FACTS:

The National Investment and Development Corporation (NIDC) entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. for the construction, operation, and management of the Subic National Shipyard. NIDC transferred its interest in the shipyard to the Philippine National Bank, which was later transferred to the National Government. The government established the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to privatize non-performing assets. The National Government's share in the shipyard increased to 97.41% and Kawasaki's share decreased to 2.59%. The COP and APT decided to sell 87.67% of the shares to private entities. Kawasaki's right of first refusal was "exchanged" for the right to top the highest bid by 5%. Kawasaki informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to top. Petitioner JG Summit Holdings participated in the public bidding and was declared the highest bidder. The COP approved the sale to petitioner, subject to Kawasaki's right to top. Petitioner protested the offer of PHI to top its bid, claiming that it violated the bidding rules. PHI paid the balance of the purchase price and exercised its option to top the bid.

In a separate case, petitioner JG Summit Holdings participated in a public bidding for the sale of shares in PHILSECO. Kawasaki-PHI exercised its right of first refusal and topped the bid made by JG Summit Holdings. The shares were awarded to PHI. Petitioner filed a petition for mandamus before the Supreme Court, which was referred to the Court of Appeals. The Court of Appeals denied the petition, stating that mandamus is not the proper remedy. The court found that the petitioner is estopped from questioning the validity of the award given to PHI because it participated in the public bidding with full knowledge of PHI's right to top. Petitioner filed a motion for reconsideration, which was denied. Petitioner then filed a petition for review on certiorari with the Supreme Court, arguing that it is not estopped from challenging the legality of the right to top and the right of first refusal. The Court of Appeals also erred in not directing a trial on alleged issues of fact and not appointing an amicus curiae to determine the applicability of requirements to the transactions.

ISSUES:

1. Whether the petition for mandamus and certiorari is proper.

2. Whether the shipyard PHILSECO is a public utility.

3. Whether the right of first refusal and the right to top the bid are unconstitutional.

4. Whether the repeal of P.D. No. 666 revived Section 1 thereof.

5. Whether there are vested rights of the parties in relation to P.D. No. 666.

6. Whether the joint venture between NIDC and Kawasaki falls within the purview of an "association" pursuant to the Constitution, requiring adherence to the proportion of 60%-40% Filipino-foreign capitalization.

7. Whether the right of first refusal in the Joint Venture Agreement (JVA) limits the parties' ability to purchase shares beyond the 60%-40% capitalization proportion.

8. Whether MARINA guidelines exempt joint ventures from the 60% Filipino ownership requirement.

9. Whether paragraph 15.0 of the ASBR allowing a completely foreign corporation to participate in the public bidding of more than 60% of the shares of a public utility corporation violates the requirement of a 60% Filipino capitalization.

10. Whether the method of disposing of government property through public bidding should adhere to rules and regulations on competitive public bidding.

11. Whether the APT violated the rule on competitive public bidding by granting KHI/PHI the right to top the highest bid.

12. Whether the Auction Procedure Team (APT) violated the rule on fair competition in public bidding when it gave the right to top to KHI/PHI, thereby placing them in an advantageous position.

13. Whether the APT’s provision on the right to top the highest bidder disregarded the capitalization arrangement stipulated in the Joint Venture Agreement (JVA) between NIDC and KHI.

14. Whether the right of first refusal can bar another bidder from submitting a bid, thereby effectively doing away with public bidding.

15. Whether the APT’s provision on the right to top is unfair to all competitors, local or foreign, in the public auction of PHILSECO shares.

16. Whether the petitioner is estopped from contesting the validity of the Auction Sale Bid Rules (ASBR) and the bidding procedure conducted pursuant to it.

RULING:

1. The Court of Appeals erred in dismissing the petition solely on the ground of the impropriety of the special civil action of mandamus. The petition also raises certiorari, alleged grave abuse of discretion, and seeks to nullify the award of the sale to a private respondent.

