Privatization and Management Office vs. Strategic Alliance Development Corporation and/or Philippine Estate Corporation

A bidder in a government auction has no right to a notice of award where its bid is below the announced indicative price; bids are mere offers that the advertiser may reject under the bidding rules, and the constitutional right to information does not create a positive right to an award.

The Privatization and Management Office, then operating as the Asset Privatization Trust, sought to sell the Philippine National Construction Corporation shares, receivables, and securities owned by the Philippine government to generate maximum cash recovery. The Asset Specific Bidding Rules governed the public bidding, including the announcement of the indicative price, the definition of the winning bidder, PMO’s reservation of the right to reject any or all bids, and the absence of warranty on financial information. Strategic Alliance Development Corporation, later substituted by Philippine Estate Corporation, participated in the bidding and accepted those terms. Philippine National Construction Corporation was also a party in the consolidated proceedings.

The Privatization and Management Office, then operating as the Asset Privatization Trust, held a public bidding on 30 October 2000 to sell the PNCC properties in order to generate maximum cash recovery for the government. The Asset Specific Bidding Rules governed the bidding process. Under those rules, the indicative price of the PNCC properties was to be announced on the day of the bidding; the winning bidder was the one that submitted the highest total bid and complied with all the terms of the ASBR; PMO reserved the right to reject any or all bids, including the highest bid; and the delivery of financial information regarding the PNCC properties did not give rise to a warranty with respect to that data or information. Strategic Alliance Development Corporation participated in the bidding and signified its acceptance of these terms.

On the day of the bidding, the indicative price was announced at P7,000,000,000. None of the bidders met the threshold. Strategic Alliance, despite giving the highest offer, only gave P1,228,888,800 as its bid offer. Consequently, PMO rejected all the bids.

Strategic Alliance protested the rejection of its bid and insisted that a notice of award of the PNCC properties be issued in its favor. PMO refused. Strategic Alliance then filed a Complaint for Declaration of Right to a Notice of Award and/or Damages before the RTC. The trial court ruled in the bidder’s favor, holding that the failure to explain the basis of the indicative price of P7 billion constituted a grave abuse of discretion and a violation of the public’s right to information, warranting the issuance of a notice of award of the PNCC properties to Strategic Alliance.

On appeal, the CA affirmed the RTC ruling in its Decision dated 27 January 2012. PMO questioned that ruling before the Supreme Court via a Petition for Review on Certiorari dated 16 March 2012. Meanwhile, PMO’s co-petitioner, PNCC, moved for reconsideration. In resolving PNCC’s Motion for Reconsideration, the CA totally reversed itself in its Amended Decision dated 13 February 2013 and Resolution dated 12 July 2013. The CA held that PMO and PNCC could not be compelled to accept the bidder’s meager offer, which was grossly disadvantageous to the Filipino people. The CA also considered that PMO had the right under the ASBR to reject any or all bids, and that its exercise of discretion to reject the bid of Strategic Alliance had not been attended by unfairness, arbitrariness, or grave abuse.

• Fraud in the Announcement of the Indicative Price: PHES argued that the announcement of the indicative price after the submission of sealed bids constituted fraud on the part of PMO.
• Erroneous Valuation and Right to Information: PHES argued that the valuation of the indicative price was erroneous and that PMO’s failure to explain the high indicative price violated the public’s right to information, warranting the issuance of a notice of award of the PNCC properties to Strategic Alliance.

• Fraud in the Announcement of the Indicative Price: Whether the announcement of the indicative price after the submission of sealed bids constituted fraud on the part of PMO.
• Erroneous Valuation and Right to Information: Whether the alleged erroneous valuation of the indicative price and PMO’s failure to explain it violated the public’s right to information and warranted issuance of a notice of award to Strategic Alliance/PHES.
• Notice of Award and Sale: Whether a notice of award is not tantamount to a sale or is merely the initial step towards the perfection of the contract of sale.
• Mootness of the 13 June 2013 Decision: Whether the Decision dated 13 June 2013 is already moot because the CA, through its amended rulings, abandoned its original Decision dated 27 January 2012.

• Fraud in the Announcement of the Indicative Price: No. PMO timely announced the indicative price on the day of the bidding pursuant to the ASBR; absent clear and convincing evidence, fraud cannot be presumed.
• Erroneous Valuation and Right to Information: No. Bids are mere offers under Civil Code Article 1326 and ASBR Section 4.3, which PMO may rightfully reject; the right to information merely gives access to public records and does not confer a positive right to an award.
• Notice of Award and Sale: Initial step only. The issuance of a notice of award is the initial step towards the perfection of the contract of sale, as PHES itself admitted.
• Mootness of the 13 June 2013 Decision: No. The CA’s amended rulings are the subjects of the appeal in G.R. No. 208127 and cannot be considered final and executory rulings that effectively vacate the original CA Decision dated 27 January 2012.

