Kilosbayan vs. Morato (G.R. No. 118910. July 17, 1995)

25 Apr

MANUEL L. MORATO, in his capacity as Chairman of the Philippine Charity Sweepstakes Office, and the PHILIPPINE GAMING MANAGEMENT CORPORATION, respondents.

Ponente: MENDOZA


[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.


Whether or not the ELA between the Philippine Charity Sweepstakes Office and the Philippine Gaming Management Corp. is invalid.


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

x x x

(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;

(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 (ELA) in question did not have to be submitted to public bidding as a condition for its validity.


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.


PADILLA, concurring

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

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 KilosbayanInc., 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, specially the lawyers and litigants, in the certainty and stability of the pronouncements of this Court. It opens the floodgates to endless litigations for re-examination of such pronouncements and weakens this Court’s judicial and moral authority to demand from lower courts obedience thereto and to impose sanctions for their opposite conduct.


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One response to “Kilosbayan vs. Morato (G.R. No. 118910. July 17, 1995)

  1. jonah besas

    June 14, 2014 at 2:32 pm

    thank you for the information


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