KURODA VS.

JALANDONI

SECOND DIVISION
[G.R. No. L-2662. March 26, 1949.]
SHIGENORI KURODA, petitioner, vs. Major General RAFAEL JALANDONI, Brigadier General CALIXTO
DUQUE, Colonel MARGARITO TORALBA, Colonel IRENEO BUENCONSEJO, Colonel PEDRO TABUENA,
Major FEDERICO ARANAS, MELVILLE S. HUSSEY and ROBERT PORT, respondents.
Pedro Serran, Jose G. Lukban, and Liberato B. Cinco for petitioner.
Fred Ruiz Castro, Federico Arenas, Mariano Yengco, Jr., Ricardo A. Arcilla, and S. Meville Hussey for
respondents.

DECISION

MORAN, C. J p:
Shigenori Kuroda, formerly a Lieutenant-General of the Japanese Imperial Army and Commanding
General of the Japanese Imperial Forces in the Philippines during a period covering 1943 and 1944,
who is now charged before a Military Commission convened by the Chief of Staff of the Armed
Forces of the Philippines, with having unlawfully disregarded and failed "to discharge his duties as
such commander to control the operations of members of his command, permitting them to commit
brutal atrocities and other high crimes against noncombatant civilians and prisoners of the Imperial
Japanese Forces, in violation of the laws and customs of war" — comes before this Court seeking to
establish the illegality of Executive Order No. 68 of the President of the Philippines; to enjoin and
prohibit respondents Melville S. Hussey and Robert Port from participating in the prosecution of
petitioner's case before the Military Commission; and to permanently prohibit respondents from
proceeding with the case of petitioner.

In support of his case, petitioner tenders the following principal arguments:

First. — "That Executive Order No. 68 is illegal on the ground that it violates not only the provisions
of our constitutional law but also our local laws, to say nothing of the fact (that) the Philippines is not
a signatory nor an adherent to the Hague Convention on Rules and Regulations covering Land
Warfare and, therefore, petitioner is charged of 'crimes' not based on law, national and
international." Hence, petitioner argues — "That in view of the fact that this commission has been
empanelled by virtue of an unconstitutional law and an illegal order, this commission is without
jurisdiction to try herein petitioner."

Second. — That the participation in the prosecution of the case against petitioner before the
Commission in behalf of the United States of America, of attorneys Melville Hussey and Robert Port,
who are not attorneys authorized by the Supreme Court to practice law in the Philippines, is a
diminution of our personality as an independent state, and their appointments as prosecutors are a
violation of our Constitution for the reason that they are not qualified to practice law in the
Philippines.

Third. — That Attorneys Hussey and Port have no personality as prosecutors, the United States not
being a party in interest in the case.

Executive Order No. 68, establishing a National War Crimes Office and prescribing rules and
regulations governing the trial of accused war criminals, was issued by the President of the
Philippines on the 29th day of July, 1947. This Court holds that this order is valid and constitutional.
Article 2 of our Constitution provides in its section 3, that —
"The Philippines renounces war as an instrument of national policy, and adopts the generally
accepted principles of international law as part of the law of the nation."

In accordance with the generally accepted principles of international law of the present day,
including the Hague Convention, the Geneva Convention and significant precedents of international
jurisprudence established by the United Nations, all those persons, military or civilian, who have
been guilty of planning, preparing or waging a war of aggression and of the commission of crimes
and offenses consequential and incidental thereto, in violation of the laws and customs of war, of
humanity and civilization, are held accountable therefor. Consequently, in the promulgation and
enforcement of Executive Order No. 68, the President of the Philippines has acted in conformity with
the generally accepted principles and policies of international law which are part of our Constitution.

The promulgation of said executive order is an exercise by the President of his powers as
Commander in Chief of all our armed forces, as upheld by this Court in the case of Yamashita vs.
Styer L-129, 42 Off. Gaz., 654) 1 when we said —
"War is not ended simply because hostilities have ceased. After cessation of armed hostilities,
incidents of war may remain pending which should be disposed of as in time of war. 'An important
incident to a conduct of war is the adoption of measures by the military command not only to repel
and defeat the enemies but to seize and subject to disciplinary measures those enemies who in their
attempt to thwart or impede our military effort have violated the law of war.' (Ex parte Quirin, 317 U.
S., 1; 63 Sup. Ct., 2.) Indeed, the power to create a military commission for the trial and punishment
of war criminals is an aspect of waging war. And, in the language of a writer, a military commission
'has jurisdiction so long as a technical state of war continues. This includes the period of an
armistice, or military occupation, up to the effective date of a treaty of peace, and may extend
beyond, by treaty agreement.' (Cowls, Trial of War Criminals by Military Tribunals, American Bar
Association Journal, June, 1944.)"

Consequently, the President as Commander in Chief is fully empowered to consummate this

unfinished aspect of war, namely, the trial and punishment of war criminals, through the issuance
and enforcement of Executive Order No. 68.
Petitioner argues that respondent Military Commission has no jurisdiction to try petitioner for acts
committed in violation of the Hague Convention and the Geneva Convention because the Philippines
is not a signatory to the first and signed the second only in 1947. It cannot be denied that the rules
and regulations of the Hague and Geneva conventions form part of and are wholly based on the
generally accepted principles of international law. In fact, these rules and principles were accepted
by the two belligerent nations, the United States and Japan, who were signatories to the two
Conventions. Such rules and principles, therefore, form part of the law of our nation even if the
Philippines was not a signatory to the conventions embodying them, for our Constitution has been
deliberately general and extensive in its scope and is not confined to the recognition of rules and
principles of international law as contained in treaties to which our government may have been or
shall be a signatory.

