YUN KWAN BYUNG, G.R. No.
163553
Petitioner,
Present:
CARPIO, J., Chairperson,
CARPIO MORALES,*
- versus - LEONARDO-DE CASTRO,**
DEL CASTILLO, and
ABAD, JJ.
PHILIPPINE AMUSEMENT
AND GAMING Promulgated:
CORPORATION,
Respondent. December 11, 2009
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO, J.:
The Case
Yun Kwan Byung (petitioner) filed this Petition for Review[1]assailing the
Court of Appeals Decision[2]dated 27 May 2003 in CA-G.R. CV No.
65699 as well as the Resolution[3]dated 7 May 2004 denying the Motion
for Reconsideration. In the assailed decision, the Court of Appeals (CA)
affirmed the Regional Trial Courts Decision[4]dated 6 May 1999. The
Regional Trial Court of Manila, Branch 13 (trial court), dismissed
petitioners demand against respondent Philippine Amusement and
Gaming Corporation (PAGCOR) for the redemption of gambling chips.
The Facts
PAGCOR is a government-owned and controlled corporation tasked to
establish and operate gambling clubs and casinos as a means to promote
tourism and generate sources of revenue for the government. To achieve
these objectives, PAGCOR is vested with the power to enter into
contracts of every kind and for any lawful purpose that pertains to its
business. Pursuant to this authority, PAGCOR launched its Foreign
Highroller Marketing Program (Program). The Program aims to invite
patrons from foreign countries to play at the dollar pit of designated
PAGCOR-operated casinos under specified terms and conditions and in
accordance with industry practice.[5]
The Korean-based ABS Corporation was one of the international groups
that availed of the Program. In a letter-agreement dated 25 April 1996
(Junket Agreement), ABS Corporation agreed to bring in foreign players
to play at the five designated gaming tables of the Casino Filipino Silahis
at the Grand Boulevard Hotel in Manila (Casino Filipino). The relevant
stipulations of the Junket Agreement state:
1. PAGCOR will provide ABS
Corporation with separate junket chips. The junket
chips will be distinguished from the chips being used
by other players in the gaming tables.
ABS Corporation will distribute these junket chips to its players and at
the end of the playing period, ABS Corporation will collect the junket
chips from its players and make an accounting to the casino treasury.
2. ABS Corporation will assume sole
responsibility to pay the winnings of its foreign
players and settle the collectibles from losing players.
3. ABS Corporation shall hold
PAGCOR absolutely free and harmless from any
damage, claim or liability which may arise from any
cause in connection with the Junket Agreement.
5. In providing the gaming facilities and services to these
foreign players, PAGCOR is entitled to receive from
ABS Corporation a 12.5% share in the gross winnings
of ABS Corporation or 1.5 million US dollars,
whichever is higher, over a playing period of 6
months. PAGCOR has the option to extend the period.
[6]
Petitioner, a Korean national, alleges that from November 1996 to March
1997, he came to the Philippines four times to play for high stakes at the
Casino Filipino.[7]Petitioner claims that in the course of the games, he was
able to accumulate gambling chips worth US$2.1 million. Petitioner
presented as evidence during the trial gambling chips with a face value of
US$1.1 million. Petitioner contends that when he presented the gambling
chips for encashment with PAGCORs employees or agents, PAGCOR
refused to redeem them.[8]
Petitioner brought an action against PAGCOR seeking the redemption of
gambling chips valued at US$2.1 million. Petitioner claims that he won
the gambling chips at the Casino Filipino, playing continuously day and
night. Petitioner alleges that every time he would come to Manila,
PAGCOR would extend to him amenities deserving of a high roller. A
PAGCOR official who meets him at the airport would bring him to
Casino Filipino, a casino managed and operated by PAGCOR. The card
dealers were all PAGCOR employees, the gambling chips, equipment and
furnitures belonged to PAGCOR, and PAGCOR enforced all the
regulations dealing with the operation of foreign exchange gambling pits.
