G.R. No. 228505 , June 16, 2021
The Philippine Racing Commission and the Games and Amusements Board, Petitioners, vs. Manila Jockey Club, Inc., Respondent.

FACTS

Respondent Manila Jockey Club, Inc. (MJCI) is a corporation granted a franchise under Republic Act No. 6631 and later extended by R.A. No. 8407 to construct and operate horse race tracks. Petitioner Philippine Racing Commission (PHILRACOM), established by Presidential Decree No. 420, has exclusive jurisdiction and control over horse racing. A dispute arose regarding the ownership of unclaimed dividends from winning betting tickets. MJCI’s franchise (R.A. 8407, Section 8) apportions the total wager funds, allocating specific percentages for dividends, MJCI’s commission, stakes/prizes, and government shares for PHILRACOM and the Games and Amusements Board (GAB). The betting tickets state that winning tickets must be claimed within 30 days, otherwise the prize is forfeited in favor of MJCI. MJCI asserts these unclaimed dividends are its private funds, as they are not listed among the amounts due to the government under its franchise. PHILRACOM, invoking its rule-making power under P.D. 420, issued PR 58-D (as amended by Resolution No. 38-12), which mandates that unclaimed dividends be used for industry development and charitable purposes as determined by PHILRACOM. MJCI filed a Petition for Declaratory Relief with the Regional Trial Court (RTC) of Bacoor, Cavite, which granted MJCI’s Motion for Summary Judgment, declaring PHILRACOM’s PR 58-D and Resolution No. 38-12 void and ruling that unclaimed dividends are MJCI’s private funds. PHILRACOM and GAB appealed.

ISSUE

Whether the Regional Trial Court erred in declaring PHILRACOM’s rules (PR 58-D and Resolution No. 38-12) void and in ruling that unclaimed dividends from winning tickets are the private funds of Manila Jockey Club, Inc.

RULING

The Supreme Court DENIED the petition and AFFIRMED the RTC’s Orders. The Court held that PHILRACOM’s rule-making power under P.D. 420 is limited to implementing the decree’s provisions and cannot contravene or amend substantive law, such as a legislative franchise. R.A. 8407, MJCI’s franchise, is a special law that specifically enumerates the apportionment of the total wager fund. Unclaimed dividends are not included in the allocations for the government or any other party under this franchise. Therefore, these unclaimed funds cannot be subjected to PHILRACOM’s disposition through its rules. The condition on the betting ticket, stating that unclaimed prizes are forfeited in favor of MJCI, constitutes a valid contract between the bettor and MJCI, authorized under Section 7 of R.A. 8407. Since the unclaimed dividends are the property of the winning bettors who failed to claim them, the forfeiture clause is valid and the funds rightfully belong to MJCI. PHILRACOM’s rules, which seek to allocate these funds, are void for being contrary to the franchise law.