Furthermore, when the crimes charged against petitioner were allegedly committed, the Philippines
was under the sovereignty of the United States, and thus we were equally bound together with the
United States and with Japan, to the rights and obligations contained in the treaties between the
belligerent countries. These rights and obligations were not erased by our assumption of full
sovereignty. If at all, our emergence as a free state entitles us to enforce the right, on our own, of
trying and punishing those who committed crimes against our people. In this connection, it is well to
remember what we have said in the case of Laurel vs. Misa (76 Phil., 372):

". . . The change of our form of government from Commonwealth to Republic does not affect the
prosecution of those charged with the crime of treason committed during the Commonwealth,
because it is an offense against the same government and the same sovereign people . . . "

By the same token, war crimes committed against our people and our government while we were a
Commonwealth, are triable and punishable by our present Republic.

Petitioner challenges the participation of two American attorneys, namely, Melville S. Hussey and
Robert Port, in the prosecution of his case, on the ground that said attorneys are not qualified to
practice law in the Philippines in accordance with our Rules of Court and the appointment of said
attorneys as prosecutors is violative of our national sovereignty.
In the first place, respondent Military Commission is a special military tribunal governed by a special
law and not by the Rules of Court which govern ordinary civil courts. It has already been shown that
Executive Order No. 68 which provides for the organization of such military commissions is a valid
and constitutional law. There is nothing in said executive order which requires that counsel
appearing before said commissions must be attorneys qualified to practice law in the Philippines in
accordance with the Rules of Court. In fact, it is common in military tribunals that counsel for the
parties are usually military personnel who are neither attorneys nor even possessed of legal training.

Secondly, the appointment of the two American attorneys is not violative of our national
sovereignty. It is only fair and proper that the United States, which has submitted the vindication of
crimes against her government and her people to a tribunal of our nation, should be allowed
representation in the trial of those very crimes. If there has been any relinquishment of sovereignty,
it has not been by our government but by the United States Government which has yielded to us the
trial and punishment of her enemies. The least that we could do in the spirit of comity is to allow
them representation in said trials.

Alleging that the United States is not a party in interest in the case, petitioner challenges the
personality of attorneys Hussey and Port as prosecutors. It is of common knowledge that the United
States and its people have been equally, if not more greatly, aggrieved by the crimes with which
petitioner stands charged before the Military Commission. It can be considered a privilege for our
Republic that a leader nation should submit the vindication of the honor of its citizens and its
government to a military tribunal of our country.

The Military Commission having been convened by virtue of a valid law, with jurisdiction over the
crimes charged which fall under the provisions of Executive Order No. 68, and having jurisdiction
over the person of the petitioner by having said petitioner in its custody, this Court will not interfere
with the due processes of such Military Commission.

Paras, Feria, Pablo, Bengzon, Briones, Tuason, Montemayor and Reyes, JJ., concur.

Footnotes
1. 75 Phil., 563.
2. Not Reported.

kilosbayan versus morato

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EN BANC
[G.R. No. 118910. November 16, 1995.]
KILOSBAYAN, INCORPORATED JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C.
CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE,
CHRISTINE TAN, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S.
DOROMAL, SEN. FREDDIE WEBB, SEN. WIGBERTO TAÑADA, REP. JOKER P. ARROYO, petitioner, vs.
MANUEL L. MORATO, in his capacity as Chairman of the Philippine Charity Sweepstakes Office, and
the PHILIPPINE GAMING MANAGEMENT CORPORATION, respondent.
Jovito R. Salonga, Fernando A. Santiago and Emilio C. Capulong, Jr. for petitioners.
Renato L. Cayetano, Regina Maria S. Riel, Eleazar B. Reyes and Nellie Jo P. Aujero for respondent
PGMC.
The Solicitor General for respondent.

RESOLUTION
MENDOZA, J p:
Petitioners seek reconsideration of our decision in this case. They insist that the decision in the first
case has already settled (1) whether petitioner Kilosbayan, Inc. has a standing to sue and (2)
whether under its chapter (R.A. No. 1169, as amended) the Philippine Charity Sweepstakes Office
can enter into any form of association or collaboration with any party in operating an on-line lottery.
Consequently, petitioners contend, these questions can no longer be reopened.
Because two members of the Court did not consider themselves bound by the decision in the first
case, petitioners suggest that the two, in joining the dissenters in the first case in reexamining the
question in the present case, acted otherwise than according to law. They cite the following
statement in the opinion of the Court:

The voting on petitioners' standing in the previous case was a narrow one, seven (7) members
sustaining petitioners' standing and six (6) denying petitioners' right to 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 charges in the membership of the Court, with the retirement of Justice 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 claim that this statement "conveys a none too subtle suggestion, perhaps a Freudian slip,
that the two new appointees, regardless of the merit of the Decision in the first Kilosbayan case
against the lotto (Kilosbayan, et al. V. Guingona, 232 SCRA 110 (1994) must be necessity align
themselves with all the Ramos appointees who were dissenters in the first case and constitute the
new majority in the second lotto case." And petitioners ask, "why should it be so?"

Petitioners ask a question to which they have made up an answer. Their attempt at psychoanalysis,
detecting a Freudian slip where none exists, may be more revealing of their own unexpressed wish
to find motives where there are none which they can impute to some members of the Court.

