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515 SCRA 720

GR No. 167919, February 14, 2007
"A taxpayer need not be a party to the contract to challenge its validity."

The petitioners, Plaridel M. Abaya who claims that he filed the instant petition as a taxpayer, former lawmaker, and a Filipino citizen,
and Plaridel C. Garcia likewise claiming that he filed the suit as a taxpayer, former military officer, and a Filipino citizen, mainly seek
to nullify a DPWH resolution which recommended the award to private respondent China Road & Bridge Corporation of the contract
for the implementation of the civil works known as Contract Package No. I (CP I). They also seek to annul the contract of agreement
subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation pursuant to the said

ISSUE: Has petitioners the legal standing to file the instant case against the government?

HELD: Petitioners, as taxpayers, possess locus standi to file the present suit. Briefly stated, locus standi is a right of appearance in a
court of justice on a given question. More particularly, it is a partys personal and substantial interest in a case such that he has
sustained or will sustain direct injury as a result of the governmental act being challenged. Locus standi, however, is merely a matter
of procedure and it has been recognized that in some cases, suits are not brought by parties who have been personally injured by the
operation of a law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the public interest.
Consequently, the Court, in a catena of cases, has invariably adopted a liberal stance on locus standi, including those cases involving
The prevailing doctrine in taxpayers suits is to allow taxpayers to question contracts entered into by the national government or
government- owned or controlled corporations allegedly in contravention of law. A taxpayer is allowed to sue where there is a claim
that public funds are illegally disbursed, or that public money is being deflected to any improper purpose, or that there is a wastage of
public funds through the enforcement of an invalid or unconstitutional law. Significantly, a taxpayer need not be a party to the contract
to challenge its validity.


197 SCRA 771
GR No. 88291 May 31, 1991
"A taxpayer may question the legality of a law or regulation when it involves illegal expenditure of public money."

FACTS: Senator Ernesto Maceda sought to nullify certain decisions, orders, rulings, and resolutions of respondents Executive
Secretary, Secretary of Finance, Commissioner of Internal Revenue, Commissioner of Customs and the Fiscal Incentives Review
Board FIRB for exempting the National Power Corporation (NPC) from indirect tax and duties. RA 358, RA 6395 and PD 380
expressly grant NPC exemptions from all taxes whether direct or indirect. In 1984, however, PD 1931 and EO 93 withdrew all tax
exemptions granted to all GOCCs including the NPC but granted the President and/or the Secretary of Finance by recommendation of
the FIRB the power to restore certain tax exemptions. Pursuant to the latter law, FIRB issued a resolution restoring the tax and duty
exemption privileges of the NPC. The actions of the respondents were thus questioned by the petitioner by this petition for certiorari,
prohibition and mandamus with prayer for a writ of preliminary injunction and/or restraining order. To which public respondents
argued, among others, that petitioner does not have the standing to challenge the questioned orders and resolution because he was not
in any way affected by such grant of tax exemptions.

ISSUE: Has a taxpayer the capacity to question the legality of the resolution issued by the FIRB restoring the tax exemptions?

HELD: Yes. In this petition it is alleged that petitioner is "instituting this suit in his capacity as a taxpayer and a duly-elected Senator
of the Philippines." Public respondent argues that petitioner must show that he has sustained direct injury as a result of the action and
that it is not sufficient for him to have a mere general interest common to all members of the public. The Court however agrees with
the petitioner that as a taxpayer he may file the instant petition following the ruling in Lozada when it involves illegal expenditure of
public money. The petition questions the legality of the tax refund to NPC by way of tax credit certificates and the use of said assigned
tax credits by respondent oil companies to pay for their tax and duty liabilities to the BIR and Bureau of Customs.


