Yun Kwan Byung vs.

Nograles
G.R. No. 163553, December 11, 2009

FACTS:

PAGCOR launched its Foreign Highroller Marketing 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. 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.

Petitioner, a Korean national, alleges that he came to the Philippines four times to play for high stakes
at the Casino Filipino; that in the course of the games, he was able to accumulate gambling chips worth US$2.1
million. Petitioner contends that when he presented the gambling chips for encashment with PAGCORs
employees or agents, PAGCOR refused to redeem them.

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.

The Trial Court dismissed the complaint and ruled that the Junket Agreement is void. Since the junket
Agreement is not permitted by PAGCOR’s charter and the mutual rights and obligations of the parties to this
case would be resolved based on agency and estoppel. The CA affirmed the trial court’s decision. It upheld that
the Junket Agreement was void and cannot give rise to an implied agency which the petitioner claims to exist
between PAGCOR and ABS Corporation. The CA explained that it cannot see how the principle of implied
agency can be applied to this case. Article 1883 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.

ISSUES:

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;

RULING:

1. No. 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 law makes no presumption of agency and proving its existence, nature and extent is incumbent upon the
person alleging it. 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.

Acts and conduct of PAGCOR negates the existence of an implied agency or an agency by estoppel

Petitioner’s argument is clearly misplaced. 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.

2. 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.

B.H. Macke vs Camps

G.R. No. 2962, February 27, 1907

FACTS:

B. H. Macke and W. H. Chandler, partners doing business under the firm name of Macke, Chandler & Company,
allege that during the months of February and March, 1905, they sold to the Jose Camps and delivered at his
place of business, known as the "Washington Cafe," various bills of goods amounting to P351.50; and he has
only paid on account of said accounts the sum of P174; that there is still due them on account of said goods
the sum of P177.50.

B. H. Macke testified that on the order of one Ricardo Flores, who represented himself to be agent of the
defendant, he shipped the said goods to the defendants at the Washington Cafe; that Flores later
acknowledged the receipt of said goods and made various payments thereon amounting in all to P174; that on
demand for payment of balance of the account Flores informed him that he did not have the necessary funds
on hand, and that he would have to wait the return of his principal, the defendant, who was at that time visiting
in the provinces.

A written contract dated May 25, 1904, was introduced in evidence, from which it appears that one Galmes,
the former owner of the business now know as the "Washington Cafe," subrented the building wherein the
business was conducted, to the defendant for a period of one year, for the purpose of carrying on that business,
the defendant obligating himself not to sublet or subrent the building or the business without the consent of
the said Galmes. This contract was signed by the defendant and the name of Ricardo Flores appears thereon
as a witness, and attached thereto is an inventory of the furniture and fittings which also is signed by the
defendant with the word "sublessee" (subarrendatario) below the name, and at the foot of this inventory the
word "received" (recibo) followed by the name "Ricardo Flores," with the words "managing agent" (el
manejante encargado) immediately following his name.

ISSUE:

Whether or not Flores is an agent of Camps?

RULING:

Yes. The contract introduced in evidence sufficiently establishes the fact that the defendant was the owner of
business and of the bar, and the title of "managing agent" attached to the signature of Flores which appears
on that contract, together with the fact that, at the time the purchases in question were made, Flores was
apparently in charge of the business, performing the duties usually entrusted to managing agent, leave little
room for doubt that he was there as authorized agent of the defendant. One who clothes another apparent
authority as his agent, and holds him out to the public as such, can not be permitted to deny the authority of
such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith
and in the following preassumptions or deductions, which the law expressly directs to be made from particular
facts, are deemed conclusive:

(1) "Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another
to believe a particular thing true, and to act upon such belief, he can not, in any litigation arising out such
declaration, act, or omission, be permitted to falsify it" (subsec. 1, sec. 333, Act no. 190); and unless the
contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of
carrying his agency into effect. (15 Conn., 347; 90 N. C. 101; 15 La. Ann, 247; 43 Mich., 364; 93 N. Y., 495; 87
Ind., 187.)

That Flores, as managing agent of the Washington Cafe, had authority to buy such reasonable quantities of
supplies as might from time to time be necessary in carrying on the business of hotel bar may fairly be
presumed from the nature of the business, especially in view of the fact that his principal appears to have left
him in charge during more or less prolonged periods of absence; from an examination of the items of the
account attached to the complaint, we are of opinion that he was acting within the scope of his authority in
ordering these goods are binding on his principal, and in the absence of evidence to the contrary, furnish
satisfactory proof of their delivery as alleged in the complaint.

Nogales vs. Capitol Medical Center

G.R. No. 142625, December 19, 2006

FACTS:

Pregnant with her fourth child, Corazon Nogales, who was then 37 y/o was under the exclusive prenatal care
of Dr. Oscar Estrada beginning on her fourth month of pregnancy or as early as December 1975. While Corazon
was on her last trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and development
of leg edemas indicating preeclampsia which is a dangerous complication of pregnancy. Around midnight of
May 26, 1976, Corazon started to experience mild labor pains prompting Corazon and Rogelio Nogales to see
Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to Capitol
Medical Center (CMC). Upon her admission, an internal examination was conducted upon her by a resident-
physician. Based on the doctor’s sheet, around 3am, Dr. Estrada advised for 10mg valium to be administered
immediately by intramuscular injection, he later ordered the start of intravenous administration of syntociron
admixed with dextrose, 5% in lactated ringer’s solution, at the rate of 8-10 micro-drops per minute. When
asked if he needed the services of anesthesiologist, he refused. Corazon’s bag of water ruptured spontaneously
and her cervix was fully dilated and she experienced convulsions. Dr. Estrada ordered the injection of 10g of
magnesium sulfate but his assisting Doctor, Dr. Villaflor, only administered 2.5g. She also applied low forceps
to extract Corazon’s baby. In the process, a 10 x 2.5cm piece of cervical tissue was allegedly torn. The baby
came out in an apric, cyanatic weak and injured condition. Consequently the baby had to be intubated and
resuscitated. Corazon had professed vaginal bleeding where a blood typing was ordered and she was supposed
to undergo hysterectomy, however, upon the arrival of the doctor, she was already pronounced dead due to
hemorrhage.

ISSUE:

Whether or not in the conduct of child delivery, the doctors and the respondent hospital is liable for negligence.

RULING:

Yes. In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however an exception to this principle. The hospital may be liable if the physician is the ostensible agent of the
hospital. This exception is also known as the doctrine of apparent authority.

Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a
physician providing care at the hospital, regardless of whether the physician is an independent contractor,
unless the patient knows, or should have known, that the physician is an independent contractor.

For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that 1.) the hospital,
or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was
alleged to be negligent was an employee or agent of the hospital; 2.) Where the acts of the agent create the
appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquired in them;
and 3.) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary
care and prudence.

Borrowed servant doctrine provides that once a surgeon enters the operating room and takes charge of the
acts or omissions of operating room personnel and any negligence associated with each acts or omissions are
imputable to the surgeon, while the assisting physicians and nurses may be employed by the hospital, or
engaged by the patient, they normally become the temporary servants or agents of the surgeon in charge while
the operation is in progress, and liability may be imposed upon the surgeon for their negligent acts under the
doctrine of respondeat superior.