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KILOSBAYAN, INCORPORATED, vs. MANUEL L.

MORATO
Facts:
1. GR 113375 (KIlosbayan vs. Guingona) held invalidity of the contract between Philippine Charity
Sweepstakes Office (PCSO) and the privately owned Philippine Gaming Management Corporation (PGMC)
for the operation of a nationwide on-line lottery system. The contract violated the provision in the PCSO
Charter which prohibits PCSO from holding and conducting lotteries through a collaboration, association, or
joint venture.
2. Both parties again signed an Equipment Lease Agreement (ELA) for online lottery equipment and accessories
on January 25, 1995. The agreement are as follow:
a) Rental is 4.3% of gross amount of ticket sales by PCSO at which in no case be less than an annual rental
computed at P35,000 per terminal in commercial operation.
b) Rent is computed bi-weekly.
c) Term is 8 years.
d) PCSO is to employ its own personnel and responsible for the facilities.
e) Upon expiration of term, PCSO can purchase the equipment at P25M.
3. Kilosbayan again filed a petition to declare amended ELA invalid because:
a. It is the same as the old contract of lease.
b. It is still violative of PCSOs charter.
c. It is violative of the law regarding public bidding. It has not been approved by the President and it is not
most advantageous to the government.
d) PCSO and PGMC filed separate comments
a. ELA is a different lease contract with none of the vestiges in the prior contract.
b. ELA is not subject to public bidding because it fell in the exception provided in EO No. 301.
c. Power to determine if ELA is advantageous vests in the Board of Directors of PCSO.
d. Lack of funds. PCSO cannot purchase its own online lottery equipment.
e. Petitioners seek to further their moral crusade.
f. Petitioners do not have a legal standing because they were not parties to the contract.

Issues:
1. Whether or not petitioner Kilosbayan, Incorporated has a legal standing to sue.
2. Whether or not the ELA between PCSO and PGMC in operating an online lottery is valid.

Rulings:
In the resolution of the case, the Court held that:
1. Petitioners do not have a legal standing to sue.
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 (opinion delivered on a former appeal) 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 OF JUDGMENT 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
petitioners 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 of interest.
f) Question of contract of law: The real parties are those who are parties to the agreement or are bound
either principally 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.
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.