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FACTS:

[T]his suit was filed seeking to declare the ELA invalid on the ground that it is
substantially the same as the Contract of Lease nullified in the first case [decision
in G.R. No. 113375 (Kilosbayan, Incorporated v. Guingona, 232 SCRA 110 (1994))
invalidating the Contract of Lease between the Philippine Charity Sweepstakes
Office (PCSO) and the Philippine Gaming Management Corp. (PGMC)].
Petitioners maintain (1) that the Equipment Lease Agreement (ELA) is a different
lease contract with none of the vestiges of a joint venture which were found in the
Contract of Lease nullified in the prior case; (2) that the ELA did not have to be
submitted to a public bidding because it fell within the exception provided in E.O.
No. 301, 1 (e); (3) that the power to determine whether the ELA is advantageous
to the government is vested in the Board of Directors of the PCSO; (4) that for lack
of funds the PCSO cannot purchase its own on-line lottery equipment and has had
to enter into a lease contract; (5) that what petitioners are actually seeking in this
suit is to further their moral crusade and political agenda, using the Court as their
forum.
ISSUE:
Whether or not the ELA between the Philippine Charity Sweepstakes Office and
the Philippine Gaming Management Corp. is invalid.
HELD:

(5) That the Equipment Lease Agreement (ELA) in question did not have to be
submitted to public bidding as a condition for its validity.
RATIO:
E.O. No. 301, 1 applies only to contracts for the purchase of supplies, materials
and equipment. It does not refer to contracts of lease of equipment like the ELA.
The provisions on lease are found in 6 and 7 but they refer to the lease of
privately-owned buildings or spaces for government use or of government-owned
buildings or spaces for private use, and these provisions do not require public
bidding. It is thus difficult to see how E.O. No. 301 can be applied to the ELA when
the only feature of the ELA that may be thought of as close to a contract of
purchase and sale is the option to buy given to the PCSO. An option to buy is not
of course a contract of purchase and sale.
Indeed the question is not whether compared with the former joint venture
agreement the present lease contract is [more] advantageous to the government.
The question is whether under the circumstances, the ELA is the most
advantageous contract that could be obtained compared with similar lease
agreements which the PCSO could have made with other parties. Petitioners have
not shown that more favorable terms could have been obtained by the PCSO or
that at any rate the ELA, which the PCSO concluded with the PGMC, is
disadvantageous to the government.

NO. Petition for prohibition, review and/or injunction was dismissed. Pertinent to
the issue, the SC held:

SEPARATE OPINIONS:

xxx

PADILLA, concurring

(3) that the ELA is valid as a lease contract under the Civil Code and is not
contrary to the charter of the Philippine Charity Sweepstakes Office;

I join the majority in voting for the dismissal of the petition in this case.

(4) that under 1(A) of its charter (R.A. 1169), the Philippine Charity Sweepstakes
Office has authority to enter into a contract for the holding of an on-line lottery,
whether alone or in association, collaboration or joint venture with another party, so
long as it itself holds or conducts such lottery; and

As to whether or not the ELA is grossly disadvantageous to the government, it


should be stressed that the matter involves, basically, a policy determination by
the executive branch which this Court should not ordinarily reverse or substitute
with its own judgment, in keeping with the time honored doctrine of separation of
powers.
VITUG, concurring

