THE PETITIONERS HERE ARE THE KILOSBAYAN, INCORPORATED (The Kilosbayan, Inc.

is an organization described in its petition as "composed of civic-spirited citizens, pastors, priests, nuns and lay leaders who are committed to the cause of truth, justice, and national renewal." Its trustees are also suing in their individual and collective capacities as "taxpayers and concerned citizens." THEN WE ALSO HAVE THESE PEOPLE AS PETITIONERS NAMELY: JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, SEN. FREDDIE WEBB, SEN. WIGBERTO TAADA, REP. JOKER P. ARROYO, Sen. Freddie Webb, Sen. Wigberto Taada and Rep. Joker P. Arroyo are members of Congress charging as such and as "taxpayers and concerned citizens." MEANWHILE, THE RESPONDENT IS MANUEL L. MORATO, in his capacity as Chairman of the Philippine Charity Sweepstakes Office, and the PHILIPPINE GAMING MANAGEMENT CORPORATION, THESE ARE THE FACTS OF THIS CASE: Based on the result of decision in G.R. No. 113375 (Kilosbayan, Incorporated v. Guingona) nullifying the Contract of Lease between the Philippine Charity Sweepstakes Office (PCSO) and the Philippine Gaming Management Corp. (PGMC) on the ground that it had been made in violation of the charter of the PCSO, the parties entered into negotiations for a new agreement that would be "consistent with the latter's [PCSO] charter . . . and conformable to the Honorable Court's Decision." On January 25, 1995, the parties signed an Equipment Lease Agreement (called ELA) whereby the PGMC leased on-line lottery equipment and accessories to the PCSO in consideration of a rental equivalent to 4.3% of the gross amount of ticket sales derived by the PCSO from the operation of the lottery which in no case shall be less than an annual rental computed at P35,000.00 per terminal in commercial operation. The rental is to be computed and paid bi-weekly. In the event the bi-weekly rentals in any year fall short of the annual minimum fixed rental thus computed, the PCSO agrees to pay the deficiency out of the proceeds of its current ticket sales. Under the law, 30% of the net receipts from the sale of tickets is allotted to charity. (R.A. No. 1169, 6 (B)) In the operation of the lottery, the PCSO is to employ its own personnel. (Par. 5) It is responsible for the loss of, or damage to, the equipment arising from any cause and for the cost of their maintenance and repair. (Pars. 7-8) Upon the expiration of the lease, the PCSO has the option to purchase the equipment for the sum of P25 million. On February 21, 1995 petitioners seek to declare the ELA invalid on the ground that it is substantially the same as the Contract of Lease nullified in the first case. Petitioners argue: 1. THE AMENDED ELA IS NULL AND VOID SINCE IT IS BASICALLY OR SUBSTANTIALLY THE SAME AS OR SIMILAR TO THE OLD LEASE CONTRACT AS REPRESENTED AND ADMITTED BY RESPONDENTS PGMC AND PCSO. 2. ASSUMING ARGUENDO, THAT THE AMENDED ELA IS MATERIALLY DIFFERENT FROM THE OLD LEASE CONTRACT, THE AMENDED ELA IS NEVERTHELESS NULL AND VOID FOR BEING INCONSISTENT WITH AND VIOLATIVE OF PCSO'S CHARTER AND THE DECISION OF THIS HONORABLE COURT OF MAY 5, 1995. 3. THE AMENDED EQUIPMENT LEASE AGREEMENT IS NULL AND VOID FOR BEING VIOLATIVE OF THE LAW ON PUBLIC BIDDING OF CONTRACTS FOR FURNISHING SUPPLIES, MATERIALS AND EQUIPMENT TO THE GOVERNMENT AS WELL AS THE "RULES AND REGULATIONS FOR THE PREVENTION OF IRREGULAR, UNNECESSARY, EXCESSIVE OR EXTRAVAGANT (IUEE) EXPENDITURES PROMULGATED UNDER COMMISSION ON AUDIT CONSIDERING THAT IT WAS AWARDED AND EXECUTED WITHOUT THE PUBLIC BIDDING REQUIRED UNDER SAID LAWS AND COA RULES AND REGULATIONS, IT HAS NOT BEEN APPROVED BY THE PRESIDENT OF THE PHILIPPINES, AND IT IS NOT MOST ADVANTAGEOUS TO THE GOVERNMENT. 4. THE ELA IS VIOLATIVE OF SECTION 2(2), ARTICLE IX-D OF THE 1987 CONSTITUTION IN RELATION TO COA CIRCULAR NO. 85-55-A. Petitioners invoke the following Principles and State Policies set forth in Art. II SECTION 5 of the Constitution : The maintenance of peace and order, the protection of life, liberty, and property, and the promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy. (5). The natural and primary right and duty of parents in the rearing of the youth for civic efficiency and the development of moral character shall receive the support of the Government. (12) The State recognizes the vital role of the youth in nation-building and shall promote their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. (13)

However, The PCSO and PGMC filed separate comments in which they question the petitioners' standing to bring this suit. They maintain (1) that the 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. Respondents question the right of petitioners to bring this suit on the ground that, not being parties to the contract of lease which they seek to nullify, they have no personal and substantial interest likely to be injured by the enforcement of the contract. Petitioners on the other hand contend that the ruling in the previous case sustaining their standing to challenge the validity of the first contract for the operation of lottery is now the "law of the case" and therefore the question of their standing can no longer be reopened. Neither the doctrine of stare decisis nor that of "law of the case," nor that of conclusiveness of