Petitioner states that he was able to redeem his gambling chips with the
cashier during his first few winning trips. But later on, the casino cashier
refused to encash his gambling chips so he had no recourse but to deposit
his gambling chips at the Grand Boulevard Hotels deposit box, every
time he departed from Manila.[9]
PAGCOR claims that petitioner, who was brought into the Philippines by
ABS Corporation, is a junket player who played in the dollar pit
exclusively leased by ABS Corporation for its junket players. PAGCOR
alleges that it provided ABS Corporation with distinct junket chips. ABS
Corporation distributed these chips to its junket players. At the end of
each playing period, the junket players would surrender the chips to ABS
Corporation. Only ABS Corporation would make an accounting of these
chips to PAGCORs casino treasury.[10]
As additional information for the junket players playing in the gaming
room leased to ABS Corporation, PAGCOR posted a notice written in
English and Korean languages which reads:
NOTICE
This GAMING ROOM is exclusively operated by ABS under
arrangement with PAGCOR, the former is solely accountable for all
PLAYING CHIPS wagered on the tables. Any
financial ARRANGEMENT/TRANSACTION between PLAYERS
and ABS shall only be binding upon said PLAYERS and ABS.[11]
PAGCOR claims that this notice is a standard precautionary measure[12]to
avoid confusion between junket players of ABS Corporation and
PAGCORs players.
PAGCOR argues that petitioner is not a PAGCOR player because under
PAGCORs gaming rules, gambling chips cannot be brought outside the
casino. The gambling chips must be converted to cash at the end of every
gaming period as they are inventoried every shift. Under PAGCORs
rules, it is impossible for PAGCOR players to accumulate two million
dollars worth of gambling chips and to bring the chips out of the casino
premises.[13]
Since PAGCOR disclaimed liability for the winnings of players recruited
by ABS Corporation and refused to encash the gambling chips, petitioner
filed a complaint for a sum of money before the trial court.[14]PAGCOR
filed a counterclaim against petitioner. Then, trial ensued.
On 6 May 1999, the trial court dismissed the complaint and counterclaim.
Petitioner appealed the trial courts decision to the CA. On 27 May 2003,
the CA affirmed the appealed decision. On 27 June 2003, petitioner
moved for reconsideration which was denied on 7 May 2004.
Aggrieved by the CAs decision and resolution, petitioner elevated the
case before this Court.
The Ruling of the Trial Court
The trial court ruled that based on PAGCORs charter,[15]PAGCOR has no
authority to lease any portion of the gambling tables to a private party
like ABS Corporation. Section 13 of Presidential Decree No. 1869 or the
PAGCORs charter states:
Sec. 13. Exemptions -
xxx
(4) Utilization of Foreign Currencies The Corporation
shall have the right and authority, solely and exclusively in
connection with the operations of the casino(s), to purchase,
receive, exchange and disburse foreign exchange, subject to
the following terms and conditions:
(a) A specific area in the casino(s) or gaming pit shall be put up
solely and exclusively for players and patrons utilizing foreign
currencies;
(b) The Corporation shall appoint and designate a duly accredited commercial bank
agent of the Central Bank, to handle, administer and manage the use of foreign
currencies in the casino(s);
(c) The Corporation shall provide an office at casino(s) exclusively for the employees
of the designated bank, agent of the Central Bank, where the Corporation shall
maintain a dollar account which will be utilized exclusively for the above purpose and
the casino dollar treasury employees;
(d) Only persons with foreign passports or certificates of identity (for Hong Kong
patron only) duly issued by the government or country of their residence will be
allowed to play in the foreign exchange gaming pit;
(e) Only foreign exchange prescribed to form part of the Philippine International
Reserve and the following foreign exchange currencies: Australian Dollar, Singapore
Dollar, Hong Kong Dollar, shall be used in this gaming pit;
(f) The disbursement, administration, management and recording of foreign exchange
currencies used in the casino(s) shall be carried out in accordance with existing
foreign exchange regulations, and periodical reports of the transactions in such
foreign exchange currencies by the Corporation shall be duly recorded and reported to
the Central Bank thru the designated Agent Bank; and
(g) The Corporation shall issue the necessary rules and regulations for the guidance
and information of players qualified to participate in the foreign exchange gaming pit,
in order to make certain that the terms and conditions as above set forth are strictly
complied with.
The trial court held that only PAGCOR could use foreign currency in its
gaming tables. When PAGCOR accepted only a fixed portion of the
dollar earnings of ABS Corporation in the concept of a lease of facilities,
PAGCOR shared its franchise with ABS Corporation in violation of the
PAGCORs charter. Hence, the Junket Agreement is void. Since the
Junket Agreement is not permitted by PAGCORs charter, the mutual
rights and obligations of the parties to this case would be resolved based
on agency and estoppel.[16]
The trial court found that the petitioner wanted to redeem gambling chips
that were specifically used by ABS Corporation at its gaming tables. The
gambling chips come in distinctive orange or yellow colors with stickers
bearing denominations of 10,000 or 1,000. The 1,000 gambling chips are
smaller in size and the words no cash value marked on them. The 10,000
gambling chips do not reflect the no cash value sign. The senior treasury
head of PAGCOR testified that these were the gambling chips used by the
previous junket operators and PAGCOR merely continued using them.