I most humbly reiterate the separate opinion I have made in Kilosbayan, Inc., et al.,
vs. Teofisto Guingona, Sr., etc., et al. (G.R. No. 113375, promulgated on 05 May
1994).
Back to the core of the petition, however, the matter of the legal standing of
petitioners in their suit assailing the subject-contract appears to me, both under
substantive law and the rules of procedure, to still be an insuperable issue. I have
gone over carefully the pleadings submitted in G.R. No. 118910, and I regret my
inability to see anything new that can convince me to depart from the view I have
expressed on it in G.R. No. 113375.
FELICIANO, dissenting
With very great respect, it is submitted that the above conclusion has been merely
assumed rather than demonstrated and that what is in fact before this Court does
not adequately support such conclusion.
REGALADO, dissenting
I am constrained to respectfully dissent from the majority opinion premised on the
constitutional and procedural doctrines posed and interpreted in tandem therein. I
also regret that I have to impose on the majority with this virtual turno en
contra when I could have indicated my disaccord by just joining Mr. Justice Davide
in his commendably objective presentation of the minority position. I feel, however,
that certain views that have been advanced require a rejoinder lest they lapse into
the realm of unanimous precedents.
DAVIDE, dissenting
I register a dissenting vote.
I am disturbed by the sudden reversal of our rulings in Kilosbayan, Inc., et al. vs.
Guingona, et al. (hereinafter referred to as the first lotto case) regarding the
application or interpretation of the exception clause in paragraph B, Section 1 of
the Charter of the PCSO (R.A.. No. 1169), as amended by B.P. Blg. 442, and on
the issue of locus standi of the petitioners to question the contract of lease
involving the on-line lottery system entered into between the Philippine Charity
Sweepstakes Office (PCSO) and the Philippine Gaming Management Corporation
(PGMC). Such reversal upsets the salutary doctrines of the law of the case, res
judicata, and stare decisis. It puts to jeopardy the faith and confidence of the
people, especially the lawyers and litigants, in the certainty and stability of the

pronouncements of this Court. It opens the floodgates to endless litigations for reexamination of such pronouncements and weakens this Courts judicial and moral
authority to demand from lower courts obedience thereto and to impose sanctions
for their opposite conduct.
Issue: whether the petitioner has the requisite personality to question the validity of
the contract in this case
Held:Yes.
Kilosbayans status as a peoples organization give it the requisite personality to
question the validity of the contract in this case. The Constitution provides
that the State shall respect the role of independent peoples organizations
to enable the people to pursue and protect, within the democratic
framework, their legitimate and collective interests and aspirations through
peaceful and lawful means, that their right to effective and reasonable
participation at all levels of social, political, and economic decision-making
shall not be abridged.
These provisions have not changed the traditional rule that only real
parties in interest or those with standing, as the case may be, may invoke
the judicial power. The jurisdiction of the Court, even in cases involving
constitutional questions, is limited by the case and controversy requirement
of Art. VIII, 5. This requirement lies at the very heart of the judicial
function. It is what differentiates decision-making in the courts from decisionmaking in the political departments of the government and bars the
bringing of suits by just any party.
It is nevertheless insisted that this Court has in the past accorded
standing to taxpayers and concerned citizens in cases involving paramount
public interest. Taxpayers, voters, concerned citizens and legislators have
indeed been allowed to sue but then only (1) in cases involving
constitutional issues and (2) under certain conditions. Petitioners do not
meet these requirements on standing.
Taxpayers are allowed to sue, for example, where there is a claim
of illegal disbursement of public funds. or where a tax measure is assailed
as unconstitutional. Voters are allowed to question the validity of election
laws because of their obvious interest in the validity of such
laws. Concerned citizens can bring suits if the constitutional question they
raise is of transcendental importance which must be settled
early. Legislators are allowed to sue to question the validity of any official
action which they claim infringes their prerogatives qua legislators.
Petitioners do not have the same kind of interest that these various
litigants have. Petitioners assert an interest as taxpayers, but they do not

meet the standing requirement for bringing taxpayers suits as set forth
in Dumlao v.Comelec, to wit:

vested with discretion as to whether or not a taxpayers suit should be


entertained.

While, concededly, the elections to be held involve the expenditure of


public moneys, nowhere in their Petition do said petitioners allege that their
tax money is being extracted and spent in violation of specific
constitutional protections against abuses of legislative power or that there
is a misapplication of such funds by respondent COMELEC or that public
money is being deflected to any improper purpose. Neither do petitioners
seek to restrain respondent from wasting public funds through the
enforcement of an invalid or unconstitutional law. Besides, the institution of
a taxpayers suit, per se, is no assurance of judicial review. The Court is

Petitioners suit does not fall under any of these categories of


taxpayers suits.
Thus, petitioners right to sue as taxpayers cannot be sustained.
Nor as concerned citizens can they bring this suit because no specific
injury suffered by them is alleged. As for the petitioners, who are members
of Congress, their right to sue as legislators cannot be invoked because
they do not complain of any infringement of their rights as legislators.