• Fraud in the Announcement of the Indicative Price: Section 3.1 of the ASBR provides that the indicative price for the shares, receivables, and securities shall be announced on the day of the bidding. PMO complied with this requirement. Absent clear and convincing evidence of fraud, and given that PMO followed the protocol, fraud on its part cannot be presumed. The Court cited Rementizo vs. Vda. de Madarieta in support of this evidentiary standard.
• Erroneous Valuation and Right to Information: Even if PMO erred in computing and explaining the indicative price of P7 billion, the allegations were irrelevant because Article 1326 of the Civil Code and Section 4.3 of the ASBR provide that bids are mere offers, which may be rightfully rejected by PMO. PHES also unsuccessfully anchored its claim on a violation of the public’s right to information because that right merely gives access to public records and does not precipitate a positive right to obtain an award of the PNCC properties.
• Notice of Award and Sale: The issuance of a notice of award, as admitted by PHES itself, is the initial step towards the perfection of the contract of sale involving the auctioned PNCC properties. Thus, the argument that a notice of award is not tantamount to a sale presented no substantial argument.
• Mootness of the 13 June 2013 Decision: The amended rulings of the CA are the subjects of the instant appeal in G.R. No. 208127. They cannot be considered as final and executory rulings that will effectively vacate the CA’s Decision dated 27 January 2012. The Court cited Ipapo vs. Court of Appeals in resolving this issue.

• Bids as Mere Offers — Under Article 1326 of the Civil Code, advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder unless the contrary appears. Under Section 4.3 of the ASBR, PMO reserved the right to reject any or all bids, including the highest. The Court applied this to hold that PMO could reject Strategic Alliance’s highest bid of P1,228,888,800, which was below the P7,000,000,000 indicative price.
• Fraud Cannot Be Presumed — Fraud must be established by clear and convincing evidence; it cannot be presumed. Because PMO timely announced the indicative price on the day of bidding under Section 3.1 of the ASBR, no fraud attended the bidding. The Court cited Rementizo vs. Vda. de Madarieta.
• Right to Information Does Not Confer a Positive Right to an Award — The constitutional right to information under Article III, Section 7 gives access to official records and documents on matters of public concern, but it does not create a positive right to obtain an award of public property. Thus, even if PMO failed to explain the indicative price, PHES could not demand a notice of award on that ground.
• Notice of Award as Initial Step to Perfection of Sale — The issuance of a notice of award is the initial step towards the perfection of the contract of sale involving the auctioned PNCC properties. It is not tantamount to a sale, and the argument regarding this issue presented no substantial argument.
• Amended Decision Subject to Appeal Cannot Vacate Original Decision — Where the CA’s amended decision and resolution are themselves the subject of an appeal, they cannot be considered final and executory rulings that effectively vacate the original CA decision. The Court cited Ipapo vs. Court of Appeals.

• “bids are mere offers, which may be rightfully rejected by PMO.” — This states the core contractual basis for rejecting PHES’s claim that the alleged erroneous valuation entitled it to the PNCC properties.
• “the said right merely gives access to public records, and does not precipitate a positive right to obtain an award of the PNCC properties.” — This defines the scope of the constitutional right to information and rejects its use as a basis for a mandatory award.
• “absent a clear and convincing evidence of fraud, and given that PMO followed the protocol, fraud on its part cannot be presumed.” — This articulates the evidentiary standard for fraud and disposes of PHES’s fraud allegation.
• “the issuance of a notice of award, as admitted by PHES itself, is the initial step towards the perfection of the contract of sale involving the auctioned PNCC properties.” — This resolves the argument concerning the legal character of a notice of award.

• Rementizo vs. Vda. de Madarieta, G.R. No. 170318, 15 January 2009, 576 SCRA 109 — Cited to support the rule that fraud cannot be presumed absent clear and convincing evidence.
• Ipapo vs. Court of Appeals, G.R. No. L-49793, 20 August 1981, 193 Phil. 791 (1981) — Cited in resolving the mootness issue, supporting the principle that an amended decision subject to appeal cannot be considered final and executory so as to vacate the original decision.

• Article 1326, Civil Code — Provides that advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder unless the contrary appears. Applied to hold that PMO was not bound to accept Strategic Alliance’s bid.
• Article III, Section 7, Constitution — Recognizes the right of the people to information on matters of public concern and access to official records and documents. Applied to hold that the right merely gives access and does not create a positive right to an award.
• Section 3.1, Asset Specific Bidding Rules — Requires the indicative price for the shares, receivables, and securities to be announced on the day of the bidding. Applied to find that PMO timely announced the P7,000,000,000 indicative price.
• Section 4.3, Asset Specific Bidding Rules — Provides that APT reserves the right to reject any or all bids, including the highest bid, or to waive any defect or required formality. Applied to uphold PMO’s rejection of all bids.
• Rule 9, Section 5, Internal Rules of the Supreme Court, A.M. No. 10-4-20-SC — Cited as the basis for consolidating G.R. No. 208127 with G.R. No. 200402, the latter having the lower docket number. Applied when the Second Division consolidated the cases on 11 November 2013.

Leonardo-De Castro, Bersamin, Villarama, Jr., and Reyes, JJ., concur.