B2_DEPALAC, JOHN PAUL, G. CASE DIGEST FOR SEPT.

17, 2022
G.R. No. 118910 November 16, 1995

KILOSBAYAN, INCORPORATED, petitioners,

vs.
MANUEL L. MORATO, respondents.

FACTS:

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 [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, (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.

ISSUE:

Whether the ELA between the Philippine Charity Sweepstakes Office and the Philippine Gaming
Management Corp. is invalid.

RULING:

Pertinent to the issue, the SC held:

-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;

-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 itself holds or
conducts such lottery; and

-That the Equipment Lease Agreement (ELA) in question did not have to be submitted to public
bidding as a condition for its validity.

ANALYSIS:

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.

CONCLUSION:

NO. Petition for prohibition, review and/or injunction was dismissed.