Case Digest (G.R. No. 146984)
Facts:
Philippine Amusement and Gaming Corporation (PAGCOR) filed three consolidated petitions for certiorari to annul the RTC Manila, Branch 11 orders issuing a Writ of Preliminary Prohibitory Injunction (June 23, 2011) and later a Writ of Preliminary Mandatory Injunction (October 13, 2011), plus related writs, alleging grave abuse of discretion for lack or excess of jurisdiction. The underlying civil actions were filed by Thunderbird Pilipinas Hotels and Resorts, Inc. and Eastbay Resorts, Inc. after PAGCOR sent closure orders in 2011, asserting that respondents’ authority to operate had expired and could not be renewed on terms extending to PAGCOR’s franchise period.While the petitions were pending, the parties executed a Joint Manifestation and Motion to Dismiss and agreed to terminate their disputes; on May 21, 2012, the RTC dismissed the complaints and released consigned monies to PAGCOR, mooting the case below. PAGCOR nonetheless pursued the petitions, invoking recurring issues
Case Digest (G.R. No. 146984)
Facts:
- Creation of PAGCOR and scope of its franchise and regulatory authority
- P.D. No. 1067-A created the Philippine Amusement and Gaming Corporation (PAGCOR) on January 1, 1977 to centralize and integrate all games of chance not previously authorized by existing franchises or permitted by law.
- P.D. No. 1869 (promulgated July 11, 1983) consolidated presidential decrees relating to PAGCOR into a single statute and charter.
- Sections 1(b) and 10 of P.D. No. 1869 declared the State policy to centralize and integrate games of chance for purposes that include minimizing or eradicating evils, malpractices, and corruptions in gambling operations without direct government involvement, and provided for the grant of PAGCOR’s franchise to operate gambling casinos, clubs, and other recreation/amusement places and sports gaming pools within the territorial jurisdiction of the Republic of the Philippines.
- Under P.D. No. 1869, Sec. 10, PAGCOR received rights, privileges, and authority to operate and maintain gambling casinos, clubs, and other recreation/amusement places, including sports gaming pools, for twenty-five (25) years renewable for another twenty-five (25) years, subject to the terms and conditions established in the decree.
- On June 20, 2007, R.A. No. 9487 amended P.D. No. 1869 by extending PAGCOR’s franchise by twenty-five (25) years after July 11, 2008, renewable for another twenty-five (25) years, while also expanding and circumscribing PAGCOR’s corporate powers.
- Under P.D. No. 1869, Sec. 3(h), PAGCOR was empowered to enter into, make, conclude, perform, and carry out contracts of every kind and nature and for any lawful purpose necessary, appropriate, proper, or incidental to its business, including investment agreements, joint venture agreements, management agreements, agency agreements, manpower supply agreements, and similar arrangements.
- Parties’ investments and casino operations in two resort complexes
- Respondent Eastbay Resorts, Inc. (ERI) and its foreign principal International Thunderbird Gaming Corporation of Canada (Thunderbird) entered into a Memorandum of Agreement (MOA) with PAGCOR on November 9, 2004.
- Thunderbird through ERI committed to invest an initial sum of US$7.5 Million in their gaming and leisure operations in Fiesta Hotel and Casino (FHC) in Eastbay Arts Recreational and Tourism Zone (EARTZ), Binangonan, Rizal.
- To secure ERI’s compliance, the amount was placed in escrow.
- PAGCOR granted ERI a six-month provisional authority to operate (ATO) a casino in FHC.
- PAGCOR retained a sole option to revoke or terminate the ATO upon material default, violation of laws or rules relative to casino operations, failure to remedy within thirty (30) days, bankruptcy, or analogous situations.
- On May 19, 2005, PAGCOR granted ERI and Thunderbird a permanent ATO co-terminous with PAGCOR’s franchise, or up to July 11, 2008.
- On January 18, 2006, an Addendum to the Agreement required ERI’s further investment of P2.5 Billion (US$31.2 Million) for Phases 1–2 of FHC over seven years ending in 2012, contingent on:
- PAGCOR being given a new franchise or its present franchise being extended beyond July 11, 2008.
- The authority of PAGCOR to grant licenses to operate a private casino within special economic zones being within the scope of the new or extended franchise, whichever applied.
