Case Digest (G.R. No. 109991)
Facts:
On May 5, 1994, the Supreme Court of the Philippines, En Banc, resolved G.R. No. 113375, entitled Kilosbayan, Incorporated, et al. v. Teofisto Guingona, Jr., et al. Petitioners, led by the civic-minded group KILOSBAYAN and including Senators Freddie Webb and Wigberto Tanada and Representative Joker P. Arroyo (all acting as concerned citizens and taxpayers, and the latter three also as legislators), assailed the December 17, 1993 “Contract of Lease” executed by the Philippine Charity Sweepstakes Office (PCSO) and the Philippine Gaming Management Corporation (PGMC) for the establishment and operation of a nationwide on-line lottery system. In August 1993, PCSO issued a Request for Proposal (RFP) calling for a domestic contractor (60% Filipino-owned) to build, at its own expense, all facilities necessary to operate and maintain the on-line lottery, to be leased back to PCSO at a rental of up to 12% of gross receipts and vesting ownership of the facilities in PCSO at lease end. PGCase Digest (G.R. No. 109991)
Facts:
- Parties and petition
- Kilosbayan, Incorporated, a civic-minded non-stock corporation, together with its trustees as taxpayers and concerned citizens, Senators Webb and Tanada, and Representative Arroyo filed a special civil action for prohibition and injunction with prayer for TRO and preliminary injunction.
- Respondents are Teofisto Guingona Jr. (Executive Secretary), Renato Corona (Assistant Executive Secretary), the Philippine Charity Sweepstakes Office (PCSO), and Philippine Gaming Management Corporation (PGMC).
- Events leading to the Contract of Lease
- Under R.A. No. 1169 (as amended), PCSO had authority to conduct lotteries and sought to establish a nationwide on-line lottery system to boost revenues.
- The Berjaya Group Berhad (Malaysia) and its U.S. affiliate organized PGMC (March 1993) to offer technical, management, and financial services to PCSO.
- PCSO issued a Request for Proposal requiring the proponent to build and maintain all facilities at its own expense and risk, lease them for up to 15 years, and be at least 60% Filipino-owned.
- PGMC reduced foreign equity to 40%, bid on 15 August 1993, was pre-qualified and recommended by the bids committee, and approved by the Office of the President in October 1993.
- On 17 December 1993 PCSO and PGMC executed a “Contract of Lease,” approved by the President on 20 December 1993, whereby PGMC would build, own, and operate the on-line lottery system for eight years, bear all costs and risks, and receive 4.9% of gross receipts; PCSO would be the “sole operator” but provide only the franchise.
- Petitioners opposed on moral grounds and alleged legal defects: violation of PCSO charter prohibition on collaboration, lack of congressional franchise for telecom network, foreign ownership limits, and PGMC’s corporate authority.
- Petition filed 28 January 1994; TRO issued 11 April 1994. The Court limited the issues to locus standi and legality under Sec. 1(B), R.A. No. 1169 (as amended).
Issues:
- Locus standi
- Do petitioners, comprising a civic association, taxpayers, and legislators, have legal capacity to maintain the action?
- Validity of the Contract of Lease
- Does PCSO’s lease to PGMC for the on-line lottery violate Sec. 1(B) of its charter prohibiting collaboration, association, or joint venture in lottery activities?
- Subsidiary claims: lack of congressional telecom franchise, foreign ownership limits under the Constitution, and corporate power under the Foreign Investment Act.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)