For the truth is that the statement is no more than an effort to explain — rather to justify — the
majority's decision to overrule the ruling in the previous case. It is simply meant to explain that
because the five members of the Court who dissented in the first case (Melo, Quiason, Puno, Vitug
and Kapunan, JJ.) and the two new members (Mendoza and Francisco, JJ.) thought the previous ruling
to be erroneous and its reexamination not to be barred by stare decisis, res judicata or
conclusiveness of judgment, or law of the case, it was hardly tenable for petitioners to insist on the
first ruling.

Consequently to petitioners' question "What is the glue that holds them together," implying some
ulterior motives on the part of the new majority in reexamining the two questions, the answer is:
None, except a conviction on the part of the five, who had been members of the Court of the time
they dissented in the first case, and the two new members that the previous ruling was erroneous.
The eight Justice (Padilla, J.) on the other hand agrees with the seven Justices that the ELA is in a
real sense a lease agreement and therefore does not violate R.A. No. 1169.

The decision in the first case was a split decision: 7-6. With the retirement of one of the original
majority (Cruz, J.) and one of the dissenters (Bidin, J.), it was not surprising that the first decision in
the first case was later reversed.

It is argued that, in any case, a reexamination of the two question is barred the PCSO and the
Philippine Gaming Management Corporation made a '"formal commitment not to ask for a
reconsideration of the Decision in the first lotto case and instead submit a new agreement that
would be in conformity with the PCSO Charter (R.A. No. 1169, as amended) and with the Decision of
the Supreme Court in the first Kilosbayan case against on-line, hi-tech lotto."

To be sure a new contract was entered into which the majority of the Court finds has been purged of
the features which made the first contract objectionable. Moreover, what the PCSO said in its
manifestation in the first case was the following: cdt
1. They are no longer filing a motion for reconsideration of the Decision on this Honorable Court
dated May 5, 1994, a copy of which was received on May 6, 1994.

2. Respondents PCSO and PGMC are presently negotiating a new lease agreement consistent with
the authority of PCSO under its charter (R.A. No. 1169, as amended by B.P. Blg. 42) and conformable
with the pronouncements of this Honorable Court in its Decision of May 5, 1995.

The PGMC made substantially the same manifestation as the PCSO.

There was thus no "formal commitment" — but only a manifestation — that the parties were not
filing a motion for reconsideration. Even if the parties made a "formal commitment," the six (6)
dissenting Justices certainly could not bound thereby not to insist on their contrary view on the
question of standing. Much less were the two new members bound by any "formal commitment"
made by the parties. They believed that the ruling in the first case was erroneous. Since in their
view reexamination was not barred by the doctrine of state decisis, res judicata or conclusiveness of
judgment or law of the case, they voted the way they did with the remaining five (5) dissenters in
the first case to form a new majority of eight.
Petitioners ask, "Why should this be so?" Because, as explained in the decision, the first decision
was erroneous and no legal doctrine stood in the way of its reexamination. It can, therefore, be
asked "with equal candor": "Why should this not be so?"

Nor is this the first time a split decision was tested, if no reversed, in subsequent case because of
change in the membership of a court. In 1957, this Court, voting 6-5, held in Feliciano v. Aquino, G.R.
No. L-10201, Sept. 23, 1957 that the phrase "at the time of the election" in §2174 of the Revised
Administrative Code of 1917 meant that a candidate for municipal elective position must be at least
23 years of age on the date of the election. On the other hand, the dissenters argued that it was
enough if he attained that age on the day he assumed office.
Less than three years later, the same question was before the Court again, as a candidate for
municipal councilor stated under oath in her certificate of candidacy that she was eligible for that
position although she attained the requisite age (23 years) only when she assumed office. The
question was whether she could be prosecuted for falsification. In People v. Yanza, 107 Phil. 888
(1960), the Court ruled she could not. Justice, later Chief Justice, Bengzon, who dissented in the first
case, Feliciano v. Aquino, supra, wrote the opinion of the Court, holding that while the statement
that the accused was eligible was "inexact or erroneous, according to the majority in the Feliciano
case," the accused could not be held liable for falsification, because: the question [whether the law
really required candidates to have the required age on the day of the election or whether it was
sufficient that they attained it at the beginning of the term of office] has not been discussed anew,
despite the presence of new members; we simply assume for the purpose of this decision that the
doctrine stands.
Thus because in the meantime there had been a change in the membership of the Court with the
retirement of two members (Reyes and Felix, JJ.) who had taken part in the decision in the first case
and their replacement by new members (Barrera and Gutierrez-David, JJ.) and the fact that the vote
in the first case was a narrow one (6 to 5), the Court allowed that the continuing validity of its ruling
in the first case might well be doubted. For this reason it gave the accused the benefit of the doubt
that she had acted in the good faith belief that it was sufficient that she was 23 years of age when
she assumed office.

In that case, the change in the membership of the Court and the possibility of change in the ruling
were noted without anyone — much less would-be psychoanalysts — finding the statement of the
Court any Freudian slip. The possibility of change in the rule as a result of change in membership
was accepted as a sufficient reason for finding good faith and lack of criminal intent on the part of
the accused.