However, the gambling chips used in the regular casino games were of a
different quality.[17]
The trial court pointed out that PAGCOR had taken steps to warn players
brought in by all junket operators, including ABS Corporation, that they
were playing under special rules. Apart from the different kinds of
gambling chips used, the junket players were confined to certain gaming
rooms. In these rooms, notices were posted that gambling chips could
only be encashed there and nowhere else. A photograph of one such
notice, printed in Korean and English, stated that the gaming room was
exclusively operated by ABS Corporation and that ABS Corporation was
solely accountable for all the chips wagered on the gaming tables.
Although petitioner denied seeing this notice, this disclaimer has the
effect of a negative evidence that can hardly prevail against the positive
assertions of PAGCOR officials whose credibility is also not open to
doubt. The trial court concluded that petitioner had been alerted to the
existence of these special gambling rules, and the mere fact that he
continued to play under the same restrictions over a period of several
months confirms his acquiescence to them. Otherwise, petitioner could
have simply chose to stop gambling.[18]
In dismissing petitioners complaint, the trial court concluded that
petitioners demand against PAGCOR for the redemption of the gambling
chips could not stand. The trial court stated that petitioner, a stranger to
the agreement between PAGCOR and ABS Corporation, could not under
principles of equity be charged with notice other than of the apparent
authority with which PAGCOR had clothed its employees and agents in
dealing with petitioner. Since petitioner was made aware of the special
rules by which he was playing at the Casino Filipino, petitioner could not
now claim that he was not bound by them. The trial court explained that
in an unlawful transaction, the courts will extend equitable relief only to a
party who was unaware of all its dimensions and whose ignorance of
them exposed him to the risk of being exploited by the other. Where the
parties enter into such a relationship with the opportunity to know all of
its ramifications, as in this case, there is no room for equitable
considerations to come to the rescue of any party. The trial court ruled
that it would leave the parties where they are.[19]
The Ruling of the Court of Appeals
In dismissing the appeal, the appellate court addressed the four errors
assigned by petitioner.
First, petitioner maintains that he was never a junket player of ABS
Corporation. Petitioner also denies seeing a notice that certain gaming
rooms were exclusively operated by entities under special agreement.[20]
The CA ruled that the records do not support petitioners theory.
Petitioners own testimony reveals that he enjoyed special
accommodations at the Grand Boulevard Hotel. This similar
accommodation was extended to players brought in by ABS Corporation
and other junket operators. Petitioner cannot disassociate himself from
ABS Corporation for it is unlikely that an unknown high roller would be
accorded choice accommodations by the hotel unless the accommodation
was facilitated by a junket operator who enjoyed such privilege.[21]
The CA added that the testimonies of PAGCORs employees
affirming that notices were posted in English and Korean in the gaming
areas are credible in the absence of any convincing proof of ill motive.
Further, the specified gaming areas used only special chips that could be
bought and exchanged at certain cashier booths in that area.[22]
Second, petitioner attacks the validity of the contents of the notice. Since
the Junket Agreement is void, the notice, which was issued pursuant to
the Junket Agreement, is also void and cannot affect petitioner.[23]
The CA reasoned that the trial court never declared the notice valid and
neither did it enforce the contents thereof. The CA emphasized that it was
the act of cautioning and alerting the players that was upheld. The trial
court ruled that signs and warnings were in place to inform the public,
petitioner included, that special rules applied to certain gaming areas even
if the very agreement giving rise to these rules is void.[24]
Third, petitioner takes the position that an implied agency existed
between PAGCOR and ABS Corporation.[25]
The CA disagreed with petitioners view. A void contract has no force and
effect from the very beginning. It produces no effect either against or in
favor of anyone. Neither can it create, modify or extinguish the juridical
relation to which it refers. Necessarily, the Junket Agreement, being void
from the beginning, cannot give rise to an implied agency. The CA
explained that it cannot see how the principle of implied agency can be
applied to this case. Article 1883[26]of the Civil Code applies only to a
situation where the agent is authorized by the principal to enter into a
particular transaction, but instead of contracting on behalf of the
principal, the agent acts in his own name.[27]
The CA concluded that no such legal fiction existed between PAGCOR
and ABS Corporation. PAGCOR entered into a Junket Agreement to
lease to ABS Corporation certain gaming areas. It was never
PAGCORsintention to deal with the junket players. Neither did
PAGCOR intend ABS Corporation to represent PAGCOR in dealing with
the junket players. Representation is the basis of agency but unfortunately
for petitioner none is found in this case.[28]
The CA added that the special gaming chips, while belonging to
PAGCOR, are mere accessories in the void Junket Agreement with ABS
Corporation. In Article 1883, the phrase things belonging to the principal
refers only to those things or properties subject of a particular transaction
authorized by the principal to be entered into by its purported agent.