In his capacity as taxpayer, Francisco Chavez petitioned the Court directly for, among other things, access to all documents and
information relating to the Smokey Mountain Development and Reclamation Project (the Project), including its underlying Joint
Venture Agreement (JVA) between the National Housing Authority (NHA), a government body, and R-II Builders, Inc. (RBI) ( pg. 1-

With Congress having approved the Project as a boost to infrastructure through its development of low-cost housing projects, a private
sector joint venture scheme was pursued in accordance with the Build-Operate-and-Transfer Law whereby the contractor undertakes
the construction . . . [for] the government agency or local government unit concerned which shall pay the contractor its total
investment expended on the project, plus reasonable rate of return (pg. 5-10). After multiple design changes, cost overruns, and
corresponding amendments to the JVA, the Project was ultimately suspended, and RBI made demands for payment. A few years later,
the Housing and Urban Development Coordinating Council initiated a bidding process for the work remaining on the Project, and the
NHA reached a settlement with RBI to terminate the original JVA (pg.39-47). Raising constitutional issues and asserting his right to
all information related to the Project, Mr. Chavez filed a petition directly with the Court.

Deciding on the issue of whether the NHA must be compelled to disclose all information related to the Project, the Court ruled that
relief must be granted because the right of the people to information on matters of public concern is enshrined in the 1987 Constitution
(pg. 86). Specifically, Article II, Section 28 and Article III, Section 7 of the Constitution, taken together as twin provisions, adopt a
policy of full public disclosure on all transactions involving public interest and acknowledge the peoples right to information. Case
law further elucidates these constitutional tenets by stating that an essential element of these freedoms is to keep open a continuing
dialogue or process of communication between the government and the people . . . These twin provisions of the Constitution seek to
promote transparency in policy-making and in the operations of the government, as well as provide the people sufficient information
to exercise effectively other constitutional rights (pg. 86-87). In defining the limits of these freedoms, the Court noted that such
information requests must pertain to definite propositions of the government and that information might be shielded by applicable
privileges (e.g. military secrets and information relating to national security) (pg. 88-90). Finally, the Court recognized that because no
enabling law exists providing government agencies with the procedural mechanics to disclose such information, the NHA cannot be
faulted for an inability to disclose. Nevertheless, where a duty to disclose does not exist, there still may exist a duty to permit access,
and so the Court ordered the NHA to permit access to all information related to the Project


G.R. No. 164527 , 15 August 2007


On August 5, 2004, former Solicitor General Francisco Chavez, filed an instant petition raising constitutional issues on the JVA
entered by National Housing Authority and R-II Builders, Inc.

On March 1, 1988, then-President Cory Aquino issued Memorandum order No. (MO) 161 approving and directing implementation of
the Comprehensive and Integrated Metropolitan Manila Waste Management Plan. During this time, Smokey Mountain, a wasteland in
Tondo, Manila, are being made residence of many Filipinos living in a subhuman state.

As presented in MO 161, NHA prepared feasibility studies to turn the dumpsite into low-cost housing project, thus, Smokey Mountain
Development and Reclamation Project (SMDRP), came into place. RA 6957 (Build-Operate-Transfer Law) was passed on July 1990
declaring the importance of private sectors as contractors in government projects. Thereafter, Aquino proclaimed MO 415 applying
RA 6957 to SMDRP, among others. The same MO also established EXECOM and TECHCOM in the execution and evaluation of the
plan, respectively, to be assisted by the Public Estates Authority (PEA).

Notices of public bidding to become NHAs venture partner for SMDRP were published in newspapers in 1992, from which R-II
Builders, Inc. (RBI) won the bidding process. Then-President Ramos authorized NHA to enter into a Joint Venture Agreement with

Under the JVA, the project involves the clearing of Smokey Mountain for eventual development into a low cost housing complex and
industrial/commercial site. RBI is expected to fully finance the development of Smokey Mountain and reclaim 40 hectares of the land
at the Manila Bay Area. The latter together with the commercial area to be built on Smokey Mountain will be owned by RBI as
enabling components. If the project is revoked or terminated by the Government through no fault of RBI or by mutual agreement, the
Government shall compensate RBI for its actual expenses incurred in the Project plus a reasonable rate of return not exceeding that
stated in the feasibility study and in the contract as of the date of such revocation, cancellation, or termination on a schedule to be
agreed upon by both parties.

To summarize, the SMDRP shall consist of Phase I and Phase II. Phase I of the project involves clearing, levelling-off the dumpsite,
and construction of temporary housing units for the current residents on the cleared and levelled site. Phase II involves the
construction of a fenced incineration area for the on-site disposal of the garbage at the dumpsite.