Indeed, a change in the composition of the Court could prove the means of undoing an erroneous
decision. This was the lesson of Knox v. Lee, 12 Wall. 457 (1871). The legal Tender Acts, which were
passed during the Civil War, made U.S. notes (greenbacks) legal tender for the payment of doubts,
public or private, with certain exceptions. The validity of the acts, as applied to preexisting debts,
was challenged in Hepburn v. Griswold, 8 Wall. 603 (1869). The Court was then composed of only
eight (8) Justices because of Congressional effort to limit the appointing power of President Johnson.
Voting 5-3, the Court declared the acts void. Chief Justice Chase wrote the opinion of the Court in
which four others, including Justice Grier, concurred. Justices Miller, Swayne and Davis dissented. A
private memorandum left by the dissenting Justices described how an effort was made "to convince
an aged and infirm member of the court [Justice Grier] that he had not understood the question on
which he voted," with the result that what was originally a 4-4 vote was converted into a majority (5-
3) for holding the acts invalid.

On the day the decision was announced, President Grant nominated to the Court William Strong and
Joseph P. Bradley to fill the vacancy caused by the resignation of Justice Grier and to restore the
membership of the Court to nine. In 1871, Hepburn v. Griswold was overruled in the Legal Tender
Cases, as Knox v. Lee came to be known, in an opinion by Justice Strong, with a dissenting opinion
by chief Justice Chase and the three other surviving members of the former majority. There were
allegations that the new Justices were appointed for their known views on the validity of the legal
Tenders Acts, Just as there were others who defended the characters and independence of the new
Justices. History has vindicated the overruling of the Hepburn case by the new majority. The Legal
Tender Cases proved to be the Court's means of salvation from what Chief Justice Hughes later
described as one the Court's "self-inflicted wounds." 1
We now consider the specific grounds for petitioners' motion for reconsideration.

I. We have held that because there are no genuine issues of constitutionality in this case, the rule
concerning real party in interest, applicable to private litigation rather than the more liberal rule on
standing, applies to petitioners. Two objections are made against that ruling: (1) that the
constitutional policies and principles invoked by petitioners, while not supplying the basis for
affirmative relief from the courts, may nonetheless be resorted to for striking down laws or official
actions which are inconsistent with them and (2) that the Constitution, by guaranteeing to
independent people's organization "effective and reasonable participation at all levels of social,
political and economic decision-making" (Art. XIII, §16), grants them standing to sue on
constitutional grounds.

The policies and principles of the Constitution invoked by petitioner read:

ART. II, §5. The maintenance of peace and order, the protection of life, liberty, and property, and the
promotion of the general welfare are essential for the enjoyment by all the people of the blessings of
democracy.
Id., §12. The natural primary right and duty of parents in the rearing of the youth for civic efficiency
and the developments of moral character shall receive the support of the Government.
Id., §13. The State recognize the vital role of the youth in nation-building and shall promote and
protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the
youth patriotism and nationalism, and encourage their involvement in public and civic affairs.

Id., §17. The State shall give priority to education, science and technology, arts culture, and sports
to foster patriotism and nationalism, accelerate social progress, and promote total human liberation
and development.

As already stated, however, these provision are not self-executing. They do not confer rights which
can be enforced in the courts but only provide guidelines for legislative or executive action. By
authorizing the holding the lottery for charity, Congress has in effect determined that consistently
with these policies and principles of the Constitution, the PCSO may be given this authority. That is
why we said with respect to the opening by the PAGCOR of a casino in Cagayan de Oro, "the
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))

It is noteworthy that petitioners do not question the validity of the law allowing lotteries. It is the
contract entered into by the PCSO and the PGMC which they are assailing. This case, therefore, does
not raise issues of constitutionality but only of contract law, which petitioners, not being privies to
the agreement, cannot raise.

Nor does Kilosbayan's status as a people's organization give it the requisite personality to question
the validity of the contract in this case. The Constitution provides that "the State shall respect the
role of independent people's organization to enable the people to pursue and protect, within the
democratic framework, their legitimate and collective interest and aspirations through peaceful and
lawful means," that their right to "effective and reasonable participation at all levels or social,
political, and economic decision-making shall not be abridged." (Art. XIII, §§15-16)

These provision have not changed the traditional rule that only real parties in interest or those with
standing, as the case may be, may invoke the judicial power. The jurisdiction of this Court, even in
cases involving constitutional questions, is limited by the "case and controversy" requirement of Art.
VIII, §5. This requirement lies at the very heart of the judicial function. It is what differentiates
decision making in the courts from decision making in the political departments of the government
and bars the bringing of suits by just and party
.
Petitioners quote extensively from the speech of Commissioner Garcia before the Constitutional
Commission, explaining the provisions on independent people's organization. There is nothing in the
speech, however, which supports their claim of standing. On the contrary, the speech points the way
to the legislative and executive branches of the government, rather than to the courts, as the
appropriate fora for the advocacy of petitioners' views. 2 Indeed, the provisions on independent
people's organization may most usefully be read in connection with the provision on initiative and
referendum as a means whereby the people may propose or enact laws or reject any of those
passed by Congress. For the fact is that petitioners' opposition to the contract in question is nothing
more than an opposition to the government policy on lotteries.

It is nevertheless insisted that this Court has in the past accorded standing to taxpayers and
concerned citizens in cases involving "paramount public interest." Taxpayers, voters, concerned
citizens and legislators have indeed been allowed to sue but then only (1) in cases involving
constitutional issues and (2) under certain conditions. Petitioners do not meet these requirements on
standing.

