Professional Documents
Culture Documents
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* EN BANC.
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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 (Ibañez v.
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546
547
or joint venture” with others or “by itself.” The reason for this is
that these are competing activities and the PCSO should not
invest in the business of a competitor.
Same; Same; Same; Same; The prohibition in §1(B) of R.A.
1169 is not so much against the PCSO entering into any
collaboration, association or joint venture with others as against
PCSO investing in the business of another franchise holder which
would directly compete with PCSO’s own charity sweepstakes
races, lotteries or similar activities.—To harmonize pars. (A) and
(B), the latter must be read as referring to the authority of the
PCSO to invest in the business of others. Put in another way, the
prohibition in §1(B) is not so much against the PCSO entering
into any collaboration, association or joint venture with others as
against the PCSO investing in the business of another franchise
holder which would directly compete with PCSO’s own charity
sweepstakes races, lotteries or similar activities. The prohibition
applies whether the PCSO makes the investment alone or with
others.
Same; Same; Same; Same; The contrary construction given
to §1 in the previous decision is based on remarks made by then
Assemblyman, now Mr. Justice, Davide during the deliberations
on what later became B.P. Blg. 42, amending R.A. No. 1169, in
connection with a proposal to give the PCSO the authority “to
engage in any and all investments”—and it is reasonable to
suppose that the members of the Batasan Pambansa, in
approving the amendment, understood it as referring to the
exception to par. (B) of §1 giving the PCSO the power to make
investments.—The contrary construction given to §1 in the
previous decision is based on remarks made by then
Assemblyman, now Mr. Justice, Davide during the deliberations
on what later became B.P. Blg. 42, amending R.A. No. 1169. It
548
PADILLA, J.,Concurring:
549
rate for the use thereof and, as long as PCSO agrees to the
amount of such rentals, as justifying an adequate net return to it,
then the contract is valid and binding between the parties
thereto. This is the essence of freedom to enter into contracts.
Commission on Audit; Judicial Review; Doctrine of Primary
Jurisdiction; The Supreme Court should not preempt the
determination and judgment of the COA on matters which are
within its primary jurisdiction under the Constitution.—On the
allegation of lack of public bidding on the ELA, the Commission
on Audit (COA) has yet to resolve a case where the issue of the
validity of the ELA due to lack of public bidding has been
squarely raised. This matter surfaced during the hearing of the
present case. Needless to say, the Court should not preempt the
determination and judgment of the COA on matters which are
within its primary jurisdiction under the Constitution.
Constitutional Law; Separation of Powers; On the question
as to whether the ELA is grossly disadvantageous to the
FELICIANO, J.,Dissenting:
550
551
REGALADO, J.,Dissenting:
Actions; Res Judicata; Law of the Case; The “law of the case”
may also arise from an original holding of a higher court on a
writ of certiorari, and is binding not only in subsequent appeals
or proceedings in the same case, but also in a subsequent suit
between the same parties.—Accordingly, the “law of the case”
may also arise from an original holding of a higher court on a
writ of certiorari, and is binding not only in subsequent appeals
or proceedings in the same case, but also in a subsequent suit
between the same parties. What I wish to underscore is that
where, as in the instant case, the holding of this highest Court on
a specific issue was handed down in an original action for
certiorari, it has the same binding effect as it would have had if
promulgated in a case on appeal. Furthermore, since in our
jurisdiction an original action for certiorari to control and set
aside a grave abuse of official discretion can be commenced in the
Supreme Court itself, it would be absurd that for its ruling
therein to constitute the law of the case, there must first be a
remand to a lower court which naturally could not be the court of
origin from which the postulated second appeal should be taken.
Same; Same; Same; Constitutional Law; Parties; Locus
Standi; The concept of a cause of action in public interest cases
should not be straightjacketed within its usual narrow confines in
private interest litigations.—It is true that a right of action is the
right or standing to enforce a cause of action. For its purposes,
the majority urges the adoption of the standard concept of a real
party in interest based on his possession of a cause of action. It
could not have failed to perceive, but
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ruling in the first lotto case on the locus standi of the petitioners
and the application or interpretation of the exception clause in
paragraph B, Section 1 of R.A. No. 1169, as amended.
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554
is null and void and cannot adversely affect the rights of third
parties.
Same; Same; Sales; Words and Phrases; “Optional
Contract,” Explained.—An optional contract is a privilege
existing in one person, for which he had paid a consideration,
which gives him the right to buy certain specified property from
another person, if he chooses, at any time within the agreed
period, at a fixed price. Said contract is separate and distinct
contract from the contract which the parties may enter into upon
the consummation of the option. The second paragraph of Article
1479 of the Civil Code expressly provides that “[a]n accepted
unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promissor if the promise is
supported by a consideration distinct from the price.”
