G.R. No. 122156 - Manila Prince Hotel vs. Government Service Insurance System

The 1987 Constitution’s “Filipino First Policy” (Sec. 10, par. 2, Art. XII) mandates that “in the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.”
Petitioner Manila Prince Hotel Corporation (a Filipino corporation) sought to acquire 51% of the shares of Manila Hotel Corporation (MHC), which is owned by respondent Government Service Insurance System (GSIS), a government‐owned and controlled corporation.

Under Proclamation No. 50 (December 8, 1986), GSIS offered for public bidding a block of 30%–51% of MHC’s issued and outstanding shares. The winning bidder/“strategic partner” was to provide management expertise and financial support to strengthen the hotel’s performance.
At the second public bidding on September 18, 1995, only two bidders participated:

Manila Prince Hotel Corporation bid for 15,300,000 shares at ₱41.58 per share.
Renong Berhad (a Malaysian firm) bid for the same number of shares at ₱44.00 per share.

Bidding rules required the highest bidder to negotiate and execute the necessary contracts (management, marketing/reservation, stock purchase agreement) with GSIS/MHC by October 23, 1995 (later reset to November 3, 1995), failing which GSIS would offer the block to other qualified bidders “willing to match the highest bid in terms of price per share.”

On September 28 and October 10, 1995, petitioner formally offered to match Renong Berhad’s ₱44.00 bid and tendered a manager’s check for ₱33,000,000 as bid security. GSIS refused to accept these matching‐bid offers.
Fearing consummation of the sale to Renong Berhad, petitioner filed a petition for prohibition and mandamus with a temporary restraining order (TRO) on October 17, 1995. On October 18, 1995, this Court issued a TRO enjoining respondents from completing the sale to the foreign bidder.
On September 10, 1996, the case was elevated to the Court En Banc, with former Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J., appearing as amici curiae.

Whether Section 10, paragraph 2, Article XII of the 1987 Constitution is self‐executing or requires implementing legislation.
Whether 51% of MHC shares constitute part of the “national economy and patrimony” protected by the Constitution.
Whether respondent GSIS, as a government‐owned and controlled corporation, is a “State” actor bound by the Filipino First Policy.
Whether GSIS gravely abused its discretion by refusing to accept petitioner’s matching bid.
Whether petitioner is estopped from challenging the sale after participating in the bidding.