Case Title: Kilosbayan, Incorporated vs. Morato Ref.

: 246 SCRA 540 and 250 SCRA 150

Mere guidelines

II.

III.

Facts (chronologically arranged) a. Result of GR 113375 (KIlosbayan vs. Guingona)- invalidated contract of lease between Phil. Charity Sweepstake Office (PCSO) and Phil. Gaming Management Corp. (PGMC) i. To be in violation of the charter of PCSO b. Jan 25, 1995- parties signed an Equipment Lease Agreement (ELA) for lease of online lottery equipment and accessories i. Rental is 4.3% of gross amount of ticket sales by PCSO at which in no case be less than an annual rental computed at P35,000 per terminal in commercial operation. ii. Rent is computed bi-weekly iii. Term is 8 years iv. Upon expiration of term, PCSO can purchase the equipment at P25M c. Petitions declared ELA as invalid i. Amended ELA is null and void being the same with the old lease contract ii. Assuming ELA is materially different from the old lease contract, it is still inconsistent with the PCSOs charter iii. Amended ELA is null and void for being violative of the law on public bidding, it has not been approved by the President and it is not most advantageous to the govt. d. PCSO and PGMC filed separate comments: i. ELA is a different lease contract with none of the vestiges in the prior contract ii. ELA is not subject to public bidding because it fell in the exception provided in EO No. 301 iii. Power to determine if ELA is advantageous vests in the BOD of PCSO iv. Lack of funds of PCSO cannot purchase the its own online lottery equipment v. Petitioners seek to further their moral crusade vi. Petitioners do not have a legal standing because they were not parties to the contract Issue a. Do the petitioners have legal standing. b. Is the ELA valid. Held/Ratio a. NO. Petitioners do not have a legal standing. i. STARE DECISIS cannot apply. The previous ruling sustaining the standing of the petitioners is a departure from the settled rulings on real parties in interest because no constitutional issues were actually involved. ii. LAW OF THE CASE (opinion delivered on a former appeal) cannot also apply. Since the present case is not the same one litigated by the parties before in Kilosbayan vs. Guingona, Jr., the ruling cannot be in any sense be regarded as the law of this case. The parties are the same but the cases are not.

IV.

iii. RULE ON CONCLUSIVENESS OF JUDGMENT cannot still apply. An issue actually and directly passed upon and determine in a former suit cannot again be drawn in question in any future action between the same parties involving a different cause of action. But the rule does not apply to issues of law at least when substantially unrelated claims are involved. When the second proceeding involves an instrument or transaction identical with, but in a form separable from the one dealt with in the first proceeding, the Court is free in the second proceeding to make an independent examination of the legal matters at issue. iv. Since ELA is a different contract, the previous decision does not preclude determination of the petitioners standing. v. STANDING is a concept in constitutional law and here no constitutional question is actually involved. The more appropriate issue is whether the petitioners are REAL PARTIES in INTEREST. Standing: maybe brought by concerned citizens, taxpayers or voters who sue in public interest - Whether such parties have alleged such a personal stake in the outcome of the controversy xxx - Valmonte v. PCSO: 1) direct and personal interest; 2) has sustained or is in immediate danger of sustained some direct injury and 3) has bee or is about to be denied some right or privilege. -In the case at bar, there is no showing of particularized interest or an allegation of public funds being misspent to make the action of public interest. Real party in interest: Whether he is the party who would be benefited or injured by the judgment or the party entitled to the avails of the suit -Petitioners invoke Sec. 5, 7 and 12 of the Constitution. But they do not embody judicially enforceable constitutional rights but guidelines for legislation. They cannot give rise to a cause of action in the courts vi. QUESTION of CONTRACT LAW: The real parties are those who are parties to the agreement or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the contracting parties and can show the detriment which would positively result to them from the contract. vii. Petitioners do not have such present substantial interest. Questions to the nature or validity of public contracts maybe made before COA or before the Ombudsman YES. ELA is valid. i. It is different with the prior lease agreement: 1. PCSO now bears all losses because the operation of the system is completely in its hands ii. Fixing the rental rate to a minimum is a matter of business judgment and the Court is not inclined to review. iii. Rental rate is within the 15% net receipts fixed by law as a maximum. (4.3% of gross receipt is discussed in the dissenting opinion of Feliciano, J.) iv. In the contract, it stated that the parties can change their agreement. Petitioner states that this would allow PGMC to control and operate the on-line lottery system. The Court held that the claim is speculative. In any case, in the construction of statutes, the presumption is that in making contracts, the government has acted in good faith. The doctrine that the possibility of abuse is not a reason for denying power. v. It was held in Kilosbayan Vs. Guingona that PCSO does not have the power to enter into any contract which would involve it in any form of collaboration, association, or joint venture for the holding of sweepstakes activities. This only mentions that

b.

PCSO is prohibited from investing in any activities that would compete in their own activities. vi. It is claimed that ELA is a joint venture agreement which does not compete with their own activities. The Court held that is also based on speculation. Evidence is needed to show that the transfer of technology would involve the PCSO and its personnel in prohibited association with the PGMC. vii. E.O. 301 (on law of public bidding) applies only to contracts for the purchase of supplies, materials and equipment and not on the contracts of lease. Public bidding for leases are only for privately-owned buildings or spaces for government use or of govt owned buildings or spaces for private use. Petitioners have no standing. ELA is a valid lease contract. Petition for prohibition, review and/or injunction is dismissed.