Facts:

The case revolves around the Philippine Basketball Association (PBA), which comprises various basketball clubs owned by different companies, including Airfreight 2100, Inc., Alaska Milk Corporation, and more. On January 6, 1976, then-President Ferdinand E. Marcos issued Presidential Decree (PD) No. 871, placing professional basketball under the regulatory authority of the Games and Amusement Board (GAB). This decree required the PBA to remit 3% of its gross receipts from any sources, including television broadcasts, to fund the GAB's operations. In 1999, the PBA entered into a Memorandum of Agreement with Viva Vintage Sports, Inc. (VVSI), granting exclusive broadcasting rights for PBA games, where VVSI was initially compliant in paying franchise fees, enabling the PBA to remit its 3% obligation to GAB. However, VVSI began defaulting on payments in 2001, impacting the PBA's financial obligations to GAB. In 2004, GAB assessed the PBA for unpaid contributions amounting to P

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Facts:

Parties and Institutional Background

• Philippine Basketball Association (PBA) is an association composed of various basketball clubs owned by major business entities such as Airfreight 2100, Inc., Alaska Milk Corporation, Asian Coatings Philippines, Inc., Coca-Cola Bottlers Philippines, Inc., Energy Food and Drinks Corporation, Ginebra San Miguel, Inc., Philippine Long Distance Telephone Company, Inc., Purefoods Hormel Company, Inc., San Miguel Corporation, and Sta. Lucia Realty and Development, Inc.
• Respondents include the Honorable Manuel B. Gaite in his official capacity as Deputy Executive Secretary for Legal Affairs of the Office of the President (OP) and the Games and Amusement Board (GAB), the latter represented by its Chairman, Eduardo R. Villanueva.

Legal Framework and Statutory Mandate

• On January 6, 1976, Presidential Decree (PD) No. 871 was enacted by then President Ferdinand E. Marcos, placing professional basketball and other professional games under the supervision and regulatory control of the GAB.
• PD No. 871 provides that:
• The GAB is responsible for issuing permits and licenses for the conduct of professional games.
• Associations conducting professional games must remit three percent (3%) of their gross receipts and income from television, radio, and motion pictures to defray the GAB’s expenses.
• Notably, PBA games are exempt from this 3% condition, being subject only to a 5% amusement tax on admission ticket gross receipts as expressly provided in Section 8 of PD No. 871.

Broadcast Arrangements and Contractual Disputes

• On December 29, 1999, the PBA entered into a Memorandum of Agreement (MOA) with Viva Vintage Sports, Inc. (VVSI), granting exclusive television and radio broadcast rights for the 2000 to 2002 PBA seasons.
• Initially, VVSI complied by paying the required franchise fees, enabling the PBA to remit the 3% assessable amount to the GAB.
• However, starting in November 2001—and again in 2002—VVSI defaulted on its payment obligations, adversely affecting the PBA’s ability to collect the fees and, consequently, to remit the 3% to the GAB.
• On January 7, 2004, the PBA formally demanded VVSI to pay the outstanding franchise fees.

Escrow Arrangement and Submission of Dispute

• In light of the dispute on whether the PBA should remit the 3% based on gross receipts regardless of actual collection, the parties executed a PBA-GAB MOA.
• Under the MOA, the PBA agreed to deposit the assessed amount of ₱3,452,233.32 in escrow with Equitable-PCI Bank.
• The release of the escrowed funds was conditioned on a judicial or administrative resolution regarding the interpretation of Section 8 of PD No. 871.

Administrative Proceedings and Subsequent Petitions

• Through a letter dated August 17, 2004, the OP, via Gaite, ruled in favor of the GAB, asserting that the obligation to remit 3% arises when the PBA’s contractual fees become due, regardless of actual receipt.
• On September 15, 2004, the PBA sought reconsideration of Gaite’s ruling, but the request was denied on October 18, 2004.
• Subsequently, on November 5, 2004, the PBA filed a petition for certiorari under Rule 65 with the Court of Appeals (CA) to challenge the OP decision, which the CA dismissed as an improper remedy.
• The PBA further elevated its dispute by filing a petition for review on certiorari under Rule 45 of the Rules of Court.

Claims and Contentions Raised by the PBA

• The PBA contended that the CA committed grave error by dismissing its Rule 65 petition as the proper remedy for challenging the OP decision.
• It alleged that the OP, through Gaite, exercised quasi-judicial functions without committing grave abuse of discretion, especially in interpreting PD No. 871.
• The PBA asserted that the CA failed to address the legal issue regarding the correct interpretation of Section 8 of PD No. 871.

Issue:

Whether the remedy of certiorari under Rule 65 of the Rules of Court was the appropriate mode of review for challenging the OP’s decision on the 3% assessment imposed on the PBA.

• Whether, given the existence of an alternative appeal remedy under Rule 43, the PBA’s recourse to Rule 65 was procedurally proper.

Whether the Office of the President, through Manuel B. Gaite, properly exercised its quasi-judicial functions in interpreting and applying PD No. 871.

• Whether there was any grave abuse of discretion or misinterpretation of the statutory provisions, particularly regarding the determination of the PBA’s obligation to remit 3% of its gross receipts.

Whether the Court of Appeals correctly addressed and resolved the legal issue concerning the proper interpretation of Section 8 of PD No. 871.

• Whether the CA was right in affirming that the issue should have been pursued through a petition for review under Rule 43 rather than via the extraordinary remedy of Rule 65.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)