G.R. No. L-7922; February 22, 1957
Recreation and Amusement Association of the Philippines, plaintiff-appellant, vs. The City of Manila, The Mayor of Manila, The City Treasurer of Manila, and The Chief of Police of Manila, defendants-appellees.

FACTS

The Recreation and Amusement Association of the Philippines, Inc., claiming to be a non-stock corporation, filed a complaint in the Court of First Instance of Manila. Its 35 members were licensed owners and operators of “Five-Ball-Flipper-Action-Pinball machines” (slot machines) in Manila. The association sought to restrain the City Mayor and City Treasurer from enforcing Ordinance No. 3628, enacted on March 19, 1954, and approved on March 20, 1954. This ordinance amended the city’s revised ordinances by prohibiting the operation of pinball machines within a 200-meter radius of any church, hospital, school, public market, plaza, or government building, and by increasing the annual license fee from P55 to P300. The plaintiff prayed for a preliminary injunction, a declaration that the ordinance was null and void, and an order compelling the city officials to issue licenses under the old ordinance. The lower court issued a preliminary injunction. The defendants filed a motion to dismiss and to lift the injunction, arguing the plaintiff lacked legal capacity to sue and the complaint stated no cause of action, as the plaintiff association did not own the machines and the real parties in interest were its unnamed members. The defendants also contended the ordinance was a valid exercise of police power under the city charter. Without waiting for an answer from the defendants or a hearing on the merits, the trial court issued a resolution dismissing the complaint and dissolving the injunction, declaring Ordinance No. 3628 valid and within the Municipal Board’s power to enact. The plaintiff appealed, assigning errors regarding the premature resolution on constitutionality, the finding that the Mayor had discretionary licensing power, and the finding of the ordinance’s validity.

ISSUE

1. Whether the trial court erred in resolving the constitutionality of Ordinance No. 3628 and dissolving the preliminary injunction at a preliminary stage, before the defendants’ answer and a hearing on the merits.
2. Whether the trial court erred in finding the Mayor of Manila had discretionary power to grant or refuse licenses, uncontrollable by mandamus.
3. Whether the trial court erred in finding Ordinance No. 3628 valid and constitutional.
4. Underlying issues: Whether the plaintiff association had legal capacity to sue and whether the complaint stated a cause of action.

RULING

The Supreme Court affirmed the order of the lower court dismissing the complaint. The Court held that the plaintiff association lacked legal capacity to sue. Inquiries revealed it was not registered with the Securities and Exchange Commission or the Bureau of Commerce and thus was not a duly organized corporation with juridical personality. The right to act as a corporation is a franchise granted by the state, and a mere association of persons without such grant cannot sue as a corporation. While it might be considered a civil association, the plaintiff claimed to be a corporation, and as such, it had no capacity to sue. Furthermore, the complaint failed to state a cause of action because the plaintiff was not the owner of the pinball machines; the real parties in interest were its individual members, who were not named. The Court also found that the ordinance was a valid exercise of the Municipal Board’s power under the Revised Charter of Manila ( Republic Act No. 409 ) to regulate businesses and exercise police power for the general welfare. The question of the ordinance’s constitutionality was one of law that did not require evidence for its resolution. Therefore, the dismissal of the complaint was proper. Costs were awarded against the appellant.