Civil Law

LEUNG BEN VS. P. J. O’BRIEN G.R. No. L-13602 April 6, 1918 Gambling, Obligations and Contracts

FACTS:

An action was instituted by P. J. O’Brien to recover the sum of P15,000 alleged to have been lost by Leung Ben to P.J. O’Brien in a series of gambling, banking and percentage games conducted during the two or three months prior to the institution of the suit. In Leung Ben’s verified complaint, O’Brien asked for an attachment against the property of Leung Ben on the ground that the latter was about to depart from the country with intent to defraud his creditors. This attachment was issued, and acting under that authority, the sheriff attached the sum of P15,000 which had been deposited by O’Brien with the International Banking Corporation. Leung Ben filed a motion to quash the attachment, which was dismissed by the court. Hence this application for a writ of certiorari, the purpose of which was to quash an attachment issued from the Court of First Instance.

ISSUE:

Was the statutory obligation to restore money won at gaming an obligation arising from “contract, express or implied?”

RULING:

By all the criteria which the common law supplies, this a duty in the nature of debt and is properly classified as an implied contract.

Upon general principles, recognized both in the civil and common law, money lost in gaming and voluntarily paid by the loser to the winner cannot, in the absence of statute, be recovered in a civil action. But Act No. 1757 of the Philippine Commission, which defines and penalizes several forms of gambling, contains numerous provisions recognizing the right to recover money lost in gambling or in playing certain games.

The original complaint filed in the Court of First Instance was not clear as to the particular section of Act No. 1757 under which the action was brought, but was alleged that the money was lost at gambling, banking, and percentage game in which the defendant was a banker. It must therefore be assumed that the action was based upon the right of recovery given in section 7 of said Act, which declared that an action may be brought against the banker by any person losing money at a banking or percentage game. It was observed that according to the Civil Code obligations are supposed to be derived either from (1) the law, (2) contracts and quasi-contracts, (3) illicit acts and omission, or (4) acts in which some sort ob (sic) lame or negligence is present. This enumeration of sources of obligations and the obligation imposed by law are different types. The obligations which in the Code are indicated as quasi-contracts, as well as those arising ex lege, are in the common law system, merged into the category of obligations imposed by law, and all are denominated implied contracts. In the case under consideration, the duty of O’ Brien to refund the money which he won from the Leung Ben at gaming was a duty imposed by statute. It therefore arose ex lege. Furthermore, it was a duty to return a certain sum which had passed from O’Brien to Leung Ben.

By all the criteria which the common law supplies, this a duty in the nature of debt and is properly classified as an implied contract.

It was well- settled by the English authorities that money lost in gambling or by lottery, if recoverable at all, can be recovered by the loser in an action of indebitatus assumpsit for money had and received. This meant that in the common law the duty to return money won in this way was an implied contract, or quasi-contract. Nor can it be said that the relations between the parties litigant constitute a quasi-contract. In the first place, quasi- contracts are “lawful and purely voluntary acts by which the authors thereof become obligated in favor of a third person. . . .” The act which gave rise to the obligation ex lege relied upon by Leung Ben in the court below is illicit an unlawful gambling game. In the second place, the first paragraph of section 412 of the Code of Civil Procedure does not authorize an attachment in actions arising out of quasi contracts, but only in actions arising out of contract, express or implied.

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