Casino franchises reinstated

THE SUPREME COURT (SC) has upheld a Manila court’s ruling which ordered the Philippine Amusement and Gaming Corp. (PAGCOR) to allow two casino operators to resume normal operations whose licenses were revoked for its alleged failure in fulfilling investment commitments.

The high court, in a 23-page decision, dismissed the petition for review of PAGCOR, which questioned the injunction order that Manila Judge Cicero D. Jurado issued in favor of Thunderbird Pilipinas Hotels and Resorts, Inc. and Eastbay Resorts, Inc.

The injunction ordered PAGCOR to grant the operators’ various requests, which would allow them to resume the operations of the Fiesta Hotel and Casino in Binganonan, Rizal, and the Fiesta Casino and Resort at the Poro Point Special Economic and Freeport Zone in La Union.

“In conclusion, PAGCOR’s sole and exclusive authority to restrict and control the operation of gambling casinos in the country cannot be said to be absolute, but must be exercised with due regard to the terms of its agreement with the licensee,” Associate Justice Bienvenido L. Reyes wrote.

“This is especially so when the grant of a particular franchisee to operate a casino is hinged on an entire investment agreement to establish a resort complex requiring a significant infusion of capital, wherein the investor must invest not just in a casino operation but in a complete hotel/resort complex which would house it,” he added.

In 2011, PAGCOR ordered Eastbay and Thunderbird to cease its casino operations unless they satisfy its terms of reference for a new license.

Conditions include completion of investment commitment within three years, a minimum floor area of 25,000 square meters for the resort, and a gross floor area of 5,000 square meters for the gaming areas, a minimum of 200 hotel rooms, a maximum of one gaming table for every hotel room, and three slot machines for every two rooms.

A three-year provisional license will be issued until it complies with its commitments, which would then be replaced with a regular license reaching a seven-year period. The new terms also included PAGCOR’s franchise fees based on gross gaming revenues.

The new terms prompted Thunderbird and Eastbay to seek remedies with the Manila regional trial court (RTC), saying they should be entitled to new franchise coterminous with that of PAGCOR.

The Manila RTC then granted the operators’ injunction plea, compelling PAGCOR to seek a review of the order before the SC.

In its ruling, the high court noted the case was already moot after the parties agreed to settle the issue. It also noted the Manila court acted within its mandate, and PAGCOR should have observed the hierarchy of courts by filing a motion for reconsideration before proceeding to the high tribunal for relief.