2. The shipyard PHILSECO is considered a public utility as provided by law.

3. The right of first refusal and the right to top the bid are constitutional.

4. The repeal of P.D. No. 666 by B.P. Blg. 391 did not revive Section 1 of P.D. No. 666.

5. There are no vested rights of the parties that should be protected in relation to the repeal of P.D. No. 666.

6. Yes, the joint venture between NIDC and Kawasaki falls within the purview of an "association" pursuant to the Constitution, and therefore must observe the proportion of 60%-40% Filipino-foreign capitalization.

7. The right of first refusal in the JVA limits the parties' ability to purchase shares beyond the 60%-40% capitalization proportion. Kawasaki cannot purchase beyond 40% of the capitalization of the joint venture on account of constitutional and contractual proscriptions.

8. The constitutionality of MARINA guidelines exempting joint ventures from the 60% Filipino ownership requirement is not in issue in this case.

9. Yes. Paragraph 15.0 of the ASBR allowing a completely foreign corporation to participate in the public bidding of more than 60% of the shares of a public utility corporation violates the requirement of a 60% Filipino capitalization.

10. Yes. The method of disposing of government property through public bidding should adhere to rules and regulations on competitive public bidding.

11. Yes. The APT violated the rule on competitive public bidding by granting KHI/PHI the right to top the highest bid.

12. The instant petition for review on certiorari is GRANTED. The Court ruled that the APT violated the rule on fair competition in public bidding by giving the right to top to KHI/PHI, placing them in an advantageous position. The APT’s provision on the right to top the highest bidder also disregarded the capitalization arrangement stipulated in the JVA between NIDC and KHI. The right of first refusal cannot bar another bidder from submitting a bid, as public bidding is required in government contracts. The APT’s provision on the right to top is unfair to all competitors, local or foreign, and sets aside the entire public bidding. The petitioner is not estopped from contesting the validity of the ASBR and the bidding procedure.

PRINCIPLES:

• A petition for mandamus may be proper if there is a clear legal right to the thing demanded and it is the duty of the respondent to perform the act required. (Doctrine of mandamus)

• A shipyard such as PHILSECO is considered a public utility and must comply with the constitutional requirement of at least 60% Filipino ownership. (Doctrine of public utilities)

• The repeal of a law does not revive the provision that was repealed unless expressly provided. (Doctrine of repeals)

• There are no vested rights that should be protected when a law is repealed, unless specific circumstances warrant its protection.

• A joint venture is an association of persons or companies jointly undertaking some commercial enterprise, governed by the laws on contracts and partnerships.

• Joint ventures engaged in the business of operating a public utility, such as a shipyard, must observe the proportion of 60%-40% Filipino-foreign capitalization.

• The right of first refusal in a joint venture agreement is subject to the capitalization proportion set in the agreement.

• Courts must ascertain whether a branch or instrumentality of the government has transgressed its constitutional or statutory boundaries, without straying into the realm of policy decision-making.

• Delegated legislative authority must respect pertinent provisions of the Constitution and the law.

• The requisite principles of competitive public bidding include the offer to the public, an opportunity for competition, and a basis for exact comparison of bids.

• In public bidding for government contracts and the disposition of government assets, the principles and objectives should be the same, with the only difference being the award to the lowest bidder for public contracts and to the highest bidder for the disposition of government assets.

• Public auction sales of government property must adhere to established mechanics and procedures in public bidding, including the presence of a COA representative to ensure proper observance of auditing rules.

• Granting a bidder the right to top the highest bid is only allowed in cases of failure of bidding, not as a regular practice in competitive public bidding.

• The basic rule on fair competition should be observed in public bidding.

• Public bidding is required in government contracts.

• The right of first refusal cannot bar another bidder from submitting a bid.

• The ASBR provision on the right to top is unfair and disregards the rule on fair competition.

• Estoppel cannot be invoked to validate an act prohibited by law or against public policy.