Necessarily, the gambling chips being mere incidents to the void lease
agreement cannot fall under this category.[29]
The CA ruled that Article 2152[30]of the Civil Code is also not applicable.
The circumstances relating to negotiorum gestio are non-existent to
warrant an officious manager to take over the management and
administration of PAGCOR.[31]
Fourth, petitioner asks for equitable relief.[32]
The CA explained that although petitioner was never a party to the void
Junket Agreement, petitioner cannot deny or feign blindness to the signs
and warnings all around him. The notices, the special gambling chips, and
the separate gaming areas were more than enough to alert him that he was
playing under different terms. Petitioner persisted and continued to play
in the casino. Petitioner also enjoyed the perks extended to junket players
of ABS Corporation. For failing to heed these signs and warnings,
petitioner can no longer be permitted to claim equitable relief. When
parties do not come to court with clean hands, they cannot be allowed to
profit from their own wrong doing.[33]
The Issues
Petitioners raise three issues in this petition:
1. Whether the CA erred in holding that PAGCOR is not liable
to petitioner, disregarding the doctrine of implied agency, or
agency by estoppel;
2. Whether the CA erred in using intent of the contracting
parties as the test for creation of agency, when such is not
relevant since the instant case involves liability of the
presumed principal in implied agency to a third party; and
3. Whether the CA erred in failing to consider that PAGCOR
ratified, or at least adopted, the acts of the agent, ABS
Corporation.[34]
The Ruling of the Court
The petition lacks merit.
Courts will not enforce debts arising from illegal gambling
Gambling is prohibited by the laws of the Philippines as specifically
provided in Articles 195 to 199 of the Revised Penal Code, as amended.
Gambling is an act beyond the pale of good morals,[35]and is thus
prohibited and punished to repress an evil that undermines the social,
moral, and economic growth of the nation.[36] Presidential Decree No.
1602 (PD 1602),[37]which modified Articles 195-199 of the Revised Penal
Code and repealed inconsistent provisions,[38]prescribed stiffer penalties
on illegal gambling.[39]
As a rule, all forms of gambling are illegal. The only form of gambling
allowed by law is that stipulated under Presidential Decree No. 1869,
which gave PAGCOR its franchise to maintain and operate gambling
casinos. The issue then turns on whether PAGCOR can validly share its
franchise with junket operators to operate gambling casinos in the
country. Section 3(h) of PAGCORs charter states:
Section 3. Corporate Powers. - The Corporation shall have
the following powers and functions, among others:
xxx
h) to enter into, make, perform, and carry out contracts of every kind
and for any lawful purpose pertaining to the business of the
Corporation, or in any manner incident thereto, as principal, agent
or otherwise, with any person, firm, association, or corporation.
xxx
The Junket Agreement would be valid if under Section 3(h)
of PAGCORs charter, PAGCOR couldshare its gambling franchise with
another entity. In Senator Jaworski v. Phil. Amusement and Gaming
Corp.,[40]the Court discussed the extent of the grant of the legislative
franchise to PAGCOR on its authority to operate gambling casinos:
A legislative franchise is a special privilege granted by the state to
corporations. It is a privilege of public concern which cannot
be exercised at will and pleasure, but should be reserved for public
control and administration, either by the government directly, or by
public agents, under such conditions and regulations as the government
may impose on them in the interest of the public. It is Congress that
prescribes the conditions on which the grant of the franchise may be
made. Thus the manner of granting the franchise, to whom it may be
granted, the mode of conducting the business, the charter and the
quality of the service to be rendered and the duty of the grantee to the
public in exercising the franchise are almost always defined in clear
and unequivocal language.
After a circumspect consideration of the foregoing discussion and
the contending positions of the parties, we hold that PAGCOR has
acted beyond the limits of its authority when it passed on or shared
its franchise to SAGE.
In the Del Mar case where a similar issue was raised
when PAGCOR entered into a joint venture agreement with two other
entities in the operation and management of jai alai games, the Court,
in an En Banc Resolution dated 24 August 2001, partially granted the
motions for clarification filed by respondents therein insofar as it
prayed that PAGCOR has a valid franchise, but only by itself (i.e. not
in association with any other person or entity), to operate, maintain
and/or manage the game of jai-alai.