- PAGCOR granting an extension of the authority to operate FHC to ERI and Thunderbird.
- On April 11, 2006, PAGCOR and respondent Thunderbird Pilipinas Hotel and Resorts, Inc. (Thunderbird Pilipinas) executed another MOA.
- Thunderbird Pilipinas committed to invest a total of US$100 Million (P5.2 Billion) in Fiesta Casino and Resort (FCR), a gaming and leisure complex in Poro Point Special Economic and Freeport Zone (PPSEFZ), San Fernando City, La Union.
- For Phase 1 of FCR, Thunderbird Pilipinas deposited in escrow the initial amount of P162.3 Million, and PAGCOR granted a six-month provisional ATO.
- Since Phases 2–5 would extend beyond July 11, 2008, subsequent additional investments were made contingent upon the same conditions, including PAGCOR being given a new or extended franchise beyond July 11, 2008 and PAGCOR granting extension of authority to operate FCR.
- On October 31, 2006, the parties executed an Amendment to the MOA.
- Thunderbird Pilipinas agreed to issue a corporate guarantee to fund, develop, and complete the FCR.
- If it failed, it would cede and transfer to PAGCOR its entire shares in FCR and lose its casino license to operate in FCR.
- PAGCOR granted Thunderbird Pilipinas an ATO for FCR of up to July 11, 2008, extendible beyond that date.
- The amendment specified that the agreement would be effective from execution of the April 11, 2006 MOA and would be co-terminous with PAGCOR’s charter or until July 11, 2008, with extension upon PAGCOR receiving a new franchise or its charter being extended beyond July 11, 2008, and upon the authority to grant licenses in special economic zones falling within the new or extended franchise.
- An accompanying document called License (also dated October 31, 2006) stated that Thunderbird Pilipinas’s casino franchise in FCR was co-terminous with PAGCOR, or until July 11, 2008, extendible if and when PAGCOR’s authority to issue licenses was extended.
- The License specified terms and conditions for operation of a gambling casino in PPSEFZ, mirroring the earlier May 19, 2005 agreement for FHC, including the co-terminus and extendibility provisions.
- Respondents’ attempted extension after R.A. No. 9487, and PAGCOR’s issuance of shorter “blank renewal” ATOs
- After the passage of R.A. No. 9487, respondents sought formal extension of their ATOs to be co-terminus with PAGCOR’s new franchise and extension of their development and investment schedules.
- On August 7, 2009, a year after respondents’ prior ATOs had expired, PAGCOR’s Board of Directors approved a retroactive month-to-month extension from July 11, 2008 and also approved a franchise extension of five years effective August 6, 2009.
- PAGCOR extended ERI’s investment timetable to July 2015 and extended Thunderbird Pilipinas’s timetable to 2021.
- On December 11 and December 21, 2009, PAGCOR sent ERI and Thunderbird Pilipinas separate blank renewal ATOs with a period of only six (6) months retroactive to July 12, 2008.
- Respondents refused to accede.
- Respondents reiterated in a letter dated March 30, 2010 that their MOAs required their ATOs to be co-terminous with PAGCOR’s new charter.
- Respondents claimed longer ATO terms were required by the size of their investments totaling P7.7 Billion.
- Respondents asserted that an industry newcomer, Resorts World, was granted a casino franchise co-terminous with PAGCOR, or up to 2033.
- PAGCOR, in a letter dated June 2, 2010, advised Thunderbird Pilipinas that it had approved automatic five-year extensions of their ATOs up to 2033, conditioned on full and satisfactory compliance with investment schedules.
- The June 2, 2010 renewal ATO provision stated that the ATO would be valid for five (5) years or until and including August 5, 2014, and then would be automatically extended to be co-terminous with PAGCOR Charter until July 11, 2033 upon full compliance with the investment commitment “to the satisfaction of” PAGCOR.
- On June 2, 2010, PAGCOR likewise advised ERI that the ATO would incorporate the five-year period until and including August 5, 2014, and would then be automatically extended to co-terminus with PAGCOR charter until July 11, 2033 upon full compliance with the investment commitment, to PAGCOR’s satisfaction.
- On July 8, 2010, respondents again wrote to ask for renewal of ATOs.
- On November 2, 2010, under a ne...(Subscriber-Only)