Taxpayers are allowed to sue, for example, where there is a claim of illegal disbursement of public
funds. (Pascual v. Secretary of public Works, 110 Phil. 331 (1960); Sanidad v. Comelec, 73 SCRA 333
(1976); Bugnay Const. & Dev. v. Laron, 176 SCRA 240 (1989); City Council of Cebu v. Cuizon, 47
SCRA 325 (1972) or where a tax measure is assailed as unconstitutional. (VAT Cases [Tolentino v.
Secretary of Finance], 235 SCRA 630 (1994)) Voters are allowed to question are validity of election
laws because of their obvious interest in the validity of such laws. (Gonzales v. Comelec, 21 SCRA
774 (1967)) Concerned citizens can bring suits if the constitutional question they raise is of
"transcendental importance" which must be settled early. (Emergency Powers Cases [Araneta v.
Dinglasan], 84 Phil. 368 (1949); Iloilo Palay and Corn Planters Ass'n v. Feliciano, 121 Phil. 358
(1965); Philconsa v. Gimenez, 122 Phil. 894 (1965); CLU v. Executive Secretary, 194 SCRA 317
(1991) Legislators are allowed to sue to question the validity of any official action which they claim
infringes their prerogatives qua legislators. (Philconsa v. Enriquez, 235 506 (1994); Guingona v.
PCGG, 207 SCRA 659 (1992); Gonzales v. Macaraig, 191 SCRA 452 (1990); Tolentino v. Comelec, 41
SCRA 702 (1971); Tatad v. Garcia, G.R. No. 114222, April 16, 1995 (Mendoza, J., concurring).

Petitioners do not have the same kind of interest that these various litigant have. Petitioners assert
an interest as taxpayers, but they do not meet the standing requirement for bringing taxpayer's
suits as set forth in Dumlao v. Comelec, 95 SCRA 392, 403 (1980), to wit:

While, concededly, the elections to be held involve the expenditure of public moneys, nowhere in
their Petition do said petitioners allege that their tax money is "being extracted and spent in
violation of specific constitutional protection against abuses of legislative power" (Flast v. Cohen,
392 U.S., 83 [1960]), or that there is a misapplication of such funds by respondent COMELEC (see
Pascual vs. Secretary of Public Works, 110 Phil. 331 [1960], or that public money is being deflected
to any improper purpose. Neither do petitioners seek to restrain respondent from wasting public
funds through the enforcement of an invalid or unconstitutional law. (Philippine Constitution
Association vs. Mathay, 18 SCRA 300 [1966] ), citing Philippine Constitution Association vs. Gimenez,
15 SCRA 479 [1965] ). Besides, the institution of a taxpayer's suit, per se, is no assurance of judicial
review. As held by this Court in Tan vs. Macapagal (43 SCRA 677 [1972] ), speaking through our
present Chief Justice, this Court is vested with discretion as to whether or not a taxpayer's suit
should be entertained. (Emphasis added)

Petitioners' suit does not fall under any of these categories of taxpayers' suits.

Neither do the other cases cited by petitioners support their contention that taxpayers have
standing to question government contracts regardless of whether public funds are involved or not. In
Gonzales v. National Housing, Corp., 94 SCRA 786 (1979), petitioner filed a taxpayer's suit seeking
the annulment of a contract between the NHC and a foreign corporation. The case was dismissed by
the trial court. The dismissal was affirmed by this Court on the grounds of res judicata and pendency
of a prejudicial question, thus avoiding the question of petitioner's standing.

On the other hand, in Gonzales v. Raquiza, 180 SCRA 254 (1998), petitioner sought the annulment of
a contract made by the government with a foreign corporation for the purchase of road construction
equipment. The question of standing was not discussed, but even if it was, petitioner's could be
sustained because he was minority stockholder of the Philippine National Bank, which was one of the
defendant in the case.

In the other case cited by petitioners, City Council of Cebu v. Cuizon, 47 SCRA 325 (1972), members
of the city council were allowed to sue to question the validity of a contract entered into by the city
government for the purchase of road construction equipment for the purchase their contention was
that the contract had been made without their authority. In addition, as taxpayers they had an
interest in seeing to it that public funds were spent pursuant to an appropriation made by law.

But, in the case at bar, there is no allegation that public funds are being misapplied or
misappropriated. The controlling doctrine is that of Gonzales v. Marcos, 65 SCRA 624 (1975 where it
was held that funds raised from contributions for the benefit of the Cultural Center of the Philippines
were not public funds and petitioner had no standing to bring a taxpayer's suit to question their
disbursement by the President of the Philippines.

Thus, petitioners' right to sue as taxpayers cannot be sustained. Nor as concerned citizens can they
bring this suit because no specific injury suffered by them is alleged. As for the petitioners, who are
members of Congress, their right to sue as legislators cannot be invoked because they do not
complain of any infringement of their rights as legislators.
Finally, in Valmonte v. PCSO, G.R. No. 78716, September 22, 1987, we threw out a petition
questioning another form of lottery conducted by the PCSO on the ground that petitioner, who
claimed to be "citizen, lawyer, taxpayer and father of three minor children," had no direct and
personal interest in the lottery. We said: "He must be able to show, not only that the law is invalid,
but also that he has sustained or is in immediate danger of sustaining some direct injury as a result
of its enforcement, and not merely that he suffers thereby in some indefinite way. It must appear
that the person complaining has been or is about to be denied some right or privilege to which he is
lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the
statute complained of ." In the case at bar, petitioners have not shown why, unlike petitioner in the
Valmonte case, they should be accorded standing to bring this suit.

