LIM vs.

PACQUING
G.R. 115044, January 27, 1995
Facts:
On 15 September 1994, respondent Associated Development Corporation (ADC)
filed a petition for prohibition seeking to prevent GAB from withdrawing the
provisional authority that had been granted them to operate jai-alai. ADC's
franchise was invalidated by PD No.771, which expressly revoked all existing
franchises to operate all forms of gambling facilitiesissued by local governments.
Respondent contends that Ordinance No. 7065 authorized the Mayor to allow ADC
to operate Jai-Alai in the City of Manila. ADC also assails the constitutionality of
PD No. 771 as violativeof the equal protection and non-impairment clauses of the
Constitution.
Issue:
Whether ADC has a valid franchise to operate the Jai-Alai de Manila
Held:
PD No. 771 is a valid exercise of the inherent police power of the State. 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. 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, taking into account national and local interests.
Here, it is the police power of the State that is paramount. 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. ADC has no franchise from Congress to operate the
jai-alai. Therefore, it may not operate even if it has a license from the Mayor to
operate the jai-alai in the City of Manila.