Case Summary (G.R. No. 167173)
Constitutional Issue: Self-Executing Nature
The core dispute was whether Section 10(2), Article XII of the 1987 Constitution—mandating preference for qualified Filipinos in national economy and patrimony—was self-executing or required implementing legislation. Respondents argued it was merely a policy statement; petitioner contended it was a standalone, enforceable mandate.
Constitutional Interpretation: Supreme Law and Self-Execution
The Court reaffirmed constitutional supremacy and the presumption of self-execution unless clearly non-self-executing. It distinguished general policy declarations (non-self-executing) from complete commands that operate without further legislation. Section 10(2) was deemed a “mandatory, positive command” complete in itself, enforceable by courts and applicable directly to all State actors.
Definition of National Patrimony
Respondents argued that “patrimony” referred only to natural resources enumerated in Article XII, Sections 1 and 2. The Court, however, adopted the framers’ intent as expressed in Commission debates: national patrimony includes cultural heritage, historical landmarks, and intangible bequests of the nation. The Manila Hotel’s storied past, role in key historical events, and cultural significance placed it squarely within patrimony.
State Action and Applicability to GSIS
Although GSIS is a government-owned corporation with separate legal personality, its sale of MHC shares was part of the State’s privatization program and required Committee on Privatization approval. The Court held that GSIS’s actions constituted “State action” subject to constitutional constraints, since the Constitution addresses the entire State, including instrumentalities acting under governmental authority.
Preference Standard and Bidding Rules
The Court read the constitutional preference into GSIS bidding rules. While rules did not specify how preference was to operate post-bidding, the constitutional command required that when a qualified Filipino bidder matched the highest foreign bid, the award must go to the Filipino. This interpretive adjustment preserved both the rules and the Constitution’s Filipino First mandate, preventing foreign acquisition when Filipinos stand ready to match.
Holding and Relief
The Court ordered GSIS, MHC, COP, and OGCC to:
- Cease and desist from selling 51% of MHC shares to Renong Berhad
- Accept Manila Prince’s matching bid of ₱44.00/share
- Execute all necessary contracts and documents to effect the sale to Manila Prince
Concurring Opinions
- Justice Mendoza emphasized that the only effective way to give preference was to permit a qualified Filipino bidder to match the highest foreign bid, citing pre-1973 precedents on market stall leases.
- Justice Padilla underscored that national patrimony encompasses historic institutions like the Manila Hotel, and that preference must touch the “heart” of economic grants by allowing matching bids.
- Justice Torres stressed the Hotel’s unique historical and cultural status
Case Syllabus (G.R. No. 167173)
Facts
- Under Proclamation No. 50 (December 8, 1986), GSIS included the historic Manila Hotel in its privatization program, offering 30%–51% of Manila Hotel Corporation (MHC) shares for public bidding.
- In the second public bidding (September 18, 1995), two qualified bidders participated:
- Manila Prince Hotel Corporation (petitioner), a wholly Filipino‐owned corporation, bid P41.58 per share (15,300,000 shares).
- Renong Berhad, a Malaysian firm, bid P44.00 per share (15,300,000 shares).
- Bidding rules required execution of management and stock purchase agreements with GSIS/MHC by October 23, 1995 (later reset to November 3, 1995); failure would allow GSIS to offer the shares to other qualified bidders who matched the highest bid.
- On September 28 and October 10, 1995, petitioner tendered a letter matching P44.00 per share and a P33 million manager’s check as bid security; GSIS refused to accept them.
- Petitioner filed a petition for prohibition and mandamus with a temporary restraining order (TRO) on October 17–18, 1995 to enjoin GSIS from consummating the sale to Renong Berhad.
Issues
- Whether Section 10(2), Article XII of the 1987 Constitution (Filipino First Policy) is self-executing or requires implementing legislation.
- Whether the 51% MHC shares fall within the “national economy and patrimony” protected by the Constitution.
- Whether GSIS, as a government instrumentality, is bound by the constitutional preference in the grant of rights and privileges.
- Whether petitioner, as a qualified Filipino bidder, is entitled to preference by matching the higher foreign bid.
- Whether petitioner is estopped from challenging the sale after participating in the bidding under the known rules.
Relevant Constitutional Provisions
- Article XII, Section 10(2): “In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.”
- Article II, Section 19: “The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.”
- Article XII, Section 2(1)–(2): Definition of “national patrimony” including natural resources and public domain.
Arguments of Petitioner
- Section 10(2), Article XII is a positive, self-executing mandate requiring no implementing statute.
- Manila Hotel is part of national patrimony and economy by