Case 1 Manila Prince Hotel vs GSIS

By: Marge: Margarita M. Gutierrez

Manila Prince Hotel vs. GSIS 

267 SCRA 402 
3 February 1997 En Banc

Alternative title: manila prince hotel petitioner vs. government service insurance system,
manila hotel corporation, committee on privatization and office of the government corporate
counsel,

I. FACTS

The Respondent Government Service Insurance System (GSIS) in pursuant to the

privatization program of the Philippine Government under Proclamation No. 50 dated 8
December 1986, decided to sell through public bidding 30% to 51% of the issued. In a close
bidding held on 18 September 1995 only two (2) bidders participated: petitioner Manila
Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% of the MHC or
15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-
Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per
share, or P2.42 more than the bid of petitioner.

Pending the declaration of Renong Berhad as the winning bidder/strategic partner of MHC,
petitioner matched the former’s bid prize also with Php 44.00 per share followed by a
manager’s check worth Php 33 million as Bid Security, but the GSIS refused to accept both
the bid match and the manager’s check. 

The petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution “Filipino first
policy” and submits that the Manila Hotel has been identified with the Filipino nation and
has practically become a historical monument which reflects the vibrancy of Philippine
heritage and culture. To all intents and purposes, it has become a part of the national
patrimony. Petitioner also argues that since 51% of the shares of the MHC carries with it the
ownership of the business of the hotel which is owned by respondent GSIS, a government-
owned and controlled corporation, the hotel business of respondent GSIS being a part of
the tourism industry is unquestionably a part of the national economy.

II. ISSUE: 
 Whether or not the provisions of Section 10, second paragraph, Article 11 of the 1987
Constitution is self executing or non self executing

If self executing: the sale of Manila Hotel to Renong Berhad is violative of the Constitutional
provision of Filipino First policy (Section 10, second paragraph, Article 11 of the 1987
Constitution) and is therefore null and void.

III. Ruling/held

As the Filipino first policy was deemed self executing, the court ruled that the qualified Filipino
entity must be given preference by granting it the option to match the winning bid because the
provision. The Supreme Court, therefore, directed the GSIS and other respondents to cease and
desist from selling the 51% shares of the MHC to the Malaysian firm Renong Berhad, and
instead to accept the matching bid of the petitioner Manila Prince Hotel. 

The rule is that (from Agpalo) in the case of doubt, the constitution should be considered self
executing rather than non self executing. Such is the case with Section 10, second paragraph,
Article 11 of the 1987 Constitution which states that “in grant of rights and privileges and
concessions covering the national economy and patrimony, the state shall give preference to
qualified Filipino”. According to Justice Bellosillo, ponente of the case at bar, Section 10,
second paragraph, Article 11 of the 1987 Constitution is a mandatory provision, a positive
command which is complete in itself and needs no further guidelines or implementing laws to
enforce it. The Court En Banc emphasized that qualified Filipinos shall be preferred over
foreigners, as mandated by the provision in question. 

Furthermore, (agpalo) in its plain ordinary meaning the term patrimony pertains to heritage .
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 and therefore an example the Manila hotel which has
become a landmark a living testimonial of Philippine heritage

The Court also reiterated how much of national pride will vanish if the nation’s cultural heritage
will fall on the hands of foreigners, and this is not to be taken lightly as Nationalism is inherent
in the concept of the Philippines being a democratic and republican state. In his dissenting
opinion, Justice Puno said that the provision in question should be interpreted as pro-Filipino
and, at the same time, not anti-alien in itself because it does not prohibit the State from
granting rights, privileges and concessions to foreigners in the absence of qualified Filipinos. He
also argued that the petitioner is estopped from assailing the winning bid of Renong Berhad
because the former knew the rules of the bidding and that the foreigners are qualified, too.