SECOND
DIVISION
|
YUN
KWAN BYUNG, Petitioner, - versus - PHILIPPINE AMUSEMENT AND GAMING
CORPORATION, Respondent. |
G.R. No. 163553 Present: CARPIO, J.,
Chairperson, CARPIO
MORALES,* LEONARDO-DE
CASTRO,** DEL CASTILLO, and ABAD, JJ. Promulgated: December 11, 2009 |
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D E C I S I O N
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 Court’s Decision[4] dated 6
May 1999. The Regional Trial Court of Manila, Branch 13 (trial court),
dismissed petitioner’s 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 PAGCOR’s
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 Hotel’s 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 PAGCOR’s 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 PAGCOR’s players.
PAGCOR argues
that petitioner is not a PAGCOR player because under PAGCOR’s 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 PAGCOR’s 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 court’s
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 CA’s decision and
resolution, petitioner elevated the case before this Court.
The Ruling of the Trial Court
The trial court ruled that based on
PAGCOR’s 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 PAGCOR’s charter states:
Sec. 13. Exemptions -
x x x
(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 PAGCOR’s charter. Hence, the Junket Agreement is void. Since the Junket Agreement is not permitted by PAGCOR’s 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 petitioner’s complaint, the trial court concluded that petitioner’s 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 petitioner’s theory. Petitioner’s 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 PAGCOR’s 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 petitioner’s 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 PAGCOR’s intention 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 PAGCOR’s charter states:
Section 3. Corporate Powers. - The Corporation shall have the following powers and functions, among others:
x x x
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.
x x x
The Junket Agreement would be
valid if under Section 3(h)
of PAGCOR’s charter, PAGCOR
could share 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 PAGCOR’s 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 operator’s 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 PAGCOR’s charter and
is therefore void.
Since the
Junket Agreement violates PAGCOR’s 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
Presidential Decree No. 1869
otherwise known as the PAGCOR Charter, is hereby further amended to read
as follows:
x x x
(2) Section 3(h) is hereby
amended to read as follows:
“SEC. 3. Corporate
Powers. -
“x x x
“(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
petitioner’s 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]
Petitioner’s
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. PAGCOR’s 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 CASTRO Associate Justice |
MARIANO C.
DEL CASTILLO 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 Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13,
Article VIII of the Constitution, and the Division Chairperson’s 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
Court’s 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 Guariña 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:
[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:
x
x x
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:
x x x
(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.