Wednesday, April 20, 2011

Case Digest: Kilosbayan, Incorporated, et. al. vs. Teofisto Guingona, PCSO and PGMC

05 May 1994                       G.R. No. 113375

Ponente: Davide, JR., J.


FACTS:

The PCSO decided to establish an online lottery system for the purpose of increasing its revenue base and diversifying its sources of funds.  Sometime before March 1993, after learning that the PCSO was interested in operating on an online lottery system, the Berjaya Group Berhad, with its affiliate, the International Totalizator Systems, Inc. became interested to offer its services and resources to PCSO.  Considering the citizenship requirement, the PGMC claims that Berjaya Group undertook to reduce its equity stakes in PGMC to 40% by selling 35% out of the original 75% foreign stockholdings to local investors.  An open letter was sent to President Ramos strongly opposing the setting up of an online lottery system due to ethical and moral concerns, however the project pushed through.

ISSUES:

  1. Whether the petitioners have locus standi (legal standing); and
  2. Whether the Contract of Lease is legal and valid in light of Sec. 1 of R.A. 1169 as amended by B.P. Blg. 42.
RULING:

  1. The petitioners have locus standi due to the transcendental importance to the public that the case demands.  The ramifications of such issues immeasurably affect the social, economic and moral well-being of the people.  The legal standing then of the petitioners deserves recognition, and in the exercise of its sound discretion, the Court brushes aside the procedural barrier.
  2. Sec. 1 of R.A. No. 1169, as amended by B.P. Blg. 42, prohibits the PCSO from holding and conducting lotteries “in collaboration, association or joint venture with any person, association, company, or entity, whether domestic or foreign.”  The language of the section is clear that with respect to its franchise or privilege “to hold and conduct charity sweepstakes races, lotteries and other similar activities,” the PCSO cannot exercise it “in collaboration, association or joint venture” with any other party.  This is the unequivocal meaning and import of the phrase. By the exception explicitly made, the PCSO cannot share its franchise with another by way of the methods mentioned, nor can it transfer, assign or lease such franchise.  

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