Case Summary (G.R. No. 163553)
Key Dates
• April 25, 1996 – Execution of the Junket Agreement
• May 6, 1999 – Regional Trial Court decision dismissing petitioner’s complaint and PAGCOR’s counterclaim
• May 27, 2003 – Court of Appeals (CA) decision affirming the trial court
• May 7, 2004 – CA resolution denying petitioner’s motion for reconsideration
• December 11, 2009 – Supreme Court decision
Applicable Law
• 1987 Philippine Constitution (public franchise vested in the State; exclusive exercise of PRIvileged privileges under government control)
• Presidential Decree No. 1869 (PAGCOR Charter) as in effect at the time of the agreement
• Republic Act No. 9487 (amending Section 3(h) of PD 1869, not retroactive)
• Revised Penal Code Articles 195–199 and PD 1602 (illegal gambling)
• Civil Code Articles on void contracts (Art. 1409), agency (Arts. 1869, 1883), negotiorum gestio (Art. 2152), and illegal gaming (Art. 2014)
Factual Background
PAGCOR launched a Foreign Highroller Marketing Program to attract international patrons to its dollar-denominated gaming pits. ABS Corporation entered into a Junket Agreement granting it exclusive use of five gaming tables at Casino Filipino–Silahis, providing distinct “junket chips,” assuming responsibility for its players’ wins and losses, and indemnifying PAGCOR. Under this arrangement, PAGCOR was to receive 12.5% of ABS’s gross winnings or USD 1.5 million, whichever was higher, over six months. From November 1996 to March 1997, petitioner played under ABS’s slate and claimed he accrued USD 2.1 million in chips. He successfully redeemed smaller amounts initially but, on a later visit, PAGCOR refused to cash his chips. He then deposited the chips in a hotel safe and filed suit against PAGCOR for their redemption.
Trial Court Ruling
The Regional Trial Court held the Junket Agreement void as it violated PD 1869 by effectively leasing a portion of PAGCOR’s exclusive franchise to a private entity. It found that the “junket chips” and designated gaming areas, supported by bilingual notices disavowing PAGCOR liability, put petitioner on notice of special rules. Petitioner, a stranger to the PAGCOR-ABS contract, was bound by those rules and could not equitably recover on an unlawful arrangement. Both complaint and counterclaim were dismissed.
Court of Appeals Ruling
The CA affirmed, rejecting petitioner’s contentions that he was neither an ABS junket player nor aware of the notices. It deemed the warnings credible and sufficient to impose notice. The CA held that:
- The Void Junket Agreement could not support implied agency (Art. 1883) or negotiorum gestio (Art. 2152) between PAGCOR and ABS.
- No apparent authority arose because PAGCOR took measures (distinct chips, separate gaming rooms, posted notices) to dispel any agency inference.
- Equitable relief was barred by petitioner’s failure to heed clear warnings and by his participation in an illegal contract.
Issues on Appeal
Petitioner contended that the CA erred in:
- Disregarding implied agency or agency by estoppel to hold PAGCOR liable to a third-party junket player.
- Using the intent of the contracting parties as dispositive of agency issues affecting a non-party.
- Failing to recognize ratification or adoption of ABS’s acts by PAGCOR.
Supreme Court Ruling
Applying the 1987 Constitution and relevant statutes, the Supreme Court held that:
• All gambling not expressly authori
Case Syllabus (G.R. No. 163553)
Facts
- PAGCOR is a government-owned and controlled corporation with authority to establish and operate casinos, enter contracts for its business, and utilize foreign currencies in designated gaming pits under P.D. No. 1869.
- PAGCOR launched the Foreign Highroller Marketing Program to invite foreign patrons to play at its dollar-exchange tables; ABS Corporation (Korean-based) entered into a Junket Agreement dated 25 April 1996 to bring in high-roller players.
- Under the Junket Agreement, PAGCOR would supply distinctive junket chips; ABS would distribute chips, collect them after play, pay winners, settle losers, and hold PAGCOR harmless.
- PAGCOR was to receive 12.5% of ABS’s gross winnings or US$1.5 million, whichever is higher, over six months, with option to extend the period.
- Petitioner, a Korean national, claimed he accumulated US$2.1 million in chips during four visits (Nov 1996–Mar 1997) and presented chips worth US$1.1 million for redemption, which PAGCOR refused.
- Petitioner asserted initial successes in encashment but later had to deposit chips in a hotel safe upon departure as PAGCOR’s cashiers declined redemption.
Procedural History
- Petitioner sued PAGCOR for redemption of gambling chips (value US$2.1 million); PAGCOR filed a counterclaim.
- On 6 May 1999, the RTC of Manila (Branch 13) dismissed both the complaint and counterclaim.
- Petitioner appealed to the CA; on 27 May 2003 the CA affirmed the RTC’s decision and on 7 May 2004 denied petitioner’s motion for reconsideration.
- Petitioner filed a Petition for Review under Rule 45 before the Supreme Court.