Due to the recommendations done by the DENR after evaluations done, the JVA was amended and restated (now ARJVA) to
accommodate the design changes and additional work to be done to successfully implement the project. The original 3,500 units of
temporary housing were decreased to 2,992. The reclaimed land as enabling component was increased from 40 hectares to 79
hectares, which was supported by the issuance of Proclamation No. 465 by President Ramos. The revision also provided for the 119-
hectare land as an enabling component for Phase II of the project.

Subsequently, the Clean Air Act was passed by the legislature which made the establishment of an incinerator illegal, making the off-
site dumpsite at Smokey Mountain necessary. On August 1, 1998, the project was suspended, to be later reconstituted by President
Estrada in MO No. 33.

On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement whereby both parties agreed to terminate the JVA and
subsequent agreements. During this time, NHA reported that 34 temporary housing structures and 21 permanent housing structures
had been turned over by RBI.


1. Whether respondents NHA and RBI have been granted the power and authority to reclaim lands of the public domain as this power
is vested exclusively in PEA as claimed by petitioner
2. Whether respondents NHA and RBI were given the power and authority by DENR to reclaim foreshore and submerged lands
3. Whether respondent RBI can acquire reclaimed foreshore and submerged lands considered as alienable and outside the commerce of
4. Whether respondent RBI can acquire reclaimed lands when there was no declaration that said lands are no longer needed for public
5. Whether there is a law authorizing sale of reclaimed lands
6. Whether the transfer of reclaimed lands to RBI was done by public bidding
7. Whether RBI, being a private corporation, is barred by the Constitution to acquire lands of public domain
8. Whether respondents can be compelled to disclose all information related to the SMDRP
9. Whether the operative fact doctrine applies to the instant position

1. Executive Order 525 reads that the PEA shall be primarily responsible for integrating, directing, and coordinating all reclamation
projects for and on behalf of the National Government. This does not mean that it shall be responsible for all. The requisites for a
valid and legal reclamation project are approval by the President (which were provided for by MOs), favourable recommendation of
PEA (which were seen as a part of its recommendations to the EXECOM), and undertaken either by PEA or entity under contract of
PEA or by the National Government Agency (NHA is a government agency whose authority to reclaim lands under consultation
with PEA is derived under PD 727 and RA 7279).
2. Notwithstanding the need for DENR permission, the DENR is deemed to have granted the authority to reclaim in the Smokey
Mountain Project for the DENR is one of the members of the EXECOM which provides reviews for the project. ECCs and Special
Patent Orders were given by the DENR which are exercises of its power of supervision over the project. Furthermore, it was the
President via the abovementioned MOs that originally authorized the reclamation. It must be noted that the reclamation of lands of
public domain is reposed first in the Philippine President.
3. The reclaimed lands were classified alienable and disposable via MO 415 issued by President Aquino and Proclamation Nos. 39 and
465 by President Ramos.
4. Despite not having an explicit declaration, the lands have been deemed to be no longer needed for public use as stated in
Proclamation No. 39 that these are to be disposed to qualified beneficiaries. Furthermore, these lands have already been
necessarily reclassified as alienable and disposable lands under the BOT law.
5. Letter I of Sec. 6 of PD 757 clearly states that the NHA can acquire property rights and interests and encumber or otherwise dispose
of them as it may deem appropriate.
6. There is no doubt that respondent NHA conducted a public bidding of the right to become its joint venture partner in the Smokey
Mountain Project. It was noted that notices were published in national newspapers. The bidding proper was done by the Bids and
Awards Committee on May 18, 1992.
7. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid a portion as percentage of the reclaimed land
subject to the constitutional requirement that only Filipino citizens or corporation with at least 60% Filipino equity can acquire the
same. In addition, when the lands were transferred to the NHA, these were considered Patrimonial lands of the state, by which it
has the power to sell the same to any qualified person.
8. This relief must be granted. It is the right of the Filipino people to information on matters of public concerned as stated in Article II,
Sec. 28, and Article III, Sec. 7 of the 1987 Constitution.
9. When the petitioner filed the case, the JVA had already been terminated by virtue of MOA between RBI and NHA. The properties
and rights in question after the passage of around 10 years from the start of the projects implementation cannot be disturbed or
questioned. The petitioner, being the Solicitor General at the time SMDRP was formulated, had ample opportunity to question the
said project, but did not do so. The moment to challenge has passed.
7. Jumamil vs. Caf, et al.
[GR 144570, 21 September 2005]
Third Division, Corona (J): 4 concur