The case of Oposa v. Factoran, Jr. 224 SCRA 792 (1993) is different. Citizens' standing to bring a suit
seeking the cancellation of timber licenses was sustained in that case because the Court considered
Art. II, §16 a right-conferring provision which can be enforced in the courts. That provision states:

The State shall protect and advance the right of the people to a balanced and healthful ecology in
accord with the rhythm and harmony of nature. (Emphasis supplied)

In contrast, the policies and principle invoked by petitioners in this case not permit of such
categorization.

Indeed, as already stated, petitioners' opposition is not really to the validity of the ELA but to
lotteries which they regard to be immoral. This is not, however, a legal issue, but a policy matter for
Congress to decide and Congress has permitted lotteries for charity.
Nevertheless, although we have concluded that petitioners do not have standing, we have not
stopped there and dismissed their case. For in the view we take, whether a party has a cause of
action and, therefore, is a real party in interest or one with standing to raise a constitution question
turn on whether he has a right which has been violated. For this reason the Court has not ducked
the substantive issues raised by petitioners.

II. R.A. No. 1169, as amended by B.P. No. 42, states:

§1. The Philippine Charity Sweepstakes Office. — The Philippine Charity Sweepstakes Office,
hereinafter designated the Office, shall be the principal government agency for raising and providing
for funds for health programs, medical assistance and services and charities of national character,
and as such shall have the general powers conferred in section thirteen of Act Numbered One
Thousand Four Hundred Fifty Nine, as amended, and shall have the authority.

A. To hold and conduct charity sweepstakes races, lotteries and other similar activities, in such
frequency and manner, as shall be determined, and subject to such rules and regulations as shall
promulgated by the Board of Directors.

B. Subject to the approval of the Minister of Human Settlements, to engage in health and welfare-
related investments, programs, projects and activities which may be profit oriented, by itself or in
collaboration, association or joint venture with any person, association, company or entity, whether
domestic or foreign, except for the activities mentioned in the preceding paragraph (A), for the
purpose of providing for permanent and continuing sources of funds for health programs, including
the expansion of existing ones, medical assistance and services, and/or charitable grants: Provided,
that such investments will not compete with the private sector in areas where investments are
adequate as may be determined by the National Economic and Development Authority.

Petitioners insist on the ruling in the previous case that the PCSO cannot hold and conduct charity
sweepstakes, lotteries and other similar activities in collaboration, association or joint venture with
any other party because of the clause "except for the activities mentioned in the preceding
paragraph (A)" in paragraph (b) of §1. Petitioners contend that the ruling is the law of this case
because the parties are the same and the case involves the same issue, i. e., the meaning of this
statutory provision.

The "law of the case" doctrine is inapplicable, because this case is not a continuation of the first one.
Petitioners also say that inquiry into the same question as to the meaning of the statutory provision
is barred by the doctrine of res judicata. The general rule on the "conclusiveness of judgment,"
however, is subject to the exception that a question may be reopened if it is a legal question and the
two action involve substantially different claims. This is generally accepted in American law from
which our Rules of Court was adopted. (Montana v. United States, 440 U.S. 59 L. ED. 2d 147, 210
(1979); RESTATEMENT OF THE LAW 2d, ON JUDGMENT, §28; P. BATOR, C. MELTZER, P. MISHKIN AND
D. SHAPIRO, THE FEDERAL COURTS AND THE FEDERAL SYSTEM 1058, n. 2 (3rd Ed., 1988)) There is
nothing in the record of this case to suggest that this exception is inapplicable in this jurisdiction.

Indeed, the questions raised in this case are legal questions and the claims involved are
substantially different from those involved in the prior case between the parties. As already stated,
the ELA is substantially different from the Contract of Lease declared void in the first case.

Borrowing from the dissenting opinion of Justice Feliciano, petitioner argue that the phrase "by itself
or in collaboration, association or joint venture with any other party" qualifies not only §1 (B) but
also §1 (A), because the exception clause ("except for the activities mentioned in the preceding
paragraph (A)") "operates, as it were, as a renvoi clause which refers back to Section 1(A) and in this
manner avoids the necessity of simultaneously amending the text of Section 1 (A)."
This interpretation, however, fails to take into account not only the location of the phrase in
paragraph (B), when it should be in paragraph (A) had that been the intention of the lawmaking
authority, but also the phrase "by itself." In other words, under paragraph (B), the PCSO is prohibited
from "engag[ing] in . . . investments, programs, projects and activities" if these involves
sweepstakes races, lotteries and other similar activities not only "in collaboration, association or
joint venture" with any other party but also "by itself." Obviously, this prohibition cannot apply when
the PCSO conducts these activities itself. Otherwise, what paragraph (A) authorizes the PCSO to do,
paragraph (B) would prohibit.
The fact is that the phrase in question does not qualify the authority of the PCSO under paragraph
(A), but rather the authority granted to it by paragraph (B). The amendment of paragraph (B) by B.P.
Blg. 42 was intended to enable the PCSO to engage in certain investments, programs, projects and
activities for the purpose of raising funds for health programs and charity. That is why the law
provides that such investments by the PCSO should "not compete with the private sector in areas
where investments are adequate as may be determined by the National Economic and Development
Authority." Justice Davide, then an Assemblyman, made a proposal which was accepted, reflecting
the understanding that the bill they were discussing concerned the authority of the PCSO to invest in
the business of others. The following excerpt from the Record of the Batasan Pambansa shows this
to be the subject of the discussion: cdtai
MR. DAVIDE.