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MENDOZA, J.:
(Pars. 1-2)
Under the law, 30% of the net receipts from the sale of
tickets is allotted to charity. (R.A. No. 1169, §6 [B])
The term of the lease is eight (8) years, commencing
from the start of commercial operation of the lottery
equipment first delivered to the lessee pursuant to the
agreed schedule. (Par. 3)
In the operation of the lottery, the PCSO is to employ its
own personnel. (Par. 5) It is responsible for the loss of, or
damage to, the equipment arising from any cause and for
the cost of their maintenance and repair. (Pars. 7-8)
Upon the expiration of the lease, the PCSO has the
option to purchase the equipment for the sum of P25
million.
A copy of the ELA was submitted to the Court by the
PGMC in accordance with its manifestation in the prior
case.
On February 21, 1995 this 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. Petitioners argue:
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I PETITIONERS’ STANDING
bring the suit. The majority was thus a tenuous one that is
not likely to be maintained in any subsequent litigation. In
addition, there have been changes in the membership of
the Court, with the retirement of Justices Cruz and Bidin
and the appointment of the writer of this opinion and
Justice Francisco. Given this fact it is hardly tenable to
insist on the maintenance of the ruling as to petitioners’
standing.
Petitioners argue that inquiry into their right to bring
this suit is barred by the doctrine of “law of the case.” We
do not think this doctrine is applicable considering the fact
that while this case is a sequel to G.R. No. 113375, it is not
its continuation. The doctrine applies only when a case is
before a court a second time after a ruling by an appellate
court. Thus in People v. Pinuila, 103 Phil. 992, 999 (1958),
it was stated:
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court, as the presumption is that all the facts in the case bearing
on the point decided have received due consideration whether all
or none of them are mentioned in the opinion. (5 C.J.S. 1286-87)”
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562
2. RENTAL
567
lease contract but which are now to be borne by the PCSO under
the new
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ELA, not to mention the additional P25 million that the PCSO
has to pay the PGMC if the former exercises its option to
purchase the equipment at the end of the lease period under the
amended ELA.
(Petition, p. 37)
a. The 4.3% rental rate for the equipment is well within the
maximum of 15% net receipts fixed by law;
b. To obviate any violation of the law, it is best to express
large operating costs for budgetary purposes as a
percentage of
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8. REPAIR SERVICES
tion.
We hold that the ELA is a lease contract and that it
contains none of the features of the former contract which
were considered “badges of a joint venture agreement.” To
further find fault with the new contract would be to cavil
and expose the opposition to the contract to be actually an
opposition to lottery under any and all circumstances. But
“[t]he morality of gambling is not a justiciable issue.
Gambling is not illegal per se. . . . It is left to Congress to
deal with the activity as it sees fit.” (Magtajas v. Pryce
Properties Corp. Inc., 234 SCRA 255, 268 (1994). Cf. Lim v.
Pacquing, G.R. No. 115044, Jan. 27, 1995) In the case of
lottery, there is no dispute that, to enable the Philippine
Charity Sweepstakes Office to raise funds for charity,
Congress authorized the Philippine Charity Sweepstakes
Office (PCSO) to hold or conduct lotteries under certain
conditions.
We therefore now consider whether under the charter of
the PCSO any contract for the operation of an on-line
lottery system, which involves any form of collaboration or
association, is prohibited.
In G.R. No. 113375 it was held that the PCSO does not
have the power to enter into any contract which would
involve it in any form of “collaboration, association or joint
venture” for the holding of sweepstakes races, lotteries and
other similar activities. This interpretation must be
reexamined especially in determining whether petitioners
have a cause of action.
We hold that the charter of the PCSO does not
absolutely prohibit it from holding or conducting lottery
“in collaboration, association or joint venture” with another
party. What the PCSO is prohibited from doing is to invest
in a business engaged in sweepstakes races, lotteries and
similar activities, and it is prohibited from doing so
whether in “collaboration, association or joint venture”
with others or “by itself.” The reason for this is that these
are competing activities and the PCSO should not invest in
the business of a competitor.
It will be helpful to quote the pertinent provisions of
R.A. No. 1169, as amended by B.P. Blg. 42:
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concerned; and
f. Whenever the purchase is made from an agency of the
government.
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CONCURRING OPINION
PADILLA, J.:
thus:
FELICIANO, J.,Dissenting:
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1 Kilosbayan, Inc., et al. v. Teofisto Guingona, etc., et al., 232 SCRA 110,
at 153 (1994).
