the national government's allegations be proven
correct, are manifest, since the latter has squarely questioned the very existence of a valid franchise to maintain
and operate the jai-alai (which is a gambling operation) in favor of ADC. As will be more extensively discussed later,
the national government contends that Manila Ordinance No. 7065 which purported to grant to ADC a franchise to
conduct jai-alai operations is void and ultra vires since Republic Act No. 954, approved on 20 June 1953, or very
much earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in Section 4 thereof, requires a
legislative franchise, not a municipal franchise, for the operation of jai-alai. Additionally, the national government
argues that even assuming, arguendo, that the abovementioned ordinance is valid, ADC's franchise was
nonetheless effectively revoked by Presidential decree No. 771, issued on 20 August 1975, Sec. 3 of which
expressly revoked all existing franchises and permits to operate all forms of gambling facilities (including the jai-
alai) issued by local governments.

On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City of Manila pursuant to
its delegated powers under it charter, Republic Act No. 409. ADC also squarely assails the constitutionality of PD
No. 771 as violative of the equal protection and non-impairment clauses of the Constitution. In this connection,
counsel for ADC contends that this Court should really rule on the validity of PD No. 771 to be able to determine
whether ADC continues to possess a valid franchise.

It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from ruling on the
issue of constitutionality of PD No. 771. Such issue has, in our view, become the very lis mota in resolving the
present controversy, in view of ADC's insistence that it was granted a valid and legal franchise by Ordinance No.
7065 to operate the jai-alai.

The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and constitutional until or
unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the Constitution states:

Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and other executive
issuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked.

There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered or amended by any
subsequent law or presidential issuance (when the executive still exercised legislative powers).

Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Court's First Division in
said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since only
the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution.4

And on the question of whether or not the government is estopped from contesting ADC's possession of a valid
franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of its
officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)

Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra distinction to
the City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is intervening in G.R. No. 115044
in the exercise, not of its business or proprietary functions, but in the exercise of its governmental functions to
protect public morals and promote the general welfare.

II

Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a statement of the
pertinent laws is in order.

1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof provides:

Sec. 18. Legislative Powers. The Municipal Board shall have the following legislative powers:

xxx xxx xxx

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards,
pools, horse and dog races, cockpits, jai-alai, roller or ice-skating on any sporting or athletic contests, as well as
grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.

2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais
from local government to the Games and Amusements Board (GAB).

3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit With Horse Races
and Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its Violation". The provisions of Republic Act
No. 954 relating to jai-alai are as follows:

Sec. 4. No person, or group of persons other than the operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-alai), shall offer, to take or arrange bets on any basque pelota game
or event, or maintain or use a totalizator or other device, method or system to bet or gamble on any basque pelota
game or event. (emphasis supplied).

Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to conduct basque pelota games
shall offer, take, or arrange bets on any basque pelota game or event, or maintain or use a totalizator or other
device, method or system to bet or gamble on any basque pelota game or event outside the place, enclosure, or
fronton where the basque pelota game is held. (emphasis supplied).
4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No.
7065 entitled "An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development
Corporation To Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And
Conditions And For Other Purposes."

5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree,
entitled "Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And
Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other Forms
Of Gambling", in Section 3 thereof, expressly revoked all existing franchises and permits issued by local
governments.

6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine Jai-Alai And
Amusement Corporation A Franchise To Operate, Construct And Maintain A Fronton For Basque Pelota And Similar
Games of Skill In THE Greater Manila Area," was promulgated.

7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the Constitution, which
allowed the incumbent legislative powers until the first Congress was convened, issued Executive Order No. 169
expressly repealing PD 810 and revoking and cancelling the franchise granted to the Philippine Jai-Alai and
Amusement Corporation.

Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power of the Municipal
Board of Manila to grant franchises for gambling operations. It is argued that the term "legislative franchise" in
Rep. Act No. 954 is used to refer to franchises issued by Congress.