In 1989, Vivencio V. Jumamil filed before the Regional Trial Court (RTC) of Panabo, Davao del Norte a petition for declaratory relief
with prayer for preliminary injunction and writ of restraining order against Mayor Jose J. Cafe and the members of the Sangguniang
Bayan of Panabo, Davao del Norte.

He questioned the constitutionality of Municipal Resolution 7, Series of 1989 (Resolution 7). Resolution 7, enacting Appropriation
Ordinance 111, provided for an initial appropriation of P765,000 for the construction of stalls around a proposed terminal fronting the
Panabo Public Market which was destroyed by fire. Subsequently, the petition was amended due to the passage of Resolution 49,
series of 1989 (Resolution 49), denominated as Ordinance 10, appropriating a further amount of P1,515,000 for the construction of
additional stalls in the same public market. Prior to the passage of these resolutions, Mayor Cafe had already entered into contracts
with those who advanced and deposited (with the municipal treasurer) from their personal funds the sum of P40,000 each. Some of the
parties were close friends and/or relatives of Cafe, et al. The construction of the stalls which Jumamil sought to stop through the
preliminary injunction in the RTC was nevertheless finished, rendering the prayer therefor moot and academic. The leases of the stalls
were then awarded by public raffle which, however, was limited to those who had deposited P40,000 each. Thus, the petition was
amended anew to include the 57 awardees of the stalls as private respondents. Jumamil alleges that Resolution Nos. 7 and 49 were
unconstitutional because they were passed for the business, occupation, enjoyment and benefit of private respondents, some of which
were close friends and/or relative of the mayor and the sanggunian, who deposited the amount of P40,000.00 for each stall, and with
whom also the mayor had a prior contract to award the would be constructed stalls to all private respondents; that resolutions and
ordinances did not provide for any notice of publication that the special privilege and unwarranted benefits conferred on the private
respondents may be availed of by anybody who can deposit the amount of P40,000; and that nor there were any prior notice or
publication pertaining to contracts entered into by public and private respondents for the construction of stalls to be awarded to private
respondents that the same can be availed of by anybody willing to deposit P40,000.00. The Regional Trial Court dismissed Jumamils
petition for declaratory relief with prayer for preliminary injunction and writ of restraining order, and ordered Jumamil to pay
attorneys fees in the amount of P1,000 to each of the 57 private respondents. On appeal, and on 24 July 2000 (CA GR CV 35082), the
Court of Appeals affirmed the decision of the trial court. Jumamil filed the petition for review on certiorari.

Issue [1]: Whether Jumamil had the legal standing to bring the petition for declaratory relief

Issue [2]: Whether the rule on locus standi should be relaxed.


Held [1]: Legal standing or locus standi is a partys personal and substantial interest in a case such that he has sustained or will sustain
direct injury as a result of the governmental act being challenged. It calls for more than just a generalized grievance.

The term interest means a material interest, an interest in issue affected by the decree, as distinguished from mere interest in the
question involved, or a mere incidental interest. Unless a persons constitutional rights are adversely affected by the statute or
ordinance, he has no legal standing. Jumamil brought the petition in his capacity as taxpayer of the Municipality of Panabo, Davao del
Norte and not in his personal capacity.

He was questioning the official acts of the the mayor and the members of the Sanggunian in passing the ordinances and entering into
the lease contracts with private respondents. A taxpayer need not be a party to the contract to challenge its validity. Parties suing as
taxpayers must specifically prove sufficient interest in preventing the illegal expenditure of money raised by taxation. The expenditure
of public funds by an officer of the State for the purpose of executing an unconstitutional act constitutes a misapplication of such
funds. The resolutions being assailed were appropriations ordinances. Jumamil alleged that these ordinances were passed for the
business, occupation, enjoyment and benefit of private respondents (that is, allegedly for the private benefit of respondents) because
even before they were passed, Mayor Cafe and private respondents had already entered into lease contracts for the construction and
award of the market stalls. Private respondents admitted they deposited P40,000 each with the municipal treasurer, which amounts
were made available to the municipality during the construction of the stalls.

