Delegata potestas non potest delegari

the principle delegata potestas non potest delegari (Latin) states that ‘no delegated powers can be further delegated’.

In Commercial Law, it is applied in the case of:

Jaworski vs. Philippine Amusement and Gaming Corporation (PAGCOR)[GR 144463, 14 January 2004]

Facts:

PAGCOR is a government owned and controlled corporation existing under PD 1869, issued on 11 July 1983 by then President Ferdinand Marcos. The PAGCOR was granted, subject to the terms and conditions established in theDecree, for a period of 25 years, renewable for another 25 years, the rights, privileges and authority to operate and maintain gambling casinos, clubs, and other recreation or amusement places, sports, gaming pools, i.e. basketball,football, lotteries, etc. whether on land or sea, within the territorial jurisdiction of the Republic of the Philippines. On 31March 1998, PAGCOR's board of directors approved an instrument denominated as "Grant of Authority and Agreement for the Operation of Sports Betting and Internet Gaming", which granted SAGE the authority to operate and maintainSports Betting station in PAGCOR's casino locations, and Internet Gaming facilities to service local and international bettors, provided that to the satisfaction of PAGCOR, appropriate safeguards and procedures are established to ensurethe integrity and fairness of the games. On 1 September 1998, PAGCOR, represented by its Chairperson, Alicia Ll.Reyes, and SAGE, represented by its Chairman of the Board, Henry Sy, Jr., and its President, Antonio D. Lacdao,executed the document. Pursuant to the authority granted by PAGCOR, SAGE commenced its operations by conducting gambling on the Internet on a trial-run basis, making pre-paid cards and redemption of winnings available at various Bingo Bonanza outlets. Senator Robert S. Jaworski, in his capacity as member of the Senate and Chairman of the Senate Committee on Games, Amusement and Sports, files the petition for certiorari and prohibition, praying that the grant of authority by PAGCOR in favor of SAGE be nullified. He maintains that PAGCOR committed grave abuse of discretion amounting to lack or excess of jurisdiction when it authorized SAGE to operate gambling on the internet. Hecontends that PAGCOR is not authorized under its legislative franchise, P.D. 1869, to operate gambling on the internet for the simple reason that the said decree could not have possibly contemplated internet gambling since at the time of its enactment the internet was yet inexistent and gambling activities were confined exclusively to real-space. Further,he argues that the internet, being an international network of computers, necessarily transcends the territorial jurisdiction of the Philippines, and the grant to SAGE of authority to operate internet gambling contravenes thelimitation in PAGCOR's franchise.

Issue:

Whether PAGCOR's legislative franchise include the right to vest another entity, SAGE, with the authority tooperate Internet gambling.

Held:

A legislative franchise is a special privilege granted by the state to corporations. It is a privilege of public concernwhich cannot be exercised at will and pleasure, but should be reserved for public control and administration, either by the government directly, or by public agents, under such conditions and regulations as the government may impose onthem in the interest of the public. It is Congress that prescribes the conditions on which the grant of the franchise may be made. Thus the manner of granting the franchise, to whom it may be granted, the mode of conducting the business,the charter and the quality of the service to be rendered and the duty of the grantee to the public in exercising thefranchise are almost always defined in clear and unequivocal language. Herein, PAGCOR has acted beyond the limits of its authority when it passed on or shared its franchise to SAGE. While PAGCOR is allowed under its charter to enter into operator's and/or management contracts, it is not allowed under the same charter to relinquish or share itsfranchise, much less grant a veritable franchise to another entity such as SAGE. PAGCOR can not delegate its power inview of the legal principle of delegata potestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expressly authorized to do so

Catch-all provisions on Human Relations

The articles (in N.C.C.) covered in the “catch-all provisions” on human relations are:

1. Article 19: “Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.”

2. Article 20: “Every person, contrary to law, willfully or negligently causes damage to another, shall indemnify the latte for the same.”