On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative powers to the
Municipal Board to grant franchises, and since Republic Act No. 954 does not specifically qualify the word
"legislative" as referring exclusively to Congress, then Rep. Act No. 954 did not remove the power of the Municipal
Board under Section 18(jj) of Republic Act No. 409 and consequently it was within the power of the City of Manila
to allow ADC to operate the jai-alai in the City of Manila.

On this point, the government counter-argues that the term "legislative powers" is used in Rep. Act No. 409 merely
to distinguish the powers under Section 18 of the law from the other powers of the Municipal Board, but that the
term "legislative franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.

Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred even the power
to regulate Jai-Alai from the local governments to the Games and Amusements Board (GAB), a national
government agency.

It is worthy of note that neither of the authorities relied upon by ADC to support its alleged possession of a valid
franchise, namely the Charter of the City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the
word "franchise". Rep. Act No. 409 empowers the Municipal Board of Manila to "tax, license, permit and regulate
wagers or betting" and to "grant exclusive rights to establishments", while Ordinance No. 7065 authorized the
Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.

It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to franchise" wagers
or betting, including the jai-alai, but retained for itself such power "to franchise". What Congress delegated to the
City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the power to "license, permit, or
regulate" which therefore means that a license or permit issued by the City of Manila to operate a wager or betting
activity, such as the jai-alai where bets are accepted, would not amount to something meaningful UNLESS the
holder of the permit or license was also FRANCHISED by the national government to so operate. Moreover, even
this power to license, permit, or regulate wagers or betting on jai-alai was removed from local governments,
including the City of Manila, and transferred to the GAB on 1 January 1951 by Executive Order No. 392. The net
result is that the authority to grant franchises for the operation of jai-alai frontons is in Congress, while the
regulatory function is vested in the GAB.

In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to operate the jai-alai, it
may not so operate even if its has a license or permit from the City Mayor to operate the jai-alai in the City of
Manila.

It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and betting under
Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless another law is enacted by
Congress expressly exempting or excluding certain forms of gambling from the reach of criminal law. Among these
form the reach of criminal law. Among these forms of gambling allowed by special law are the horse races
authorized by Republic Acts Nos. 309 and 983 and gambling casinos authorized under Presidential Decree No.
1869.

While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai games is
undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199 of the Revised Penal
Code, unless it is shown that a later or special law had been passed allowing it. ADC has not shown any such special
law.

Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress on 18 June 1949
gave the Municipal Board certain delegated legislative powers under Section 18. A perusal of the powers
enumerated under Section 18 shows that these powers are basically regulatory in nature.5 The regulatory nature
of these powers finds support not only in the plain words of the enumerations under Section 28 but also in this
Court's ruling in People v. Vera (65 Phil. 56).

In Vera, this Court declared that a law which gives the Provincial Board the discretion to determine whether or not
a law of general application (such as, the Probation law-Act No. 4221) would or would not be operative within the
province, is unconstitutional for being an undue delegation of legislative power.

From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to prevail, this Court would
likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional for the power it would delegate to
the Municipal Board of Manila would give the latter the absolute and unlimited discretion to render the penal code
provisions on gambling inapplicable or inoperative to persons or entities issued permits to operate gambling
establishments in the City of Manila.

We need not go to this extent, however, since the rule is that laws must be presumed valid, constitutional and in
harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065
should be taken together and it should then be clear that the legislative powers of the Municipal Board should be
understood to be regulatory in nature and that Republic Act No. 954 should be understood to refer to
congressional franchises, as a necessity for the operation of jai-alai.

We need not, however, again belabor this issue further since the task at hand which will ultimately, and with
finality, decide the issues in this case is to determine whether PD No. 771 validly revoked ADC's franchise to
operate the jai-alai, assuming (without conceding) that it indeed possessed such franchise under Ordinance No.
7065.

ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and non-impairment
provisions of the Constitution. On the other hand, the government contends that PD No. 771 is a valid exercise of
the inherent police power of the State.