584
“When parsed, it will be seen that under §1, the PCSO is given
authority to do any of the following: (1) to hold or conduct charity
sweepstakes races, lotteries or similar activities; and/or (2) to
invest—whether ‘by itself or in collaboration, association or joint
venture with any person, association, company or entity’ in any
‘health and welfare-related investments, programs, projects and
activities which may be profit-oriented,’ except those which are
engaged in any of ‘the activities mentioned in the preceding
paragraph (A),’ i.e., sweepstakes races, lotteries and similar
activities, for the obvious reason, as already states, that these
are competing activities.” (Underscoring in the original)
586
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588
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“x x x. Had it been [the legislators’] intention to prohibit the PCSO from entering
into any collaboration, association or joint venture with others even in instances
when the sweepstakes races, lotteries or similar activities are operated by it
(‘itself’), they would have made the amendment not in par. (B), but in par. (A), of
§1, as the logical place for the amendment.”
In the very next page, the majority opinion quotes then Assemblyman
Davide, Jr.:
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II
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letter (a) which is the holding and conducting of sweepstakes races, lotteries and other
similar acts.” (Emphases supplied)
It is submitted that Assemblyman Davide’s statement is entirely clear and captures the
essence of the amendment he offered with such economy of words.
590
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4 See, e.g., Beltran v. PAIC Finance Corporation, 209 SCRA 105 (1992);
Investors Finance Corporation v. Court of Appeals, 193 SCRA 701 (1991).
5 The majority also seek to bolster the second proposition by what is
essentially an argumentum ad absurdum. Should rescue operations after a
calamity like an earthquake require the use of heavy equipment, there is
no law that requires the government to go (with or without a public
bidding) shopping for equipment first before commencing such rescue
operations. As a practical matter, the government (through, e.g.,
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honest those who would contract with it. This is the basic
reason why competition through public bidding is the
general rule and not the exception. I fear that the opinion
of my learned brother Justice Mendoza would, in ultimate
effect, stand this rule on its head and make public bidding
the exception rather than the general rule.
III
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the Department of Public Works and Highways) would simply order its
own equipment to be brought forthwith to the scene of the disaster. Or the
government may resort to the “requisition” or the temporary expropriation
of the use of personal property, i.e., heavy equipment, and thereafter pay
compensation for such use.
592
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593
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7 During the oral hearing of this case, at least one Member of the Court
requested counsel for PGMC to enlighten the Court as to the structure of
the rental provisions, that is to say, to indicate to the Court the factors or
kinds of factors deemed relevant in setting the percentage figure
constituting the rental rate. (TSN, 3 March 1995, pp. 47-57) No useful
information was furnished to the Court either during the hearing or in the
pleadings filed thereafter. There has also been no showing of how the
percentage rate and structure of the rental provisions of ELA compare
with the rental provisions in comparable contracts in other parts of the
world.
595
DISSENTING OPINION
REGALADO, J.:
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1 Kilosbayan, Inc., et al. vs. Guingona, Jr., etc., et al., G.R. No. 113375,
May 5, 1994, 232 SCRA 110.
2 Lim, etc., et al. vs. Pacquing, etc., et al., G.R. No. 115044, and
Guingona, Jr., et al. vs. Reyes, et al., G.R. No. 117263, jointly decided on
January 27, 1995.
3 G.R. No. 114222, April 6, 1995.
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4 People vs. Medina, Cal., Cal. Rptr. 630, 635, 492 P.2d 686, cited in
Black’s Law Dictionary, 6th ed., 887.
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5 White vs. Higgins, C.C.A. Mass., 116 F.2d 312; Fleming vs. Campbell,
148 Kan. 516, 83 P.2d 708.
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6 Atchison, T. & S.F. Ry. Co. vs. Railroad Comm. of California, 209 Cal.
460, 288 P. 775.
7 Goodkind vs. Wolkowsky, 147 Fla. 415, 2 So.2d 723; Atlantic Coast
Line R. Co. vs. Sperry Flour Co., 63 Ga. App. 611, 11 S.E. 2d 809.
8 Oglethorpe University vs. City of Atlanta, 180 Ga. 152, 178 S.E. 156.
600
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9 59 Am. Jur. 2d, Parties, 429, citing State vs. Estate of Frankel, 94 Misc. 2d 105,
404 NYS2d 954.
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602
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11 Since this is a Philippine case, I am using the term “res judicata” and,
hereafter, “conclusiveness of judgment” in the Philippine setting and as
understood in our jurisdiction. The importation of the alluring but
variegated concepts thereof in American law for application in this case
would compound the confusion, especially if considered along with the rule
on collateral estoppel, whether by judgment or verdict, as understood in
U.S. procedural law.