In the case at bar, PAGCOR executed an agreement with SAGE
whereby the former grants the latter the authority to operate and
maintain sports betting stations and Internet gaming operations. In
essence, the grant of authority gives SAGE the privilege to actively
participate, partake and share PAGCORs franchise to operate a
gambling activity. The grant of franchise is a special privilege that
constitutes a right and a duty to be performed by the grantee. The
grantee must not perform its activities arbitrarily and whimsically but
must abide by the limits set by its franchise and strictly adhere to its
terms and conditionalities. A corporation as a creature of the State is
presumed to exist for the common good. Hence, the special privileges
and franchises it receives are subject to the laws of the State and the
limitations of its charter. There is therefore a reserved right of the State
to inquire how these privileges had been employed, and whether they
have been abused. (Emphasis supplied)
THUS, PAGCOR HAS THE SOLE AND EXCLUSIVE
AUTHORITY TO OPERATE A GAMBLING ACTIVITY. WHILE
PAGCOR IS ALLOWED UNDER ITS CHARTER TO ENTER INTO
OPERATORS OR MANAGEMENT CONTRACTS, PAGCOR IS NOT
ALLOWED UNDER THE SAME CHARTER TO RELINQUISH OR
SHARE ITS FRANCHISE. PAGCOR CANNOT DELEGATE ITS
POWER IN VIEW OF THE LEGAL PRINCIPLE OF DELEGATA
POTESTAS DELEGARE NON POTEST, INASMUCH AS THERE IS
NOTHING IN THE CHARTER TO SHOW THAT IT HAS BEEN
EXPRESSLY AUTHORIZED TO DO SO.[41]
Similarly, in this case, PAGCOR, by taking only a percentage of
the earnings of ABS Corporation from its foreign currency collection,
allowed ABS Corporation to operate gaming tables in the dollar pit. The
Junket Agreement is in direct violation of PAGCORs charter and is
therefore void.
Since the Junket Agreement violates PAGCORs charter,
gambling between the junket player and the junket operator under such
agreement is illegal and may not be enforced by the courts. Article
2014[42]of the Civil Code, which refers to illegal gambling, states that no
action can be maintained by the winner for the collection of what he has
won in a game of chance.
Although not raised as an issue by petitioner, we deem it necessary
to discuss the applicability of Republic Act No. 9487[43](RA 9487) to the
present case.
RA 9487 amended the PAGCOR charter, granting PAGCOR the
power to enter into special agreement with third parties to share the
privileges under its franchise for the operation of gambling casinos:
Section 1. The Philippine Amusement and
Gaming Corporation (PAGCOR) franchise granted under PresidentialD
ecree No. 1869 otherwise known as the PAGCOR Charter, is hereby
further amended to read as follows:
XXX
(2) SECTION 3(H) IS HEREBY AMENDED TO READ AS
FOLLOWS:
SEC. 3. CORPORATE POWERS. -
xxx
(h) to enter into, make, conclude, perform, and
carry out contracts of every kind and nature and
for any lawful purpose which are necessary,
appropriate, proper or incidental to any business
or purpose of the PAGCOR, including but not
limited to investment agreements, joint venture
agreements, management agreements, agency
agreements, whether as principal or as an agent,
manpower supply agreements, or any other
similar agreements or arrangements with any
person, firm, association or corporation.
(Boldfacing supplied)
PAGCOR sought the amendment of its charter precisely to address and
remedy the legal impediment raised in Senator Jaworski v. Phil.
Amusement and Gaming Corp.
Unfortunately for petitioner, RA 9487 cannot be applied to the
present case. The Junket Agreement was entered into between PAGCOR
and ABS Corporation on 25 April 1996 when the PAGCOR charter then
prevailing (PD 1869) prohibited PAGCOR from entering into any
arrangement with a third party that would allow such party to actively
participate in the casino operations.
It is a basic principle that laws should only be applied
prospectively unless the legislative intent to give them retroactive effect
is expressly declared or is necessarily implied from the language used.
[44]
RA 9487 does not provide for any retroactivity of its provisions. All
laws operate prospectively absent a clear contrary language in the text,
[45]
and that in every case of doubt, the doubt will be resolved against the
retroactive operation of laws.[46]
Thus, petitioner cannot avail of the provisions of RA 9487 as this
was not the law when the acts giving rise to the claimed liabilities took
place. This makes the gambling activity participated in by petitioner
illegal. Petitioner cannot sue PAGCOR to redeem the cash value of the
gambling chips or recover damages arising from an illegal activity for
two reasons. First, petitioner engaged in gambling with ABS Corporation
and not with PAGCOR. Second, the court cannot assist petitioner in
enforcing an illegal act. Moreover, for a court to grant petitioners prayer
would mean enforcing the Junket Agreement, which is void.
