Macalinao, Romielyn P.

Subject: Constitutional Law 1

Topic: Interpretation of the Constitution
Title: KILOSBAYAN vs. MORATO
Reference: G.R. No. 118910

FACTS
In Jan. 25, 1995, PCSO and PGMC signed an Equipment Lease
Agreement (ELA) wherein PGMC leased online lottery equipment and
accessories to PCSO (Rental of 4.3% of the gross amount of ticket or
at least P35, 000 per terminal annually). 30% of the net receipts is
allotted to charity. Term of lease is for 8years. PCSO is to employ its
own personnel and responsible for the facilities. Upon the expiration of
lease, PCSO may purchase the equipment for P25 million.

Feb. 21,

1995. A petition was filed to declare ELA invalid because it is the same
as the Contract of Lease Petitioner's Contentions:
1. ELA was same to the Contract of Lease.
2. It is still violative of PCSOs charter.
3. It is violative of the law regarding public bidding.
4. It violates Sec. 2(2) of Art. 9-D of the 1987 Constitution
5. Standing can no longer be questioned because it has become the
law of the case.
Accordingly, respondents reply that:
1. ELA is different from the Contract of Lease
2. There is no bidding required
3. The power to determine if ELA is advantageous is vested in the
Board of Directors of PCSO
4. PCSO does not have funds
5. Petitioners seek to further their moral crusade
6. Petitioners do not have a legal standing because they were not
parties to the contract

ISSUES

Does the petitioner have legal standing (Locus standi)?

RULINGS
No, The petitioners have no legal standing.
(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 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 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 in INTEREST. Standing:
maybe brought by concerned citizens, taxpayers or voters who sue in
public interest- Whether such parties have alleged such a personal
stake in the outcome of the controversy - Valmonte v. PCSO: 1) direct
and personal interest; 2) has sustained or is in immediate danger of
sustained some direct injury and 3) has bee or is about to be denied
some right or privilege. In the case at bar, there is no showing of
particularized interest or an allegation of public funds being misspent
to make the action of public interest.
Real party in interest: Whether he is the party who would be
benefited or injured by the judgment or the party entitled to the avails

of the suit. Petitioners invoke Sec. 5, 7 and 12 of the Constitution. But

they do not embody judicially enforceable constitutional rights but
guidelines for legislation. They cannot give rise to a cause of action in
the courts.
(f) QUESTION of CONTRACT LAW: The real parties are those who
are parties to the agreement or are bound either principally or
subsidiary 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 xxx.
(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. Whether or not ELA is valid?
Yes.
i.)Fixing the rental rate to a minimum is a matter of
business judgment and the Court is not inclined to review.
ii.) In the contract, it stated that the parties can change
their agreement. Petitioner states that this would allow PGMC to
control and operate the on-line lottery system. The Court held
that the claim is speculative. In any case, in the construction of
statutes, the presumption is that in making contracts, the
government has acted in good faith. The doctrine that the
possibility of abuse is not a reason for denying power.
(c) It is also claimed that ELA is a joint venture agreement. The
Court held that is also based on speculation. Evidence is needed to
show that the transfer of technology would involve the PCSO and its
personnel in prohibited association with the PGMC.
Petitioners have no standing. ELA is a valid lease contract. Petition for
prohibition, review and/or injunction is dismissed.