The police power has been described as the least limitable of the inherent powers of the State. It is based on the
ancient doctrine salus populi est suprema lex (the welfare of the people is the supreme law.) In the early case of
Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm stated thus:

The police power of the State . . . is a power co-extensive with self-protection, and is not inaptly termed the "law
of overruling necessity." It may be said to be that inherent and plenary power in the State which enables it to
prohibit all things hurtful to the comfort, safety and welfare of society. Carried onward by the current of
legislation, the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided the
purposes of the law do not go beyond the great principles that mean security for the public welfare or do not
arbitrarily interfere with the right of the individual.

In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as follows:

WHEREAS, it has been reported that in spite of the current drive of our law enforcement agencies against vices and
illegal gambling, these social ills are still prevalent in many areas of the country;

WHEREAS, there is need to consolidate all the efforts of the government to eradicate and minimize vices and other
forms of social ills in pursuance of the social and economic development program under the new society;

WHEREAS, in order to effectively control and regulate wagers or betting by the public on horse and dog races, jai-
alai and other forms of gambling there is a necessity to transfer the issuance of permit and/or franchise from local
government to the National Government.

It cannot be argued that the control and regulation of gambling do not promote public morals and welfare.
Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the value of good, honest and
hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which government must minimize (if not
eradicate) in pursuit of social and economic development.

In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated thru Mr. Justice
Isagani A. Cruz:

In the exercise of its own discretion, the legislative power may prohibit gambling altogether or allow it without
limitation or it may prohibit some forms of gambling and allow others for whatever reasons it may consider
sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In making
such choices, Congress has consulted its own wisdom, which this Court has no authority to review, much less
reverse. Well has it been said that courts do not sit to resolve the merits of conflicting theories. That is the
prerogative of the political departments. It is settled that questions regarding wisdom, morality and practicability
of statutes are not addressed to the judiciary but may be resolved only by the executive and legislative
departments, to which the function belongs in our scheme of government. (Emphasis supplied)

Talks regarding the supposed vanishing line between right and privilege in American constitutional law has no
relevance in the context of these cases since the reference there is to economic regulations. On the other hand,
jai-alai is not a mere economic activity which the law seeks to regulate. It is essentially gambling and whether it
should be permitted and, if so, under what conditions are questions primarily for the lawmaking authority to
determine, talking into account national and local interests. Here, it is the police power of the State that is
paramount.

ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot look into allegations
that PD No. 771 was enacted to benefit a select group which was later given authority to operate the jai-alai under
PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217,
29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute lack of evidence to support ADC's allegation
of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court cannot go
behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even laudable.

It should also be remembered that PD No. 771 provides that the national government can subsequently grant
franchises "upon proper application and verification of the qualifications of the applicant." ADC has not alleged
that it filed an application for a franchise with the national government subsequent to the enactment of PD No.
771; thus, the allegations abovementioned (of preference to a select group) are based on conjectures, speculations
and imagined biases which do not warrant the consideration of this Court.

On the other hand, it is noteworthy that while then president Aquino issued Executive Order No. 169 revoking PD
No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai), she did not scrap or repeal PD No.
771 which had revoked all franchises to operate jai-alais issued by local governments, thereby re-affirming the
government policy that franchises to operate jai-alais are for the national government (not local governments) to
consider and approve.

On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it should be
remembered that a franchise is not in the strict sense a simple contract but rather it is more importantly, a mere
privilege specially in matters which are within the government's power to regulate and even prohibit through the
exercise of the police power. Thus, a gambling franchise is always subject to the exercise of police power for the
public welfare.

In RCPI v. NTC (150 SCRA 450), we held that:

A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the hands of a
subject." This definition was given by Finch, adopted by Blackstone, and accepted by every authority since . . .
Today, a franchise being merely a privilege emanating from the sovereign power of the state and owing its
existence to a grant, is subject to regulation by the state itself by virtue of its police power through its
administrative agencies.