Now, to address the issues raised by petitioner in his petition, petitioner
claims that he is a third party proceeding against the liability of a
presumed principal and claims relief, alternatively, on the basis of
implied agency or agency by estoppel.
Article 1869 of the Civil Code states that implied agency is derived
from the acts of the principal, from his silence or lack of action, or his
failure to repudiate the agency, knowing that another person is acting on
his behalf without authority. Implied agency, being an actual agency, is a
fact to be proved by deductions or inferences from other facts.[47]
On the other hand, apparent authority is based on estoppel and can arise
from two instances. First, the principal may knowingly permit the agent
to hold himself out as having such authority, and the principal becomes
estopped to claim that the agent does not have such authority. Second, the
principal may clothe the agent with the indicia of authority as to lead a
reasonably prudent person to believe that the agent actually has such
authority.[48]In an agency by estoppel, there is no agency at all, but the one
assuming to act as agent has apparent or ostensible, although not real,
authority to represent another.[49]
The law makes no presumption of agency and proving its
existence, nature and extent is incumbent upon the person alleging it.
[50]
Whether or not an agency has been created is a question to be
determined by the fact that one represents and is acting for another. [51]
Acts and conduct of PAGCOR negates the existence of an implied
agency or an agency by estoppel
Petitioner alleges that there is an implied agency. Alternatively, petitioner
claims that even assuming that no actual agency existed between
PAGCOR and ABS Corporation, there is still an agency by estoppel
based on the acts and conduct of PAGCOR showing apparent authority in
favor of ABS Corporation. Petitioner states that one factor which
distinguishes agency from other legal precepts is control and the
following undisputed facts show a relationship of implied agency:
1. Three floors of the Grand Boulevard Hotel[52]were leased
to PAGCOR for conducting gambling operations;[53]
2. Of the three floors, PAGCOR allowed ABS Corporation to use one
whole floor for foreign exchange gambling, conducted by PAGCOR
dealers using PAGCOR facilities, operated by PAGCOR employees and
using PAGCOR chips bearing the PAGCOR logo;[54]
3. PAGCOR controlled the release, withdrawal and return of
all the gambling chips given to ABS Corporation in
that part of the casino and at the end of the day,
PAGCOR conducted an inventory of the gambling
chips;[55]
4. ABS Corporation accounted for all gambling chips with
the Commission on Audit (COA), the official auditor
of PAGCOR;[56]
5. PAGCOR enforced, through its own manager, all the rules
and regulations on the operation of the gambling pit
used by ABS Corporation.[57]
Petitioners argument is clearly misplaced. The basis for agency is
representation,[58]that is, the agent acts for and on behalf of the principal
on matters within the scope of his authority and said acts have the same
legal effect as if they were personally executed by the principal.[59]On the
part of the principal, there must be an actual intention to appoint or an
intention naturally inferable from his words or actions, while on the part
of the agent, there must be an intention to accept the appointment and act
on it.[60]Absent such mutual intent, there is generally no agency.[61]
There is no implied agency in this case because PAGCOR did not
hold out to the public as the principal of ABS Corporation. PAGCORs
actions did not mislead the public into believing that an agency can be
implied from the arrangement with the junket operators, nor did it hold
out ABS Corporation with any apparent authority to represent it in any
capacity. The Junket Agreement was merely a contract of lease of
facilities and services.
The players brought in by ABS Corporation were covered by a
different set of rules in acquiring and encashing chips. The players used a
different kind of chip than what was used in the regular gaming areas of
PAGCOR, and that such junket players played specifically only in the
third floor area and did not mingle with the regular patrons of PAGCOR.
Furthermore, PAGCOR, in posting notices stating that the players are
playing under special rules, exercised the necessary precaution to warn
the gaming public that no agency relationship exists.
For the second assigned error, petitioner claims that the intention of
the parties cannot apply to him as he is not a party to the contract.
We disagree. The Court of Appeals correctly used the intent of the
contracting parties in determining whether an agency by estoppel existed
in this case. An agency by estoppel, which is similar to the doctrine of
apparent authority requires proof of reliance upon the representations, and
that, in turn, needs proof that the representations predated the action taken
in reliance.[62]
There can be no apparent authority of an agent without acts or
conduct on the part of the principal and such acts or conduct of the
principal must have been known and relied upon in good faith and as a
result of the exercise of reasonable prudence by a third person as
claimant, and such must have produced a change of position to its
detriment.[63]Such proof is lacking in this case.