judgment poses a barrier to a determination of petitioners' right to maintain this suit. ISSUE: The issues: (a) WON the two actions involve claims that are substantially unrelated (b) WON the petitioners are the "real parties in interest" within the meaning of Rule 3, 2 of the Rules of Court which requires that "Every action must be prosecuted and defended in the name of the real party in interest." (c) WON petitioners have a legal right which has been violated. HELD: A. YES. THE TWO ACTIONS INVOLVE CLAIMS THAT ARE SUBSTANTIALLY UNRELATED. Petitioners argue that inquiry into their right to bring this suit is barred by the doctrine of "law of the case." We do not think this doctrine is applicable considering the fact that while this case is a sequel to G.R. No. 113375, it is not its continuation. The doctrine applies only when a case is before a court a second time after a ruling by an appellate court. Thus in People v. Pinuila, 103 Phil. 992, 999 (1958), it was stated: "Law of the case" has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. (21 C. J. S. 330) In accordance with the general rule stated in Section 1821, where, after a definite determination, the court has remanded the cause for further action below, it will refuse to examine question other than those arising subsequently to such determination and remand, or other than the propriety of the compliance with its mandate; and if the court below has proceeded in substantial conformity to the directions of the appellate court, its action will not be questioned on a second appeal . . . As this Court explained in another case, "The law of the case, as applied to a former decision of an appellate court, merely expresses the practice of the courts in refusing to reopen what has been decided. It differs from res judicata in that the conclusiveness of the first judgment is not dependent upon its finality. The first judgment is generally, if not universally, not final. It relates entirely to questions of law, and is confined in its operation to subsequent proceedings in the same case. . . ." (Municipality of Daet v. Court of Appeals, 93 SCRA 503, 521 (1979) It follows that since the present case is not the same one litigated by the parties before in G.R. No. 113375, the ruling there cannot in any sense be regarded as "the law of this case." The parties are the same but the cases are not. Nor is inquiry into petitioners' right to maintain this suit foreclosed by the related doctrine of "conclusiveness of judgment." 1 According to the doctrine, an issue actually and directly passed upon and determined in a former suit cannot again be drawn in question in any future action between the same parties involving a different cause of action. It has been held that the rule on conclusiveness of judgment or preclusion of issues or collateral estoppel does not apply to issues of law, at least when substantially unrelated claims are involved. For income tax purposes what is decided with respect to one contract is not

conclusive as to any other contract which was not then in issue, however similar or identical it may be. The rule on collateral estoppel, it was held, "must be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged." (333 U.S. at 599-600, 92 L.Ed. at 907) Consequently, "if the relevant facts in the two cases are separate, even though they be similar or identical, collateral estoppel does not govern the legal issues which occur in the second case. Thus the second proceeding may involve an instrument or transaction identical with, but in a form separable from, the one dealt with in the first proceeding. In that situation a court is free in the second proceeding to make an independent examination of the legal matters at issue. . . ." (333 U.S. at 601, 92 L.Ed at 908)

B. NO. BECAUSE Legal standing is not even the issue in this case, since standing is a concept in constitutional law and here no constitutional question is actually involved. Stare decisis is usually the wise policy. But in this case, concern for stability in decisional law does not call for adherence to what has recently been laid down as the rule. The previous ruling sustaining petitioners' intervention may itself be considered a departure from settled rulings on "real parties in interest" because no constitutional issues were actually involved. Just five years before that ruling this Court had denied standing to a party who, in questioning the validity of another form of lottery, claimed the right to sue in the capacity of taxpayer, citizen and member of the Bar. (Valmonte v. Philippine Charity Sweepstakes, G.R. No. 78716, Sept. 22, 1987) Only recently this Court held that members of Congress have standing to question the validity of presidential veto on the ground that, if true, the illegality of the veto would impair their prerogatives as members of Congress. Conversely if the complaint is not grounded on the impairment of the powers of Congress, legislators do not have standing to question the validity of any law or official action. (Philippine Constitution Association v. Enriquez, 235 SCRA 506 (1994)). The question whether petitioners have standing to question the Equipment Lease Agreement or ELA is a legal question. As will presently be shown, the ELA, which petitioners seek to