There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai, when played for bets, is
pure and simple gambling. To analogize a gambling franchise for the operation of a public utility, such as public
transportation company, is to trivialize the great historic origin of this branch of royal privilege.

As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD No. 771. and yet, the
purpose of PD No. 771 is quite clear from its provisions, i.e., to give to the national government the exclusive
power to grant gambling franchises. Thus, all franchises then existing were revoked but were made subject to
reissuance by the national government upon compliance by the applicant with government-set qualifications and
requirements.
There was no violation by PD No. 771 of the equal protection clause since the decree revoked all franchises
issued by local governments without qualification or exception. ADC cannot allege violation of the equal
protection clause simply because it was the only one affected by the decree, for as correctly pointed out by the
government, ADC was not singled out when all jai-alai franchises were revoked. Besides, it is too late in the day
for ADC to seek redress for alleged violation of its constitutional rights for it could have raised these issues as
early as 1975, almost twenty 920) years ago.

Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise in Republic Act
No. 954 are "riders" to the two 92) laws and are violative of the rule that laws should embrace one subject which
shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court ruled that the
requirement under the constitution that all laws should embrace only one subject which shall be expressed in the
title is sufficiently met if the title is comprehensive enough reasonably to include the general object which the
statute seeks to effect, without expressing each and every end and means necessary or convenient for the
accomplishing of the objective.

III

On the issue of whether or not there was grave abuse of discretion committed by respondent Judge Reyes in
issuing the temporary restraining order (later converted to a writ of preliminary injunction) and the writ of
preliminary mandatory injunction, we hold and rule there was.

Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a preliminary injunction. While
ADC could allege these grounds, respondent judge should have taken judicial notice of Republic Act No. 954 and
PD 771, under Section 1 rule 129 of the Rules of court. These laws negate the existence of any legal right on the
part of ADC to the reliefs it sought so as to justify the issuance of a writ of preliminary injunction. since PD No. 771
and Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the Supreme Court after
due hearing, ADC was not entitled to the writs issued and consequently there was grave abuse of discretion in
issuing them.

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.

SO ORDERED.
1. Is PD 771 unconstitutional?

There is no record that shows or even suggests that PD No. 771 has been repealed, altered or amended by
any subsequent law or presidential issuance at the time of this case.

There was no violation by PD No. 771 of the equal protection clause since the decree revoked all
franchises issued by local governments without qualification or exception.

2. Summary of the case

Petitioner Lim filed for certiorari to set aside the Order that granted the motion of Associated
Development Corporation (ADC) to compel petitioner Lim to issue a gambling permit or license in favor of
ADC to upon compliance by private respondent with all the requirements set thereunder. The certiorari
was later dismissed as no abuse of discretion, much less lack of or excess of jurisdiction, on the part of
respondent judge. After which, then, Executive Secretary Teofisto Guingona Jr. intervened and directed
the Chairman of Games and Amusement to suspend or withdraw the grant of authority to ADC to operate
Jai Alai in Manila until legal questions are resolved including whether or not PD 771 REVOKING ALL
POWERS AND AUTHORITY OF LOCAL GOVERNMENT TO GRANT FRANCHISE, LICENSE OR PERMIT AND
REGULATE WAGERS OR BETTING BY THE PUBLIC ON HORSE AND DOG RACES, JAI-ALAI OR BASQUE
PELOTA, AND OTHER FORMS OF GAMBLING is unconstitutional.

As it cannot be stated that the issue of the continued existence of ADCs franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Courts First
Division in said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as
unconstitutional, since only the Court En Banc has that power and ADC cannot allege violation of the
equal protection clause simply because it was the only one affected by the decree, for as correctly
pointed out by the government, ADC was not singled out when all jai-alai franchises were revoked.
Therefore, judgment was rendered:

allowing the Republic of the Philippines to intervene in G.R. No. 115044.

declaring Presidential Decree No. 771 valid and constitutional.

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.