Appeals court junks Mondragon bid to operate Clark casino

MANILA, Philippines—The Court of Appeals has dismissed the bid of the Mondragon and Resorts Corporation (MLRC) to acquire the authority to operate the Mimosa Regency Casino inside the Clark Special Economic Zone.

In a 17-page decision made public Wednesday, the Appeals Court 4^th Division through Associate Justice Ricardo Rosario said the Angeles City Regional Trial Court did not err in junking the petition filed by MLRC to compel the Philippine Amusement and Gaming Corporation (Pagcor) to pursue arbitration on its violations of their agreement.

On March 11, 1998, MLRC filed a petition for arbitration alleging that in 1995 it had entered into an Agreement with Pagcor under which it was granted the authority to operate the casino.

Within a year of its operations, Pagcor accused MLRC of enticing and inducing local players to patronize the Mimosa Regency Casino in violation of a provision in their agreement that limits the patrons of the casino to foreign players and walk-in local players.

As a consequence of MLRC’s supposed violation of the agreement, Pagcor threatened to withdraw its authority to operate and denied MLRC’s proposal for expansion.

Pagcor also pointed out that MLRC failed to pay Pagcor’s proper share in the casino’s income, and warned to close the hotel-casino without undergoing arbitration. This prompted MLRC to file a petition seeking to compel Pagcor to undergo arbitration to settle their differences.

However, during the pendency of the case from 1998 to 2005, a separate legal dispute arose involving MLRC’s failure to pay the correct amount of rentals to Clark Development Corporation, from whom it was renting the premises occupied by the Mimosa Leisure Estate, including the hotel-casino.

Subsequently, the MLRC and CDC entered into a compromise agreement providing for the payment by MLRC to CDC of P325 million by way of rentals in arrears. As part of the agreement, failure to comply on the part of MLRC means leaving all premises to them by CDC.

Due to MLRC’s failure to comply, CDC then terminated the agreement and demanded that the former vacate all the leased premises.

Then, the trial court ruled in favor of CDC and ordered the execution of the compromise agreement specifically ordering MLRC to vacate the leased premises.

After taking back the leased premises from MLRC, the CDC and Pagcor agreed to continue the operations of the casino in order to use its revenues to pay MLRC’s debts to the government and its creditor banks while waiting for a new investor to take over the operations.

In 2003, CDC gave MLRC the chance to regain control of the operations of the casino under the memorandum of understanding, but MLRC failed to come up with a letter of credit guaranteeing its payment of P450 million to CDC.

The appeals court in its ruling said “in fine, this Court finds that the trial court committed no error in dismissing MLRC’s petition for being moot and academic and in denying the motion for a new trial,” the Appeals Court said.

The lower court, in its ruling, maintained that the issue on whether the MLRC has a license to operate or not from Pagcor is already immaterial because the casino is now under the control of Clark Development Corporation (CDC) .

“MLRC no longer has anything to do with its management, except as an adviser or consultant to CDC,” the appeals court said.

Concurring with the ruling were Associate Justices Amelita Tolentino and Leoncia Real-Dimagiba.