In the entire duration that petitioner played in Casino Filipino, he
was dealing only with ABS Corporation, and availing of the privileges
extended only to players brought in by ABS Corporation. The facts that
he enjoyed special treatment upon his arrival in Manila and special
accommodations in Grand Boulevard Hotel, and that he was playing in
special gaming rooms are all indications that petitioner cannot claim good
faith that he believed he was dealing with PAGCOR. Petitioner cannot be
considered as an innocent third party and he cannot claim entitlement to
equitable relief as well.
For his third and final assigned error, petitioner asserts that
PAGCOR ratified the acts of ABS Corporation.
The trial court has declared, and we affirm, that the Junket Agreement is
void. A void or inexistent contract is one which has no force and effect
from the very beginning. Hence, it is as if it has never been entered into
and cannot be validated either by the passage of time or by ratification.
[64]
Article 1409 of the Civil Code provides that contracts expressly
prohibited or declared void by law, such as gambling contracts, cannot be
ratified.[65]
WHEREFORE, we DENY the petition. We AFFIRM the Court of
Appeals Decision dated 27 May 2003 as well as the Resolution dated 7
May 2004 as modified by this Decision.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
CONCHITA CARPIO MORALES
Associate Justice
TERESITA J. LEONARDO-DE MARIANO C. DEL
CASTRO CASTILLO
Associate Justice Associate Justice
ROBERTO A. ABAD
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of
the Courts Division.
ANTONIO T. CARPIO
Associate Justice
CHAIRPERSON
CERTIFICATION
PURSUANT TO SECTION 13, ARTICLE VIII OF THE
CONSTITUTION, AND THE DIVISION CHAIRPERSONS
ATTESTATION, I CERTIFY THAT THE CONCLUSIONS IN THE
ABOVE DECISION HAD BEEN REACHED IN CONSULTATION
BEFORE THE CASE WAS ASSIGNED TO THE WRITER OF THE
OPINION OF THE COURTS DIVISION.
REYNATO S. PUNO
Chief Justice
*
Designated additional member per Special Order No. 807.
*
* Designated additional member per Special Order No. 776.
[1]
Under Rule 45 of the Rules of Court.
[2]
Rollo , pp. 30-38. Penned by Associate Justice Rosmari D. Carandang, with Associate Justices
Conrado M. Vasquez, Jr. and Mercedes Gozo-Dadole, concurring.
[3]
Id. at 57. Penned by Associate Justice Rosmari D. Carandang with Associate Justices Conrado M.
Vasquez, Jr. and Mercedes Gozo-Dadole, concurring.
[4]
Id. at 58-62. Penned by RTC Judge Mario Guaria III.
[5]
Id. at 5-6.
[6]
Records, pp. 23-24.
[7]
Rollo, p. 8.
[8]
Id. at 6-7.
[9]
Id. at 8-9.
[10]
Id. at 69.
[11]
Id. at 70.
[12]
Id. Petitioner showed a similar notice posted with regard to another junket operator GIT.
[13]
Id.
[14]
Id. at 121.
[15]
Presidential Decree No. 1869, Consolidating and Amending Presidential Decree Nos. 1067-A, 1067-
B, 1067-C, 1399 and 1632 Relative to the Franchise and Powers of the Philippine Amusement
and Gaming Corporation (PAGCOR). Took effect on 11 July 1983.
[16]
Rollo, pp. 60-61.
[17]
Id.
[18]
Id.
[19]
Id. at 61-62.
[20]
Id. at 33.
[21]
Id.
[22]
Id. at 34.
[23]
Id.
[24]
Id. at 34-35.
[25]
Id.
[26]
Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons
with whom the agent has contracted, neither have such persons against the principal.
In such case, the agent is the one directly bound in favor of the person with whom he has contracted, as
if the transaction were his own, except when the contract involves things belonging to the principal.
The provisions of this article shall be understood to be without prejudice to the actions between the
principal and agent.
[27]
Rollo, p. 35.
[28]
Id.
[29]
Id. at 36.
[30]
Art. 2152. The officious manager is personally liable for contracts which he has entered into with
third persons, even though he acted in the name of the owner, and there shall be no right of
action between the owner and third persons. These provisions shall not apply:
(1) If the owner has expressly or tacitly ratified the management, or
(2) When the contract refers to things pertaining to the owner of the business.
[31]
Rollo, p. 36.
[32]
Id.
[33]
Id. at 36, 38.
[34]
Id. at 12.
[35]
United States v. Salaveria, 39 Phil. 102, 112 (1918).
[36]
People v. Punto, 68 Phil. 481, 482 (1939).
