Kilosbayan vs. Morato July 17, 1995 Mendoza, J. Petition for prohibition, review and/or Injunction FACTS: In Jan.

25, 1995, PCSO and PGMC signed an Equipment Lease Agreement (ELA) wherein PGMC leased online lottery equipment and accessories to PCSO. (Rental of 4.3% of the gross amount of ticket or at least P35,000 per terminal annually). 30% of the net receipts is allotted to charity. Term of lease is for 8 years. PCSO is to employ its own personnel and responsible for the facilities. Upon the expiration of lease, PCSO may purchase the equipment for P25 million. Feb. 21, 1995. A petition was filed to declare ELA invalid because it is the same as the Contract of Lease Petitioner s Contention: 1. ELA was same to the Contract of Lease. 2. It is still violative of PCSO s charter. 3. It is violative of the law regarding public bidding. 4. It violates Sec. 2(2) of Art. 9-D of the 1987 Constitution 5. Standing can no longer be questioned because it has become the law of the case Respondent s reply: 1. ELA is different from the Contract of Lease 2. There is no bidding required 3. The power to determine if ELA is advantageous is vested in the Board of Directors of PCSO 4. PCSO does not have funds 5. Petitioners seek to further their moral crusade 6. Petitioners do not have a legal standing because they were not parties to the contract ISSUES: 1. WON the petitioners have standing? (NO) (a) 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.

(b) LAW OF THE CASE 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. (c) RULE ON CONCLUSIVENESS 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. (d) Since ELA is a different contract, the previous decision does not preclude determination of the petitioner s standing. (e) 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. y 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. y 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. (f) QUESTION of CONTRACT LAW: The real parties are those who are parties to the agreement or arebound 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 xxx. (g) 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. 2. WON ELA is valid? (YES) (a) Fixing the rental rate to a minimum is a matter of business judgment and the Court is not inclined to review.

(b) 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. (c) It is also claimed that ELA is a joint venture agreement. 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. Petitioners have no standing. ELA is a valid lease contract. Petition for prohibition, review and/or injunction is dismissed.

Note: It s important to also mention that the SC, through this case, reversed its Decision in Kilosbayan, Inc vs Guingona. It has to do with the Court s application/interpretation of the exception clause in par B, Sec 1 of the PCSO Charter (RA 1169, as amended by BP 442) and the locus standi of the petitioners. (Recall that Davide justified, in Kilosbayan vs Guingona, the locus standi of the petitioners by saying that the issue is of public interest. These issues affect the social, economic, and moral well-being of the people and the counter-productive and retrogressive effects of the envisioned online lottery are as staggering as the billions of pesos it is expected to raise. Justice Feliciano also further strengthens the locus standi of the petitioners through the ff: -the public character of the funds involved in the lease -PCSO s disregard of the Constitutional provision -lack of other parties in raising the questions that Kilosbayan has raised -wide range impact of the lease)