Manila Prince Hotel vs Government Service Insurance System

G.R. No. 122156 – 267 SCRA 408 – Political Law – Constitutional Law – Supremacy of the Constitution – Filipino First Policy

Self-Executing Provisions of the Constitution – Par. 2, Sec. 10, Art. XII

Pursuant to the privatization program of the government, the Government Service Insurance System (GSIS) decided to sell 30-51% of the Manila Hotel Corporation. Two bidders participated, Manila Prince Hotel (MPH) and the Malaysian Firm Renong Berhad (RB). MPH’s bid was at share while RB’s bid was at RB was the highest bidder hence it was logically considered as the winning bidder but is yet to be declared so. Pending declaration, MPH matches RB’s bid and invoked the Filipino First Policy enshrined under par. 2, Sec. 10, Art. XII of the 1987 Constitution which provides:

Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

But GSIS refused to accept said offer. In turn MPH filed a petition for TRO against GSIS to avoid the perfection/consummation of the sale to RB. TRO was granted.

RB then assailed the TRO issued in favor of MPH arguing among others that:

  1. Par. 2, Sec. 10, Art. XII of the 1987 Constitution needs an implementing law because it is merely a statement of principle and policy (not self-executing);
  2. Even if said passage is self-executing, Manila Hotel does not fall under national patrimony.

ISSUE: Whether or not RB should be admitted as the highest bidder and hence be proclaimed as the legit buyer of shares.

HELD: No. MPH should be awarded the sale pursuant to Art 12 of the 1987 Const. This is in light of the Filipino First Policy.

Par. 2, Sec. 10, Art. 12 of the 1987 Constitution is self executing. The Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract.

Manila Hotel falls under national patrimony. Patrimony in its plain and ordinary meaning pertains to heritage. When the Constitution speaks of national patrimony, it refers not only to the natural resources of the Philippines, as the Constitution could have very well used the term natural resources, but also to the cultural heritage of the Filipinos. It also refers to our intelligence in arts, sciences and letters. Therefore, we should develop not only our lands, forests, mines and other natural resources but also the mental ability or faculty of our people. Note that, for more than 8 decades (9 now) Manila Hotel has bore mute witness to the triumphs and failures, loves and frustrations of the Filipinos; its existence is impressed with public interest; its own historicity associated with our struggle for sovereignty, independence and nationhood.

Herein resolved as well is the term Qualified Filipinos which not only pertains to individuals but to corporations as well and other juridical entities/personalities. The term ‘qualified Filipinos’ simply means that preference shall be given to those citizens who can make a viable contribution to the common good, because of credible competence and efficiency. It certainly does NOT mandate the pampering and preferential treatment to Filipino citizens or organizations that are incompetent or inefficient, since such an indiscriminate preference would be counter productive and inimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has to be made between a ‘qualified foreigner’ and a ‘qualified Filipino,’ the latter shall be chosen over the former.

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