Lex Rex Ph

Kilosbayan Inc. vs. Morato Digest


The SC invalidated the Contract of Lease between PCSO and Phil Gaming Mgt Corp (PGMC) on the ground of violation PSCO’s charter. Then, the parties negotiated a new agreement that would be consistent with such a charter.

(Jan 1995) The parties signed an Equipment Lease Agreement (ELA) where PGMC leased online lottery equipment and accessories to PCSO. Rental is 4.3% of the gross ticket sales of PCSO. Term is 8 years.

A month after, this case was filed by Kilosbayan et al. that described themselves as “taxpayers and concerned citizens.”, composed of civic-spirited citizens and religious people committed for the truth and renewal.

They are seeking to declare ELA as invalid on the ground that it is substantially the same as the Contract of Lease nullified in the first case – still violative of the PCSO’s Charter.

PCSO and PGMC questioned their standing to bring this suit.


Are Petitioners Kilosbayan Inc., and certain persons and politicians entitled to bring this suit or to be a party to this case?


No. Because the issue, in this case, is no longer about “standing” (which was the standing in the previous case) but WON they are “real parties in interest” within the meaning of Section 2.

This case involves an action for annulment of contracts, hence, the parties must be those who will be prejudiced in their rights with respect to the contract.

Parties in interest require that “Every action must be prosecuted and defended in the name of the real party in interest.”

The question as to the real party in interest is whether he is the party who would be benefitted or injured by the judgment or the ‘party entitled to the avails of the suit.’

The kind of interest that is concrete and will entitle him to recover (if the evidence is sufficient) must be→present substantial interest.

Kilosbayan et al have legal standing but are not a real party in interest. The former is sufficient legal interest and injury. The latter is present substantial interest (injury or benefit) in the contract.

Legal StandingReal Party in Interest
Sufficient legal interestPresent substantial interest
Plaintiff may sustain an injury in a governmental actPlaintiff may be benefitted or be injured in the judgment over the contract
Legal standing vs. Real Party in Interest

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