[37]
Prescribing Stiffer Penalties on Illegal Gambling. Took effect on 11 June 1978.
[38]
Gambling and Illegal Lottery are crimes covered by Chapter One, Title VI (Crimes against Public
Morals) of the Revised Penal Code.
[39]
Section 1. Penalties. The following penalties are hereby imposed:
(a) The penalty of prision correccional in its medium period or a fine ranging from
one thousand to six thousand pesos, and in case of recidivism, the penalty of prision
mayor in its medium period or a fine ranging from five thousand to ten thousand
pesos shall be imposed upon:
1. Any person other than those referred to in the succeeding sub-sections
who in any manner, shall directly or indirectly take part in any illegal or
unauthorized activities or games of cockfighting, jueteng, jai alai or horse
racing to include bookie operations and game fixing, numbers, bingo and
other forms of lotteries; cara y cruz, pompiang and the like; 7-11 and any
game using dice; black jack, lucky nine, poker and its derivatives, monte,
baccarat, cuajo, pangguingue and other card games; piak que, high and low,
mahjong, domino and other games using plastic tiles and the likes; slot
machines, roulette, pinball and other mechanical contraptions and devices;
dog racing, boat racing, car racing and other forms of races, basketball,
boxing, volleyball, bowling, pingpong and other forms of individual or team
contests to include game fixing, point shaving and other machinations;
banking or percentage game, or any other game scheme, whether upon
chance or skill, wherein wagers consisting of money, articles of value or
representative of value are at stake or made;
[40]
464 Phil. 375, 385-386 (2004).
[41]
Id.
[42]
Art. 2014. No action can be maintained by the winner for the collection of what he has won in a
game of chance. But any loser in a game of chance may recover his loss from the winner, with
legal interest from the time he paid the amount lost, and subsidiarily from the operator or
manager of the gambling house.
[43]
An Act Further Amending Presidential Decree No. 1869, Otherwise Known as PAGCOR Charter.
Took effect on 20 June 2007.
Prior to the amendment, Section 3(h) of the PAGCOR Charter (PD 1869) reads as follows:
SEC. 3. CORPORATE POWERS. - THE CORPORATION SHALL HAVE THE FOLLOWING
POWERS AND FUNCTIONS, AMONG OTHERS:
xxx
H) TO ENTER INTO, MAKE, PERFORM, AND CARRY OUT CONTRACTS OF EVERY KIND
AND FOR ANY LAWFUL PURPOSE PERTAINING TO THE BUSINESS OF
THE CORPORATION, OR IN ANY MANNER INCIDENT THERETO, AS
PRINCIPAL, AGENT OR OTHERWISE, WITH ANY PERSON, FIRM,
ASSOCIATION OR CORPORATION.
[44]
Erectors, Inc. v. National Labor Relations Commission, 326 Phil. 640, 646 (1996).
[45]
Agpalo, Ruben, STATUTORY CONSTRUCTION (5th ed., 2003), p. 355.
[46]
Cebu Portland Cement Co. v. Collector of Internal Revenue, 134 Phil. 735, 740 (1968).
[47]
De Leon, Hector S., COMMENTS AND CASES ON PARTNERSHIP, AGENCY AND TRUSTS,
5th edition, 1999, p. 411.
[48]
Woodchild Holdings, Inc. v. Roxas Electric and Construction Company, Inc., 479 Phil. 896, 914
(2004).
[49]
Supra note 47 at 410.
[50]
Tuazon v. Heirs of Bartolome Ramos, G.R. No. 156262, 14 July 2005, 463 SCRA 408, 415.
[51]
Angeles v. Philippine National Railways, G.R. No. 150128, 31 August 2006, 500 SCRA 444, 452.
[52]
Formerly known as Silahis Hotel.
[53]
Rollo, p. 124.
[54]
Id.
[55]
Id. at 125.
[56]
Id.
[57]
Id.
[58]
Bordador v. Luz, 347 Phil. 654, 662 (1997).
[59]
Eurotech Industrial Technologies, Inc. v. Cuizon, G.R. No. 167552, 23 April 2007, 521 SCRA 584,
593.
[60]
Victorias Milling Co., Inc. v. Court of Appeals, 389 Phil. 184, 196 (2000).
[61]
Supra note 50 at 415.
[62]
Litonjua, Jr. v. Eternit Corporation, G.R. No. 144805, 8 June 2006, 490 SCRA 204, 225.
[63]
Supra note 48 at 914.
[64]
Francisco v. Herrera, 440 Phil. 841, 849 (2002).
[65]
Art. 1409. The following contracts are inexistent and void from the beginning:
xxx
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