declare invalid in this proceeding, is essentially different from the 1993 Contract of Lease entered into by the PCSO with the PGMC. Hence the determination in the prior case (G.R. No. 113375) that petitioners had standing to challenge the validity of the 1993 Contract of Lease of the parties does not preclude determination of their standing in the present suit. Petitioners do not in fact show what particularized interest they have for bringing this suit. It does not detract from the high regard for petitioners as civic leaders to say that their interest falls short of that required to maintain an action under Rule 3, 2. C. NO.BECAUSE These are not, however, self executing provisions, the disregard of which can give rise to a cause of action in the courts. They do not embody judicially enforceable constitutional rights but guidelines for legislation. In actions for the annulment of contracts, such as this action, 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 even though they did not intervene in it (Ibaez v. Hongkong & Shanghai Bank, 22 Phil. 572 (1912)), or who claim a right to take part in a public bidding but have been illegally excluded from it. (See De la Lara Co., Inc. v. Secretary of Public Works and Communications, G.R. No. L-13460, Nov. 28, 1958) These are parties with "a present substantial interest, as distinguished from a mere expectancy or future, contingent, subordinate, or consequential interest. . . . The phrase 'present substantial interest' more concretely is meant such interest of a party in the subject matter of action as will entitle him, under the substantive law, to recover if the evidence is sufficient, or that he has the legal title to demand and the defendant will be protected in a payment to or recovery by him." (1 MORAN, COMMENTS ON THE RULES OF COURT 154-155 (1979)) Thus, inGonzales v. Hechanova, 118 Phil. 1065 (1963) petitioner's right to question the validity of a government contract for the importation of rice was sustained because he was a rice planter with substantial production, who had a right under the law to sell to the government. But petitioners do not have such present substantial interest in the ELA as would entitle them to bring this suit. Denying to them the right to intervene will not leave without remedy any perceived illegality in the execution of government contracts. Questions as to the nature or validity of public contracts or the necessity for a public bidding before they may be made can be raised in an appropriate case before the Commission on Audit or before the Ombudsman. The Constitution requires that the Ombudsman and his deputies, "as protectors of the people shall act promptly on complaints filed in any form or manner against public officials or employees of the government, or any subdivision, agency or instrumentality thereof including government-owned or controlled corporations." (Art. XI, 12) In addition, the Solicitor General is authorized to bring an action for quo warranto if it should be thought that a government corporation, like the PCSO, has offended against its corporate charter or misused its franchise. (Rule 66, 2 (a) (d)) WHEN IT COMES TO THE MERITS OF PETITIONERS CLAIM TO CONSTITUTE THIS ACTION:

II. THE EQUIPMENT LEASE AGREEMENT This Court ruled in the previous case that the Contract of Lease, which the PCSO had entered into with the PGMC on December 17, 1993 for the operation of an on-line lottery system, was actually a joint venture agreement or, at the very least, a contract involving "collaboration or association" with another party and, for that reason, was void. The Court noted the following features of the contract: (1) The PCSO had neither funds nor expertise to operate the on-line lottery system so that it would be dependent on the PGMC for the operation of the lottery system. (2) The PGMC would exclusively bear all costs and expenses for printing tickets, payment of salaries and wages of personnel, advertising and promotion and other expenses for the operation of the lottery system. Mention was made of the provision, which the Court considered "unusual in a lessor-lessee relationship but inherent in a joint venture," for the payment of the rental not at a fixed amount but at a certain percentage (4.9%) of the gross receipts from the sale of tickets, and the possibility that "nothing may be due or demandable at all because the PGMC binds itself to 'bear all risks if the revenue from the ticket sales, on an annualized basis, are insufficient to pay the entire prize money.'" (232 SCRA at 147) (3) It was only after the term of the contract that PCSO personnel would be ready to operate the lottery system themselves because it would take the entire eight-year term of the contract for the technology transfer to be completed. In the view of the Court, this meant that for the duration of the contract, the PGMC would actually be the operator of the lottery system, and not simply the lessor of equipment. The Court considered the Contract of Lease to be actually a joint venture agreement. From another angle, it said that the arrangement, especially the provision that all risks were for the account of the PGMC, was in effect a lease by the PCSO of its franchise to the PGMC. WITH REGARDS TO THE INTERPRETATION OF 1 OF R.A. 1169 