May I introduce an amendment after "adequate". The intention of the amendment is not to leave the
determination of whether it is adequate or not to anybody. And may amendment is to add after
"adequate" the words AS MAY BE DETERMINED BY THE NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY. As a matter of fact, it will strengthen the authority to invest in these areas, provided
that the determination of whether the private sector's activity is already adequate must be
determined by the National Economic and Development Authority.
Mr. ZAMORA.
Mr. Speaker, the committee accepts the proposed amendment.
MR. DAVIDE.
Thank you, Mr. Speaker.
(2 RECORD OF THE BATASAN PAMBANSA, Sept. 6, 1979, p. 1007)
Thus what the PCSO is prohibited from doing is from investing in a business engaged in sweepstakes
races, lotteries and other similar activities. It is prohibited from doing so whether "in collaboration,
association or joint venture" with others or "by itself." This seems to be the only possible
interpretation of §1 (A) and (B) in light of its text and legislative history. That there is today no other
entity engaged in sweepstakes races, lotteries and like does not detract from the validity of this
interpretation.

III. The Court noted in its decision that the provisions of the first contract, which were considered to
be features of a joint venture agreement, had been removed in the new contract. For instance, §5 of
the ELA provides that in the operation of the on-line lottery, the PCSO must employ "its own
competent and qualified personnel." Petitioners claim, however, that the "contemporaneous
interpretation" of PGMC officials of this provision is otherwise. They cite the testimony of Glen
Barroga of the PGMC before a Senate committee to the effect that under the ELA the PGMC would be
operating the lottery system "side by side" with PCSO personnel as part of the transfer of
technology.

Whether the transfer of technology would result in a violation of PCSO'S franchise should be
determined by facts and not by what some officials of the PGMC state by way of opinion. In the
absence of proof to the contrary, it must be presumed that §5 reflects the true intention of the
parties. Thus, Art. 1370 of the Civil Code says that "if the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall
control." The intention of the parties must be ascertained from their "contemporaneous and
subsequent acts." (Art. 1371; Atlantic Gulf Co. v. Insular Government, 10 Phil. 166 (1980)) It cannot
simply be judged from what one of them says. On the other hand, the claim of third parties, like
petitioners, that the clause on upgrading of equipment would enable the parties after a while to
change the contract and enter into something else in violation of the law is mere speculation and
cannot be a basis for judging the validity of the contract.

IV. It is contended that §1 of E.O. No. 301 covers all types of "contract[s] for public services or for
furnishing of supplies, materials and equipment to the government or to any of its branches,
agencies or instrumentalities" and not only contracts or purchase and sale. Consequently, a lease of
equipment, like the ELA, must be submitted to public bidding in order to be valid. This contention is
based on two premises: (1) that §1 of E.O. No. 301 applies to any contract whereby the government
acquires title to or the use of the equipment and (2) that the words "supplies," "materials," and
"equipment" are distinct from each other so that when an exception in §1 speaks of "supplies," it
cannot be construed to mean "equipment."

Petitioners' contention will not bear analysis. For example, the term "supplies" is used in paragraph
(a), which provides that a contract for the furnishing of "supplies" in order to meet an emergency is
exempt from public bidding. Unless "supplies" is construed to include "equipment," however, the
lease of heavy equipment needed for rescue operations in case of a calamity will have to be
submitted to public bidding before it can be entered into by the government. cdasia
In dissent Justice Feliciano says that in such a situation the government can simply resort to
expropriation, paying compensation afterward. This is just like purchasing the equipment through
negotiation when the question is whether the purchase should be by public bidding, not to mention
the fact that the power to expropriate may not be exercised when the government can very well
negotiate with private owners.
Indeed, there are fundamental difficulties in simultaneously contending (1) that E. O. No. 301, §1
covers both contracts of sale and lease agreements and (2) that the words "supplies," "materials"
and "equipment" can not be interchanged. Thus, under paragraph (b) of §1, public bidding is not
required "whenever the supplies are to be used in connection with a project or activity which cannot
be delayed without causing detriment to the public service." Following petitioners' theory, there
should be a public bidding before the government can enter into a contract for the lease of
bulldozers and dredging even if these are urgently needed in areas ravaged by lahar because, first,
lease contracts are covered by the general rule and, second, the exception to public bidding in
paragraph (b) covers only "supplies" but not equipment.
To take still another example. Paragraph (d), which does away with the requirement of public
bidding "whenever the supplies under procurement have been unsuccessfully placed on bid for at
least two consecutive times, either due to lack of bidders or the offers received in each instance
were exorbitant or non conforming to specifications." Again, following the theory of the petitioners, a
counteract for the lease of equipment cannot be entered into even if there are no bids because,
first, lease contracts are governed by the general rule on public bidding and, second, the exception
to public bidding in paragraph (d) applies only to contracts for the furnishing of "supplies."

