Justice Secretary Hernando Perez and Education Secretary Raul Roco said the decision meant charges could still be refiled against Lacson, a former police general, without threat of double jeopardy.
Had the court ordered a reopening of the case, Lacson and his 37 co-accused would face arrest and detention since murder is non-bailable.
Voting 13-0, the high tribunal directed RTC Judge Ma. Theresa Yadao to determine whether the March 1999 decision of her predecessor, Judge Wenceslao Agnir, was valid. Justices Antonio Carpio and Jose Melo abstained.
Perez viewed the SC ruling as "victory for the government."
"If the decision is to remand (the case to the lower court), then that is a great victory for us because the case continues. The fact that it is still alive is a victory for us. The government is not restrained from prosecuting," he said.
Acting Press Secretary Silvestre Afable said the government supported the reopening of the case, but denied that Malacañang had a hand in the SC decision.
Yadao, an appointee of deposed President Joseph Estrada on endorsement by his brother-in-law Raul de Guzman and former Sen. Juan Ponce Enrile, was directed to "determine the factual and legal issues" pertaining to the celebrated case.
Although the SC ruling did not call for an immediate reopening of the case, it may pave the way for a revival of the charges against Lacson, who was also head of the defunct Presidential Anti-Organized Crime Task Force under the Estrada administration.
"This court is not in a position to rule whether or not the re-filing of the cases for multiple murder against Lacson should be enjoined. Fundamental fairness requires that both the prosecution and Lacson should be afforded the opportunity to be heard," the ruling stated.
Section 8, Rule 117 of the Revised Rules of Criminal Procedures provide that dismissals of cases, once it has reached the two-year ban, can only be valid if it had the consent of the accused, and if the victims were notified, among other factors.
"The records of the case, however, do not reveal with equal clarity and conclusiveness whether notices to the offended parties were given. It appears from the resolution that the relatives who desisted did not appear during the hearing," the SC added.
Lacson and his co-accused were originally charged with summarily executing the 11 suspected members of the Kuratong Baleleng gang, but the respondents insisted it was a shootout.
The RTC dismissed the case in 1999 after Estrada, Lacson’s ally, was elected president.
Despite the controversy, Estrada later appointed Lacson as PNP chief.
Estrada was eventually overthrown by a military-backed popular uprising in January last year, and is now being tried for the capital offense of plunder and other corruption charges.
Lacson has since been elected to the Senate on a pro-Estrada ticket.
His lawyers charged that the two-year limit for the reopening of the charges over the Kuratong Baleleng incident has expired.
However, the Arroyo administration moved for a reopening of the case.
"We want justice to move forward without any politics or partisan implications. That’s the position of the government," Afable said.
He added that he would ask the RTC to immediately issue an arrest warrant against Lacson once it decided to reopen the case.
"We have a pretty good case and we believe we can obtain a conviction," Perez stressed.
Roco expressed elation over the SC decision.
"Justice has triumphed...justice has prevailed," he told reporters after attending a Cabinet meeting at Malacañang.
As a former senator, Roco chaired the Senate committee on justice that conducted the legislative inquiry into the incident and ruled that it was a case of extra-judicial execution of suspects, not a gunfight as Lacson and his co-accused had claimed.
The Office of the Ombudsman used the report of the Roco committee in filing the criminal and administrative charges against the policemen involved.
Roco also said the whistle blower on the alleged salvaging, former policeman Eduardo de los Reyes who has since fled to Canada, can now return to the countrty to testify in case the charges against Lacson were revived.
Opposition Sen. Edgardo Angara said even if charged, Lacson could still file for bail.
Meanwhile, legal observers said the high tribunal, in issuing the ruling, wanted to be technical about the dismissal of the case, saying the justices did not delve on the substantive issues, but merely wanted to know whether the rules of court were followed.
The sources said the SC was particularly interested in knowing if the families of the victims were represented and informed of the dismissal of the case.
Government lawyers claimed only seven of the 11 families were apprised of the status of the case.
Apart from Lacson, other police officials indicted for multiple murder in connection with the case were Chief Superintendents Jewel Canson, Romeo Acop and Fancisco Zubia; Senior Superintendents Michael Ray Aquino, Cesar Mancao III, Glenn Dumlao and 31 other policemen.
State prosecutors moved for the reopening of the case after five new witnesses who took part in the police operation surfaced and expressed willingness to testify.
The five were identified as Senior Inspectors Ismael Yu, Abelardo Ramos, SPO1 Wilmar Medes, SPO2 Noel Seno and radio technician Mario Enad.
Previous prosecution witnesses were De los Reyes, Corazon de la Cruz, Mandy Capili and Jane Gomez.
The government lawyers said the policemen were not covered by the principle of double jeopardy.
State Prosecutor Peter Ong, head of the three-member panel that conducted the preliminary investigation, recommended no bail for Lacson and his men.–With Marichu Villanueva