The deposits, however, were needed to ensure the speedy completion of the stalls after the public market was gutted by a series of
fires. Thus, the award of the stalls was necessarily limited only to those who advanced their personal funds for their construction.
Jumamil did not seasonably allege his interest in preventing the illegal expenditure of public funds or the specific injury to him as a
result of the enforcement of the questioned resolutions and contracts. It was only in the Remark to Comment he filed in the Supreme
Court did he first assert that he (was) willing to engage in business and (was) interested to occupy a market stall. Such claim was
obviously an afterthought.

Held [2]: Objections to a taxpayer's suit for lack of sufficient personality, standing or interest are procedural matters.
Considering the importance to the public of a suit assailing the constitutionality of a tax law, and in keeping with the Court's duty,
specially explicated in the 1987 Constitution, to determine whether or not the other branches of the Government have kept themselves
within the limits of the Constitution and the laws and that they have not abused the discretion given to them, the Supreme Court may
brush aside technicalities of procedure and take cognizance of the suit.

There being no doctrinal definition of transcendental importance, the following determinants formulated by former Supreme Court
Justice Florentino P. Feliciano are instructive: (1) the character of the funds or other assets involved in the case; (2) the presence
of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of
the government; and (3) the lack of any other party with a more direct and specific interest in raising the questions being
raised. But, even if the Court disregards Jumamils lack of legal standing, this petition must still fail. The subject
resolutions/ordinances appropriated a total of P2,280,000 for the construction of the public market stalls. Jumamil alleged that these
ordinances were discriminatory because, even prior to their enactment, a decision had already been made to award the market stalls to
the private respondents who deposited P40,000 each and who were either friends or relatives of the mayor or members of the
Sanggunian. Jumamil asserted that there (was) no publication or invitation to the public that this contract (was) available to all who
(were) interested to own a stall and (were) willing to deposit P40,000. Respondents, however, counter that the public respondents
act of entering into this agreement was authorized by the Sangguniang Bayan of Panabo per Resolution 180 dated 10 October 1988
and that all the people interested were invited to participate in investing their savings. Jumamil failed to prove the subject
ordinances and agreements to be discriminatory.

Considering that he was asking the Court to nullify the acts of the local political department of Panabo, Davao del Norte, he should
have clearly established that such ordinances operated unfairly against those who were not notified and who were thus not given the
opportunity to make their deposits. His unsubstantiated allegation that the public was not notified did not suffice. Furthermore, there
was the time-honored presumption of regularity of official duty, absent any showing to the contrary.



Pursuant to Section 1 of the charter of the PCSO (R.A. No. 1169, as amended by B.P. Blg. 42) which grants it the authority to hold
and conduct "charity sweepstakes races, lotteries and other similar activities," the PCSO decided to establish an on- line lottery system
for the purpose of increasing its revenue base and diversifying its sources of funds. After learning that the PCSO was interested in
operating an on-line lottery system, the Berjaya Group Berhad, "a multinational company and one of the ten largest public companies
in Malaysia, and who has been long engaged in lottery operations in Asia, became interested to offer its services and resources to
PCSO. As an initial step, Berjaya Group Berhad (through its individual nominees) organized with some Filipino investors in March
1993 a Philippine corporation known as the Philippine Gaming Management Corporation (PGMC), which was intended to be the
medium through which the technical and management services required for the project would be offered and delivered to PCSO.
Before August 1993, the PCSO formally issued a Request for Proposal (RFP) for the Lease Contract of an on-line lottery system for
the PCSO. The bids submitted by PGMC were evaluated by the Special Pre-Qualification Bids and Awards Committee (SPBAC) for
the on-line lottery and its Bid Report was thereafter submitted to the Office of the President. On 21 October 1993, the Office of the
President announced that respondent PGMC may finally operate the country's on-line lottery system and that the corresponding
implementing contract would be submitted for final clearance and approval by the Chief Executive.

