G.R. No. 163553; December 11, 2009
Yun Kwan Byung, Petitioner, vs. Philippine Amusement and Gaming Corporation, Respondent.

FACTS

Petitioner Yun Kwan Byung, a Korean national, filed a complaint against respondent Philippine Amusement and Gaming Corporation (PAGCOR) seeking the redemption of gambling chips worth US$2.1 million which he allegedly accumulated while playing at Casino Filipino Silahis from November 1996 to March 1997. PAGCOR refused to encash the chips. PAGCOR launched a Foreign Highroller Marketing Program and entered into a Junket Agreement with ABS Corporation, a Korean-based group. Under the agreement, PAGCOR provided distinct junket chips to ABS Corporation, which distributed them to its players. ABS Corporation assumed sole responsibility to pay its players’ winnings and settle collectibles from losing players, and agreed to hold PAGCOR free from any related claims. A notice posted in the gaming room, in English and Korean, stated that the room was exclusively operated by ABS under arrangement with PAGCOR and that ABS was solely accountable for all playing chips. PAGCOR argued that petitioner was a junket player of ABS Corporation, not a direct PAGCOR player, and that under its rules, chips could not be brought outside the casino. The trial court dismissed the complaint, a decision affirmed by the Court of Appeals.

ISSUE

Whether PAGCOR is liable to redeem the gambling chips held by petitioner.

RULING

No. The Supreme Court denied the petition and affirmed the lower courts’ decisions. The Court held that the Junket Agreement between PAGCOR and ABS Corporation was valid. PAGCOR’s charter granted it the corporate power to enter into contracts pertaining to its business. The agreement did not constitute an illegal lease of franchise but was a legitimate exercise of PAGCOR’s marketing authority to attract foreign players. The relationship between PAGCOR and ABS was one of principal-agent, where ABS acted as a junket operator or agent in bringing players to PAGCOR’s casino. However, petitioner was not a party to this agreement. The posted notice informing players that the gaming room was exclusively operated by ABS, which was solely accountable for all chips, was a valid warning. By continuing to play despite this notice, petitioner was bound by the special rules and assumed the risk of dealing with ABS. Consequently, his claim for redemption lay against ABS Corporation, not against PAGCOR. The gambling transaction itself, being a game of chance, also could not give rise to a cause of action for the collection of winnings under Article 2014 of the Civil Code.