Yun Kwan Byun vs.

Philippine Amusement and Gaming Corporation

G.R. no 163553
December 11, 2009

Facts:

1.) 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.
2.) Pursuant to this authority, PAGCOR launched its Foreign Highroller Marketing Program which 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.
3.) The Korean-based ABS Corporation was one of the international groups that availed of the
Program and 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
4.) Petitioner, Yun Kwan Byun, a Korean national, alleges that he was able to accumulate gambling
chips worth US$2.1 million but when he presented them for encashment with PAGCOR’s
employees or agents, PAGCOR refused to redeem them.
5.) 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 and only ABS Corporation would make an accounting of these chips to PAGCOR’s casino
treasury.

Issue:
Whether or not the doctrine of implied agency or agency by estoppel can applied in this case
making PAGCOR the principal and liable for the ABS Corporation’s act.

Ruling:

No, the doctrine of implied agency or agency by estoppel cannot applied in this case making
PAGCOR the principal and liable for the ABS Corporation’s act.

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.

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. 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.
 The basis for agency is representation, 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. 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. Absent such mutual intent, there is generally no agency.

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.

Moreover, 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.

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. 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.

Fallo: 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.
 Diego Liň󠇛an v. Marcos Puno et al
G.R. no. 9608
August 7, 1915

Facts:

1.) The plaintiff, Diego Liň󠇛an, was the owner of a certain parcel of land and executed a document,
which conferred upon the defendant Marcos P. Puno the power, duties and obligations to,
purchase, sell, collect and pay, as well as sue and be sued before any authority for the interest of
said property.
2.) With this, the defendant Puno, for the sum of P800, sold and delivered said parcel of land to the
other defendants.
3.) Thus, plaintiff alleges that he did not confer upon the defendant Puno the power to sell the land
and prayed that the sale be set aside

Issue:

Whether or not Marcos Puno was authorized to sell the land in question as the agent conferred
by the document executed by Diego Liň󠇛an

Ruling:

Yes, Marcos Puno was authorized to sell the land in question as the agent conferred by the
document executed by Diego Liň󠇛an.

Contracts of agency as well as general powers of attorney must be interpreted in accordance with
the language used by the parties. The real intention of the parties is primarily to be determined from the
language used. The intention is to be gathered from the whole instrument. In case of doubt resort must
be had to the situation, surroundings and relations of the parties. Whenever it is possible, effect is to be
given to every word and clause used by the parties. It is to be presumed that the parties said what they
intended to say and that they used each word or clause with some purpose and that purpose is, if possible,
to be ascertained and enforced. The intention of the parties must be sustained rather than defeated. If
the contract be open to two constructions, one of which would uphold while the other would overthrow
it, the former is to be chosen. So, if by one construction the contract would be illegal, and by another
equally permissible construction it would be lawful, the latter must be adopted. The acts of the parties in
carrying out the contract will be presumed to be done in good faith. The acts of the parties will be
presumed to have been done in conformity with and not contrary to the intent of the contract. The
meaning of general words must be construed with reference to the specific object to be accomplished
and limited by the recitals made in reference to such object.

The words "administer, purchase, sell," etc., seem to be used coordinately. Each has equal force
with the other. There seems to be no good reason for saying that Puno had authority to administer and
not to sell when "to sell" was as advantageous to the plaintiff in the administration of his affairs as "to
administer." To hold that the power was "to administer" only when the power "to sell" was equally
conferred would be to give to special words of the contract a special and limited meaning to the exclusion
of other general words of equal import.
Fallo:

In view of all the foregoing, we are of the opinion that the lower court committed the error
complained of in the second assignment, and, without discussing the other assignments of error, we are
of the opinion, and so hold, that the judgment of the lower court should be and is hereby revoked and
that the appellants should be relieved from all liability under the complaint. Without any finding as to
costs, it is so ordered.

Arellano, C.J., Torres, Carson, and Araullo, JJ., concur.

 Olaguer v. Purugganan Jr. and Locsin
G.R. no. 158907
February 12, 2007

Facts:

1.) Petitioner Eduardo B. Olaguer alleges that he was the owner of 60,000 shares of stock of
Businessday Corporation and that he, with respondent Raul Locsin (Locsin) and Enrique Joaquin
(Joaquin), was active in the political opposition against the Marcos dictatorship.
2.) Petitioner executed a Special Power of Attorney (SPA) appointing as his attorneys-in-fact Locsin,
Joaquin and Hofileña for the purpose of selling or transferring petitioner’s shares of stock with
Businessday.
3.) On 24 December 1979, petitioner was arrested by the Marcos military thus during the petitioner’s
detention, respondent Locsin ordered fellow respondent Purugganan to cancel the petitioner’s
shares in the books of the corporation and to transfer them to respondent Locsin’s name.
4.) When petitioner was finally released from detention, he then discovered that he was no longer
registered as stockholder of Businessday in its corporate books and that recorded the transfer of
shares in favor of respondent Locsin
5.) Respondent Locsin averred that he tried to sell petitioner’s shares, but nobody wanted to buy
them thus decided to buy the shares himself and that petitioner, through his wife, received the
amount of ₱600,000.00 as payment for the shares of stock.

Issue:
Whether or not the sale and purchase of the shares of stock made by Locsin as the agent is valid.

Ruling:

Yes, the sale and purchase of the shares of stock made by Locsin as the agent is valid.

It is a general rule that a power of attorney must be strictly construed; the instrument will be held to grant
only those powers that are specified, and the agent may neither go beyond nor deviate from the power
of attorney. However, the rule is not absolute and should not be applied to the extent of destroying the
very purpose of the power. If the language will permit, the construction that should be adopted is that
which will carry out instead of defeat the purpose of the appointment. Clauses in a power of attorney that
are repugnant to each other should be reconciled so as to give effect to the instrument in accordance with
its general intent or predominant purpose. Furthermore, the instrument should always be deemed to give
such powers as essential or usual in effectuating the express powers.

Defining the terms "absence" and "incapacity" by their everyday usage makes for a reasonable
construction, that is, "the state of not being present" and the "inability to act," given the context that the
SPA authorizes the agents to attend stockholders’ meetings and vote in behalf of petitioner, to sell the
shares of stock, and other related acts. This construction covers the situation wherein petitioner was
arrested and detained. This much is admitted by petitioner in his testimony.

Moreover, Article 1882 of the Civil Code provides that the limits of an agent’s authority shall not be
considered exceeded should it have been performed in a manner more advantageous to the principal
than that specified by him. Had respondent did not purchase the said shares of stock if would have been
among petitioner’s properties which were confiscated by the military.

Fallo:

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed Decision of
the Court of Appeals, promulgated on 30 June 2003, affirming the validity of the sale of the shares of stock
in favor of respondent Locsin. No costs.

SO ORDERED.