On 4 November 1993, KILOSBAYAN sent an open letter to Presidential Fidel V. Ramos strongly opposing the setting up to the on-
line lottery system on the basis of serious moral and ethical considerations. Petitioners also submit that the PCSO cannot validly enter
into the assailed Contract of Lease with the PGMC because it is an arrangement wherein the PCSO would hold and conduct the on-
line lottery system in "collaboration" or "association" with the PGMC, in violation of Section 1(B) of R.A. No. 1169, as amended by
B.P. Blg. 42, which prohibits the PCSO from holding and conducting charity sweepstakes races, lotteries, and other similar activities
"in collaboration, association or joint venture with any person, association, company or entity, foreign or domestic." Petitioner seeks to
prohibit and restrain the implementation of the "Contract of Lease" executed by the Philippine Charity Sweepstakes Office (PCSO)
and the Philippine Gaming Management Corporation (PGMC) in connection with the on- line lottery system, also known as "lotto."


Whether or not the oppositions made by the petitioner was valid.


The Court agrees with the petitioners and the challenged Contract of Lease executed by respondent PCSO and respondent PGMC is
declared to be contrary to law and invalid. The preliminary issue on the locus standi of the petitioners which was raised by the
respondents should be resolved in their favor. The Court finds this petition to be of transcendental importance to the public. The issues
it raised are of paramount public interest and of a category even higher than those involved in many of the aforecited cases. The
ramifications of such issues immeasurably affect the social, economic, and moral well-being of the people even in the remotest
barangays of the country and the counter-productive and retrogressive effects of the envisioned on-line lottery system are as
staggering as the billions in pesos it is expected to raise. The legal standing then of the petitioners deserves recognition and, in the
exercise of its sound discretion, this Court hereby brushes aside the procedural barrier which the respondents tried to take advantage
On the substantive issue regarding the provision in Section 1 of R.A. No. 1169, as amending by B.P. Blg. 42, is indisputably clear
with respect to its franchise or privilege "to hold and conduct charity sweepstakes races, lotteries and other similar activities."
Meaning, the PCSO cannot exercise it "in collaboration, association or joint venture" with any other party. Thus, the challenged
Contract of Lease violates the exception provided for in paragraph B, Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, and is,
therefore, invalid for being contrary to law.

7. Kilosbayan, Incorporated, et. al. vs. Teofisto Guingona, PCSO and PGMC
05 May 1994 G.R. No. 113375


The PCSO decided to establish an online lottery system for the purpose of increasing its revenue base and diversifying its sources of
funds. Sometime before March 1993, after learning that the PCSO was interested in operating on an online lottery system, the Berjaya
Group Berhad, with its affiliate, the International Totalizator Systems, Inc. became interested to offer its services and resources to
PCSO. Considering the citizenship requirement, the PGMC claims that Berjaya Group undertook to reduce its equity stakes in PGMC
to 40% by selling 35% out of the original 75% foreign stockholdings to local investors. An open letter was sent to President Ramos
strongly opposing the setting up of an online lottery system due to ethical and moral concerns, however the project pushed through.


1. Whether the petitioners have locus standi (legal standing); and

2. Whether the Contract of Lease is legal and valid in light of Sec. 1 of R.A. 1169 as amended by B.P. Blg. 42.

1. The petitioners have locus standi due to the transcendental importance to the public that the case demands. The
ramifications of such issues immeasurably affect the social, economic and moral well-being of the people. The legal standing
then of the petitioners deserves recognition, and in the exercise of its sound discretion, the Court brushes aside the procedural
2. Sec. 1 of R.A. No. 1169, as amended by B.P. Blg. 42, prohibits the PCSO from holding and conducting lotteries in
collaboration, association or joint venture with any person, association, company, or entity, whether domestic or foreign.
The language of the section is clear that with respect to its franchise or privilege to hold and conduct charity sweepstakes
races, lotteries and other similar activities, the PCSO cannot exercise it in collaboration, association or joint venture with
any other party. This is the unequivocal meaning and import of the phrase. By the exception explicitly made, the PCSO
cannot share its franchise with another by way of the methods mentioned, nor can it transfer, assign or lease such franchise.