KilosBayan v Guingona

Facts: On 21 October 1993, the Office of the President announced that it had given
the respondent PGMC the go-signal to operate the country's on-line lottery system
and that the corresponding implementing contract would be submitted not later
than 8 November 1993 "for final clearance and approval by the Chief Executive."
The petitioners raise the following points of law to wit:
a) Under Section 1 of the Charter of the PCSO, the PCSO is prohibited from
holding and conducting Lotteries 'in collaboration, association or joint venture with
any person, association, company or entity';
b) Under Act No. 3846 and established jurisprudence, a Congressional
franchise is required before any person may be allowed to establish and operate
said telecommunications system;
c) Under Section 11, Article XII of the Constitution, a less than 60% Filipinoowned and/or controlled corporation, like the PGMC, is disqualified from operating a
public service, like the said telecommunications system; and
d) Respondent PGMC is not authorized by its charter and under the Foreign
Investment Act (R.A. No. 7042) to install, establish and operate the on-line Lotto and
telecommunications systems."
Considering the above citizenship requirement, the PGMC claims that the 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.
Issue: In the deliberation on this case on 26 April 1994, the issues are regarding:
(a) the locus standi of the petitioners, and
(b) the legality and validity of the Contract of Lease in the light of Section 1 of
R.A. No. 1169, as amended by B.P. Blg. 42, which 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."

Held: Requirement of standing was waived by the Court. (a)

WHEREFORE, the instant petition is hereby GRANTED and the challenged Contract
of Lease executed on 17 December 1993 by respondent Philippine Charity
Sweepstakes Office (PCSO) and respondent Philippine Gaming Management
Corporation (PGMC) is hereby DECLARED contrary to law and invalid.

The Temporary Restraining Order issued on 11 April 1994 is hereby MADE

PERMANENT.
Ratio: A party's standing before this Court is a procedural technicality which it may,
in the exercise of its discretion, set aside in view of the importance of the issues
raised. In the landmark Emergency Powers Cases, this Court brushed aside this
technicality because "the transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure. (a)
The actual lessor in this case is the PCSO and the subject matter thereof is its
franchise to hold and conduct lotteries since it is, in reality, the PGMC which
operates and manages the on-line lottery system for a period of eight years.

As may be expected, it will induce in PGMC an active interest and participation in

the success of PCSO that is not expected of an ordinary detached lessor who gets to
be paid his rental fee whether the lessee's business prospers or not. PGMC's
share in the operation depends on its own performance and the effectiveness of its
collaboration with PCSO. Although the contract pretends otherwise, PGMC is a coinvestor with PCSO in what is practically, if not in a strictly legal sense, a joint
venture.