Manila Prince Hotel vs. GSIS, GR No.

122156, February 3, 1997

Facts:

Government Service Insurance System (GSIS) decided to sell shares in Hotel

Manila through a public offering in accordance with the government's privatization
program. There were two companies that participated in the auction: Applicant Manila
Prince Hotel (MHC), a Filipino company that offered to buy the shares at ₱41.58 per
share, and Renong Berhad, a Malaysian company that offered to buy the shares at
₱44.00 per share. MHC matched Renong Berhad's offer price. MHC even sent a check
to which GSIS declined outright. Concerned about GSIS' refusal, MHC filed a ban and
Mandamus petition with the Supreme Court.
MHC stated that in Paragraph 2, Section 10, Article XII of the 1987 Constitution
("Filipino First Policy"), that in granting rights, privileges and concessions affecting the
national economy, Filipino companies and Filipinos in general shall be given preference
over foreign companies and other nationalities. Consequently, MHC claimed that the
Manila Hotel has become part of the national heritage due to its significance to the
Filipinos historically. Pointed out also was that GSIS ownership of shares shows that
they are in the hotel business, making them part of the national economy. Therefore,
the aforementioned constitutional provision can be used and MHC should be
considered a preferred bidder.

Issues:
1.Is Par. 2, Sec. 10, Art. XII of the 1987 Constitution a self-executing provision?
2. Can Manila Hotel be considered part of the national patrimony in order for the Art. XII
of the 1987 Constitution to be applicable?

Ruling:

For the first issue, The Supreme Court ruled in the affirmative, arguing that
Section 10, of Article XII already contains mechanisms in which manner the provision
shall be executed, it is operative without the need for an enabling legislation. As the
whole Section 10, Article XII of the 1987 Constitution reads:

“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.”

The Supreme Court stipulates that the provision already furnishes sufficient rule
by means of which the right it grants may be enjoyed or protected and thus can be
considered as self-executing in nature. Stressing further, provisions of the Constitution
should be considered as self-executing in general. Also, since GSIS has already set
guidelines, MHC was considered by GSIS and selected as one of the qualified bidders.
Hence, they are deemed to be qualified Filipinos already. Even though the Renong
Berhad had the higher bid, the bid shall not be automatically given to the highest bid
without completing the negotiations and completion of other contracts mandated by the
bid. More importantly, under the doctrine of constitutional supremacy, GSIS was
mandated to follow the 1987 Constitution and its subsequent provisions regarding the
preferential treatment of qualified Filipinos.

For the second issue, the Supreme Court also ruled in the affirmative, deeming
that more than a hotel or a private business, Manila Hotel could be considered as a
culturally significant building, bearing witness to many historical events and landmarks
of Philippine history, part of the national patrimony in a grander sense. Consequently,
awarding the controlling number of shares to a foreign company runs contrary to the
provisions of the article of constitution in question. The proper execution of said
provision would be to award the bid to MCH, a qualified Filipino company.