Scribd
Upload
66 views2 pages

Kilosbayan Vs Guingona Digested

The Supreme Court ruled that the Philippine Charity Sweepstakes Office (PCSO) entered into a joint venture with the Philippine Gaming Management Corporation (PGMC) in violation of its charter. While PCSO claimed it had merely contracted with PGMC as an independent contractor, the Court found several aspects of their agreement established a joint venture: both parties would take on risks of the business, with PGMC handling the technical operations and PCSO providing its lottery franchise. This sharing of risks and responsibilities constituted a prohibited "collaboration or association" and effectively a joint venture between the two. The Court therefore invalidated the contract between PCSO and PGMC.

Uploaded by

gregoriomanueldon.patrocinio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
66 views2 pages

Kilosbayan Vs Guingona Digested

The Supreme Court ruled that the Philippine Charity Sweepstakes Office (PCSO) entered into a joint venture with the Philippine Gaming Management Corporation (PGMC) in violation of its charter. While PCSO claimed it had merely contracted with PGMC as an independent contractor, the Court found several aspects of their agreement established a joint venture: both parties would take on risks of the business, with PGMC handling the technical operations and PCSO providing its lottery franchise. This sharing of risks and responsibilities constituted a prohibited "collaboration or association" and effectively a joint venture between the two. The Court therefore invalidated the contract between PCSO and PGMC.

Uploaded by

gregoriomanueldon.patrocinio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

G.R. No.

113375 May 5, 1994

KILOSBAYAN, INCORPORATED, ET. AL petitioners,


vs.
TEOFISTO GUINGONA, JR., ET. AL. respondents.

ISSUE: whether or not PCSO entered into a joint venture with PGMC in violation of its charter

FACTS:

Pursuant to its decision to establish an on-line lottery system, PCSO entered into the so called “contract of
lease” with Philippine Gaming Management Corporation- a company which "was intended to be the
medium through which the technical and management services required for the establishment of said on-
line lottery system would be offered and delivered to PCSO.

Herein petitioners vehemently opposed such agreement between PCSO and PGMC arguing among
others that it is an arrangement wherein the PCSO would hold and conduct the on-line lottery system in
"collaboration" or "association" with the PGMC, in violation of Section 1(B) of R.A. No. 1169, as amended
by B.P. Blg. 42, which prohibits the PCSO from holding and conducting charity sweepstakes races,
lotteries, and other similar activities "in collaboration, association or joint venture with any person,
association, company or entity, foreign or domestic and that there are terms and conditions of the Contract
"showing that respondent PGMC is the actual lotto operator and not respondent PCSO."

On the other hand, private respondent PGMC asserts that "(1) it is merely an independent contractor for a
piece of work, (i.e., the building and maintenance of a lottery system to be used by PCSO in the operation
of its lottery franchise); and (2) as such independent contractor, PGMC is not a co-operator of the lottery
franchise with PCSO, nor is PCSO sharing its franchise, 'in collaboration, association or joint venture' with
PGMC — as such statutory limitation is viewed from the context, intent, and spirit of Republic Act 1169, as
amended by Batas Pambansa 42 .

In its comment the Sol Gen argued that What the PCSO charter "seeks to prohibit is that arrangement akin
to a "joint venture" or partnership where there is "community of interest in the business, sharing of profits
and losses, and a mutual right of control," a characteristic which does not obtain in a contract of lease."

Ruling:

Yes, PCSO entered into a joint venture with PGMC in violation of its charter.

After a careful analysis and evaluation of the provisions of the contract and a consideration of the
contemporaneous acts of the PCSO and PGMC the court held that the contract is not in reality a contract
of lease under which the PGMC is merely an independent contractor for a piece of work, but one where the
statutorily proscribed collaboration or association, in the least, or joint venture, at the most, exists between
the contracting parties. Collaboration is defined as the acts of working together in a joint
project. 63 Association means the act of a number of persons in uniting together for some special purpose
or business. 64 Joint venture is defined as an association of persons or companies jointly undertaking some
commercial enterprise; generally all contribute assets and share risks. It requires a community of interest in
the performance of the subject matter, a right to direct and govern the policy in connection therewith, and
duty, which may be altered by agreement to share both in profit and losses.
The court found that the only contribution the PCSO would have is its franchise or authority to operate the
on-line lottery system; with the rest, including the risks of the business, being borne by the proponent or
bidder.

from the very inception, the PCSO and the PGMC mutually understood that any arrangement between
them would necessarily leave to the PGMC the technical, operations, and management aspects of the on-
line lottery system while the PCSO would, primarily, provide the franchise.

This joint venture is further established by among others

This risk-bearing provision in the definition of rent; the non-compete clause and the "Hold Harmless
Clause"; the coordinating and cooperative powers and functions of the parties.

In view of the foregoing the Contract of Lease was declared violative of paragraph B, Section 1 of R.A. No.
1169, as amended by B.P. Blg. 42, and is, therefore, invalid for being contrary to law.

Hence the Temporary Restraining Order against it was MADE PERMANENT.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy