KILOSBAYAN v.

MORATO
G.R. No. 118910; July 17, 1995

KILOSBAYAN, INCORPORATED, et al. ​petitioners ​vs. MANUEL L. MORATO, in his capacity

as Chairman of the Philippine Charity Sweepstakes Office, and the PHILIPPINE GAMING
MANAGEMENT CORPORATION, respondents.

Ponente: Mendoza, ​J.

FACTS:

The Kilosbayan, Inc., petitioner, is an organization composed of civic-spirited citizens, pastors,

priests, nuns and lay leaders who are committed to the cause of truth, justice, and national
renewal. Its trustees are also suing in their individual and collective capacities as "taxpayers and
concerned citizens." The other petitioners (Sen. Freddie Webb, Sen. Wigberto Tañada and Rep.
Joker P. Arroyo) are members of the Congress suing as such and as "taxpayer and concerned
citizens.”

As such, The Philippine Charity Sweepstakes Office (PCSO) and Philippine Gaming
Management Corporation (PGMC) signed an Equipment Lease Agreement (ELA), wherein
PGMC leased online lottery equipment and other accessories to PCSO. Petitioners seek
reconsideration of ​Kilosbayan v. Guigona and filed a petition to invalidate the ELA on the ground
that the ELA is violative of the PCSO Charter, which states that it cannot hold and conduct
charity sweepstakes, lotteries and other similar activities in collaboration, association, or joint
venture with any other party because of the clause “except for the activities mentioned in the
preceding paragraph (A)” in paragraph B of Sec. 1 of RA 1169 as amended by BP 42.

The decision in the ​Kilosbayan v. Guigona w ​ as a split decision of 7-6. However, Two new
members of the Court did not consider themselves bound by the decision, and as such, joined
the dissenters, which overruled the previous decision of the Court.

Consequently, petitioners seek reconsideration of the decision in this case, insisting that the first
case has already settled (1) whether petitioner Kilosbayan, Inc. has a standing to sue and (2)
whether under its charter (R.A. No. 1169, as amended) the Philippine Charity Sweepstakes
Office can enter into any form of association or collaboration with any party in operating an
on-line lottery. As such, the petitioners averred ​these questions can no longer be reopened​.

Petitioners allege that a ​Freudian slip exists, finding motives to impute some members of the
Court. To which the Court answered, that the reason for the reexamination of the two questions
is due to the conviction on the five members of the Court at the time they dissented in the first
case, and the two new members, that the previous ruling was erroneous ​and its reexamination
is not barred by ​stare decisis​, r​ es judicata ​or conclusiveness of judgment, or law of the case.
It is argued that a reexamination of the two questions is barred because the PCSO and the
PGMC made a "​formal commitment” n ​ ot to ask for a reconsideration of the Decision in the first
lotto case and instead submit a new agreement that would be in conformity with the PCSO
Charter (R.A. No. 1169, as amended) and with the Decision of the Supreme Court in the first
Kilosbayan case against on-line, hi-tech lotto."

However, there was no “formal commitment”, but only a manifestation not to ask for a
reconsideration of the first case. Even if the parties made a "formal commitment," the six (6)
dissenting Justices certainly could not be bound thereby not to insist on their contrary view on
the question of standing. Much less were the two new members bound by any "formal
commitment" made by the parties.

As such, the possibility of change in the rule as a result of change in membership was accepted
as a sufficient reason for finding good faith and lack of criminal intent on the part of the accused.
Indeed, a change in the composition of the Court could prove the means of undoing an
erroneous decision.

ISSUE:
Whether petitioners are the real parties-in-interest? NO.

SUBJECT TO STATUTORY CONSTRUCTION:

Rule 3, Sec. 2 of the Rules of Court requires that "Every action must be prosecuted and
defended in the name of the real party-in-interest."

HELD:

The Petition seeking to declare the ELA invalid between the PCSO and the PGMC is dismissed
because the petitioners have neither standing to bring this suit nor substantial interest to make
them real parties in interest within the meaning of Rule 3, Sec. 2;

Kilosbayan, ​et al. did not show what particular interest they have for bringing this suit. It does
not detract from the high regard for petitioners as civic leaders to say that their interest falls
short of that required to maintain an action under the Rule 3, Sec. 2. Furthermore, the
petitioners in invoking provisions of the Principles and State Policies in the Constitution (Secs.
5, 12, 13, 17) are not self executing provisions. They do not embody judicially enforceable
constitutional rights but guidelines for legislation.

It was also dismissed because the ELA is valid as a lease contract under the Civil Code and is
not contrary to the charter of PCSO. It has authority to enter into a contract for the holding of
online lottery so long as it itself holds or conducts such lottery whether alone or in association,
collaboration or joint venture with another party. Also, the ELA in question did not have to be
submitted to the public bidding as a condition for its validity.
IN RELATION TO THE TOPIC (JUDICIAL CONSTRUCTION, REQUISITES FOR JUDICIAL
REVIEW)
There’s a difference between legal standing and real party-in-interest.

Legal standing ​is a concept in constitutional law (but in this case, no constitutional question is
actually involved). It is where such parties have alleged such a personal stake in the outcome of
the controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of difficult constitutional
questions.

The interest of the person assailing the constitutionality of a statute must be direct and personal.
He must be able to show, not only the law is invalid, but also that he has sustained or is in
immediate danger of sustaining some direct injury as a result of its enforcement, and not merely
that he suffers thereby in some indefinite way. It must appear that the person complaining has
been or is about to be denied some right or privilege to which he is lawfully entitled or that he is
about to be subjected to some burdens or penalties by reason of the statute complained of.

Whereas ​real party-in-interest ​is the capacity of the party to sue. It is where the party is the
one who would be benefited or injured by the judgment, or the 'party entitled to the avails of the
suit.

In action for annulment of contracts such as this action, ​the real parties are those who are
parties to the agreement or are bound 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 even though they did not intervene in it or who
claim a right to take part in a public bidding but have been illegally excluded from it.

These are parties with "a ​present substantial interest​, as distinguished from a mere
expectancy or future, contingent, subordinate, or consequential interest. The phrase 'present
substantial interest' more concretely is meant such interest of a party in the subject matter of
action as will entitle him, under the substantive law, to recover if the evidence is sufficient, or
that he has the legal title to demand and the defendant will be protected in a payment by him.
But petitioners do not have such present substantial interest in the ELA as would entitle them to
bring this suit.