603
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604
DISSENTING OPINION
I.
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607
has defined the issues in this case and limited them to the
following:
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“To engage in any and all investments and related profitoriented projects
or programs and activities by itself or in collaboration, association or joint
venture with any person, association, company or entity, whether domestic
or foreign, for the main purpose of raising funds for health and medical
assistance and services and charitable grants.” [Record of the Batasan, vol.
Two, 993)
“MR. DAVIDE:
Mr. Speaker.
THE SPEAKER:
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MR. ZAMORA:
We accept the amendment, Mr. Speaker.
MR. DAVIDE:
Thank you, Mr. Speaker.
THE SPEAKER:
Is there any objection to the amendment? (Silence)
The amendment, as amended, is approved.” [Id.,
1007, emphasis supplied]
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612
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7 Zarate vs. Director of Lands, 39 Phil. 747, 749 [1919], citing American
cases. See also Fernando vs. Crisostomo, 90 Phil. 585 [1951]; Padilla vs.
Paterno, 93 Phil. 884 [1953]; People vs. Penuila, 103 Phil. 992 [1958];
Kabigting vs. Director of Prisons, 6 SCRA 281 [1962]; People vs. Olarte, 19
SCRA 494 [1967]; Ramos vs. Intermediate Appellate Court, 171 SCRA 93
[1989].
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sufficient. 8
Its reliance on the ruling in Montana vs. United States
that preclusion of issues or collateral estoppel does not
apply to issues of law, at least when substantially
unrelated claims are involved, is misplaced. For one thing,
the question of the petitioners’ legal standing in the first
lotto case and in this case is one and the same issue of law.
For another, these cases involve the same and not
substantially unrelated subject matter , viz., the second
contract between the PCSO and the PGMC on the
operation of the on-line lottery system.
The majority opinion likewise failed to consider that in
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614
(b) In all other cases the judgment or order is, with respect to the
matter directly adjudged or as to other matter that could have
been raised in relation thereto, conclusive between the parties
and their successors in interest by title subsequent to the
commencement of the action or special proceedings, litigating for
the same thing in the same title and in the same capacity.
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615
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617
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15 43 SCRA 677 [1972]. See also Macasiano vs. NHA, 224 SCRA 236
[1993].
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619
II.
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623
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renewed or entered into without public bidding except under any of the
following situations:
xxx
(e) In cases where it is apparent that the requisition of the needed
supplies through negotiated purchase is most advantageous to the
government to be determined by the Department Head concerned; and
xxx
625
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626
JUSTICE DAVIDE:
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JUSTICE DAVIDE:
But if given the chance to rewrite this contract, what
proposal would you give, what recommendation
would you give to your client?
ATTY. REYES:
Your Honor, that is why I said I would leave it to the
business judgment of my client.
JUSTICE DAVIDE:
As a lawyer what kind of a contract would you
recommend to be rewritten, to satisfy the law, to
satisfy the judgment of this Court in the first case?
ATTY. REYES:
The safest, Your Honor, is a sale.
JUSTICE DAVIDE:
Sale, meaning the Philippine Charity Sweepstakes
Office will buy everything?
ATTY. REYES:
Yes, Your Honor.
JUSTICE DAVIDE:
Why did you not recommend that to your client
instead you went into the process [of drafting the]
ELA.
ATTY. REYES:
Because, Your Honor, they do not have the money.
They are going to use the proceeds from the gains for
the payment of the rental but they do not have the
cash.
JUSTICE DAVIDE:
In the event that this Court will now strike down this
agreement as also void, would you recommend that to
your client as a third contract?
ATTY. REYES:
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Yes, Your Honor, if the PCSO can pay for it.
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RENTAL
REPAIR SERVICES
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24 Clause 1.
630
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631
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633
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The national government may enter into agreement for the lease
purchase of equipment subject to public bidding, the approval of
the Office of the Management, and to other pertinent accounting
and auditing religions. Details of the payments shall be indicated
in the lease purchase agreement and accompanied with a
certification of availability of equipment outlay authorized for
the agency to cover the full contract cost. The lease purchase
agreement may be entered into
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637
638
640
It then concludes:
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.
VITUG, J.:
they see fit. The legislative and executive branches are not
bound to seek the Court’s advice as to what to do or not to
do. (Tan vs. Macapagal, 43 SCRA 677 [1972])
The duty of the Supreme Court to exercise its power of
judicial review must still be performed in the context of a
concrete case or controversy. (Tolentino vs. Secretary of
Finance, 235 SCRA 630 [1994])
——o0o——