In G.R. No. 113375 it was held that the 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 races, lotteries and other similar activities. This interpretation must be reexamined especially in determining whether petitioners have a cause of action. We hold that the charter of the PCSO does not absolutely prohibit it from holding or conducting lottery "in collaboration, association or joint venture" with another party. What the PCSO is prohibited from doing is to invest in a business engaged in sweepstakes races, lotteries and similar activities, and it is prohibited from doing so whether in "collaboration, association or joint venture" with others or "by itself." The reason for this is that these are competing activities and the PCSO should not invest in the business of a competitor. It will be helpful to quote the pertinent provisions of R.A. No. 1169, as amended by B.P. Blg. 42: . 1 The Philippine Charity Sweepstakes Office. The Philippine Charity Sweepstakes Office, hereinafter designated the Office, shall be the principal government agency for raising and providing for funds for health programs, medical assistance and services and charities of national character, and as such shall have the general powers conferred in section thirteen of Act Numbered One Thousand Four Hundred Fifty-Nine, as amended, and shall have the authority: A. To hold and conduct charity sweepstakes races, lotteries and other similar activities, in such frequency and manner, as shall be determined, and subject to such rules and regulations as shall be promulgated by the Board of Directors. B. Subject to the approval of the Minister of Human Settlements, to engage in health and welfare-related investments, programs, projects and activities which may be profit-oriented, by itself or in collaboration, association or joint venture with any person, association, company or entity, whether domestic or foreign, except for the activities mentioned in the preceding paragraph (A), for the purpose of providing for permanent and continuing sources of funds for health programs, including the expansion of existing ones, medical assistance and services, and/or charitable grants: Provided, That such investments will not compete with the private sector in areas where investments are adequate as may be determined by the National Economic and Development Authority. When parsed, it will be seen that 1 grants the PCSO authority to do any of the following: (1) to hold or conductcharity sweepstakes races, lotteries and similar activities; and/or (2) to invest whether "by itself or in collaboration, association or joint venture with any person, association, company or entity" in any "health and welfare-related investments, programs, projects and activities which may be profit oriented," except "the activities mentioned in the preceding paragraph (A)," i.e., sweepstakes races, lotteries and similar activities. The PCSO is prohibited from investing in "activities mentioned in the preceding paragraph (A)" because, as already stated, these are competing activities. WITH REGARDS TO THE REQUIREMENT OF PUBLIC BIDDING 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. These provisions state: 6. Guidelines for Lease Contracts. Any provisions of law, decree, executive order or other issuances to the contrary notwithstanding, the Department of Public Works and Highways (DPWH), with respect to the leasing of privately-owned buildings or spaces for government use or of government-owned buildings or space for private use, shall formulate uniform standards or guidelines for

determining the reasonableness of the terms of lease contracts and of the rental rates involved. 7. Jurisdiction Over Lease Contracts. The heads of agency intending to rent privately-owned buildings or spaces for their use, or to lease out government-owned buildings or spaces for private use, shall have authority to determine the reasonableness of the terms of the lease and the rental rates thereof, and to enter in such lease contracts without need of prior approval by higher authorities, subject to compliance with the uniform standards or guidelines established pursuant to Section 6 hereof by the DPWH and to the audit jurisdiction of COA or its duly authorized representative in accordance with existing rules and regulations. For the foregoing reasons, (1) that petitioners have neither standing to bring this suit nor substantial interest to make them real parties in interest within the meaning of Rule 3 2; (2) that a determination of the petitioners' right to bring this suit is not precluded or barred by the decision in the prior case between the parties; (3) that the Equipment Lease Agreement of January 25, 1995 is valid as a lease contract under the Civil Code and is not contrary to the charter of the Philippine Charity Sweepstakes Office; (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 itselfholds or conducts such lottery; and (5) That the Equipment Lease Agreement in question did not have to be submitted to public bidding as a condition for its validity. WHEREFORE, the Petition for Prohibition, Review and/or Injunction seeking to declare the Equipment Lease Agreement between the Philippine Charity Sweepstakes Office and the Philippine Gaming Management Corp. invalid is DISMISSED.