PCSO vs DE LEON
G.R. Nos. 236577 and 236597 August 15, 2018
Grounds for issuance of preliminary injunction
FACTS
This case arose from the Equipment Lease Agreement executed in 1995 by the PCSO and
PGMC. The Equipment Lease Agreement provided that PCSO (lessee) will lease the lottery
equipment and accessories of Philippine Gaming and Management Corporation's (lessor) for 8
years (or until 2003) for the operation of its online lottery in Luzon. It is stated in the agreement
that PGMC has contractual exclusivity in providing the central computer system for the Luzon
on-line lottery project until 2007 and the complete proprietary rights to the central computer
system's hardware and software.
In 1997, the Equipment Lease Agreement was amended to extend the term until 2007. In
2004, the said agreement was further amended to extend the term of the lease to another eight
years or until 2015. It was during the effectivity of the Amendments to Equipment Lease
Agreement that PCSO allowed Pacific Online, the on-line lottery operator for Visayas and
Mindanao, to supply a number of lottery equipment for its Luzon operation.
In 2013, while the Amendments was still in effect, PCSO and PGMC entered into an
Interim Settlement and agreed to bring the exclusivity issue before the International Chamber of
Commerce, an arbitral tribunal. While the arbitration case was pending, petitioner and
respondent PGMC executed a Supplemental and Status Quo Agreement, extending the term of
the Agreement to another 3 years or until 2018. Since the Agreement was about to expire,
PCSO started preparing for the bidding of the Nationwide On-line Lottery System, which would
have a term of five (5) years-from 2018 to 2023. Claiming that it is "the exclusive supplier/lessor
of lottery equipment for Luzon," PGMC applied for a TRO and a writ of preliminary injunction
in 2017 to enjoin PCSO from further proceeding with the bidding process. Presiding Judge De
Leon granted respondent PGMC’s application for injunctive relief.
ISSUE
Whether or not PGMC has the exclusive right to the nationwide on-line lottery system.
HELD
No. PGMC’s basis for its Writ of Preliminary Injunction application is its purported
exclusive rights for the period beyond what was agreed upon in the extended Amendments to
Equipment Lease Agreement. To emphasize, PGMC’s exclusive rights, if any, extend only until
August 21, 2018. After the expiration of the Supplemental and Status Quo Agreement, it can no
longer claim any alleged right to exclusively provide on-line lottery equipment in Luzon.
This Court finds that the Regional Trial Court committed grave abuse of discretion in
granting respondent Philippine Gaming and Management Corporation's application for injunctive
relief. A Writ of Preliminary Injunction is issued "to prevent threatened or continuous
irremediable injury to some of the parties before their claims can be thoroughly studied and
adjudicated.
The issuance of a Writ of Preliminary Injunction is governed by Rule 58, Section 3 of the
1997 Rules of Civil Procedure. In Department of Public Works and Highways (DPWH) v. City
Advertising Ventures Corporation,123 this Court held that "[f]or a writ of preliminary injunction
to be issued, the applicant must show, by prima facie evidence, an existing right before trial, a
material and substantial invasion of this right, and that a writ of preliminary injunction is
necessary to prevent irreparable injury."
PGMC’s claim of exclusive rights, as stated in the Interim Settlement and which was
brought to arbitration, pertained to its rights under the Amendments to Equipment Lease
Agreement, which will expire on August 21, 2018. It failed to provide proof that the
Amendments to Equipment Lease Agreement was extended beyond August 21, 2018. It cannot
claim that it has alleged exclusive rights to be protected and that it will suffer irreparable injury if
petitioner continued with the Nationwide On-line Lottery System bidding process. This is
precisely because the bidding was for the next supplier of the Nationwide On-line Lottery
System for a period of five (5) years after August 21, 2018 or commencing on August 22, 2018.