Other examples can be given to show the absurdity of interpreting §1 as applicable to any contract
for the furnishing of supplies, materials and equipment and of considering the words "supplies,"
"materials" and "equipment" to be not interchangeable. Our ruling that §1 of E. O. No. 301 does not
cover the lease equipment avoids these fundamental difficulties and is supported by the text of §1,
which is entitled "Guidelines for Negotiated Contracts" and by the fact that the only provisions of E.
O. No. 301 on leases, namely, §§6 and 7, concern the lease of buildings by or to the government.
Thus the text of §1 reads:
§1. Guidelines for Negotiated Contracts. — Any provision of law, decree, executive order or other
issuances to the contrary notwithstanding, no contract to public services or for furnishing supplies,
materials and equipment to the government or nay of its branches, agencies or instrumentalities
shall be renewed or entered into without public bidding, except under any of the following situations:
a. Whenever the supplies are urgently needed to meet an emergency which may involve the loss of,
or danger to, life and/or property;
b. Whenever the supplies are to be used in connection with a project or activity which cannot be
delayed without causing detriment to the public service;
c. Whenever the materials are sold by an exclusive distributor or manufacturer who does not have
sub-dealers selling at lower prices and for which no suitable substitute can be obtained elsewhere at
more advantageous terms to the government; cdt
d. Whenever the supplies under procurement the supplies under procurement have been
unsuccessfully placed on bid for at least two consecutive times, either due to lack of bidders or the
offers received in each instance were exorbitant or non-conforming to specifications;
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
f. Whenever the purchase is made from an agency of the government.
Indeed, the purpose for promulgating E. O. No. 301 was merely to decentralize the system for
reviewing negotiated contracts of purchase for the furnishing of supplies, materials and equipment
as well as lease contracts of buildings. Theretofore, E. O. No. 298, promulgated on August 12, 1940,
required consultation with the Secretary of Justice and the Department Head concerned and the
approval of the President of the Philippines before contracts for the furnishing of supplies, materials
and equipment could be made on a negotiated basis, without public bidding. E. O. No. 301 changed
this by providing as follows:
§2. Jurisdiction over Negotiated Contracts. — In line the principles of decentralization and
accountability, negotiated contracts for public services or for furnishing supplies, materials or
equipment may be entered into by the department or agency head or the governing board of the
government-owned or controlled corporation concerned, without need of prior approval by higher
authorities, subject to availability of funds, compliance with the standards or guidelines prescribed in
Section 1 hereof, and the audit jurisdiction of the Commission on Audit in accordance with existing
rules and regulation.
Negotiated contracts involving P2,000,000 up to P10,000,000 shall be signed by the Secretary and
two other Undersecretaries.

xxx xxx xxx

§7. Jurisdiction Over Lease Contracts. — The heads of agency intending to rent privately owned
buildings or spaces for their use, or to lease out government-owned buildings or spaces for private
use, shall have authority to determine the reasonableness of the terms of the lease and the rental
rates thereof, and to enter into such lease contracts without need or prior approval by higher
authorities, subject to compliance with the uniform standards or guidelines established pursuant to
Section 6 hereof by the DPWH and to the audit jurisdiction of COA or its duly authorized
representative in accordance with existing rules and regulations.

In sum, E. O. No. 301 applies only to contracts for the purchase of supplies, materials and
equipment, and it was merely to change the system of administrative review of emergency
purchases, as theretofore prescribed by E. O. No. 298, that E. O. No. 301 was issued on July 26,
1987. Part B of this Executive Order applies to leases of buildings, not of equipment, and therefore
does not govern the lease contract in this case. Even if it applies, it does not require public bidding
for entering into it.

Our holding that E. O. No. 301, §1 applies only to contracts of purchase and sale is conformable to
P.D. No. 526, promulgated on August 2, 1974, which is in pari materia. P.D. No. 526 requires local
governments to hold public bidding in the "procurement of supplies." By specifying "procurement of
supplies" and excepting from general rule "purchase" when made under certain circumstances, P.D.
No. 526, §12 indicates quite clearly that it applies only to contracts of purchase and sale. This
provision reads:
§12. Procurement without public bidding. — Procurement of supplies may be made without the
benefit of public bidding in the following mades:
(1) Personal canvas of responsible merchants;
(2) Emergency purchases;
(3) Direct purchases from manufacturers or exclusive distributors;
(4) Thru the Bureau of Supply Coordination; and
(5) Purchase from other government entities or foreign governments.

Sec. 3 broadly defines the term "supplies" as including —

everything, excepts real estate, which may be needed in the transaction of public business, or in the
pursuit of any undertaking, project, or activity, whether of the nature of equipment, furniture,
stationery, materials for construction, or personal property of any sort, including non-personal or
contractual services such as the repair and maintenance of equipment and furniture, as well as
trucking, hauling, janitorial, security, and related or analogous services.
Thus, the texts of both E.O. No. 301, §1 and of P.D. No. 526, §§1 and 12, make it clear that only
contracts for the purchase and sale of supplies, materials and equipment are contemplated by the
rule concerning public biddings.
Finally, it is contended that equipment leases are attractive and commonly used in place of
contracts of purchase and sale because of "multifarious credit and tax constraints" and therefore
could not have been left out from the requirement of public bidding. Obviously these credit and tax
constraints can have no attraction to the government when considering the advantages of sale over
lease of equipment. The fact that lease contracts are in common use is not a reason for implying
that the rule on public bidding applies not only to government purchases but also to lease contracts.
For the fact also is that the government leases equipment, such as copying machines, personal
computers and the like, without going through public bidding.
FOR THE FOREGOING REASONS, the motion for reconsideration of petitioners is DENIED with finality.
SO ORDERED.
Regalado, Melo, Puno, Kapunan, Francisco and Hermosisima, Jr., JJ ., concur.
Panganiban, J ., took no part.