Case Summary (G.R. No. 124293)
Petitioner and Respondents
Petitioner: J.G. Summit Holdings, Inc.
Respondents: Court of Appeals; COP, its Chairman and Members; APT; Philyards Holdings, Inc.
Key Dates
– January 27, 1977: NIDC-Kawasaki JVA executed.
– November 25, 1986: NIDC’s interest in PHILSECO transferred to PNB, then to the National Government.
– December 8, 1986 & February 27, 1987: COP created; APT trust agreement signed.
– December 2, 1993: Public bidding held; JG Summit declared highest bidder.
– February 2–7, 1994: PHI exercised “right to top” by 5% and paid purchase price.
– May 11, 1994: JG Summit’s mandamus petition filed with Supreme Court, referred to CA.
– July 18, 1995: CA denied mandamus for lack of proper remedy.
– November 20, 2000: SC ruled in favor of JG Summit, voided PHI’s purchase.
– September 24, 2003: SC reversed its 2000 decision in favor of respondents.
– October 2003–February 2004: JG Summit filed motions for reconsideration and to elevate to en banc.
Applicable Law
– 1987 Philippine Constitution (foreign equity limitations, public domain).
– Civil Code provisions on contracts, estoppel, real rights.
– Jurisprudence on public bidding discretion, right of first refusal, enforceability of contractual stipulations.
Joint Venture and Right of First Refusal
Under the 1977 JVA, NIDC and Kawasaki each held rights in PHILSECO capitalized at ₱330 million (60%–40%). Clause 1.4 granted mutual rights of first refusal on any transfer, except to government-owned entities or Kawasaki affiliates.
Privatization and Bidding Process
Following quasi-reorganization in 1989 (Government equity rose to 97.41%), COP and APT decided to privatize PHILSECO. ASBR for the 1993 bidding: public sale of 896,869,942 shares; indicative price ₱1.3 billion; highest bid subject to COP/APT approval; Kawasaki/PHI entitled to “option to top” highest bid by 5%, with defined deposit and payment terms.
Exercise of the Right to Top
JG Summit bid ₱2.03 billion and acknowledged Kawasaki/PHI’s topping right. After COP approval on December 3, 1993, PHI exercised its top-up option within 30 days, deposited required amounts, and executed a Stock Purchase Agreement on February 24, 1994.
Lower Courts’ Rulings
CA (July 18, 1995) denied JG Summit’s mandamus for impropriety, held right of first refusal and topping option prima facie legal, and applied estoppel based on JG Summit’s participation with full knowledge. CA’s denial of reconsideration on March 15, 1996 prompted JG Summit’s certiorari to SC.
Supreme Court’s 2000 Decision
SC (Nov. 20, 2000) ruled PHILSECO a public utility requiring 60% Filipino ownership; invalidated Kawasaki’s topping right under ASBR (allowed foreign equity >40%); held provisions unconstitutional; voided PHI’s title; ordered APT to convey shares to JG Summit upon payment.
2003 Resolution and Subsequent Motions
SC Special First Division (Sept. 24, 2003) reversed the 2000 decision, holding: (1) PHILSECO is not a public utility; (2) JVA imposes no 40% cap on Kawasaki’s equity; (3) the right to top did not violate competitive bidding. JG Summit then moved for reconsideration and elevation to en banc.
Motion to Elevate to Court en banc
JG Summit urged en banc review on grounds of confusion between bidding propriety and shipping-industry policy, existence of novel questions, and alleged executive interference (Finance Secretary’s memo to Chief Justice). PHILYARDS and COP/APT opposed, citing settled jurisprudence, estoppel by prior opposition, and en banc non-appellable status of divisional resolutions.
Court’s Analysis on Elevation
SC held no confusion: the 2003 Resolution directly addressed bidding issues. No novel legal questions arose; rights of first refusal and competitive-bidding principles are well-established. The finance-secretary memo was merely noted without impact. Divisional resolutions are Supreme Court decisions; en banc escalation is not available. Motion denied.
Motion for Reconsideration
JG Summit challenged: (1) reliance on policy rather than strict
...continue readingCase Syllabus (G.R. No. 124293)
Facts of the Case
- On January 27, 1977, the National Investment and Development Corporation (NIDC) and Kawasaki Heavy Industries, Ltd. (Kawasaki) signed a Joint Venture Agreement (JVA) to establish Philippine Shipyard and Engineering Corporation (PHILSECO), with P330 million capitalization in a 60%-40% Filipino-foreign split.
- The JVA granted mutual rights of first refusal on share transfers, except to government-controlled entities or Kawasaki affiliates.
- In November 1986, NIDC transferred its PHILSECO interest to Philippine National Bank, then to the National Government under Administrative Order No. 14.
- Proclamation No. 50 (December 8, 1986) created the Committee on Privatization (COP) and Asset Privatization Trust (APT) to manage and dispose of non-performing government assets, including PHILSECO shares.
- APT accepted trusteeship of government PHILSECO shares on February 27, 1987; a 1989 quasi-reorganization raised government equity to 97.41%, reducing Kawasaki’s to 2.59%.
- COP and APT agreed to convert Kawasaki’s right of first refusal into an option to top any highest bid by 5%, exercisable by a nominee designated by Kawasaki.
- On December 2, 1993, J.G. Summit bid ₱2,030,000,000 for the government’s 87.67% block, acknowledging the top-up option of Philyards Holdings, Inc. (Philyards).
- COP approved the bid on December 3, 1993; Philyards exercised its 5% top-up right within 30 days and paid in full by February 2, 1994.
Procedural History
- February 1994: J.G. Summit filed a writ of mandamus (G.R. No. 114057) in the Supreme Court; case referred to the Court of Appeals.
- July 18, 1995: Court of Appeals denied the petition for lack of proper remedy and estoppel.
- March 15, 1996: Motion for reconsideration before the CA denied.
- November 20, 2000: Supreme Court Division reversed the CA, held PHILSECO a public utility requiring 60%-40% Filipino equity, found the top-up option illegal, and awarded shares to J.G. Summit.
- Respondents moved for reconsideration of the November 2000 Decision.
- September 24, 2003: Supreme Court Special First Division reversed its own Decision, upholding Philyards’ acquisition and the validity of the bidding process.
- October 2003: J.G. Summit filed motions for reconsideration of the Division’s 2003 Resolution and to elevate the case to the Court en banc.
Issues Presented
- Whether the case should be elevated to the S