3. Article 21: “Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs, or public policy shall compensate the latter for the damage.”

The differences/distinctions of the three articles is that:

1. Article 19 declares a principle of law and article 21 gives flesh to its provisions, while article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction;

2. There is a common element under articles 19 and 21, that is, the act must be intentional, however, article 20 does not distinguish, in that the act may be done either willfully or negligently;

3. Under any of the three articles, an act which causes injury to another may be made the basis for an award of damages;

4. Under article 21, the act is contrary to morals, good customs or public policy; in article 21, the act is contrary to law. Under article 21, the act is done willfully, in article 20, the act is done either willfully or negligently.

ARTICLE 19

Article 19 is commonly referred to as the principle of abuse of rights. The law recognizes the norms of human on all rights: that in their exercise, the norms of human conduct set forth in Article 19 must be observed.

The article sets standards which may be observed not only in the exercise of one’s rights but also in the performance of one’s duties. These standards are: a) to act with justice, b) to give everyone his due; and c) to observe honesty and good faith.

Article 19 rejects the classical and traditional theory that “he who uses a right injures no one.”

A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible.

Article 19 is intended to expand the concept of torts by granting adequate remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law.

Article 19 lays down a rule of conduct for the regulation of human relations and for the maintenance of social order. It does not provide a remedy for its violation. Generally, an action for damages under either Articles 20 and 21 would be proper [(Globe Mackay vs/ CA, 176 SCRA 778 (1989).]

THE ELEMENTS OF AN ABUSE OF RIGHT UNDER ARTICLE 19

1. Exercise of a right which is objective and apparently legal;

2. Damage or injury to an interest not specifically protected by a legal precept; and

3. Immorality or anti-social character of the damage or injury manifested either subjectively, i.e., when the right is exercised with the intent to injure or simply without legal or legitimate purpose.

ARTICLE 20

This article punishes illegal acts whether done willfully or negligently. The article is broad enough to cover all legal (not moral) wrongs in violation of law, whether willfully or negligently. Thus, in the law of torts or quasi-delict – “Whoever by act or omission causes damages to another, there being fault or negligence, is obliged to pay for the damage done.“ (Article 2176) It embraces the Spanish-Philippine concept of quasi-delict which is based on negligence and the tort in Anglo-Amercian jurisprudence which is based on malice.

This article serves as a sanction to all violations of right which cause damage to another irrespective of whether the particular law that is violated provides for damages or not. The rule in Article 20 compliments the principle of abuse of rights enumerated in Article 19.

The conduct may be both a crime and a quasi-delict. Any person who willfully or negligently causes damage to another in his person, his property, or in any right shall be obliged to indemnify the latter. A felony may be committed by means of deceit or by means of fault or negligence (Article 3, Revised Penal Code). If the fault or negligence does not constitute a penal offense, the actor is liable only for quasi-delict under Article 2176. In either case, it is essential that the act is voluntary for the obligation to indemnify to arise.

In Banal vs. Tadeo, G.R. No. L-8911-25,Dec. 11,1987, the SC held that regardless ofwhether or not a special law so provides,indemnification of the offended party maybe on account of the damage, loss or injury directly suffered as a consequence of thewrongful act of another. The indemnity which a person is sentenced to pay forms anintegral part of the penalty imposed by lawfor the commission of the crime.

ARTICLE 21

Article 21 seeks to remedy the “countless gaps in the statutes, which leave so may victims of moral wrongs helpless, even though they have actually suffered material and moral injury. Article 21 deals with acts contra bonus.

THE ELEMENTS OF ACTS CONTRA BONUS:

1. There is an act which is legal;

2. But which is contrary to morals, good customs, public order, or public policy; and

3. It is done with intent to injure

Under Article 21, damages are recoverable even though no positive law was violated. It presupposes losses or injuries material or otherwise, which one may suffer as a result of the violation. Thus, the complaint must asks for damages.