G.R. No.

112399 July 14,

1995R E P R E S E N T A T I V E A M A D O S . B A G A T S I N G V S COMMITTEE ON
PRIVATIZATIONFACTS OF THE CASE
PETRON was originally registered with the Securities and
Exchange Commission (SEC) in 1966 under the corporate name "Esso
Philippines, Inc." .ESSO became a wholly-owned company of the government
under the corporate name PETRON and as a subsidiary of
PNOC.P E T R O N o w n s t h e l a r g e s t , m o s t m o d e r n c o m p l e x
refinery in the Philippines. I t is listed as the
No. 1c o r p o r a t i o n i n t e r m s o f a s s e t s a n d i n c o m e i n t h e
Philippines in 1993.President Corazon C. Aquino promulgated Proclamation No. 50
in the exercise of her legislative power under the Freedom Constitution.
Implicit in the Proclamation is the need to raise revenue for the
Government and the ideal of leaving business to the private sector by
creating the committee on privatization. The
Government can then concentrate on the delivery of basic services
and the performance e of vital public functions. The Presidential Cabinet of
President Ramos approved t h e p r i v a t i z a t i o n o f P E T R O N a s p a r t o f t h e
E n e r g y Sector Action Plan. PNOC Board of Directors passed
aresolution authorizing the company to negotiate andconclude a
contract with the consortium of
SalomonB r o t h e r s o f H o n g k o n g L i m i t e d a n d P C I C a p i t a l C
o r p o r a t i o n f o r f i n a n c i a l a d v i s o r y s e r v i c e s t o b e rendered to
PETRON. The Petron Privatization
WorkingC o m m i t t e e ( P W C ) w a s t h u s f o r m e d . I t f i n a l i z e d a privat
ization strategy with 40% of the shares to be sold to a strategic partner and
20% to the general public T h e P r e s i d e n t a p p r o v e d t h e 4 0 %
4 0 % 2 0 % privatization strategy of
PETRON. T h e i n v i t a t i o n t o b i d w a s p u b l i s h e d i n s e v e r a l n e
w s p a p e r s o f g e n e r a l c i r c u l a t i o n , b o t h l o c a l a n d foreign. The PNOC
Board of Directors then
passedResolution No. 866, S. 1993, declaring ARAMCO thewinning
bidder. PNOC and ARAMCO signed the StockPurchase
Agreement, the two companies signed theShareholders' Agreement. The
petition for prohibition in G.R. No. 112399 sought:(1) to nullify the bidding
conducted for the sale of ablock of shares constituting 40% of the
capital stock(40% block) of Petron Corporation (PETRON) and
thea w a r d m a d e t o A r a m c o O v e r s e a s C o m p a n y , B .
V
.(ARAMCO) as the highest bidder and (2) to stop the s ale of said block of
shares to ARAMCO. The petition forprohibition and
certiorari

in G.R. No. 115994 sought toa n n u l t h e s a l e o f t h e

s a m e b l o c k o f P e t r o n s h a r e s subject of the petition in G.R. No. 112399.ARAMCO
entered a limited appearance to question the jurisdiction over its person,
alleging that it is a foreigncompany organized under the laws of the
Netherlands,that it is not doing nor licensed to do business in
thePhilippines, and that it does not maintain an office or abusiness address in
and has not appointed a residentagent for the Philippines (
Rollo
, p. 240).P e t i t i o n e r s h o w e v e r , c o u n t e r e d t h a t t h e y f i l e d t h e action in
their capacity as members of Congress.
ISSUE:
WON Petitioners have a locus standi
DECISION:
Petition is dismissed.
LOCUS STANDI
In
Philippine Constitution Association
v
.
Hon. Salvador Enriquez
, G.R. No. 113105, August 19, 1994, we held that the members of Congress
have the legal standingto question the validity of acts of the Executive
whichi n j u r e s t h e m i n t h e i r p e r s o n o r t h e i n s t i t u t i o n o f Congres
s to which they belong. In the latter case,
thea c t s c a u s e d e r i v a t i v e b u t n o n e t h e l e s s s u b s t a n t i a l i n j u r y w h i c
h c a n b e q u e s t i o n e d b y m e m b e r s o f Congress (Kennedy
v
. James, 412 F. Supp. 353 [1976]).In the absence of a claim that the contract in
questionv i o l a t e d t h e r i g h t s o f p e t i t i o n e r s o r i m p e r m i s s i b l y intruded
into the domain of the Legislature, petitionershave no legal standing to institute
the instant action intheir capacity as members
of Congress.H o w e v e r , p e t i t i o n e r s c a n b r i n g t h e a c t i o n i n t h e i r capa
city as taxpayers under the doctrine laid downin
Kilosbayan, Inc.
v
. Guingona
, 232 SCRA 110
(1994).Under said ruling, taxpayers may question contractse n t e r e d i
n t o b y t h e n a t i o n a l g o v e r n m e n t o r government-owned
or controlled corporations allegedto be in contravention of the law. As long as
the rulingin
Kilosbayan
on
locus

standi
is not reversed, we haveno choice but to follow it and uphold the legal
standingo f p e t i t i o n e r s a s t a x p a y e r s t o i n s t i t u t e t h e p r e s e n t action.
PRIVATIZATION
The only requirement under R.A. No. 7181 in order
top r i v a t i z e a s t r a t e g i c i n d u s t r y l i k e P E T R O N i s t h e a p p r o v a l
o f t h e P r e s i d e n t . I n t h e c a s e o f P E T R O N ' s privatization, the President
gave his approval not onlyonce but twice.PETRON's privatization is also in line
with and is part of the Philippine Energy Program under R.A.
No. 7638.Section 5(b) of the law provides that the PhilippineEnergy
Program shall include a policy direction towardsthe privatization
of government agencies related toenergy.
BIDDING
O n t h e c l a i m t h a t t h e r e w a s a f a i l e d b i d d i n g , petitio
ners contend that there were only three bidders.One of them, PETRONAS,
submitted a bid lower thanthe floor price while a second, failed to pre-qualify.