KILOSBAYAN v GUINGONA, JR

232 SCRA 110 Business Organization Corporation Law PCSOs Charter

In 1993, the Philippine Charity Sweepstakes Office decided to put up an on-line lottery system which will establish a
national network system that will in turn expand PCSOs source of income.
A bidding was made. Philippine Gaming Management Corporation (PGMC) won it. A contract of lease was awarded in
favor of PGMC.
Kilosbayan opposed the said agreement between PCSO and PGMC as it alleged that:
1. PGMC does not meet the nationality requirement because it is 75% foreign owned (owned by a Malaysian firm
Berjaya Group Berhad);
2. PCSO, under Section 1 of its charter (RA 1169), is prohibited from holding and conducting lotteries in collaboration,
association or joint venture with any person, association, company or entity;
3. The network system sought to be built by PGMC for PCSO is a telecommunications network. Under the law (Act No.
3846), a franchise is needed to be granted by the Congress before any person may be allowed to set up such;
4. PGMCs articles of incorporation, as well as the Foreign Investments Act (R.A. No. 7042) does not allow it to install,
establish and operate the on-line lotto and telecommunications systems.
PGMC and PCSO, through Teofisto Guingona, Jr. and Renato Corona, Executive Secretary and Asst. Executive
Secretary respectively, alleged that PGMC is not a collaborator but merely a contractor for a piece of work, i.e., the
building of the network; that PGMC is a mere lessor of the network it will build as evidenced by the nature of the
contract agreed upon, i.e., Contract of Lease.
ISSUE: Whether or not Kilosbayan is correct.
HELD: Yes, but only on issues 2, 3, and 4.
1. On the issue of nationality, it seems that PGMCs foreign ownership was reduced to 40% though.
2. On issues 2, 3, and 4, Section 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. There is undoubtedly a collaboration between PCSO and PGMC and not merely a
contract of lease. The relations between PCSO and PGMC cannot be defined simply by the designation they used,
i.e., a contract of lease. Pursuant to the wordings of their agreement, PGMC at its own expense shall build, operate,
and manage the network system including its facilities needed to operate a nationwide online lottery system. PCSO
bears no risk and all it does is to provide its franchise in violation of its charter. Necessarily, the use of such
franchise by PGMC is a violation of Act No. 3846.

KILOSBAYAN v MORATO
G.R. No. 118910. November 16, 1995.

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: ELA was same to the Contract of Lease.. It is still violative of PCSO's charter. It is violative of

the law regarding public bidding. It violates Sec. 2(2) of Art. 9-D of the 1987 Constitution. Standing can no longer be
questioned because it has become the law of the case Respondent's reply: ELA is different from the Contract of
Lease. There is no bidding required. The power to determine if ELA is advantageous is vested in the Board of
Directors of PCSO. PCSO does not have funds. Petitioners seek to further their moral crusade. Petitioners do not
have a legal standing because they were not parties to the contract
ISSUES:
Whether or not the petitioners have standing?
HELD:
NO. 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. LAW OF THE
CASE cannot also apply. Since the present case is not the same one litigated by theparties 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. 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. Since ELA is a different contract, the previous decision does not preclude
determination of the petitioner's standing. 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.