Wednesday, April 23, 2008 CA overturns ruling on online casino deal
THE state-owned Philippine Amusement and Gaming Corporation (Pagcor) has scored a victory after the Court of Appeals (CA) denied the bid of an online gaming service provider Sports and Games Entertainment Corp. (Sage) to recover a sum of money as just compensation following a botched contract to operate Internet casino.
Sage claimed that it had incurred more than P185 million in setting up the Internet casino system after Pagcor decided to terminate the online casino deal.
Pagcor abandoned its deal with Sage to operate online casino after the Supreme Court (SC) declared null and void the gaming corporation's grant of authority to operate sports betting and Internet gaming to Sage.
In a decision penned by Associate Justice Arcangelita Romilla-Lontok, the CA 13th Division granted Pagcor's petition seeking to set aside the ruling of the Makati Regional Trial Court (RTC) dated March 30, 2007 denying its motion to dismiss Sage's complaint for just compensation.
The CA gave merit to the claim of Pagcor that Sage's complaint should be dismissed because the verification and certification of non-forum shopping attached to the complaint were falsified, as attested by Patrick Deakin, former chief operating officer of Sage, who disowned the signature as his.
"Without the signature of Patrick Deakin, the signature on the complaint being falsified as he himself, claimed, no authorized individual signed in behalf of the corporation. As Sage itself cannot personally do the act of signing, the complaint cannot be considered sufficient in form. Its dismissal is, therefore, warranted," the CA ruled.
The appellate court further said Deakin is not the plaintiff but Sage. The verification/certification having been falsified, as attested to by Deakin whose signature was orchestrated to appear on said document, it clearly showed that no one with proper authority had subscribed to the authenticity of the complaint, the CA added.
The CA also junked the argument of Sage that the complaint is sufficient in form and substance and Pagcor's motion to dismiss on the ground of lack of cause of action is not sufficient to assail the material allegations of the complaint.
Aside from disowning the signature, Deakin also denied knowledge in the preparation of the complaint, having left Sage and having ceased as its chief operating officer since April 2005.
Deakin likewise noted that the November 7, 2005 meeting of the board of director of Sage as stated in the secretary's certificate executed by Sage assistant corporate secretary Efrenilo Cayanga appointing Deakin as attorney-in-fact for purposes of filing the complaint against Pagcor is likewise inaccurate for being falsified.
Court records showed that Sage entered into an agreement with petitioner Pagcor under a grant of authority for the operation of sports betting and Internet gaming in the country.
Under said agreement, Sage is allowed to operate Internet casino in Pagcor's premises where it is obligated to remit to Pagcor 20 percent of its gross winnings, with 15 percent as Pagcor's share and five percent as franchise tax required remitted to the Bureau of Internal Revenue (BIR).
Sage incurred a total of P184.79 million in setting up the Internet casino system in addition to the cash bond of P500,000 paid to Pagcor as provided for in the gaming contract.
However, former senator Rober Jaworski, then chairman of the Senate committee on games, amusement and sports, filed a petition for certiorari and prohibition before the SC and questioned the validity of the said grant of authority.
Jaworski argued that Pagcor is not authorized under its charter to operate gambling activities in the Internet.
The erstwhile senator added that Internet gambling does not fall within the commonly accepted definition of gambling casinos, clubs or other recreation or amusement places and asserting that the authority to grant franchise for gambling operation in the Internet is in Congress.
The SC granted Jaworski's petition and declared that Pagcor is not allowed under its charter to relinquish or share its franchise or grant a franchise to another entity.
Sage claimed that Pagcor placed its operation to a halt without payment of just compensation which is tantamount to unjust enrichment on its part.
It filed a complaint for recovery of a sum of money before the Makati RTC, which granted Sage's petition, prompting Pagcor to elevate the case before the CA. (ECV/Sunnex)
